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BOOKTHINK: I like it that sellers can upload actual photos of their books to your site.

DONALDSON: We prefer that because of condition issues. It saves us all a lot of woes when you guys are uploading an actual photo of a book and showing a customer what it's going to look like. They don't get it with the expectation that it will look like a brand new cover from a publisher. That can hurt us all with a lot of returns.

BOOKTHINK: Don't you think that photos also help buyers to actually commit to buying because they have a clearer idea of what they are getting?

DONALDSON: There was a study published recently comparing customers shopping online and buying in person, and that's the number one reason people buy in person: They want to see it and feel it, size it up, before they invest.

BOOKTHINK: As of March 1, 2006, Biblio began a structured billing process that offers sellers the option of either paying a commission on each sale or paying a flat fee and a smaller commission. Was that well received?

DONALDSON: It was well received. We had so many booksellers contacting us asking for a flat-fee structure. And when we brought it up to our advisory committee, they said that it was going to really alienate a lot of people who don't sell a lot and want to be on a commission basis only. Somebody then came up to us and said, "Why not do both?" So we thought about it for a minute and said, "Wow, that's a really good idea. Why not? Nobody else is doing it." So we did decide to change to that. And it's been very well received because it does give you the option. If one of the options isn't working for you, you are more than welcome to change to the other so you can pay at the rate you feel comfortable with. It is really a revenue-neutral investment for us, as far as technology goes. We are not making any additional money off of it. What's good about it is that we are offering booksellers, unlike some of our competitors, options to list the way they want to list and change when they want to change. It seems to have made everyone happy. This idea was actually suggested by one of our sellers, and it shows that we listen. If it makes sense, we are going to do it.

BOOKTHINK: You don't rate your sellers as some other venues do. Does this work well for you?

DONALDSON: There are a lot of customers asking for seller ratings. And there are some - not a lot, but some - sellers asking for it. Usually it's the exceptional sellers who do everything right who would like to see a seller rating system in place. But it's the poor guy who makes one mistake who can be completely trashed by a customer who is just angry that makes us fearful of a system like that. When you go into some sites, you can see vendors being hurt by one angry or possibly hostile customer. So while it may be something we do in the future, we're still juggling with exactly how to do it. And I don't know that anybody's really nailed it down. Even e-Bay and Amazon have, in my opinion, fairly archaic methods of rating sellers, and feedback still can come back to bite sellers. So we are trying to figure out the best way to do it. Right now, though, in the short term, we've solved it by managing the quality of the sellers, screening them better when they apply and removing their accounts if they are consistently bad or we have customer complaints. And even though it's unwritten, we have kind of a three-strike policy. If we get three major complaints about a seller, they will be inactivated indefinitely until we can figure out what's wrong with their account or determine if they are not really a quality seller - and we then have to remove them.

BOOKTHINK: Do you have problems with sellers abandoning accounts?

DONALDSON: Very rarely. We often times have situations where there's a loss in the family or someone becomes ill and doesn't have the time to manage their account, but you would be amazed at how many sellers email us and say something like, "I'm going in for heart surgery on Friday, please put my account on vacation status," and we say, "Oh my goodness, the last thing in the world you should be worried about right now is putting your account on vacation," but they do it. It's interesting to see how the quality sellers on Biblio, or on any site, behave compared to those who are just in it for a quick buck.

BOOKTHINK: Any plans for further enhancement of the site?

DONALDSON: You know, the web changes every day, and web users demand more, so yes, absolutely. We've just recently changed our Rare Book Room to show you much larger images of rare books. If you are going to invest $1,000 or more in a title, you ought to be able to look at it really closely. We're improving our search all the time, trying to get it to be more precisely keyword focused and based on popularity of searches and that sort of thing. We are always tweaking and doing slight changes in this area. I could go on and on because there are hundreds of things we'd like to do, but it's all about time. We try to manage our feature growth on our site as we manage everything else on our site, slowly, so that we don't put out a big product that's just going to break down on us.

Recently, we worked with IOBA books to get their bookselling engine going at IOBA, so that took a little bit of time away from our developers.

And then, most recently, as of the last 3 weeks, we were beta testing and running Biblion.co.uk.

Just a few days ago we launched that site to the world. Basically, they were operating primarily under Biblion.com. They had a lot of technical problems, and really it was no fault of theirs. They had hired outsource companies to manage it for them, and they just couldn't find a company to meet their needs. So they left the third party companies and came to us in about February of this year and asked if we could help them. We thought about it and decided we could do the same thing for Biblion that we did for IOBA and sort of provide the back end to Biblion to re-launch their site. We worked on that for a couple of months, tested it recently with some sellers, and re-launched it.

We are going to focus a little more on it being Biblion.co.uk and let them concentrate much more on the UK market and UK sellers rather than to try to re-launch it as Biblion.com. It's not just because they compete with us but also because we don't have the intention of going stomping into the United Kingdom market. That's not our core competency, we don't have enough staff, and we're not physically there in the country, which always bothers us and I'm sure bothers others too when you're dealing with technical support that works in a different time zone than you do.

So what we're doing is working with Biblion to provide a lot of services for their website. They are still going to do the marketing, advertising in the UK, and some initial customer support, but we're going to do mostly everything else and provide all of the back-end services for them. It's just a revenue share type of thing. They didn't have to pay us $100,000 because they didn't have it, and we're not eating a ton of expense because we already have the technology on Biblio. So it's kind of a win-win situation. It's nice to see them back up and running; they had a lot of customers who loved them, also a lot of great sellers on their site, and they are coming back slowly.

BOOKTHINK: So how, if at all, will this affect Biblio sellers?

DONALDSON: We are going to make it very easy to upload your books after you register an account with Biblion. We'll put your inventory on Biblion for free, the books will be uploaded to us, and we'll just put it over there, handling the uploads initially and on an ongoing basis. You don't have to upload to them and to us every time. We'll provide sort of a FillZ type of service but only on these two sites. And the billing structure on Biblion is exactly as it is on Biblio. For all intents and purposes, it's like a little Biblio over in the UK with a brand that was already established and people enjoyed. We've seen several UK sellers that don't list with Biblio already sign up for the site, so it's kind of nice to see those folks coming on board. We'll see how it goes.

BOOKTHINK: Do you have any marketing plans to attract more sellers to Biblio?

DONALDSON: We do very little print advertising. We do some in collectors' magazines and things like that to make more sellers aware of our site, as well as to attract some of the high-end collectors who really spend a lot of money on books, but what we really spend our time and money on is search engine optimization and search engine marketing. And by that I mean making our site friendlier toward sites like Google. We actually hired a company in January to help us with that because it is not our core competency, and it's also something that is very time-consuming. You need one or two people sitting there all the time dealing with this, and we really couldn't justify the expense. So we found a company up in Ohio to help us - Intrapromote - and they have done an absolutely fantastic job.

We have seen our number of pages listed in Google double in six months. And that's substantial, considering we had something like 1.2 million to begin with, so we have somewhere in the ballpark of pushing 4 million pages listed with Google. And by pages, I mean some content, but mostly books pages - ISBN numbers, unique inventory numbers, things like that - which does nothing but help sell books. When you type in "Charles Dickens A Christmas Carol" and the first return that comes back is a Biblio listing, there's a good chance it's going get clicked. That's been a big push for us.

Search Engine Optimization is hard for sellers to understand, and to be honest with you, sometimes it makes my head hurt. But it is a substantial return on your investment because you can quantify it. When we are spending time and money every day marketing books on the internet, when we are selling more books month over month, when we see sales and volume and actual number of titles going up month over month, then it's working. And it is quantifiable. You can actually put a dollar amount to it - which is nice. It's still so hard to do that with print advertising or with television or radio.

So, the big push is with what we call SEO (Search Engine Optimization) and public relations. We've done a lot of PR in the last year and a half since I've gotten here, and we're going to continue that - making customers aware of us. One of the best ways you can be mentioned is in the Sunday paper, and it's nice to have people find us in those ways.

BOOKTHINK: If you had to name one or two things that you believe are crucial to success for online booksellers, what would they be?

DONALDSON: Number one is always customer service. You would be surprised at how many people will return and buy from you again, whether it's from Biblio, whether it's direct through your website, or whether it's a guy in your town who might start coming to your store. Taking care of the customer is still paramount. Identifying somebody who buys a high quality book and keeping that person in mind when you go shopping for books, looking for books for that customer. It's the old way of doing used and rare book selling - establishing good solid customer relationships. That is the single most important thing. Even if it seems like it's a cold email from a customer through Biblio, that is still the beginning of a relationship. It might take two or three emails, and the next thing they may give you their phone number.

What's interesting about Biblio - a lot of people think we are chomping at the bit to keep every customer, and honestly, if as a Biblio seller you get a customer that you begin to develop a relationship with and they become exclusive with you, deal with you directly from your store, we are fine with that. You are incurring expenses talking to them, spending valuable time - it's your customer. We aren't going to say, "Hey, we want a piece of that action." That is why we're here, to get these relationships started because if you stay in business, we stay in business. There's nothing you guys can do - except maybe openly taking every single one of your sales off our site and cancelling Biblio orders, causing disruptions in service - other than that, there's nothing you can do in the process of building a customer relationship that will bother us.

Number two - in this world of technical applications, taking care of your inventory and making sure things are well described. And to be honest, there are a lot of sellers out there who have a lot of spare time on their hands. Use it to take photos of your books over a certain value threshold that makes sense for you - $15, $20, $25, whatever it is. And put up as much information as you possibly can about your books because we've already found that these buyers are buying books for particular reasons - for gifts, for other collectors, for their own collection. They are higher end buyers and they are going to spend more on a title, so if you can prove the value of your title, you are going to be more likely to sell it.

The biggest challenge, of course, is getting the customer to come to our site. That is a very big thing, and we work hard on that every day. And as I said, I think our biggest thing right now is SEO.

BOOKTHINK: Tell us a bit about Biblio Charitable Works, Inc., how it came about, and the Bolivian Library Project.

DONALDSON: That started as our Bolivian library project in Morado K'asa. [MEDIA EDITOR'S NOTE: Morado K'asa is a mountain village of about 200 families and central to eight other outlying communities in Bolivia. It serves a total population of just under 3,000. The finished library in Morado K'asa - Biblioteca "Villa Zamora" - officially opened on April 19th, 2005.] We just set it up as a corporation. We donated money, and we asked booksellers to donate books and/or money - and they came through. There weren't a lot, maybe 50 or 60 that gave us money or books, but they have not stopped asking about it and want to help us more. It makes us feel good - I mean, even sending $2 or $5 is a lot for independent booksellers, but it makes so much of a difference. You can turn that $2 in Bolivia into about $10 - that's the exchange rate. It's good to see this project come to fruition.

We raised the unbelievable sum of $4,800 to build an entire building and fill it with books, and we just couldn't believe it would cost that little to do it. It was so much fun, and it was such a success! We sent somebody down there to open the library, and they just fell over backwards. It was so amazing.

So we decided to keep going. We created a non-profit corporation, 501Z3 status, and hired one person who works down in Bolivia and coordinates the project - actually, it's Brendan's sister, Megan Scherar, and she was the inspiration behind the initiative and our involvement in it. She came to us with the idea for a community project while serving in the Peace Corps and said, "Hey, would you guys fund this?" We realized it could be a great project, one that could involve booksellers too.

Megan has now left the Peace Corps and is down there as our Project Coordinator for Biblio Charitable Works. She coordinates contact with the State Department, organizes shipping of books and meeting with town mayors to organize construction. She just doesn't stop.

I believe we're now working on six libraries in Bolivia. You can find out a lot more about this at BiblioWorks , which has almost all the information about the projects.

It's blown up into a huge thing. It's growing so quickly, and we are desperately seeking grants, seeking money to help things grow. I'm currently serving on the Board along with our CFO and our CEO.

BOOKTHINK: What do you Biblio's biggest challenge will be in the years ahead?

DONALDSON: Adapting to customers' needs, making sure that we're doing what they want, that we're providing the kinds of inventory they want. We don't want to tell booksellers they aren't important; booksellers help us evolve. They will stay true to us if we stay true to them, which we fully intend to do. But what's important is to make sure that we are moving with the tide. When customers change the way they do things, we have got to change. If we don't, we'll be left standing there like some of the old sites that have disappeared. That's why we're all technology guys, sitting here watching the marketplace, making sure we are adapting to it.

BOOKTHINK: Are you optimistic about the future of online independent book selling in general? Do you foresee any changes?

DONALDSON: We've got a huge future. It's going to continue to grow because there's a huge demand for it. What's nice is that publishers are slowing down on their print runs a little bit, and that is benefiting us. I don't mean anything negative toward publishers; I only mean to say that one of their reasons for reducing publication volume is that they want to slow down their overages and returns, and there's too many used copies selling, so there's less need for printing new copies. Also, slowing down print runs results in increasing demand for titles, making them more valuable in book format.

There are a lot of interesting changes coming down the pike. My son, who is 7 years old, loves books. He loves to hold books and to read books. That kid is not just going to fall into the e-book world and say he never wants to have another book. He just loves them too much. And as long as there are people in the world like me, forcing books on my children (just kidding), then there will always be books here for them. And books will become even more special when publishers become exclusively e-book publishers or there's no print copy of a particular author available. It just makes selling a book a more unique thing, and I think there will always be a space for it.

We do have to be careful not to commoditize the used/rare book business. There are a couple of "A" words for dot coms that I won't use that may commoditize or attempt to commoditize a product territory. By that I mean making these books as cheap and as easily available and as inexpensive to ship to your front door as possible - the lower the price, the better. We want to avoid the "Wal-Martization", if you will, of the used book industry. As long as we don't allow it to become commoditized as a product category, I think we will prevent it from becoming just another run of the mill product line.

Unfortunately, the music industry has slipped into commoditization because of its format and a thousand spin-off formats that have come from it. But books are a totally different thing. They have so much longer a history than recorded music - a different aura.

BOOKTHINK: I agree. I think people will always love holding books. You know, I spend all day staring at a computer, and at night, I don't want stare at a computer or print out something to read. I want to pull a book off the shelf and take it to bed with me.

DONALDSON: I think you are exactly right about that. The more our work lives are focused on computers, the less likely we are to want to spend time in front of them in the future. People are going to want books to get away from their technology. And that's a good thing for us.

There are tons of challenges, and I can't tell you what all of them will be. I just know that we all have a viable product, and selling it online is the way things are going now. I hate to see independents in small towns go out of business.

I think independents, in the US especially, ought to follow suit with what the Europeans do and become more like consortiums, start more book fair types of things, or get together in groups of 10 or 12 and open stores. Europeans are so much better at it than we are because of space limitations; space is so expensive there; if they don't get together and do it, they can't do it at all. But here it's kind of easy to rent your own space, and we go about it that way, and after about a year and half realize that we just can't do it anymore.

I think it would make a lot more sense if US booksellers would come together and open shops cooperatively. I think they would have a lot more success. People who might stay away from a store because it is a specialty store, such as a science fiction or a mystery store, will come to a place like that and end up perusing booksellers inventory that they might not otherwise have looked at because they thought it was too genre-specific, and they might find something they like. So, there's a ton of marketing advantages to it. I think it's a smart idea and a way to keep independent booksellers alive.

BOOKTHINK: Anything else you would like to add?

DONALDSON: Just that we are always appreciative of bookseller support, and we love having good inventory on the site. We see a long and healthy future for all parties involved.

BOOKTHINK: Thank you, Kevin, for taking time to talk with me today.

DONALDSON: It was my pleasure.

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