Wednesday, May 28, 1997

Coming of online bookstores signals big changes for book biz By ELIZABETH WEISE / Associated Press

SAN FRANCISCO (AP) - The book business online is becoming as crowded as it has in the bricks and mortar arena. Huge national chains are setting up shop, independents are struggling to compete.

But the changes go deeper than that.

Amazon.com of Seattle basically cornered the market when it first began selling via the World Wide Web in July 1995. It wasn't too long before smaller, independent bookstores like Powell's in Portland, Ore., put up their own Web sites to keep from losing their wired customers.

Then came Book Stacks Unlimited, known online as books.com, which started a price war by knocking 40 percent off the suggested retail prices for all books on The New York Times best-seller list. Tiny Expressbooks.com of Granada Hills, Calif., went one better, matching the best-seller discount and offering 33 percent discount on all hardbacks, 22 percent on all paperbacks.

This month, industry giant Barnes & Noble waded into the fray with a one-two punch, first suing Amazon over its claim to be the largest online bookseller, then launching its own Web site the next day.

And if that weren't enough, the other 800-pound gorilla in the industry, Borders Books, plans to go online within the next year.

Not that anyone's making any money yet. Despite its showy initial public stock offering two weeks ago, Amazon spent about $20 million last year to sell $15 million worth of books, noted Bill Bass, a senior analyst with Forrester Research in Cambridge, Mass.

And while Amazon has been the big fish in a small pond, that's going to change quickly.

"Barnes & Noble is a $2.4 billion bookseller. The biggest Internet book selling site is a gnat compared to them or to Borders," said Bass.

For small presses, online bookstores are a godsend. They allow publishers with tiny lists to get descriptive information about their titles out to readers.

Take China Books, a small, family-owned publisher of books based in San Francisco. Their advertising budget is minuscule. The Web helps customers find them who didn't even know they - or their books - existed.

"If you type in China and tea, or even tea, our book "All The Tea in China" shows up. Customers would never see it in their local bookstore, but when they find it online they buy it," said sales manager Greg Jones.

But the expansion online is another heavy blow to small, independent booksellers, who already must compete with huge mega-stores that entice customers with big inventories and deep discounts and now face the same online.

While online booksellers are clamoring for market share, there are many benefits for those customers willing to shop over the Internet. Price is a major advantage of buying online, with booksellers often offering cheaper rates, despite the added costs of shipping.

"If you don't want to pay for the fireplace and the Starbucks' Barnes & Noble blend coffee, you can get books for 40 percent off. But you don't get to touch the books and you don't get the comfy chair," said Jamey Bennett of BookWire, a New York-based publishing industry Web site.

Online bookselling has also given power and breadth of choice back to the reader, something that many feared might be lost, as the chains tend to concentrate on best sellers. It's also giving publishers both large and small a way to reach readers directly.

Almost every bookseller online provides access to the entire Books In Print database. Type in an author, a subject or even part of a title and a list of books pops up. Find the one you want, click on it and you're only a credit card number away from having it arrive by mail in three to five days.

What seems clearest is that online bookstores have added yet another variable in an industry undergoing a major restructuring. For Edwin Allen Bish II of Bookpeople, an Oakland, Calif.-based distributor, it's exhausting.

"What used to be a real simple thing - here's an idea, print it in a book and do you want to buy it or now? - has become this multi-headed hydra. It's anybody's guess what's going to happen."