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NACS and Varsity Agree On Ad Standards
John Mutter -- 8/14/00

The National Association of College Stores and Varsity Group, the parent company of VarsityBooks.com, have settled the suit NACS filed against Varsity last fall. At the height of the threat posed by online textbook retailers to traditional college bookstores, NACS charged that Varsity used false and misleading advertising. At issue were Varsity ads touting the sale of textbooks at a 40% discount. Under the terms of the settlement, Varsity and NACS endorsed a framework of advertising standards that NACS will encourage its 2,800 member stores to follow, too.

Ironically, the battle that many college booksellers feared would ruin them has largely been won--by the college booksellers. The textbook online retailing model turned out to have limitations, and college bookstores helped themselves by promoting their cause and improving service and standards. Beginning earlier this year, VarsityBooks.com changed its business model from emphasizing selling textbooks online toward becoming a marketing services business that offers companies the chance to reach college students through Varsity's student network (News, May 8).

Under the NACS-Varsity agreement, Varsity will not advertise textbooks in a range of discounts unless at least 10% of the texts are offered for sale at the maximum discount advertised. Thus if Varsity advertises "up to a 40% discount," at least 10% of the books advertised will be sold at a 40% discount. The 10% of titles sold at the maximum discount must have "material sales," meaning that they are available for immediate shipment and are required, recommended or optional titles adopted by course instructors for the current term. And finally, Varsity is supposed to disclose clearly and prominently the basis for suggested or list prices in its advertising.

Varsity emphasized that the agreement "contains no admission of liability." For its part, NACS called the settlement "groundbreaking."

Last year, NACS also sent letters of complaint regarding advertising to BigWords.com, which changed its copy, and ecampus.com, a subsidiary of Wallace's Bookstores.

For the second quarter ended June 30, 2000, Varsity reported revenues of $2.3 million, compared to $365,000 in last year's second period, while its net loss increased to $7.1 million from $2.4 million. For the six-month period, sales jumped to $14.5 million from $1.7 million, and the company's loss deepened to $26 million from $5.4 million. During the quarter, Varsity signed marketing services agreements with a number of companies including AT&T Wireless, Ben & Jerry's, Papa John's and Time.
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