Books, books, books!

The End of Books?

No, not really. Not the end of BOOKS. But perhaps a large movement away from the printed book and worrying times ahead for the traditional bookstore. And for people like me, who work in one of them.

Books. Remember these?

Books. Remember these?

Book sales are falling in many countries around the world. Borders (UK) LTD started out as a subsidiary of the US bookstore of the same name, but became independent in 2007. On December 24th 2009, the company went bankrupt and ceased operations. In January 2010, UK bookseller Waterstone’s noted that their Christmas sales were down 8.5%. Earlier this year, they went on to announce the closure of 20 stores (and 40 HMV stores, part of the same company) in towns and cities where they operate more than one location.

In The United States, Borders has closed around 180 of its Waldenbooks stores since 2009. Borders has not turned a profit since 2006 and their 2008-2009 holiday sales were down 14.7% on the previous year. In February 2011, the company filed for Chapter 11 Bankruptcy Protection, so that they might reorganise their company and halt their losses. Barnes and Noble, the largest book retailer in The US and seller of The Nook, has enjoyed better success. Their profits have increased most years, although their share price is in a decreasing trend. Competitor Books-A-Million has had declining sales. Perhaps most tellingly, The American Association of Publishers reported that January sales in adult hardcovers were down 11.3%, trade paperbacks were down 19.7% and mass markets were down 30%.

In Canada, the main bookseller is Indigo. As my employer, I cannot speak for them. However, according to BookNet during the Christmas period 2010, book sales were down 5.6% in terms of number of books sold and they were down 6.2% in terms of dollars spent.

The stock market speaks volumes:

Indigo 1Y Share Price

Barnes and Noble 1Y Share Price

Barnes and Noble 1Y Share Price

Borders Group 1Y Share Price

Borders Group 1Y Share Price

HMV UK (Waterstone's) 1Y Share Price

There are a number of likely reasons for the decline in sales. The economic slump is affecting each of the countries mentioned. Amazon is able to out-compete traditional brick and mortar stores as they are essentially a distributor who sell via their website (compared to a traditional bookstore who buys books from distributors and then have to still make a profit). Amazon continue to out-compete traditional bookstores on price and their profits are healthy, but even Amazon now sells electronics and so forth.


The Kobo E-Reader

Another reason is the rise of the e-book. It is interesting to note that Barnes and Noble, who sell their own Nook e-reader, and Indigo, who sell their own Kobo e-reader, appear to be in healthier positions than Borders and HMV (Waterstones) who sell 3rd-party e-readers. Sales in e-books are up substantially, while sales in traditional books are falling. You could argue that any bookstore that is selling e-readers is also signing its own death warrant, but the alternative is that you continue to lose customers to the ‘e-era’ and you’re not even selling your own device. Note how The Kindle at least partially locks you into buying ebooks with Amazon.

So what is going to happen to the traditional bookstore? It’s tough to say, but they need to adapt quickly. I think it is likely that authoring and publishing of books will go the same way as the music industry. Publishers will become less necessary, just like music labels have. More and more books will be distributed electronically, like mp3s. Authors will have to do more and more self-promotion through events and social marketing, just like many bands. Customers might have to do some work to find the books they like, and perhaps recommendation engines for books will begin to crop up like Last.FM for music.

It is often said that people will always want to read books. That might be true, but perhaps only to the same extent that people will always want to listen to vinyl. Will there be enough of a market for these people to keep hundreds of bookstores in business? Unlikely, unless they specialise. Bookstores have to provide better and better service to their customers and add more and more ‘added value’ or provide extra services to stay in the game. Perhaps they will have to sell vouchers for specific books. Perhaps books will have to come with a unique code on the inside cover allowing you to download a digital copy of the book for free or at a reduced price (a little buying a movie DVD that comes with a digital version). They will have to do something, soon. But in the long run, perhaps the decline of the bookstore is inevitable.

The setup of the publishing and bookselling world needs to be shaken up. At the moment, there are so many fingers in the pie (the author, the agent, the publisher who edits, designs, markets and manufactures the product, the distributor and the bookseller) that the cost of the book is quite high for many less-avid readers. Customers are not willing to pay anywhere near the same price for an e-book as they do for the physical item, even though the cost of producing an e-book is not much less (manufacturing a physical book only accounts for around 10% of the price).

It is no wonder that publishers are pulling stunts like making libraries re-license e-books (pay for a book again) that have been lent out a certain number of times. They are scared, and they probably should be. But, as with the music industry, booksellers and publishers need to give the customer what they want in a way that is acceptable. Otherwise they will find their own way to get it, completely by-passing the booksellers and publishers.

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