The Great NBA Disaster

John Sutherland

Wednesday, 27 September 1995 was not a day lacking in newsworthy events. A rogue Japanese trader had out-Leesoned Leeson by losing a billion dollars on Wall Street without his employers noticing; Clinton had successfully, as it seemed, bombed the Serbs and blackmailed the Israelis to the peace table; Humphrey the missing Downing Street cat had been found. What the Times chose to lead with on Wednesday morning was BOOK PRICING AGREEMENT IS SHATTERED, with the explanatory sub-heading ‘Discount War Begins on Top Titles’ and an unflattering mugshot of Sir Kingsley Amis over the caption: ‘Book Likely to be Cheaper’.

Other national papers, while noting it as something of interest, did not conceive the collapse of the Net Book Agreement and a 20 per cent reduction in the retail price of The Biographer’s Moustache as events of world-historical importance. The Guardian relegated the NBA story to Home News on page 3, with much explanation as to what exactly net books were. As interesting as the unwarranted prominence was the care which went into the formulation of the Times lead. The picture of Kingsley Amis seemed shrewdly chosen to forestall the ‘Lord Archer wins the lottery’, ‘lucky Stephen King’, or ‘not more cash for Martin’ reactions. Conservative values and Good English (virtues that Sir Kingsley and the Times share) would be the prime beneficiaries of the shattered book agreement. Inside, the op-ed page was dominated by a gloating ‘Good Riddance to the Net Book Agreement, says Geoffrey Wheatcroft.’ Wheatcroft wrapped up what was evidently a rushed piece with the Maoist-Thatcherite slogan: ‘Let a hundred flowers bloom, nourished by the marketplace.’ One hundred might be thought a parsimonious spray even in these new times.

Why the immoderate rejoicing in Wapping at a technical adjustment to the way the British book trade merchandises its wares? Salman Rushdie’s latest will cost £12 rather than £16 if you buy it in Dillons: so what? Hardback novels will still be prohibitively expensive. The book trade, although it is a useful export performer, is very small potatoes and rarely features significantly in the financial section of the Times, let alone on the front page. Leeson and Mr Iguchi between them lost more than its total annual turnover in 1994. Why was the Thunderer so excited?

One reason, as cynics noted, was that Harper-Collins, the publisher leading the charge against the NBA, is Murdoch-owned. Another is that the Times has strenuously opposed the NBA (or its equivalent) for 143 years or more. The paper’s opposition has taken the form of unwavering editorial hostility and, on occasion, outright commercial sabotage. If the Times was joyous on 27 September it was because it tasted victory in what has been one of the longer campaigns in its history.

Effective central control over the retail price of books originated in 1829, with the so-called Booksellers Regulations, by which a committee of London publishers formally agreed to boycott any shop supplying new books to the public at below the publisher’s posted price.[*] The arrangement suited all parties and was accepted as general trade practice. In the late 1840s, fired by the spirit of free trade, a small number of London booksellers (egged on by half a dozen younger publishers) flouted the Regulations by embarking on an all-out sales war. Establishment publishers felt that the retail network for their books, tenderly nurtured over the previous three decades, was imperilled. They invoked the Regulations to starve the undersellers into submission. The publishers’ boycott incurred the wrath of the Times, which offered a daily platform to the undersellers and supported their views with pugnacious articles and editorials putting the free-trade case. However, a majority in the book trade wanted the peace and quiet which the Regulations provided: the trade has always preferred ‘gentlemanly’ co-operation to rampant competition, not because they are commercially timid but because return on investment is very long in publishing and the appeal of the product is notoriously unpredictable. It is an apple-cart which is easily upset.

The case for protection boils down to: 1. ‘Books are different’. No one would ever say: ‘Where baked beans are burned, men are burned.’ 2. The abolition of retail price maintenance (the arrangement by which a book costs the same in Inverness as it does in Hatchards in Piccadilly) will force regional booksellers into bankruptcy and damage the countrywide network of outlets on which a healthy literature depends. Commercial bookclubs and mail-order offers on the back-pages of colour supplements are poor substitutes for a local bookshop. 3. Abolition will encourage publishers to concentrate on a small number of surefire authors and titles, reducing quality and the huge range of backlist items currently available to the British book-buyer. Where there used to be a shelf with fifty different titles there will be a dumpbin with two hundred copies of Jeffrey Archer’s latest garbage. Ask for anything that sells less than 20,000 a year and you will be told it’s out of print.

On the other side, opposition to the NBA rests on one simple article of faith: the principle of free trade is indivisible and, however painful the transitional stages, the end result will be a leaner, more competitive industry that serves the customer better. While it has always been the case that the bulk of the book trade wants retail price maintenance, and knows that it works, the opposition party has the more rhetorically effective arguments. It is much easier to proclaim a grand truth (‘free enterprise is a good thing’) than to plead singular exemptions (‘free enterprise is a good thing for every line of business except the British book trade’).

In 1851 the trade referred its dispute to a tribunal headed by the author and judge Lord John Campbell. His decision was delivered on 19 May 1852 and published in its entirety by the triumphant Times. Campbell came down uncompromisingly for free trade. The Regulations, they said, were

indefensible, and contrary to the freedom which ought to prevail in commercial transactions. Although the seller of a property may put what price he pleases upon it when selling it, the condition that the purchaser, after the property has been transferred to him and he has paid the purchase money, shall not resell it under a certain price, derogates from the rights of ownership, which, as purchaser, he has acquired.

In other words, publishers should not prevent booksellers selling new books at whatever price suits them.

The book trade agreed to abide by Campbell’s decision and the Regulations were discontinued. The undersellers and the Times had won, but almost all the undersellers and the publishers who supported them went bust in the next few years. British bookshops declined calamitously. Their place as suppliers of new books to the reading classes was taken over by the ‘leviathan’ circulating libraries. (If Geoffrey Wheatcroft wants to know what a cosy cartel in the book trade is really like he should contemplate the hegemony of Mudie’s and W. H. Smith’s lending libraries in the late 19th century.) The price of new books has never been as high: in their standard three-volume form, novels cost a guinea and a half – a week’s wage. Writers were stifled by the puritanical prejudices of the circulating-library proprietors and their susceptibility to anything that might bring a blush to the cheek of the average maiden.

Reviewing the experiment in the early 1890s, the publishing establishment, under Frederick Macmillan, determined that free trade in books had not worked and that something radical must be done. The time was propitious. The 1890s saw the formation of the Booksellers’ Association, the Publishers Association, the Society of Authors, and the first commercial literary agencies. Authors (notably Dickens) had been free-traders in the mid-century uproar. Now they had a stake in stable pricing. The standard form of payment advocated by the Society of Authors was the royalty, calculated as a percentage of the net sales price. It was in the interest of the author that the retail price should be fixed and not variable. (Lord Archer would be less enthusiastic about the abolition of the NBA if he got his money from six-monthly royalty cheques rather than multi-million pre-publication advances.) The new trade associations revived the 1829 Regulations in the form of the NBA. ‘Net books’ were those articles which sold through retail outlets; no bookseller could sell them for less than the publisher’s posted price without incurring reprisal in the form of a boycott. ‘Non-net books’ were articles (like schoolbooks) which were sold direct from the publisher or wholesaler to the customer and these might be discounted.

The NBA was coolly received by the British press, the Times especially. By the mid-1890s, the paper was itself dabbling in books. To stimulate flagging sales it offered a cut-price reprint of the Encyclopaedia Britannica to subscribers in 1898. The stunt was a success. In 1905 the paper went a step further by offering membership of a free circulating library, the Times Book Club, to any reader taking out a year’s subscription to the paper. It was another success. But very quickly the Book Club set up a huge bookshop, retailing next-to-new, ex-library copies at giveaway prices. The Publishers Association construed this as a calculated violation of the NBA. They invoked the boycott. The Times retorted on 25 September 1906 with a fighting editorial, indicting the book trade as a wicked monopoly. The ‘Book War’ that followed lasted until September 1907. The Times fatally compromised its case by forging a letter slandering the publisher John Murray and publishing it in its columns. Murray brought a libel action, and won £7000 damages. The Book Club was wound up. (The latest NBA brouhaha has blown up when the Times is again accused of cooking its correspondence columns: this time with its refusal to print Wynne Godley’s refutation of William Rees-Mogg’s claim that the British economy has outperformed the Japanese by 75 per cent over the last decade.)

The Book War with the Times was a great test for the NBA and clinching proof that, this time, the agreement would hold. The publishers won comprehensively and the newspaper lost ignominiously. The agreement stood virtually unopposed until 1956 and the passing of the Restrictive Trade Practices Act. With Edward Heath’s wholesale assault on retail price maintenance the NBA again came under attack. In June 1962 the book trade presented its case for exemption to the Restrictive Practices Court. The 24 days of testimony, in which the century-old arguments were reiterated ad nauseam, were found persuasive. The court judged that the NBA rendered ‘specific and substantial advantages to the public’. It was legal. The Publishers Association celebrated its victory by printing the transcript of the hearing (one of the most unreadable books ever offered to the British public) under the exultant title Books Are Different. The agreement lasted until the late Eighties and the high-tide of Thatcherite ‘free enterprise’ when Terry Maher launched the kamikaze attack which cost him his job as managing director of Dillons and cost Dillons 45 of its branch outlets but effectively holed the NBA below the water line. Even so, it was a long time sinking.

Perhaps one should not grudge the Times its day’s gloat, but still there has always been a vein of hypocrisy in its arguments against retail price maintenance. Every copy of the paper has, prominently displayed in vivid colour on the right-hand side of the front page where no retailer or reader can miss it, the sale price – currently 25p. Suppose W. H. Smith were to announce that anyone buying a copy of the Guardian (currently 45p) will get the Times thrown in for 10p. It is odds-on that both papers would sell more copies and that W. H. Smith would attract more customers into its outlets. Alternatively, imagine that Sainsbury offers copies of today’s Times free to anyone buying more than £10 worth of goods at any of their supermarkets. Again, circulation of the paper would soar (temporarily). Thirdly, imagine John Menzies announcing that, given the cost of transporting the Times to Scotland, a surcharge of 20p will be levied on all copies – while newsagents in the City, who can collect supplies direct from Wapping, sell the paper at half its cover price.

None of these things will happen. If any of them did, the Times would bring same-day injunctions against Smith, Sainsbury and Menzies – and in the interim, boycott these outlets. Why? Because any local or arbitrary variation in price would disrupt the paper’s nationwide distribution and its complex sale-or-return arrangements. Why should newspapers not be priced like baked beans (or, indeed, books), according to the whim of the retailer? Because newspapers are different. Dillons can sell the five titles on the Booker shortlist at £2 less than the cover price. Woe betide them if they knock 5p off the price of the Times.

The NBA is buried, though not necessarily dead. It has risen from the grave before and will probably do so again. But as in the late 19th century, it may take some uncomfortable decades before the book trade rediscovers the virtues of self-restraint and the internal strength to reimpose it. What follows in the short term? Bad things, but different bad things depending on which countries you look at. In Australia, which abolished its NBA twenty years ago, the consequences seem to have been entirely dire. The abolition of the NBA in Belgium has apparently made little noticeable difference, but the country produces relatively few books of its own. France abolished her version of the NBA in the Eighties only to bring it back five years later, alarmed by the ravages that discount selling was wreaking among the nation’s bookshops. France is not, as current events in the South Pacific demonstrate, given to U-turns. When your nearest neighbour field-tests a risky economic theory and convincingly demonstrates that it does not work it would seem quixotic, or downright stupid, not to take warning. Perhaps French books are different.

The future for British bookselling without the prop of the NBA can most clearly be seen in the United States (a country which has only once, and very briefly in the early years of the century, flirted with regulation). The centre ground of American bookselling is occupied by three nation-wide chains: Crown, Waldenbooks and Barnes and Noble. America also has well-developed mail-order book-clubs (something that the NBA, with its special concern for high-street bookshops, successfully inhibited in 20th-century Britain). American book prices are not, to the browser’s eye, significantly lower than British ones, but the reductions are enticing enough: Crown offers up to 40 per cent discounts on targeted bestsellers, Barnes and Noble currently offers 20 per cent off all new hardbacks. There is no shortage of bookstores. Every shopping mall in the country has at least one; where there are more, they are probably ‘competing’ with each other on special offers. But they are as alike as franchised Kentucky Fried Chicken outlets. Go to James Thin, Blackwell, Heffers or Foyle’s and you know – from the composition and flavour of the stock – that you are in Edinburgh, Oxford, Cambridge and London. Go to any Waldenbooks and you could be anywhere in America.

American bookstores continue to evolve (‘mutate’ might be the better word), nourished by Geoffrey Wheatcroft’s hailed market forces. Barnes and Noble have recently broken away from the pattern of uniform outlets in shopping malls to pioneer ‘total book environments’ – large, spacious establishments, drenched in tasteful classical muzak, with play-and-read areas for children, and adjoining Starbuck coffee houses offering 57 different kinds of espresso and newspapers on batons for patrons. The atmosphere is part Virgin Megastore, part French pavement café, part airport duty-free shop. They bear the same relationship to traditional bookstores that Disneyland bears to life: bright, sanitary, odourless (bookshops used to have a wonderful smell), and ruthlessly efficient. They are machines for selling produce in large quantities, all packaged in ducky little plastic bags decorated with (trademarked) Levine cartoons of Stephen King, Virginia Woolf, Margaret Atwood, Toni Morrison or John Updike (gender and ethnic propriety are carefully observed). What is most dispiriting about these Barnes and Noble stores is the expansive blandness of their produce, and the prominence given bestsellers and non-books – diet-books, health-books, computer-manuals, how-to books.

Still, it would, I suppose, be just about bearable if in a year or two British high-street bookshops were transformed into a string of Barnes and Noble or SuperCrown bookstores in all their glossy glory. But getting from British here to American there will not be that easy. As the Maher-Dillons débâcle revealed, the British book trade does not have the capital resources to restructure itself along modern American lines. It will need outside finance. It will probably also need the expertise in free-trade bookselling techniques that can only be found in America. It is plausible to expect that at least one of the embryonic American-style chains (Smith, Waterstone, Dillons) will go the way of the unlamented Wimpy, which was taken over lock, stock and chip-pan by Burger King. And just as British Burger King is a poor apology for the real American thing so the high-street bookstore will be just like its American equivalent, only shabbier and forever looking across the Atlantic for new ideas.

What then does the abolition of the NBA mean, and what does it portend? It will not, as the Times fondly prophesied, kick-start the publishing industry out of recession, although it will be highly profitable for a few large producers who will now be able to funnel a greater volume of fewer titles to fewer outlets. It will be even more profitable to a few hundred megastores through which a disproportionate volume of product will flow. These stores may, like their American counterparts, charge publishers rent for display space and demand 100 per cent sale-or-return arrangements. They, too, will want to reduce range. The remarkable diversity of titles produced by the British book trade (89,000 last year, against some 50,000 in America, a four times bigger market) will be thinned out – probably by a third or so. This will make booksellers’ lives easier but literary British culture poorer, given that many of its most valuable products (first novels, for example) are produced at the margins of profitability. Abolition will not mean a bright new morning for British authors – apart, that is, from the fat-cats. The bulk of writers (fewer of whom will get into print) will be competing for diminished display in bookstores at undiscounted prices – prices which may be higher than they now are, to compensate for reduced sales. French experience suggests that while centrally located bookshops will bloat to supermarket size, some 20 per cent of small and middle-sized outlets will close if abolition lasts five years. Please God it doesn’t.

[*] The account of organised price regulation in the British book trade from which I draw here is given in James Barnes’s Free Trade in Books (Oxford, 1964).