Waterstone's squeeze on publishers

Some small independent publishers claim they are facing bankruptcy after the giant bookseller Waterstone's demanded huge new discounts from them.

Some small independent publishers claim they are facing bankruptcy after the giant bookseller Waterstone's demanded huge new discounts from them.

The chain stunned smaller publishers by giving them just one week to accept new terms and conditions, including a 50 per cent discount on the cover price of any book stocked by Waterstone's.

The move could wipe out some publishers' profit margins and threaten their livelihoods, as some had previously offered small discounts or none at all. "Potentially this could change the face of publishing," said one, who was afraid to be named. "I do think a lot of people will go out of business."

The move comes in the wake of increasing turmoil at Waterstone's, with significant staff losses and problems with the distribution of Christmas books. Some branch managers have also refused to see sales representatives from all but the biggest publishers, further weakening the position of small companies that have relied on reps to place their books in the stores. Waterstone's buying policy has always rested with local managers to take account of local interests.

One publisher said: "They have gone from being a laid-back company who ordered 100 of everything and never bothered to return them to the opposite - an unpleasant, vitriolic company that seems to have no interest in what they're selling at all. Somewhere there's a middle road."

Another publisher, Jim Driver of The Do-Not Press, said he had already seen profits fall because of changes at Waterstone's, which had always been an important stockist for independents. His company's novels would have been in most of the chain's 218 shops, but were now in only 25. "Waterstone's were the great white hope when they started. They used to be run by booksellers, now they're run by book-keepers."

But Pete Ayrton, editorial director of the publishing company Serpent's Tail, said he was sure that Waterstone's would reach a compromise.

"I think Waterstone's want to make sure that books by independent publishers are represented in their stores," he said.

But he admitted the refusal to see representatives was a worrying development. "It's a question of whether this is part of a transition towards centralising buying... One hopes it wouldn't be the case."

Christopher Rushby, head of the supply chain at Waterstone's, said the company had to "professionalise" its supply arrangements as it dealt with almost all of the 23,000 publishers in the UK.

"Waterstone's historically has not had formal terms and conditions of supply in place with a lot of publishers. It wants to establish formal terms."

He said Waterstone's were making a loss with many publishers by holding stock that failed to sell. "Waterstone's does not want to make a loss. I'm sorry if some publishers may not be making a profit, but it does not follow that Waterstone's should subsidise the publishers' operations."

On the subject of reps, he added: "There are far more publishers that want to spend time with Waterstone's than Waterstone's could possibly spend time with. It's working out how to prioritise to make the best book-buying decisions."

* Tim Waterstone, the founder of the bookselling chain, is to leave the company for a second time following a failed attempt to buy it back from HMV Media.