College Game Gets Rough

College booksellers focus on online sales, dual discounts and author.

What a year it's been for college booksellers, who met at the National Association of College Stores (NACS) annual meeting and CAMEX show in Salt Lake City this spring. In the 12 months since the group had gathered in Indianapolis, the college store world changed dramatically.

Several online booksellers specializing in textbooks opened for business, beginning last summer, and were so effectively marketing their services that textbook sales in some stores are noticeably down, according to many booksellers (Bookselling, May 3). The issues raised in the lawsuit filed against several publishers over short discounts on books for classroom use continued rankle some members. The association developed and introduced its new Web site, suitable for use by any NACS members. And Brian Cartier, a new executive director, now called chief staff officer, took the helm at NACS. (At the show in Salt Lake City, Cartier told PW that when he started last summer, he had expected to have time to familiarize himself with people and issues in the business; instead, "It's been a roller coaster ride," he said.)

As always, the Monday book and author breakfast was entertaining and evocative. This year's event was distinguished, too, by fortuitous timing. Speaker A. Scott Berg learned several hours after the breakast that he had won the Pulitzer Prize for Lindbergh, about which he had spoken at length.

CourseWeb Gets High Grades

CourseWeb, the online bookselling program designed for NACS member stores -- and similar to the ABA's BookSense.com, which will launch in August -- was introduced at the show. Many college booksellers were enthusiastic about it, particularly as a means for combating some of the online textbook retailers. The program allows stores to set up home pages and online sales sites that appear to users to be only the stores'. In addition, NACS has teamed up with Collegestudent.com, an Austin, Tex., developer of localized communities, to enhance the online services that CourseWeb stores can offer students.

Representatives of some of the stores that have been testing CourseWeb spoke about their experiences, which were unanimously positive.

In an unusual twist, Follett Corp. was marketing its new Web site, e-follett.com, to college booksellers, most of whom would consider the company, which leases some 600 college stores, to be a competitor. Follett College Stores president James Baumann noted that Follett had several divisions, including wholesaling operations, that make e-follett a logical fit for college booksellers interested in selling online.

Interleague Competition

At a well-attended session on legal issues, NACS legal counsel Marc L. Fleischaker, of Arent Fox in Washington, D.C., discussed two of the biggest topics in college bookselling -- dual discounting and online bookselling.

For booksellers who are concerned about deep discounts offered by online booksellers like varsitybooks.com and BigWords.com, Fleischaker illustrated several legal and illegal sales models. If, for example, a publisher sells a book to wholesalers for a specific price and the wholesalers sell it at a common price to online retailers, general booksellers and college booksellers, then it is legal for the different final resellers to sell at whatever price they wish. In addition, he said, if a publisher sells a book at the same price to a trade store and college store but sells to a wholesaler at a lower price (and the wholesaler sells the book to an online bookseller at a price equivalent to the other stores), that, too, is legal, since a publisher can sell to different groups as long as the price d sn't disable competition down the line. And, of course, those retailers can then price the book at whatever level they want.

However, it is illegal, Fleischaker said, for a publisher to sell a book to an Internet bookseller and college store at different prices, even if the Internet bookseller buys its book through a wholesaler. There is strong case law supporting the association in its fight against indirect price discrimination, Fleischaker added.

The association has surveyed some 700 publishers about their pricing policies to online booksellers and had received about 180 responses as of the Salt Lake City meeting, Fleischaker announced. Of those respondees, 123 said that they sold to online booksellers and only six of them admitted selling at lower prices than to other accounts. NACS will now follow up with "key non-respondents." By the end of June, the association will issue a public report on the issue and "in certain cases" will name offending publishers.

The Robinson-Patman Act d s not apply to sales abroad, Fleischaker noted. NACS is, he said, trying to work with publishers regarding textbooks sold overseas that have no use there and are being resold here.

In the case of U.S. editions of books sold through affiliated foreign Web sites by multinational online booksellers but where the books do not leave the U.S., this is illegal and the publisher shouldn't allow it, he said.

The issue of whether course lists need to be given to competitors under Freedom of Information Act laws is murky, Fleischaker noted, mainly because of the "patchwork quilt of state laws that are very difficult to reconcile." Arent Fox has just sent a new compendium of state laws on the matter to NACS.

On the issue of sales tax -- all the more important because online booksellers who don't charge it can offer more attractive pricing -- Fleischacker said that he didn't think the federal Web tax-relief act would survive beyond its current term, particularly considering the growth of sales of such high-priced items as cars, computers and even homes on the Web. "The states will rise up," he said.

Lawsuit Settlements

Fleischaker reviewed NACS's settlements with Addison-Wesley, Oxford University Press and Cambridge University Press, noting that each of the defendants in the dual-pricing lawsuit had implemented significant changes that make for a more level playing field.

Among his points: the A-W settlement allows for price differences only in reference materials and otherwise d s away with dual discounts. And in the reference division, there is a maximum number of titles that can be short discounted. There are also audit requirements.

The Oxford settlement was "tailored" on the A-W settlement plan, and includes an allowance for a small percentage of books to have dual discounts and auditing procedures.

Cambridge's settlement, which was comparable to the two others but not identical, contained several important elements, Fleischaker said. For one, all retail accounts will have a single account and price system. For another, online booksellers are mentioned as being offered the same price as college bookstores.

He also pointed out that in a denial of the plaintiffs' motion to dismiss the case, the judge had established an important point: that Amazon.com can be proven to be an "omnipresent competitor," thus making publishers' pricing policies to online retailers relevant.