High Street booksellers: Smith, Smug or Smersh?

Enormous discounts on books have hurt both booksellers and authors. It must be time to end them, says Giles Gordon

There are two schools of thought, or thoughtlessness, about WH Smith. One is that Smersh is the salvation of literature and kultur in the high street: after all, you can buy Jeffrey Archer's and Jilly Cooper's latest offerings there. The other is that Smug is an abomination and an embarrassment; Britain's leading bookselling and newspaper chain, certainly since the 1950s, has been responsible for lowering the aspirations and potential of more than a generation of readers by providing so much pap.

The truth, I fear, does not lie somewhere between these two entrenched viewpoints. Until recently, the directors and senior executives were exclusively of the patrician class, with the chairman, Sir Simon Hornby, and chief executive, Sir Malcolm Field, dishing out crumbs of congratulation to harassed and uninterested staff.

As I wrote recently in a column for a glossy monthly, the top brass of WHS was unlikely to shop at any of its 450-odd branches, as it would be unlikely to find there books that would stimulate its interest. These paragraphs were removed from my copy at the last moment on the instructions of the magazine's Kremlin, as the monthly was selling fewer copies than it should have done at WHS and the management was terrified that criticism of Smug might result in the magazine being dropped by the chain.

For change is afoot at WHS, with Bill Cockburn, the new chief executive brought in from the Post Office, announcing yesterday that the group's "product lines" would be reduced from 49,000 to 35,000. WHS is the most powerful single force in the British book trade. It is market-driven: why provide an intelligent service if it's more profitable to lay on an unintelligent one?

Sir Simon Hornby was succeeded in 1994 as chairman by the witty and energetic Jeremy Hardie, who has in his favour that he is married to a literary agent and thus is likely to be sympathetic to authors: during his first year as chairman, Vikram Seth won the genuinely prestigious WH Smith Award for A Suitable Boy, notoriously omitted from the same year's Booker Prize shortlist.

Hardie must have realised that the times were out of joint for WHS, and quickly instituted radical changes, the most crucial being the departure of Sir Malcolm Field and the arrival six months ago of Cockburn. WHS is 204 years old, and the annual figures to be announced in August will reveal a loss - the first in the firm's history - of pounds 200m. The workforce is being slashed by 1,100.

Most authors fear and loathe WHS, because they cannot find their books there, yet publishers invariably suck up to the young men and women who run the book side.

Publishers need Smith's business, and thus are prepared, albeit gritting their false teeth, to give them preposterous discounts. For instance, 26 per cent of Reed's turnover (imprints include Secker & Warburg, Heinemann, Sinclair-Stevenson, Conran Octopus, Methuen, Mitchell Beazley) comes from WH Smith; 31 per cent if Waterstone's is included. Reed gives WHS an overall discount of 55 per cent off the recommended retail price, and WHS may return as many or as few books as it wishes. This gigantic discount is, surely, potential business suicide, and to some degree explains why a few months ago Reed failed to find a buyer for itself at the right price.

Other publishers give WHS even more lavish discounts: the Penguin Group gives 53.5 per cent, Orion 55 per cent, and HarperCollins an astonishing 56.5 per cent.

With discounts such as these, authors' royalties of 10 per cent, 12.5 per cent and 15 per cent of the recommended published price on hardbacks and 7.5 per cent and 10 per cent on paperbacks are automatically reduced to the same percentages of the discounted prices. When the Net Book Agreement was suddenly rejected last autumn, it was assumed, not least by WHS, that it would be the major beneficiary. This certainly has been the case with regard to discounts, WHS threatening not to stock publishers' titles unless they up the percentages. However, there have been no winners, and Britain's booksellers, the chains and independents, are not selling sufficiently more copies of books to justify the reduced prices of some.

It is hard to see how matters may improve for WHS's core business as a bookseller if it stocks even fewer titles than it does at present, and with a much-reduced staff there are likely to be even longer queues than there are at present at the tills (but let's hope that chocolate brown colour and those drab uniforms are abolished).

Publishers have to travel to WHS's headquarters at Swindon to present their forthcoming titles to the chain's book buyers. Titles are, essentially, bought centrally, which is why the same relatively few titles pop up with such inevitability in WHS shops up and down the country. Recently some bright new executive announced to publishers that in future they would have to pay for the privilege of showing their new books to Smith. This was quickly squashed after howls of anguish from publishers. Even so, publishers now often submit typescripts to WHS before taking a decision to publish, and redo jackets and covers if the minions at Swindon don't like them. And rather than unsold books being returned to publishers, the bulk-buying WHS's shredding and pulping machines are said to work day and night.

It is a cliche of the book trade that a healthy WHS leads to a healthy book trade. At present, beleaguered independent booksellers are turning their backs on ordering direct from inefficient publishers and are placing their orders with the country's very efficient wholesalers. Publishers don't like this because they have to give wholesalers, who by definition order in bulk, larger discounts than they do to independent booksellers lacking in muscle. The only solution is for the major conglomerates to insist upon reducing their discounts to WHS, which they will need to do for survival. This, of course, will put WHS in an even more parlous state.

The writer is a director of the literary agency Curtis Brown.