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Freedom of Expression and the Role of Independent Businesses

Independent businesses struggle for survival in all types of commerce today. Toys, computers, and other fields are closer to monopolization than the music, book, and film trade. Why then, should we be especially concerned if chains dominate these fields? Put simply, a variety of independent outlets for these items is essential to maintain the range of thought and expression we cherish.

Protecting Freedom of Choice

Monopolies in these trades diminish choice, especially among any ideas challenging the status quo. The entertainment chains carefully include enough non-mainstream artists to be hip, but consider what happened when the Ayatollah Khomeini demanded the execution of Salman Rushdie, and elimination of his book The Satanic Verses. The two largest book chains complied by pulling the book off shelves nationwide, but independent booksellers rallied to defend free speech. Many independents prominently featured the book, and helped defeat this terrorism.

Because a book or recording has value beyond its unit cost, a distribution system for these items should provide opportunity for quality authors or artists, representing a broad spectrum of ideas. As in any business, independents create demand for variety through the tastes of the owners, and of customers in their community. A chain superstore may carry the largest selection in some towns, but it is nearly the same selection in each of their stores, with an overall impact of reducing choice. It is common for a single outstanding independent store to provide a greater selection than entire national chains, as with Boulder's own Video Station. A diversity of retailers enables publishers to distribute new music or unique books or films, which chains typically shun until independents prove them profitable. Collectively, independents protect the free speech values of the First Amendment and provide defense against censorship.

Most censorship today is more subtle than removing books, as with the increasing practice of publishers sending manuscripts to a chain buyer to ask if they would be inclined to purchase the book. The invitation to suggest "improvements" is implicit, and publishing companies declining to even print work not favored by the chains' buyers is now a reality. More blatant censorship occurs too, as when the Borders book chain canceled an in-store appearance by author Michael Moore, because he supported employees' organizing efforts.

A Free Market at Work?

In 1982 two large publishers were sued for giving national book chains illegal price breaks. The publishers admitted it had been going on for 10 years, and revealed that other companies violated the law as well. The publishers claimed the discounts were justified because it was cheaper to do business with chains. The U.S. District Court examined all costs, then ruled in favor of the independents, finding the publishers claims without merit. The court debunked the idea of chains being more efficient, as well as the "free market" myth. However, just last month, the American Booksellers Association sued the Borders and Barnes & Noble Corporations to have the law enforced again (most other book chains are owned by these two mega-corporations.) As long as we permit corporate crimes to be "punished" by tax-deductible fines, we'll fail to deter repeat criminals. Imagine our street crime rate if we punished convicted bank robbers by sentencing them to return the money and walk away free.

No longer bothering with the pretense of bringing books or music to new consumers, the chains now aggressively target independents, even opening within blocks of established stores. The illicit deals and the chains' ability to endure years of losses at any individual store, too often helps the chain store destroy the independent owner's livelihood. Prices at the discount chains often rise as soon as they acquire market share, as with the elimination of the initial 10% paperback discount at Barnes & Noble's Boulder unit. Even B&N's much-hyped discounts on hardcovers are bettered for any customer order by Eads News, just around the corner.

Is This Our Future?

The fastest growing segment of retail book and music sales is not the specialty chains, but the mass merchants like the Wal-Mart and Target Corporations. With over 2,400 stores, Wal-Mart is the country's largest music retailer. Wal-Mart has immense power over music, and they use it habitually to censor ideas, images, and lyrics they don't like. They even refused a disc by popular artist Sheryl Crow for including a song that simply mentioned Wal-Mart unfavorably. Wal-Mart's claims that the censored artists voluntarily comply with their "requests", but unless you're an established star, it's an offer you can't refuse. As with the Blockbuster video chain's practice of editing films, what's most disturbing is Wal-Mart's failure to fully inform buyers. Any business is free to refuse a product, but this covert censorship is a threat to freedom that we should halt-simply by buying from local, independent sources.

It's Our Choice

We cannot routinely buy from the Warehouse Corporation (which assumes the name Rocky Mountain Records in CO), and look to Albums on the Hill or Bart's CD Cellar when we want an out-of-print, or independently published title. The independents need our patronage to survive. Without it, neither they, nor the independent labels that produce music and thought outside the status quo, will be there when we need them.. As with other businesses, our independent music, video, and book stores offer many important benefits to our community. They strengthen our economy by recirculating more dollars locally, provide most support for non-profit groups that support community causes, and help maintain the character we value in our home. These particular businesses additionally play a crucial role in the free flow of ideas and speech. Let's vote with our dollars to protect these values.

The Benefits of Doing Business Locally

Edit of editorial published in Boulder newspapers

Each year brings more national chains displacing locally-owned businesses throughout the country. We see clones replace unique establishments. People across the country are losing sense of community in their town, and consider this trend a symptom, but could it be a cause as well? Also, what are the impacts of this trend on our economic well-being?

It seems obvious that we do business where we perceive we receive the best value for our time and money. Perceptions, however, are not always accurate when we are lacking some of the essential information for fully informed decisions. We see and hear the omnipresent ads of corporate chains everyday, but are collectively under-informed about the many important values independent businesses provide us individually and as a community. We have begun the Boulder Independent Business Alliance to address this problem. BIBA is devoted to creating a thriving local economy based on the independent businesses that support our community in many ways. Our goal is to provide the community with essential information about the impacts of where we put our dollars, and then trust people to choose what's best for themselves. We believe that as fully informed consumers, we will more often choose to patronize local businesses because it benefits our community, and ourselves.

Some economists would call the chain encroachment a natural trend. Tough for the family who owns the small business, but it doesn't really affect the economy. Overall sales may even go up a little when a chain drives out a small independent, so what's the problem? The disappearance of local businesses leaves a social and economic void that is palpable and real — even when it is unmeasured. The quality of life of a community changes in ways that macroeconomics is slow to measure, or ignores completely. Let's look at some of the issues BIBA addresses.

1. Building A Strong Local Economy

The giant chains often win a town’s consent to build new stores with promises of growth and tax revenues. But when communities such as St Albans, VT & New Paltz, NY performed thorough analyses, they concluded proposed new “big box” retailers would create economic costs exceeding benefits, (loss of existing jobs and increased infrastructure demands being the top two) and wisely rejected them on those grounds. They are among more than 90 communities around the country to have such foresight in recent years. Their scrutiny inevitably shows that most income of new chains comes directly from established businesses. For example, an extensive study of new Wal-Marts by Iowa State University found 84% of sales simply shifted dollars away from existing local merchants.

It's time to consider the real costs to a community that loses its local business base. Independent local businesses employs a wide array of supporting services. They hire architects, designers, cabinet shops, sign makers and contractors for construction. Opportunities grow for local accountants, insurance brokers, computer consultants, attorneys, advertising agencies and others to help run it. Local retailers and distributors also carry a higher percentage of locally-made goods than the chains, creating more jobs for local producers. In contrast, a new chain store typically puts in place a clone of other units, eliminates the need for local planning, and uses a minimum of local goods and services. In a company-owned store, the profits are promptly exported to corporate headquarters. These factors lead local independent merchants create a multiplier effect in the local economy up to five times that of a chain outlet (the multiplier difference in non-retail businesses is generally lower, but no less important). As we examine “leakage” of dollars from Boulder, we need to remember that the one-time sales tax revenue is only one part of the economic picture.

Small manufacturers are also affected since they rely on local retailers to give their new products a chance. Local retailers are more free to take chances with the goods of a new manufacturer, or a product that is not part of a national sales plan. Therefore, small manufacturers and a wide variety of service industries have a clear stake in the nationwide health of local retailers. In the larger picture, sales of the 500 largest corporations grew 700% in the past 20 years, yet those corporations are now net disemployers, firing more people than they hire despite record profits. That our economy is still in decent health is testimony to the employment generated by small business during this time. We need to recognize the impact of our dollars and support institutions that benefit our common interests.

2. Ensuring Choice and Diversity

Retailers sift through competing goods and services to find those that appeal to their customers. Even though a single local shop may have a smaller selection than a big chain outlet, a multiplicity of independent retailers creates great diversity. For example, when 3,000 or so national independent booksellers or music shops buy for their local customers' tastes, the cumulative effect is demand for a wide variety of ideas and music. This makes accessible controversial books or music from new artists with the expectation that there will be a market somewhere within a variety of stores. As fewer giant corporations dominate both production and sales, our options - determined by a powerful few – will be drastically reduced. Our freedom of choice is imperiled when a few buyers from national chains choose what reaches consumers. This may be only mildly disturbing for most consumer goods, but truly frightening when you consider the impact on our choice of news sources, books, music and other modes of expression.

3. Maintaining Community Character

When asked to name our favorite restaurant, cafe, or shop, we almost always cite a unique local business (look at the results in any “Best of Boulder” polls as proof). We embrace the idea of distinctive businesses with local character, but often forget their survival depends on our patronage. It is easy for us to get so consumed by efficiency that we forget how much of our lives we spend eating out, shopping, and doing other business. We owe it to ourselves to consider the quality of our experience, and ask if we benefit when we choose a community-based business.

Local owners with much of their life savings invested in their businesses have a natural interest in the long-term health of the community. Community-based businesses are essential to charitable endeavors, frequently serving on local boards, and supporting a variety of causes. Yes, there are some corporate chains that give back to towns in which they do business, but anyone who raises funds for local non-profits will tell you that independents are their base of support. Not all local businesses are models to follow, and corporate chains are not inherently bad, but the overall impacts are clear: local businesses play a vital role in our community that corporate chains rarely do, while chains often even undermine community interests.

Recurring Problems

The loss of local businesses hasn't just resulted from free market economics; it's had plenty of help. Favoritism from large manufacturers toward corporate chains such as "promotional allowances" (free advertising), takes different forms, most of them illegal under anti-trust laws. Enforcement of these laws, created to protect consumers and communities, is an important step in solving these problems. Local officials nationwide often fall for the seductions and political appeal of luring new national chains. They often look at promises of jobs and tax revenues, but fail to consider the greater losses that occur when the local business base is undermined. Here in Boulder County, we have numerous examples of tax and regulatory breaks worth millions used to lure out-of state corporations. Why should these businesses enjoy favors that our community-based businesses do not? Let's make future decisions based on full-cost accounting, and create a level (or better) playing field for local businesses with our policies; the chains already have enough laws rigged in their favor nationally.

Hope For The Future

For long-term progress, a conceptual change is also necessary. We must quantify the real needs of local communities in understandable terms, so that the work of local business people can be valued for its essential role as part of what holds a community together. Each time we spend a dollar, we must consider the full value of our choices, and that each dollar is a vote for the future direction of our community. The votes we cast with our dollars every day influence our community every bit as much as those on elections days.

Jeff Milchen, B.I.B.A. director

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