The Idea Logical Company

The Shatzkin Files

Why are you for killing bookstores?

by 151 Comments

No news from here today; just rumination.

Those of us in the book business have to choose which anti-social position we want to take.

Some people are for the most rapid possible adoption of ebooks. They can be cheaper. They don’t require paper which pollutes when you create it and adds carbon footprint every time you ship it around. They have much greater functionality, or at least the potential for it. They enable business models that don’t require capital-intensive infrastructure.

But have you thought about this? If you are for the most rapid possible adoption of ebooks, you are for killing bookstores faster.

Although there are probably few people reading this blog who expect bookstores to be around in 15 or 20 years (and those who do will undoubtedly leave a comment!), there are many who would like to keep them around as long as possible. There is a magic to being in a building surrounded by 40,000, 60,000, 100,000 different books. Bookstores are inherently community centers. They make possible the wide dissemination and promotion of great writing. They enable people to see heavily-illustrated books before they purchase them.

But have you thought about this? If you are for bookstores lasting as long as possible, you want to slow down the uptake of ebooks.

As individuals, which side you’re on is a matter of personal preference. Although I have mostly read ebooks for more than 10 years and haven’t read a printed book in two years, I am for bookstores lasting as long as possible. It’s a “health of society”and a “health of my industry” question for me. I think both will be much poorer when bookstores go away.

My societal preference isn’t enough to motivate a self-indulgent guy like me to inconvenience myself, so I read electronically, not on paper. But it does not distress me to remain part of a small minority. It helps keep bookstores alive.

Individuals decide this question on personal preference; businesses think about competitive advantage.

Barnes & Noble and the biggest legacy publishers clearly have an interest in slowing down ebook uptake. Even though B&N and the big publishers are now in the ebook business, their competitive advantage exists heavily on the print side. They recognize that they have to live in the ebook world to serve the authors and customers they’ve had for years, so they do. But I don’t think a single big player in legacy publishing could give you a convincing description of how they maintain their scale and power when digital becomes the rule and print the exception. Can that day possibly be more than 20 years away? Might it be 10? I know a man that will take a bet that it will be five.

Apple and Kobo and Google and a slew of new players clearly have an interest in accelerating the growth of the ebook business because that’s the only part of the book business they’re in.

Amazon sells mostly print, but they sell print online. As sales migrate from print to electronic, it is still good for the print business at Amazon. Reducing print sales drives bookstores out of business, one by one. They go out because their sales went down 10% or 20% or 30%. But the remaining 70% or 80% or 90% of their print book business is demand to be redistributed. When a store disappears, some of those sales migrate to online purchases. And most of that moves to Amazon.

And, as we observed on this blog nearly a year ago, Amazon’s position as an online print retailer would be much harder to dislodge than their position as a leading ebook retailer (particularly with a major weapon — discount pricing on hot new titles — apparently being taken out of their hands by Agency pricing.)

Even though I believe that ebook hegemony will be harder for Amazon to defend than their dominance of online print, their strategy of pushing the move to digital reading has paid big dividends so far. Amazon delivered the Kindle, which was the first really great catalyst to move people from print to digital. (The iPhone was probably the second.) It is clear that Amazon gained an enormous first mover advantage by doing that and succeeded in converting a large number of their best book-buying customers to digital.

Both Barnes & Noble and Borders have suffered same-store sales declines for the past two years. Lots of those Kindle owners might have stopped buying some of their books in stores because they switched to electronic reading. They’re locked in to buying from Amazon until either there’s another way to put books on their Kindle or they move on to another device. Amazon created high switching costs for many of the best bookstore customers in the country. So they now own business they used to compete for and, at the same time, diminish their brick-and-mortar competition driving more print book business to the web.

The big legacy publishers’ greatest strength is their unique ability to handle print book distribution. There really are only a handful of companies in this country (the Big Six plus a few distributors and a tiny number of other publishers) that can put a book into every brick-and-mortar outlet where a customer might buy one. Doing that requires capabilities and relationships that you either have now or never will.

Although the big publishers and big authors have been allies fighting Amazon’s selling policies because they want to preserve print-driven book pricing, in the longer run their interests diverge. As ebook sales keep rising as a percentage of the total, the big publishers’ position weakens and the big authors’ position strengthens.

The book business has always been one with very low financial barriers to entry. Ebook publishing makes getting into the game even cheaper. It is also going to bring increased competition to book publishers from content-creators outside publishing. None of this is appealing if your power as a publisher is the ability to control shelf space and get fast reprints.I don’t think anybody would want to be accused of being in favor of killing bookstores faster. And very few of us would be comfortable having it said we were trying to slow down the progress of digital technology, strategizing to slow down ebook uptake. But you are for one or the other, unless you don’t have any opinion at all.

Those of us in the book business have to choose which anti-social position we want to take.
Some people are for the most rapid possible adoption of ebooks. They can be cheaper. They don’t require paper which pollutes when you create it and adds carbon footprint every time you ship it around. They have much greater functionality, or at least the potential for it. They enable business models that don’t require capital-intensive infrastructure.
But have you thought about this? If you are for the most rapid possible adoption of ebooks, you are for killing bookstores faster.
Although there are probably few people reading this blog who expect bookstores to be around in 15 or 20 years, there are many who would like to keep them around as long as possible. There is a magic to being in a building surrounded by 40,000, 60,000, 100,000 different books. Bookstores are inherently community centers. They make possible the wide dissemination and promotion of great writing. They enable people to see heavily-illustrated books before they purchase them.
But have you thought about this? If you are for bookstores lasting as long as possible, you want to slow down the uptake of ebooks.
As individuals, which side you’re on is a matter of personal preference. Although I have mostly read ebooks for more than 10 years and haven’t read a printed book in two years, I am for bookstores lasting as long as possible. It’s a “health of society”and a “health of my industry” question to me. I think both will be much poorer when bookstores go away.
My preference doesn’t extend to personally inconveniencing myself, so I read electronically, not on paper. But it does not distress me to remain part of a small minority. It keeps bookstores alive.
On the other hand, many businesses have a vested stake in this question.
Barnes & Noble and the biggest legacy publishers clearly have an interest in slowing down ebook uptake. Even though B&N and the big publishers are now in the ebook business, their competitive advantage exists heavily on the print side.
Apple and Kobo and Google and a slew of new players clearly have an interest in accelerating the growth of the ebook business because that’s the only part of the book business they’re in.
Amazon sells print, but they sell print online. As sales migrate from print to electronic, it is a double-edged sword for Amazon. Reducing print sales drives bookstores out of business, one by one. They go out because their sales went down 10% or 20% or 30%. But the remaining 70% or 80% or 90% of their business remains in print. When a store disappears, some of those sales move to online purchases. And most of that moves to Amazon.
And, as we observed on this blog nearly a year ago, Amazon’s position as an online print retailer would be much harder to dislodge than their position as a leading ebook retailer (particularly with a major weapon — discount pricing on hot new titles — apparently being taken out of their hands by Agency pricing.)
Despite our contention that ebook hegemony will be harder for Amazon to defend than their dominance of online print, the evidence is that Amazon has decided that the fastest possible shift to digital is best for them. That’s why they have pushed Kindle so hard. That’s why they have pushed Kindle pricing so hard.
The big legacy publishers’ greatest strength is their unique ability to handle print book distribution. There really are only a handful of companies in this country (the Big Six plus a few distributors and a tiny number of other publishers) that can put a book into every brick-and-mortar outlet where a customer might buy one. Doing that requires capabilities and relationships that you either have now or never will.
Although the big publishers and big authors have been allies fighting Amazon’s selling policies because they want to preserve print-driven book pricing, in the longer run their interests diverge. As ebook sales keep rising as a percentage of the total, the big publishers’ position weakens and the big authors’ position strengthens.
The book business has always been one with very low financial barriers to entry. Ebook publishing makes getting into the game even cheaper. It is also going to bring increased competition to book publishers from content-creators outside publishing.
I don’t think anybody would want to be accused of being in favor of killing bookstores faster. And very few of us would be comfortable having it said we were trying to slow down the progress of digital technology, strategizing to slow down ebook uptake. But you are for one or the other, unless you don’t have any opinion at all.

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