Back-door Books Dealing Undone
By David Madison
OCTOBER 27, 1997: Big-time publishers have had the book thrown at them again. This time, the American Booksellers Association (ABA) hope a recent court settlement will close another chapter in what's become a battle between chain and independent bookstores.
"For at least a decade," says Tony Weller at Zion Book Store on Main Street, "very illegal activities have been taking place."
As a plaintiff in the most recent round of litigation between the ABA and publishers, Weller will receive about $9,000 from a national, $25 million settlement with Penguin Books. It's the largest anti-trust settlement ever crafted under the Robinson Patman Act, which prohibits unfair business deals between suppliers and sellers.
Attorneys for the ABA interviewed current and former employees at chain stores, such as Barnes & Noble, and built a case against top publishers. Confirming suspicions of independent booksellers around the country, the ABA attorneys found that publishers such as Penguin, Viking and Random House were performing illegal favors for the chains.
"A lot of this stuff happens behind closed doors," says Weller, explaining how publishers would provide Barnes & Noble with extended credit and unjustified discounts, but not offer the same deals to independent retailers like Zion Books.
The big publishing houses eventually settled with the ABA and agreed to change their business practices. But later, after Penguin was sold to a British media conglomerate, the new owners discovered evidence of old tricks.
This time, Weller says Penguin got caught rigging back-door deals with the chain stores. Instead of billing the large retailers less, Penguin would ask for only 80 or 90 percent payment on invoices. This activity clearly violated its previous court settlement with the ABA, so Penguin must now pay up.
"I think it's interesting that a company that claims to be innocent is paying $25 million," says Weller.
A large portion of that money will finance future watchdog work through the ABA and its lawyers in Washington, D.C. ABA attorney Kit Pearson says that while the publishers have taken a hit in court, the big chain bookstores have remained on the sidelines.
A representative from Barnes & Noble's New York City office returned a call from City Weekly but offered no comment. Pearson says the book giant "has been fairly silent" and "not had a public posture" with regard to the settlement.
Not surprisingly, independent sellers have rejoiced over ABA's success in court. For them, the victories provide hope for other businesses also feeling the squeeze from massive retail franchises.
"We're a feisty bunch," says Weller. "We're not rolling over like the mom- and-pop drug and hardware stores."
Family-owned bookstores also pride their quiet, dusty corners and creaky wood floors. But during the past few years, as Barnes & Noble has emerged on the market, giant footsteps can be heard in strip malls across the country. Downtown and just up the street from Zion Books, a Borders Books franchise is going in at Crossroads Mall.
Weller says that chain bookstores continue to expand at 16 times the rate of the marketplace, with retail space dedicated to book sales quadrupling in the last five years. During that time, publishers have refined ways to get their big-named authors noticed in the big chain stores.
"There was this illusion that books being displayed were good books," says Pearson. The ABA attorney explains how paid placement at times elevates certain titles out of the stacks and on to their own display. In the past, publishers have offered to purchase prominent displays from only the chain stores.
Weller says that in light of the ABA's court settlements, his store must now be given the option to participate in these kinds of promotions, "if we choose to. I'd prefer things to be displayed on their merits."
As for the ABA's historic, $25 million settlement getting prominent display in the national media, Weller says he doesn't expect to read bad headlines about big publishers. Like large book retailers who also sell CDs, giant publishing companies often own newspapers and magazines.
Says Weller, "It may just be that one branch of a media conglomerate wouldn't be pointing a finger at another branch."
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