Vol. 1, Number 3	Fall 1998 issue

Dear Reader,

When I walked into the Toad Hall Children's Bookstore in Austin, Texas, it didn't strike me as a particularly likely headquarters for a revolution.

But Toad Hall's owner, Barbara Bonds Thomas, watched thousands of businesses like hers close their doors in the face of inexorably expanding chains, and finally decided to fight back. For the past two years she served as president of the American Booksellers Association, a group of independent bookstores that recently won two rounds of multi-million dollar class action settlements from America's major publishing houses. This spring, the Association filed another class action suit, this one against large bookstore chains including Borders and Barnes and Noble.

In a stockroom behind her bright bookcases and teddy bear murals, Ms. Thomas explained why the independent stores took the corporations to court. The major publishing houses, she said, were giving special discounts, payments, and perks to the largest chains. By making a display of a new novel in a front window, a large chain could earn substantial enough discounts to sell the book at 40% off. These discounts were not available to independent stores.

"What really tipped us off," Ms. Thomas said, "was when we saw print ads for a new Walter Mosley mystery that was being billed as a bestseller - but the book hadn't actually come out yet!" She said that a private detective uncovered the publisher's apparently industry-standard practice of paying $18,000 to chains that would pre-emptively put new books on their bestseller shelves.

The ABA's suit against the publishers was based on a depression-era statute called the Robinson-Patman Act, which mandates that a discount available to one retailer must be available to all. The law was designed to protect smaller stores from unfair competition.

But in the case of independent booksellers, there is some question about whether they will even survive fair competition.

In five years, the ABA's membership has declined from 5500 to 3500. Most of that drop presumably had little to do with illegal discounts and perks negotiated by major chains. As anyone with who has taken introductory microeconomics will tell you, it's just not easy to compete with economies of scale.

Compared to an individual store, a chain can operate on much smaller margins and still buy ads, use computerized systems for inventory and checkout, and (most importantly) pay less for its books. Discounts based on the number of books ordered are perfectly legal under Robinson-Patman -- as long as the discounts are above the table and available to anyone who wants that many copies.

If the struggle of independent booksellers seems remote, consider that the same drama is being played out in microcosm at Yale.

Here, our own Barnes and Noble College Bookstore generally offers lower prices, a more convenient location, more efficient checkout, and various other significant advantages in comparison to the Co-Op. And so, even though most Yale students approve of the Co-Op and even would say we "prefer" it, more of us seem to shop at Barnes and Noble.

The result, at Yale and on a larger scale throughout America, is one of the paradoxes of capitalism. We all express individual preferences for clean, well-lit stores, convenient locations, and low prices. None of us, individually, makes much of a difference to an independent store's survival. So we base our shopping choices on convenience. A decision about where to buy a particular item -- contributing at most a few dollars to either business -- never strikes us as an ideological act.

Then, we are saddened and somehow surprised by the unintended result of our collective action, which is that the independent stores we valued (but did not patronize) drop like flies.

For now, our own Co-Op is surviving, which may mean that Yalies are disproportionately idealistic in comparison to the general population. To assure its continued survival despite market forces, I imagine it will seek a more stable arrangement, perhaps a merger or agreement with some larger entity.

But the larger question is inescapable: what are we going to do about the accumulated consequences of acting on our own consumerist desires?

Even those who feel no particular nostalgia for the Co-Op or other independent retailers ought to be just a little worried about the rapid consolidation of this industry. Between the growing chains on the one hand and the explosive popularity of Amazon.Com on the other, we are all getting more of what we want, faster, and cheaper, but from fewer and fewer companies.

This year, for the first time, articles have hit the national press about books that were slated for publication, but at the last minute were axed because buyers from the major chains were uninterested.

Ultimately, as fewer players dominate book sales, more books will be deemed commercially unviable, and these will never reach consumers. Market forces are dispensing with the variety of independent decision-makers that may be playing a central role in ensuring the free exchange of ideas.

America has a simple, traditional solution for taming markets that make things worse for everyone. That solution is government regulation. Recently, it has fallen far out of favor, as an amazing, nearly continuously rising economic tide has lifted the boats of our middle and upper classes.

But it is worth remembering, as this industry and others continue their present wave of corporate consolidation, that regulations like the Robinson-Patman Act are there for a purpose. Without affecting the content of books, rules could be rewritten to give the smaller players a fair chance.

It is easy to forget, but our American system actually involves democracy as well as capitalism.

For now, though, the prevailing political winds dictate that we will vote mostly with our checkbooks.

So go ye forth, and buy school supplies.

Sincerely,
Joey Fishkin
Editor-In-Chief

Footnote: Barnes and Noble and the Yale Co-Op have both contributed financially to The Yale Review of Books through advertising. The YRB's website is a participant in the Amazon.Com Associates program.