Merchants of Culture. John B. Thompson

Percentage Estimated dollars in millions Superstores/chains 45 5,571 Libraries, schools 16 1,980 Independents 13 1,609 Internet 11 1,362 Bookclubs/mail order 10 1,238 Other (mass merchandisers, wholesale clubs, drugstores, etc.) 5 619 Total $12,380

The peculiarities of the British

The transformation of the retail landscape in the United States was mirrored by similar changes in the UK; most of the players were different, some of the customary practices were peculiarly British and the consequences were in some respects more radical, but the overall pattern was the same. For most of the twentieth century, the British book trade had been regulated by the Net Book Agreement – an informal arrangement between publishers and booksellers that had been proposed by Macmillan in the 1890s following a period of turmoil and intensive price competition in the publishing industry.²⁴ The Agreement was based on the idea that publishers would set a fixed or ‘net’ retail price for each book they published; booksellers would agree to sell the books at the net price in return for a discount that would enable them to make a reasonable margin. Any bookseller who broke the rules would not be supplied on trade terms by the publishers. The Agreement came into force on 1 January 1900 and remained in place for nearly the whole of the twentieth century, creating a relatively stable commercial environment for publishers and booksellers.

The NBA was not without its critics, however, and it was challenged on numerous occasions. In 1959 it was referred to the Restrictive Practices Court, a special tribunal that had been established by the Restrictive Trade Practices Act of 1956, and the case was heard in 1962.²⁵ The Registrar of Restrictive Trading Agreements argued that the NBA was an illegal price-fixing cartel which acted against the public interest, whereas the publishers and booksellers associations argued that, given the cultural and educational value of books, it was in the public interest to have a wide network of stock-holding bookstores and that this would be destroyed if underselling were allowed, leading to a decline in the quality and quantity of books published. The Chairman of the Court ruled in favour of the publishers and booksellers and the NBA survived.

The reprieve, however, was only temporary. The NBA faced renewed pressure in the early 1990s from a number of retailers and consumer publishers who wanted to experiment with discounting in the hope that lower prices would drive a higher volume of sales. Terry Maher, head of the Pentos retail group which had acquired Dillons – an academic bookseller with its main store in Gower Street, London and a couple of small campus bookshops – in 1977 and begun to roll out a national chain of bookstores in the late 1980s, had always opposed the NBA. ‘I just thought the Net Book Agreement was stupid – it was an irritant,’ he recalled. ‘When we had a few shops, it didn’t matter that much, but once we had a national chain and we were branding Dillons nationally, it became more of an irritant.’²⁶ Dillons began experimenting with price promotions in 1989, including an attempt – cut short by an injunction secured by the Publishers Association – to discount the titles shortlisted for the 1990 Booker Prize. In 1991 Reed Consumer Books withdrew from the Agreement – the first of the major publishers to do so – and in August 1994 the Director General of the Office of Fair Trading decided that the NBA should be reviewed again by the Restrictive Practices Court. A period of confusion and uncertainty followed. In September the Publishers Association announced that it would defend the NBA and the following day Tim Hely Hutchinson – then CEO (chief executive officer) of Hodder Headline – announced that he was going to de-net their books on the day after Christmas. In September 1995 Random House and HarperCollins both announced that they would no longer be bound by the Agreement, and shortly after the retailer WH Smith – previously one of the staunchest defenders of the NBA – announced a major de-netted promotion with them. The NBA was effectively dead. In March 1997 the Restrictive Practices Court sealed the coffin by ruling that the NBA was illegal. From this point on, retailers were free to discount books and to sell them at any price they chose.

Prior to the dissolution of the NBA, Britain had experienced the growth of book retailing chains in a way that was somewhat similar to the US. In the 1970s and before, WH Smith, the general high-street bookseller, newsagent and stationer, was the most important player in the retail book market in Britain. Originally established as a wholesale newsagent and stationer in London’s East End at the end of the eighteenth century, WH Smith had expanded rapidly in the nineteenth century thanks to a series of exclusive deals with the major railway companies to operate bookstalls in railway stations.²⁷ By the 1970s WH Smith probably controlled as much as 40 per cent of the retail book market in the UK. The rest of the market was accounted for by some well-established, traditional independent booksellers, like Hatchards of Piccadilly, a few small chains like Blackwell and Hammicks and a plethora of small independent bookstores. Unlike the United States, Britain had not experienced the rise of mall bookstore chains in the 1960s and 1970s, as this phenomenon was linked to the social geography of the American city, with the migration of the middle classes to the suburbs and the growth of the suburban shopping malls based on high levels of car ownership.

The bookselling environment in Britain began to change significantly in the 1980s, thanks in large part to the rapid rise of Waterstone’s and Dillons. Tim Waterstone joined WH Smith in the late 1970s but was sacked in 1982. At the time he had been working on a paper on bookselling in Britain and had come up with a plan for a new kind of bookstore – ‘a store which would have an extraordinarily well-informed inventory, extraordinarily well-informed staff and a sort of messianic desire to sell books, independent bookselling at its best, but to have them as a chain,’ as he put it. He managed to raise £6,000 to open his first bookstore in the Old Brompton Road in London, and then raised further finance to roll out a chain of stores across the country. These were large bookstores in central, high-street locations, filled with huge amounts of stock including many backlist titles and designed in ways that were attractive to customers and conducive to browsing. The stores were similar in conception and design to the superstores that were being opened by Barnes & Noble and Borders in the US in the 1980s but the idea appears to have been developed independently.²⁸ While Waterstone’s was actively expanding its national network, the Pentos Group began, from 1986 on, to roll out a national chain of bookstores under the Dillons brand; by 1989 it was operating 61 bookstores across the country. A third chain was started up in 1987 by James Heanage, an entrepreneur with a background in advertising who had spotted an opportunity to develop a network of attractive, well-run bookstores in small and medium-sized towns in southern England; the first two Ottakar’s bookstores were opened in Brighton and Banbury in 1988 and the chain continued to expand over the next decade. By the end of the 1980s, there were two major bookselling chains rolling out stores nationwide and a third chain opening bookstores in the smaller towns and cities of southern England. The volume of retail space for books was expanding rapidly and dramatically. All