Random House Considers Direct Sales Online

Random House CEO Peter W. Olson's annual end-of-the-year letter to the company's employees has caused some consternation among booksellers and drawn the attention of the media. For the most part, Olson's letter was a review of the company's key accomplishments in 2004, but one of Random House's potential initiatives, Olson said, was "direct sales online." The brief mention of the publisher selling direct via the Web spurred news articles in the Wall Street Journal and the New York Times, among others.

In a paragraph in the middle of the three-page letter to Random House employees, Olson wrote: "In the year ahead I will report to you on our progress with [potential initiatives], which, in time, may include direct sales online of our books to readers as a complement to our existing sales channels and the expansion of our proprietary publishing, as well as many other publishing, marketing, and distribution ideas."

ABA's CEO, Avin Mark Domnitz, said that he's believed for some time that publishers are, in fact, independent booksellers' biggest potential competitors and he has been at many gatherings of publishers in recent years where marketing experts have urged publishers to "get closer to the end users of their products." Domnitz said that he hoped that "publishers would concentrate on what they do best -- publish books -- and leave the retail selling to bookstores."

Barnes & Noble Chief Executive Stephen Riggio, reacting to Olson's comments, told the New York Times that he was "deeply concerned" and dismayed that Random House -- whose parent company, Bertelsmann A.G., sold its stake in barnesandnoble.com last year -- now wants "to compete with us."

However, Stuart Applebaum, a spokesperson for Random House, stressed to BTW, "We're a little puzzled as to what there is to be concerned about." He explained that while it is Random House's intention to examine the possibility of online sales of "some" of its books, among a number of other potential initiatives outlined in Olson's letter, there was neither a timeline nor commitment to selling direct online. "It's just one of many areas we'll be exploring," he said.

If Random House does sell direct, it won't be the first major publisher to do so. In January 2004, Penguin began giving consumers the option of purchasing, at full price, all of its titles from Penguingroup.com or us.penguinclassics.com. Penguin said its decision to sell its titles directly to the consumer via the Web was made because "it's getting more difficult for retailers to carry our entire backlist -- which is about 30,000 titles," Dave Zimmer, a spokesperson for Penguin, said in a February interview. At that time, independent booksellers told BTW that they were extremely displeased with Penguin's decision. --David Grogan