Cash Up Front
By RANDY KENNEDY
June 5, 2005

If you walk around any Barnes & Noble or other large bookseller right about now, there's a good chance you will notice prominent stacks of a thick hardcover with an eye-catching jacket and the title ''Running the World: The Inside Story of the National Security Council and the Architects of American Power.'' The book, written by a former Clinton administration official, David J. Rothkopf, and published by PublicAffairs, is based on interviews with foreign policy insiders like Henry Kissinger, Madeleine Albright and Condoleezza Rice, and offers itself as a definitive study of the council, sometimes called the most powerful group of people in the history of the world.

Like many other customers, you might have thought the book was on display simply because the booksellers believed it was important, particularly relevant now and would practically sell itself.

This is also what Peter Osnos, the chief executive of PublicAffairs, would like to think. But he has been in the publishing business long enough to know that it's never that simple. In order to ensure the book was on display on the front tables, his company had to pay a total of about $11,000 to the large bookstore chains. Last fall the company also paid what Osnos called ''a significant amount of money'' for prominent placement of a new boxed edition of Lou Cannon's two-volume biography of Ronald Reagan, after the former president died in June.

''Had we not done that,'' Osnos said recently, ''there's no guarantee where the book would be. It could have been in the back somewhere.''

Osnos takes great pains to stress that he is not complaining about the arrangement, but simply describing a complicated kind of machinery that has evolved over the last 15 years in the world of American bookselling. Over that period, the amount of retail space devoted to selling books has quadrupled -- from superstores like Barnes & Noble and Borders to the growing book sections of big-box stores like Wal-Mart and Costco, and even of supermarkets. And with this expansion the once humble conventions of book display -- the neighborhood bookstore window, the recommended-books table near the cash register -- have also been supersized beyond recognition. In fact, many publishers say that the tables and flashy cardboard displays that crowd the front of chain bookstores have emerged as a marketing force fully as powerful as the traditional ways of trying to bring a book to the public's hard-won attention -- through newspaper and magazine ads, reviews, author tours and radio and television interviews.

But this promotional device, like most others, comes with a cost. It is known, somewhat deceptively, as a cooperative advertising agreement. In plain terms, it means that many of the books on display at the front of a store or placed face out at the end of an aisle are there because the publisher paid for them to be there, not necessarily because anyone at the bookstore thought the book was noteworthy or interesting.

Under such programs, booksellers -- mostly chains, but also larger independent stores -- keep a certain percentage of a publisher's net sales, usually 3 percent to 5 percent annually, depending on the agreement with the publisher. This money is then parceled out for various purposes, to help, for example, defray the bookseller's advertising costs, when a chain takes out ads or prints fliers to promote certain books. But the publisher's money may also buy coveted space on the store's front tables or on tall, highly visible racks, known as stepladders, announcing to customers that these books are considered the most important in the store.

''The Barnes & Noble stepladder is the best piece of real estate there is,'' said one veteran publishing executive -- who, like most others interviewed for this article, did not want his name used when talking about the world of book display. ''Now, when I go into a store I practically genuflect in front of the stepladder.'' (As an example, he said that one of his books with sales of about 800 copies a week immediately jumped to 3,000 to 4,000 copies a week once he paid for its placement on stepladders in stores across the country.)

Pay-for-display programs are nothing new in the retail world. Supermarkets have long extracted money from manufacturers to put their boxes of cereal or detergent in eye-catching spots. But the practice seems less savory in bookselling, where bookstore owners and managers were once assumed to serve as an editorial presence, recommending and featuring books they liked. Besides, publishers complain that, despite its name, cooperative advertising is not a cooperative exercise in the least. Some compare it to a tax or even to extortion -- evoking the practice of ''payola'' in the radio industry. Which is not to say that co-op is actually under-the-table, illegal or even unethical -- it's just that bookstores don't tell customers about it.

Co-op advertising has thus acquired a reputation as a kind of dirty secret of the publishing business. In 1999, Amazon.com, which also charges publishers for prominent placement and promotion of books on its Web site, dealt with complaints about the policy by saying it would disclose which titles had been paid for, but it has since stopped doing so. A disclaimer on the site (it takes some searching to find) informs customers that Amazon accepts payments, but, it adds, ''We don't sell our reviews -- and we don't say a book is good just because it's a publisher-supported title.'' Barnes & Noble likewise says that while its ''Discover Great New Writers'' program is supported by money from publishers, the company would never allow a publisher to ''buy'' a spot on this list; it reserves the right to choose the books itself.

Trying to get publishers or booksellers to talk about display agreements, even off the record, is like trying to persuade Mafiosi to break the oath of omertá. One respected New York publishing executive contacted by this reporter couldn't get off the phone fast enough when asked about it. But among themselves, publishers complain bitterly that display programs are just another way that the big bookstores are dictating how they do business. Booksellers, meanwhile, hate to talk about display arrangements because they feel that they have been unfairly portrayed as somehow dishonest or mercenary in a highly competitive business with paper-thin profit margins.

''At no point in time do we put a book on display unless we think it's going to sell,'' said Stephen Riggio, the chief executive of Barnes & Noble, who bristled at questions about the practice. Gregory P. Josefowicz, the chief executive of Borders Group -- which has a chain of about 500 bookstores -- agreed. ''If we just keep displaying things that don't meet customer needs but are there because of the availability of co-op, that would be a bad strategy,'' he said. He didn't dispute the prevalence of co-op, however, noting that he and other booksellers felt that sharing some display costs with publishers was justified. ''Space does cost,'' he said.

''The rearrangement of the products in the store by store staff is an investment in money for us,'' Josefowicz added.

The phenomenon of co-op advertising was born during the Depression, when book sales dropped sharply and publishers and bookstores willingly joined hands to share advertising and promotion costs. Later, when sales improved, some booksellers insisted on keeping the agreements. ''And that was the first step down the slippery slope from many publishers' points of view,'' said one publishing executive with more than 20 years' sales experience. For years, as bookselling remained largely in the hands of independent stores, pay-for-display was rare, but with the rise of chains and the explosion of display space the arrangements have become more complex and costly.

Publishers have had a love-hate relationship with the idea almost from the beginning. ''I have to say that there were probably some publishers at the time who saw someone else's book in the front window and thought, 'Hey, I'd pay for that if I could,' '' said the veteran executive. And indeed now, displays in superstores are seen by some publishers, especially smaller houses, as an increasingly reliable way to promote their books. ''The promotions cost a fair amount,'' said George Gibson, the publisher of Walker & Company -- known for making successful books like Dava Sobel's ''Longitude'' -- ''but you're buying space, and they have every right to sell that space, and in this day and age when there are so many books being published -- literally every day -- the trick is to try to get a book to stand out in the crowd.''

He added, of the agreements, ''Sure, it might be nice if they cost less, but you use them judiciously.''

The veteran publishing executive said he believes that in many Barnes & Noble superstores, about 70 percent of the books on front-of-store tables are there because co-op money secures their spot. (In New York City, the percentage is less because store clerks have traditionally retained more autonomy to promote books they personally like and think will sell well.) Stephen Riggio declined to say what percentage of books on display tables in Barnes & Noble were generally part of cooperative programs, but maintained that it was ''a small amount system-wide'' and added that ''it's not the driving force behind our merchandising.''

But many publishers disagree and say that costs for certain types of display arrangements with large booksellers are becoming too high. Numbers are very hard to come by, but some publishers said that the price for placement on front-of-store promotional tables for only a few weeks or a month -- in some cases, even, just one week -- at Barnes & Noble stores can be between $10,000 and $20,000 per book, depending on the time of year. Placement on eye-catching cardboard displays can cost much more than $20,000. When compared to the cost of advertising, those fees are not inordinately large, but publishers say that they are starting to take a bigger and bigger share of the money set aside to promote books.

''A great deal of our marketing money is now going to co-op,'' said one publisher. He added that he also has experienced more pressure from booksellers. They do not openly threaten to hide the book in the store if no cooperative money is used, he said; the stores obviously also want books to sell. But that threat is sometimes implicit. ''They're not rude,'' he said. ''They just don't promote the book.''

And booksellers are going after even relatively small amounts of additional money from publishers. One publisher tells a story of a major bookselling company offering a chance for one of the publisher's noted authors to address a dinner meeting of the company's senior managers, a great opportunity for the author. But the bookseller demanded $5,000 from the publisher to allow the author to speak. The offer was declined. ''It's an aggressive posture,'' the publisher said.

While publishers disagree about the merits of paying for display, one thing about the arrangements is clear: they further concentrate money and attention on the books that need it least.

The phenomenon, which has been called a reverse Robin Hood effect, happens because publishers pay huge advances to star authors and then feel they must support that author's book with substantial promotion money. Of course, this was happening well before bookstore display emerged as a force. But publishers say that display arrangements have made promotion budgets even more lopsided in favor of the Stephen Kings and Danielle Steels of the book world, meaning that new authors or less prominent books are given increasingly little advertising or display help.

Stephen Riggio said that while prominent authors do get heavy display support from publishers, he believes big booksellers are unfairly charged with hurting smaller books and publishers with their display policies. ''It's just another j'accuse story in which we are painted by some people in publishing as limiting the marketplace,'' he said. ''It gets right to me.''

On the contrary, he argues, the expansion of his company's stores gives it ''the ability to stock the most diverse collection of books that we've ever been able to do.'' That means books by small and medium-size publishers are ''getting more exposure than ever before.''

The publishing executive with 20 years in sales said that he has been part of many discussions in which marketing divisions have debated the wisdom of devoting large sums of display money to big-name authors whose books would sell well anyway, instead of putting it toward good smaller books that need the attention.

''Those conversations have occurred time and time again,'' he said. ''But no one has had the guts'' to gamble on the lesser-known titles. ''Nobody will do that because the risk is too great for losing the amount of money you've invested in Stephen King.''

Peter Osnos said that for small publishers like him -- PublicAffairs puts out around 50 new books a year -- the expensive world of bookstore display forces him to try to find other ways to get his books talked about.

''One way is to hand a retailer a large check and they will stick your book up front,'' he said. ''What I have to be is more intrepid.''

''Money is the easiest way,'' he added, ''but it's not the only way.''

Randy Kennedy is an arts reporter for The Times.


Cash Up Front - New York Times