Slow book sales spark new rivalry

By Edward Wyatt
NEW YORK TIMES

Two of the book industry's giants, frustrated by two years of little to no growth, appear to be taking their frustrations out on each other.

Last week, Peter Olson, the chief executive of Random House Inc., the United States' largest publisher, disclosed the company's tentative plans to sell books directly to consumers through its own Web site. On Friday, Stephen Riggio, the chief executive of Barnes & Noble Inc., the country's largest bookseller, said he was "deeply concerned" by Random House's plans to enter his business, raising the possibility of a growing rift between the publishing titans.

The announcement of the new plans comes as the book business is suffering through a second consecutive year of almost-flat sales. The average age of book consumers continues to climb, and except for children's and religious books, few areas of the business seem to be picking up new readers. Many of the best-selling books of this year were published in 2003, including "The Da Vinci Code," (Doubleday), "The South Beach Diet" (Rodale Press) and "The Five People You Meet in Heaven" (Hyperion).

Those disappointing trends have led most big publishing companies to weigh new ways to increase sales or to reach new consumers. At the same time, publishers have complained that they are facing greater competition from Barnes & Noble, which has been aggressively trying to expand its own publishing business. Recently, it began a series of full-page newspaper advertisements publicizing new advice and how-to books that it is publishing. Its growing effort to increase that business has begun to worry some of the publishers who are Barnes & Noble's biggest suppliers.

The dispute over online sales appears to be largely theatrics at this point, given the difficulty of building a retail business from scratch.

Olson disclosed the online plans last week in his annual year-end letter to employees in North America. Though the disclosure took up only part of one sentence in a three-page, single-spaced letter, it quickly became the talk of the publishing world.

Riggio of Barnes & Noble said that people at his company were surprised by the announcement in part because Bertelsmann AG, Random House's parent company that is based in Germany, just got out of the business, selling its stake in barnesandnoble.com last year.

"We were partners with them," Riggio said Friday in a statement relayed by a company spokeswoman. "Now they're wanting to compete with us."

Riggio said that because this is the busiest time of year for his company, he had not had time to ask to Random House about its plans. "We want to be able to talk to the folks at Random House before we make any public statements," he said.

Stuart Applebaum, a spokesman for Random House, said on Friday that Barnes & Noble's agitation seemed to be bigger than the energy Random House had put into the online sales idea.

"It's premature to characterize it as anything but a concept at this point," Applebaum said. "It's on the drawing board, but it's a drawing board with just a few pencils applied to it yet."

The extent of Barnes & Noble's concern about Random House's plans would seem to also stem from the company's size. Several other publishers already sell their books on their own Internet sites, including Penguin Group USA, the second-largest book publishing company. But David Shanks, Penguin's chief executive, said that Barnes & Noble has never objected to its online sales operations, which it started early this year.

W.W. Norton & Co., an independent company, and Harlequin, the Torstar Corp. unit that dominates the romance novel business, also sell their own books through their Internet sites. Meanwhile, Scholastic Inc., the education and children's publisher that operates book fairs and a small retail operation, sells its own books and those from other publishers on its site.

Olson's mention of online selling followed a list of potential initiatives, including different pricing and distribution models and the sale to outside companies of Random House publishing services, including bookkeeping and other back-office functions and distribution services.

"In the year ahead, I will report to you on our progress with initiatives, which, in time, may include direct sales online of our books to readers as a complement to our existing sales channels and the expansion of our proprietary publishing, as well as many other publishing, marketing and distribution ideas," Olson wrote.

Applebaum also noted that Random House has long sold books directly to consumers, mainly though book clubs, including Book-of-the-Month Club and the Literary Guild, run by Bookspan, jointly owned by Bertelsmann and Time Warner.

But as opposed to the book clubs, Riggio said, "We believe this is an entirely different matter."

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ContraCostaTimes.com | 12/22/2004 | Slow book sales spark new rivalry