The Shatzkin Files


A hot Christmas may be followed by a chilling Spring


No new facts today, just some perspective.

Google has launched and Copia has launched. Kindles and Nooks are on sale in consumer electronics stores far and wide. iPads continue to roll out by the millions and recent evidence suggests that consumers are very happy reading ebooks on them.

I’ve made the point on the blog before that every book purchased online is another nail in the coffin of brick-and-mortar bookselling. All ebooks are purchased online (despite some charming, but futile, fantasies to the contrary.) Even with the Google proposition enabling all stores to participate in the ebook marketplace, which may motivate Amazon to try a similar proposition (and, considering the hostility of competing book retailers toward Amazon, good luck with that), it all adds up to less support for brick-and-mortar. Google ebooks might help some bookstore owners generate some margin, but that doesn’t mean it will keep more stores open.

(Look at it this way. If you ran a bookstore and found that through Google you were able to sell more and more virtual goods while your brick-and-mortar sales were declining, would you invest what you were earning through the new and growing channel in the old and declining one?)

This is not the moment for chewing over stats. We’re in the middle of a huge acceleration in digital reading. I have seen it suggested that this year might mark the first when Christmas will be the book business’s biggest sales day, because all those ereader recipients unwrap their presents and immediately go online to load up their machines.

There will be lots of opportunities for statistics-based observation after the turn of the year and we’ll be doing a lot of it at Digital Book World. (We just got some early data from iModerate, which is looking at ebook consumption on multi-function devices for us, and it is provocative.)

I’m expecting that what brick-and-mortar booksellers will experience in the first six months of 2011 will be the most difficult time they’ve ever seen, with challenges escalating beyond what most of them are now imagining or budgeting for. If I were programming a show for six months from now for the book industry, I’d plan for that to be Topic A.

Things happen “gradually, then suddenly.” I think the next six months will make what we’ve been experiencing for the past year look very gradual. I know smart people who have thought for the past year that there would be some flattening coming soon in the ebook switchover. It doesn’t feel that way to me.

I linked immediately above to a post of mine from last Spring in which I got something pretty damn wrong: figuring that iBookstore’s early success would be sustained and that Random House would find it “necessary” to switch to Agency, even though I saw the logic in their initial decision to stay out. As it has turned out, iBookstore’s share appears to have declined, even as the use of iPads and iPhones as ereaders has grown. Many more ebook titles are available for those devices through other sources which now, emphatically and ironically, include Google. Because Google is delivering a lot more illustrated and complex-page ebooks to the market than there were before, it will make the iPad even more valuable. So as Google Ebooks succeed, iBookstore doesn’t benefit but Apple very well may.

I’m a baseball fan and I think both hitters and future predictors should be happy if they bat .300. I’m not embarrassed to be pointing out one of the times that I made an out.

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  • gous

    Non book items will rise much faster than now anticipated. The big ones will be electronics (ereaders, tablets, accessories), educational games and toys, food and drink (bigger and hopefully better cafes). Books instore will become just one part of turnover, perhaps only one-third within a few years. None of this is good news for publishers obviously.

    The trick for the bookstore chains is to manage this transition while keeping their customers that are migrating online for ebooks or pbooks.The only candidate that comes to mind is B&N, not least because they have some hundreds of leases coming up in the next couple of years. Books-A-Million seems to have hitched its wagon to the Nook while Borders is Dead Man Walking.

    You can check out the website of a B&N manager at http://www.rocketbomber.com/ca…/ for some ideas that might save some Indies. Being a natural pessimist I suspect nothing will.

    • /blog Mike Shatzkin

      You and I see pretty much eye to eye.

      Mike

  • http://twitter.com/emmittc emmittc

    While I support indies and wish them well – the enthusiasm about “level playing field” is misplaced and wrong. For non-agency books, even diehard indie supporters will find it difficult to pay $27 for something they can get for $9.99 from google….ebooks will not save indie bookstores, and the margin gained in selling them may not even cover the cost of offering them (kind of like magazines in the store)…the aba should sell as indiecommerce – and simply use the proceeds to support brick and mortar in whatever way and for however long they can…..

    • /blog Mike Shatzkin

      The indies won't keep trying to sell books at full wholesale-publisher

      retail. Or at least most won't. They can price the books as they want to,

      but this all happened so fast that many didn't have time to execute on that.

      That said, your point is well taken. The margins from ebook sales will be

      slim (except, of course, for the agency books, which are a LOT of the sales,

      on which the margin is protected because the sale price is protected.) I

      think it will be positive and I think it will be helpful to indies, but it

      is a little 40 horsepower putt-putt outboard pushing the boat against a

      gale-force wind in a stormy sea.

      Mike

  • marytod

    A couple of personal data points that might add to the discussion. I've had a Kindle almost twelve months and, when I am looking for something to read, I often download several at once. With a price of $7.99 or even a little higher, I don't hesitate to try a book, not something I would have done when shopping in a bricks and mortar store. My book purchasing is much higher than in the past.

    On a Christmas note, with a husband who is already difficult to buy for and one who rarely reads a traditional book any more, my Christmas shopping has become much more difficult. Who wants to give a virtual gift to one's sweetheart??

    • /blog Mike Shatzkin

      Mary, even better than buying lots of books on spec, you can download the

      sample chunk almost every time. That's also a capability that print and

      brick-and-mortar can't match.

      I can't help you on the “presents for loved ones” front. That's a topic on

      which I claim no expertise; I try to stick to what I know.

      Mike

      • http://freesf.strandedinoz.com/wordpress Blue Tyson

        It is endlessly surprising why publishers can't manage something so simple as excerpts on their website – and when some of them do they are in absolutely terrible flash applications – presumably because of some of the same paranoia as DRM.

      • /blog Mike Shatzkin

        Agreed, but it would be a much more serious problem if any consumers

        actually* shopped* on most publishers' web sites!

        Mike

      • Fredje Libeer

        And why shouldn't consumers shop on publishers' web sites if the publisher is able to deliver ?

      • /blog Mike Shatzkin

        No reason why they shouldn't, but they normally don't because publishers

        don't often merchandise things in a consumer-friendly way.

        Mike

  • marytod

    A couple of personal data points that might add to the discussion. I've had a Kindle almost twelve months and, when I am looking for something to read, I often download several at once. With a price of $7.99 or even a little higher, I don't hesitate to try a book, not something I would have done when shopping in a bricks and mortar store. My book purchasing is much higher than in the past.

    On a Christmas note, with a husband who is already difficult to buy for and one who rarely reads a traditional book any more, my Christmas shopping has become much more difficult. Who wants to give a virtual gift to one's sweetheart??

  • http://twitter.com/OBXpublishing OBX Publishing Group

    I agree with most of everything you say in your blog, but I don't think brick and mortar bookstores will die out completely – they will just be smaller. Bookstores are between a rock and a hard place. They have to change into something different to catch the wave of ebooks. Perhaps, they can be a digital reading outpost with larger lounge areas, coffee and pastry shops and offer certain ebook titles for free for a very limited time say for two hours or so if you come into the store. Who knows. The facts are obvious – print book sales are declining and ebook sales are increasing.

    • /blog Mike Shatzkin

      Well, vinyl stores haven't “disappeared.” I know of one on Bleecker Street.

      Will stores that sell used books, pastries, or furniture also sell printed

      books? Probably somebody will. But it won't be enough shelf space to support

      an industry, let alone six behemoth trade publishers.

      Mike

  • Andrew Malkin

    I couldn't agree more about the huge acceleration in digital reading and its impact even beyond North America as devices/titles become more easily available and consumers digital reading awareness level improves beyond early adopters/tech types. I think there are many outside of NY, LA or major markets that are still getting their head around digital reading and what is available beyond eink on a dedicated reading device.

    Second, with regard to your comment–”Look at it this way. If you ran a bookstore and found that through Google you were able to sell more and more virtual goods while your brick-and-mortar sales were declining, would you invest what you were earning through the new and growing channel in the old and declining one”?

    Obviously, not a wise idea to generalize but I still get the sense that publishers big and small are not dedicating enough resources to digital and slow to get in a position where they are committing enough time/energy. Granted, more houses are getting their own DAMs and setting up arrangements with DADs but it often feels like there are only a handful of people in-house doing the heavy lifting whereas publishers need to have a much higher % of their headcount thinking/touching/doing digital before the sales jump to high percentages of their overall sales. The notion of “we will commit resources appropriately as revenue increases” seems short-sighted given the rate of change. Of course, how can some afford it if declines in b&m esp on backlist continue unless someone works both on p and e side of the equation or shifts over to digital entirely.

    Dominique Raccah has articulated the idea of an entire publishing company doing two jobs but I wonder how publishing houses are structuring (or restructuring) themselves to handle digital growth in 2011 and beyond. Topic for DIGITAL BOOK WORLD I trust?..

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