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New Unfair Competition?

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As if the world of independent publishing wasn’t difficult enough, I just read the following in PW Daily, the online version of Publishers Weekly (dated 2/21/02):

Oh Pioneers!: B&N Execs See Publishing as the “Next Great Frontier”

[Alan] Kahn noted that “Len [Riggio] and I are convinced that publishing is the next great frontier” for B&N. He said the company’s publishing program will grow sales incrementally, rather than merely replacing sales. Areas that the company will initially focus on are children’s and popular general-interest titles in hardcover and trade paperback formats, Kahn said. The company will also continue with its promotional and reprint business.…

Echoing Kahn’s “great frontier” comments, Len Riggio said the publishing program will focus on bringing more properly priced and better packaged books to market. He said he hoped publishers will follow “the new paradigm” that B&N plans to bring to the publishing business. And while Riggio said he has “no plans at the moment to buy a publishing company, that doesn’t preclude us from putting our money where our mouth is….’ ”



How Can We Compete?

For years, we have been competing with the major publishing houses to get our children’s books and other titles on the shelves of B&N. Now we’re going to have to compete with B&N itself? Isn’t there a major conflict of interest in a major retailer of books now becoming a publisher? Assuming that they won’t have to use the typical distribution methods that we must use in order to get our books on the shelves (usually 60-64% lopped off the top), how can we possibly compete on pricing?

When some of the major motion picture studios also owned chains of movie theaters, the government stepped in. The studios were ordered to divest themselves of these chains since it could cause unfair competition with regard to films being shown at certain locations.

I believe there is a similarity here. In the world of antitrust litigation, there’s a term called “vertical integration” that seems to apply. Not too long ago, when Barnes & Noble attempted to purchase Ingram Book Company, I (along with many other people in the industry) was interviewed for many hours by U.S. government attorneys about how this would affect the industry as a whole. The acquisition never occurred.

Hopefully B&N will reconsider moving into the world of publishing to increase its bottom-line profitability.

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