Investing in community

Over the weekend Ron Charles, a respected book critic at The Washington Post, reported on his participation in a three-day event organized to help save Kepler's Books, a Palo Alto bookstore. The meeting was motivated by Praveen Madan, a San Francisco bookstore owner who wants to refashion Kepler's as part not-for-profit, part community-owned operation.

Charles' reports appeared the Post on Friday, Saturday and Sunday [registration required]. Read in sequence, they give a sense of the love, fears and frustrations that can accumulate when we talk about sustaining an independent bookstore.

One of the recurring fears and frustrations is Amazon. Writing about his experiences on the first day, Charles describes a woman who, when "referring to a friend who orders books from Amazon … grew so angry she couldn't finish her sentence." In his description of the second day, Charles writes:

"The challenge, of course, is He Who Must Not Be Named: chief executive Jeff Bezos. The Internet retailer has driven hundreds of independent booksellers out of business in the past decade, first by undercutting prices on physical books and then by popularizing e-books, which indie bookstores haven’t been able to sell effectively."

Amazon's stance on paying state and local sales taxes is certainly a sticking point, but that is a position that a wide array of direct marketers have held for decades. It's useful to remember that the company's ability to negotiate discounts from publishers starts with publishers.

The discounts that Amazon receives are used to lower prices for consumers. As I wrote last week in my response to an op-ed by U.S. Senator Charles Schumer, arguing that consumers "should" pay more for the same product or service is not a strong starting position. If price is not an option, meaningful differentiation is required.

At the end of three days, the group identified what it called "eight foundational principles and activities." These were:

  1. Be financially sustainable.
  2. Have a clearly defined mission.
  3. Be dedicated to community outreach.
  4. Serve as a gathering place for creative events and social events.
  5. Support life-long learning and literary education.
  6. Sell books in any form, on any platform.
  7. Maintain a virtual presence, with technology fully integrated into the store.
  8. Provide a carefully curated selection of books

Of this list, a buyer for Kepler's said, "When I look at these ideas, they're wonderful, but I don't see anything new." That response may be a bit unfair, as a lot of conversation and detail underpins summary statements like these.

But I do think there's a problem, not with the business model, but the "community owned and operated" framework that Madans required the group to use. According to Charles, "Madan insisted that if the community didn't feel invested in Kepler's, it would fail again."

Here, I think the tactic leaves the arrow pointing in the wrong direction. In talking about a "commmunity owned and operated" store, Madan means locally-held stock. While equity is nice, its use here is usury: "We'll lock you into using our store, because if you don't, your shares will be worthless."

That's no recipe for success, as other cooperative bookstores have found. Rather than plan financial mechanisms that try to get the community invested in Kepler's, the store might focus more plainly on things like principles 3, 4, and 5 (above). Remaking themselves as a business that is invested in and provides value to its community feels a lot closer to a sustainable strategy.

About Brian O'Leary

Founder and principal of Magellan Media Consulting, Brian O’Leary helps enterprises with media and publishing components capitalize on the power of content. A veteran of more than 30 years in the publishing industry and a prolific content producer himself, Brian leverages the breadth and depth of his experience to deliver innovative content solutions.