Profile: Has the prize bookseller sold out?: Tim Waterstone

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Here it comes again, the annual kerfuffle of the Booker prize. Amid Tuesday night's celebrations - and acrimony and recriminations - one man will be watching the proceedings with wry disinterest, secure that he has won again, as indeed he has done for the past 10 years.

Neither author, agent nor publisher, the real victor will be a retailer, a businessman. In the decade since the Booker was first televised, Tim Waterstone, 52, founder of 86 bookstores, has done more than anyone to transform literary Britain.

It would be difficult to overstate Mr Waterstone's impact on the book trade, and publishers tumble over each other in tribute: he has changed the rules, moved the goalposts, revolutionised the industry. He has made book-buying a pleasurable experience, not an obstacle course. He has made high culture stylish. His shops have proved a godsend to publishers specialising in literary fiction - the Fabers, the Seckers, the Picadors. He staffed them with postgrads who had read a volume or two and were more than likely to be writers themselves. He set in motion an Eighties publishing revolution that inspired many other stores to revamp - Dillons, Hatchards, Books Etc - and with the boom in authors' advances and the emergence of the writer as talk-show star, he somehow made the whole business rather rock'n'roll.

Before Mr Waterstone opened his first shop in Brompton Road in 1982, you could go into Foyles and be anaesthetised by inefficiency, stunned by confusion; it made the local library look snazzy. Or you could go into WH Smith and find little but bestsellers and gift books. In most cities outside London you couldn't find philosophy or art or science, because if it didn't sell by the dump-bin, it wasn't stocked. Such classics as there were, invariably dusty Penguins, were consigned to a dark outpost beyond Cookery.

But Mr Waterstone opened a shop you could walk around, a shop that stocked 50,000 titles, almost everything you could need. It had a sensible layout, agreeable lighting, a thoughtful kids' section. Staff didn't bother you if you read a chapter or two. It organised book readings and signings, a book search service, published a catalogue with its own recommendations and kept cuttings of the reviews. If they had bunged in an espresso bar and a chaise longue, you could practically have lived there.

And he's done OK for himself: he has made a lot of money out of books, which is not something many people do these days. But things may be turning a little sour for him. He says he is bored with the British book trade, and he is increasingly distancing himself from it. The problem is: he is leaving his empire in the hands of his one-time arch rival, WH Smith. Perhaps we should worry.

Mr Waterstone is an entrepreneur without flash. He looks a little puckish, balding, nondescript. 'He comes on like the man in a Mel Calman cartoon,' says a literary agent. 'In a crowd of two, he's the one you wouldn't notice. Often he looks as if he's about to burst into tears.'

He has been a voracious reader since his early teens, and he was a bright student, first at Tonbridge School and later at St Catharine's, Cambridge, where he studied English. He worked first in Calcutta, for his father's tea-broking company, and then as marketing manager for Allied Breweries.

His association with the book trade began in 1973 when he joined WH Smith, where he worked primarily in distribution; he was fired eight years later for failing to establish a profitable American operation. These days he says he was anyway 'too individualistic' to remain a company man.

So, partly out of spite, he set up his own bookstore, in which he sank all his own savings and a hefty bank loan. What he wanted was something customer- friendly and effortlessly efficient, and he struck a deal with publishers that enabled him to pay for their stock only when much of it had been sold.

By 1984 he had three shops and he would talk with zeal of many more. The word 'family' cropped up a lot. 'He encouraged everyone to take out shares,' says Ray Monk, an early employee at the Charing Cross branch. 'He gave everyone their own specialist budget, so we bought books as well as sold them.' Mr Monk went on to write an acclaimed biography of Wittgenstein, and recalls a 'benign and fatherly' speech that Mr Waterstone gave at its launch.

But the expansion was not always fruitful. Bored with just opening new stores, Mr Waterstone moved into publishing. He bought manuscripts, commissioned authors and hoped to produce up to 50 titles a year. Few succeeded. 'The venture showed his ruthless streak,' an agent recalls. 'He had to fire people unceremoniously, and it left no doubt that he was a businessman, not a noble philanthropist.' As such, Mr Waterstone slotted well into the publishing world of the late Eighties, a time of takeover and consolidation. It was a hint of things to come.

The expansion of Mr Waterstone's professional family of bookstores was mirrored by his personal family. He has been married three times (his present wife is more than 20 years his junior), and he has six children, with another due before Christmas. 'I have not been a model father,' he says. 'How could I have been?'

In interviews and at dinner parties Mr Waterstone admits to being prone to bouts of depression, and will occasionally hit a confessional groove in which he will talk, as if in therapy, about personal intimacies. A year ago on these pages he spoke movingly of his relationship with his second son, Martin. 'Probably because of marriages breaking up, he had a very difficult late adolescence,' he said, going on to describe the 'agony' of losing touch with him. About three years ago Martin was arrested for drug dealing, and his father went to visit him every week in custody. 'These meetings with him became phenomenal, real love was going backwards and forwards, it was the greatest love I've ever known for anybody.' He served as a character witness at his son's trial, and was instrumental in getting him a suspended sentence.

Though not a regular Catholic church- goer, at times of crisis he will often seek solace in prayer. He sets great store by his inner spirituality, describing himself as 'absorbed in the whole concept of God within me'. One publisher puts it in a more derogatory light, believing there is an 'elusive sacredness' about him.

A month ago Mr Waterstone threw what he called a 'very personal' party in his Kensington branch for 470 people to mark the 10th anniversary of the founding of his chain. The invitations, sent out to a vast number of senior staff as well as the likes of Salman Rushdie and P D James, included a yarn about what he did with his very first day's takings of pounds 924: he left the money on the Circle Line.

By all accounts, the party was a bubbly affair, but it was tinged with vague despair. 'Running Waterstone's has been nothing like the fun of the early days,' the host admitted later in the week. 'I draw from the fun of leading teams, making friendships, getting people to do what you want them to do.' There had been a lot less of that lately.

Mr Waterstone had spent much energy on the debate over the Net Book Agreement. Whereas a rival bookseller, Terry Maher, chairman of the Pentos Group (Dillons, Hatchards, Athena), had campaigned forcefully for its abolition, arguing that books sold at a discount price would boost turnover and benefit everyone, Mr Waterstone countered that price bore very little relation to sales. But when Mr Maher discounted many books in 1991, Mr Waterstone was reluctantly forced to follow suit; for a few weeks it was impossible to move in the high street for knock-down stickers.

But Mr Waterstone soon abandoned the practice, concluding that other factors were much more important than price. Such as? Much the same stuff that made his name: 'What people want is a wide range of stock, long opening hours and informed staff.'

But what happens when your staff get uppity? Two weeks ago it looked as though many junior salespeople at Waterstone's wouldn't be getting their bonuses this year, and they threatened mutiny. An uproar at civilised Waterstone's was once unthinkable: what might they do - refuse to tell you where the Kierkegaard was? But this time there was real anger.

In the end their bonuses were reinstated. But the incident drew vituperative accusations of betrayal and sell-out, many directed at Tim Waterstone himself. His staff, many of whom are paid less than pounds 10,000, had discovered that Sir Malcolm Field, the managing director of WH Smith, had received a 57 per cent pay rise of pounds 117,000, taking his total salary to pounds 323,000. Why should they have cared what was happening at Smith's? It all harked back to three years before, when the founder of their empire had in effect surrendered control to his rivals.

In July 1989 Mr Waterstone had signed a deal with WH Smith that was originally announced as 'a merger' between Waterstone's and the WH Smith specialist bookselling arm, Sherratt & Hughes. In reality, Mr Waterstone sold his stores for pounds 42m, of which he would get pounds 9m.

Mr Waterstone stressed there were many clauses guaranteeing future independence, but the deal also contained a schedule for his own departure. Next year Mr Waterstone will spend most of his time in the United States establishing an American chain (there are already Waterstone's stores in Boston and Chicago). And then in 1994 he will leave his empire for good. Or maybe for worse: he will be replaced by Alan Giles, every inch a WH Smith man.

The main question is whether Mr Waterstone has done enough to change the book trade irreversibly. If not, the recessionary hard-sell could encroach again, the dark days of pile it high and sell it cheap, a scenario in which Ben Elton will be everywhere and Ben Okri barely visible.