The TRENDS projections for the adult trade segment of the industry over the next five years can be summed up in a word: flat. Projections for unit sales—hardcover and paperback—hardly deviate from a straight line. Dollar projections lift gently, fueled entirely by price increases. And even this is an improvement from the most recent reality. BISG figures show that book sales in dollars and units peaked in 1999 and fell from the prior year in both 2000 and 2001.
Adult Trade Books Adult Trade Books Total Net Publishers’ Revenues Total Net Publishers’ Units (Millions of Dollars) (Millions of Units) ______________________________________________________________________ 1992 $3,484.2 460.5 1993 $3,887.2 482.5 1994 $4,324.2 512.8 1995 $4,234.1 484.7 1996 $4,195.4 465.1 1997 $4,395.3 476.5 1998 $4,659.8 496.6 1999 $5,083.9 529.0 2000 $4,586.6 457.1 2001 $4,553.7 442.1 ______________________________________________________________________ Source: Book Industry Study Group, Inc., Book Industry TRENDS (various years).
However, it is important to remember that what looks flat in the aggregate reflects the interplay of both positive and negative forces in a variety of areas, each of which describes its own patterns of growth and decline. Seven patterns seem especially worthy of notice.
Explosive growth of superstores followed by slower rates of expansion.
Not only were Barnes & Noble and Borders opening up new superstores at a breath-taking rate for several years in the 1990s, so were others: Musicland had the MediaPlay stores, there were Crown Superstores, and such chains as Books-A-Million and
Hastings were in the superstore game.
That expansion has now virtually stopped. Barnes & Noble and Borders have much more modest expansion plans, despite investments in infrastructure that would be amortized more effectively if they continued to grow as they had before. And virtually no superstore creation is taking place outside the two leading chains.
Superstore expansion was fueled by the same thing that created the Internet business: the willingness of Wall Street to invest. Now, in a more mature marketplace, those dollars aren’t there, and the total shelf space for books appears to be contracting.
Reductions in shelf-space opportunities. Recent trends at Barnes & Noble and Borders could cut shelf-space opportunities for trade publishers. Both major superstore chains are taking steps which threaten the superstore shelf-space availability that now exists. Barnes & Noble’s publishing interests have been well covered in the press; Borders’ expanded efforts to buy in customized proprietary packages are less well known. And there are growing suspicions (as of this writing) that Borders’ much-discussed Category Management program will steadily reduce the number of titles those stores carry. Anecdotal evidence from sales reps is suggesting that representation in both chains is progressively more difficult for publishers to get.
Reductions in the number of independent bookstores and mall chain stores. For the past several years, the growth in superstore shelf space has cushioned publishers from the reduction in exposure available through independent stores and through the venerable Walden and B. Dalton chains (now owned by Borders and Barnes & Noble, respectively). Some evidence suggests that the reduction of indies has leveled off, but there is every chance that the plateau is temporary. Virtually all the leading independent bookstores in America are superstore-sized and being run by owners who are approaching retirement age. It would take a hardy entrepreneur indeed to open a new independent bookstore under current conditions. Further reduction of indie shelf space therefore seems inevitable.
The mall chain stores are a conundrum. On one hand, between them, the two leading chains represent more than 600 points of sale, a huge number in the current retail book context. On the other hand, the number of mall chain stores and their per-outlet sales keep going down, so they don’t get the attention from their owners or from publishers that could perhaps pull them out of their tailspin.
Growth in online sales. The numbers from Christmas 2002 underscored the fact that the online booksellers are living in a different trend world from their brick-and-mortar counterparts. While brick-and-mortar stores reported dollar sales that were flat, at best, both BarnesandNoble.com and Amazon.com reported robust sales increases. Because Amazon does not break out book sales (let alone new book sales), and because brick-and-mortar stores also sell a smattering of nonbook items, the comparison is not precise. But the trend looks clear.
This is a big opportunity for some publishers, but it is tricky. The books that sell robustly online are not always the same as the ones that sell robustly in shops. And the promotion of books for online sales has a largely different tool set than the one for promotion in a retail store.
Huge growth in the number of “affiliates” on the Web. One of the important feeders of sales to the big online sites are “affiliates”—independent Web sites (often created by publishers or authors) that are “found” on the Web and that then push their sales to the big site. These affiliates are increasingly important marketing targets for publishers.
Ubiquitously available used books competing with new books. Undoubtedly one of the most frustrating developments for publishers is the marketing of used books alongside new books, which is especially visible at Amazon.com. There, customers are routinely offered the opportunity to buy a used copy of almost any book they want for a lower price than the new book. These sales are just as valuable to the bookseller as new-book sales, but they do nothing for the publisher or author—except perhaps indirectly, in that the original purchaser gets some money back that might go toward that person’s next new-book purchase. Powell’s in Portland has, of course, sold used books and new books in the same retail space for years.
Short of encouraging people to write in the books they buy or to tear out the pages they’ve read instead of using a bookmark, it is hard to see what strategy publishers could use to combat this trend. Both what Amazon is doing and what Powell’s is doing in merchandising new and used books together are practices very likely to spread.
Title-production base shifts. While the large publishers consolidate and prune lists, new titles from smaller and fledgling publishers are proliferating. Over the past decade, new title production, as measured by Bowker’s issuance of ISBNs, has increased from 102,000 titles in 1992 to more than 140,000 in 2002.
During the same period, the biggest publishers have been buying the companies a level or two down from them and reducing the combined title output. So the most- established houses are publishing a diminishing percentage of the new titles. This view is confirmed by Bowker’s count of active publishers, which has doubled from about 37,300 in 1992 to about 73,000 today—not counting those who work through companies such as iUniverse, Xlibris, and 1stBooks.
Given both the growth of online sales—with that market’s relative insensitivity to high-priced promotion—and the growth of the title base from less well-established publishers, big publishers may find that buying competitors to corner the market is a bit like herding cats. If the current pattern continues, as it is likely to do, sales will tend to spread over more and more titles, and the largest publishers will control a smaller and smaller percentage of what is available.