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The quirky, cozy bookstore of yore is in serious trouble. As literary superstores Barnes & Noble and Borders move in down the block, independent booksellers are finding themselves engaged in, and losing, local turf wars.
But some of those independent bookstores took steps to fight back. A lawsuit filed Wednesday in US District Court in Northern California by the American Booksellers Association and 23 independent bookstores is alleging that the two giant booksellers are taking unfair advantage of their market dominance to exact discounts from publishers. The plaintiffs are demanding injunctive relief and an end to what they call monopolistic practices.
"Borders and Barnes & Noble are using their clout and influence with publishers to get discounts and preferential treatment," Avin Mark Domnitz, executive director of the American Booksellers Association, said Wednesday. "This poses a threat to [independent bookstores'] survival and the diversity of American bookselling. They are being asked to compete with one hand tied behind their backs."
The lawsuit was filed on behalf of the American Booksellers Association and 23 independent bookstores across the country, ranging from small feminist book shops to larger stores like Cody's in the Bay Area. The suit alleges that Barnes & Noble and Borders and their subsidiaries (B Dalton and Walden) have been illegally requesting extra discounts from publishers, as well as better terms for payments and unsold book returns - and getting them, thanks to their market share. The suit also claims the large booksellers are demanding special fees for in-store promotions. According to the suit, these discounts aren't offered to independent bookstores, and have allowed the chains to lower their prices so much that the independents simply can't compete.
Although neither of the defendants would comment on this lawsuit, saying that they have not yet been served with the papers, Barnes & Noble released a statement saying that the company "follows accepted industry practices in all of its business dealings."
The lawsuit cites several statutes: the federal Robinson-Patman Act, which makes it illegal for a retailer to request illegal terms of sale, and the California Unfair Trade Practices Act, which is intended to prevent large chains from receiving special discounts. The Robinson-Patman Act has been invoked by the ABA before, when, in 1994, they sued several large publishers (including Random House, St. Martin's Press, Penguin USA, and Houghton Mifflin Company) for providing discounts to favored superstores. In that case, the ABA won, getting US$25 million in damages from Penguin.
This lawsuit is tackling the same problem from a different angle - an angle, Domnitz said, that will assist the publishing companies as well.
The two companies, said Domnitz, are moving toward monopoly status: as stated in the lawsuit, Barnes & Noble increased its number of superstores from 135 to 469 in the last four years, while Borders jumped from 31 to 189. Of a $23 billion dollar industry, these two chains alone make up $5 billion.
Meanwhile, Domnitz explained, book sales have remained flat in recent years, while the amount of retail space selling books has doubled, thanks to the superstores. Independents now control only 18 percent of the book marketplace, while the bigger chains own 26 to 28 percent. Much of this is because many independents are simply going out of business: the membership of the ABA has dropped from 5,100 bookstore companies in 1993, to only 3,500 today.
California is the focal point of the case, since Borders and Barnes & Noble have concentrated their stores in this state. Of the 23 independent bookstores participating in the lawsuit, 8 are based in California; they hope to receive monetary disbursements if they win the case, since California laws also call for "disgorgement of profits" (i.e., illegal profits get redistributed to plaintiffs).
The San Francisco Bay Area has seen the mega-chains sprout up all over; because of this, said Clark Kepler, general manager of independent bookstore Kepler's, the local bookstores are feeling the pinch. Kepler is most concerned about the fate of the book itself. Independents like Kepler's helped promote acclaimed books like Cold Mountain and Angela's Ashes, recognizing their potential even though the authors were unknowns; the chains, he said, are more concerned about showcasing proven bestsellers.
Said Kepler, "Independent bookstores made those books bestsellers. In a bookselling community without a strong independent base, quality books like that might not be published; as chains look more towards the bottom line, publishers will only look to the bottom line too."
Borders, in a statement, refuted that allegation, saying that the sheer success of its stores proves that it serves the needs of customers. According to its release, "for the past 27 years, Borders has thrived by providing its customers with a massive assortment. In a typical store, Borders carries more than 200,000 different book, music, video, and periodical titles. We have a direct relationship with more than 12,000 suppliers, many of whom are small and independent presses. We give customers access to books that have never been available before in many markets."
But that doesn't satisfy the hurting bookstores, who fear a cultural monopoly.
As Domnitz put it, "This is much more than an economic grievance, more than an argument between competitors in a marketplace; it's American culture that's in jeopardy here. Should all the buying power be concentrated in the hands of the two large chains, the culture will suffer from lack of choice."
