Yen and I just read this article in Business Spectator, about the future of the publishing industry. It has some interesting information about the way the current revenue is structured in publishing, and the kinds of risk which publishers are exposed to with the existing retail model. At the moment, retailers get about half of proceeds, but get to send books back to publishers if they don’t sell. So publishers are in the risk-bearers seats when it comes to investing in books.
The author of the article, Josh Dowse, eventually makes the point that, like the music sector, the book industry will need to integrate vertically. So a retail presence will ultimately just be a shopfront for online or e-book sales, with display copies rather than loads of unsellable print stock in the back room.
I reckon that this is the start of a fair point. At the moment, Amazon gets away with not investing in these sorts of shopfronts because I can go into Gleebooks, for example, work out what books are good, and then go buy them online from the Kindle store. The online Kindle and Amazon stores are pretty rubbish when it comes to helping you find books you might like. They have not had to shape up their game because they have such a major price advantage, and because shops like Gleebooks are still fulfilling this role for them. Amazon has its rusty old recommendation engine, but it doesn’t have links to opinion leaders I trust, or lists of recent Orange Book Prize winners (for example) – another way that readers work out if they want to take a punt on a book.
But this doesn’t necessarily mean that Amazon will need to suddenly open retail shopfronts full of display books once regular bookstores start closing. And it won’t necessarily save bookstores from closing, as many of these display and taste-setting functions can actually be fulfilled online.
So who will fulfil the functions of current bookstores, outside of the actual sale of books? And what will happen to bookstores – will there be many, any or none at all? To answer this, we have to understand the functions of bookstores, beyond just selling books: taste setting, try-before-you-buy, selling books as objects and bookstores as cool places. Then we can start to see how these roles will be fulfilled, and by whom.
Taste setting:
As bookstores close, the online booksellers will probably have to ramp up their rather hopeless taste-setting functions, as noted above. But there is also a role for existing, trusted independent booksellers to fulfil this role online.
For example: I trust certain independent booksellers because I share their preferences. I like their staff picks, and I like that when I walk into their stores, I am probably going to see a book or three that I would like to read. The bookstores I am talking about are stores like Brunswick St Bookshop or Gleebooks, or perhaps Ariel or Berkelouw bookstores. Some of these stores already allow you to buy books online from them – but not e-books (as far as I can tell – I might be wrong though!)
If I were running one of those stores, I would think about selling my lease. I would start building or changing my website to get ready for e-books, and cash in on my role as a trusted brand and taste-leader. I would say to my web consultant: please set me up a website that does not look like Amazon, but looks more like the personal blog of a trusted writer and, more importantly, reader. Set something up that lets me expound my (and my other trusted staff/friends) opinions about what to read at the moment, right across the categories of books I am knowledgeable about. Make the front page of my website show featured books, top picks, and recommendations in response to frequently made requests. Let people respond to my posts and ask me for recommendations.
And then, rather than try to get people to buy the books from me online, when probably what people will do is say, thank you for the recommendation, and now I will go to Booktopia or the Book Depository or Amazon/Kindle or iTunes, and buy that for half what you are selling it for: I would provide links directly to any or all of those websites.
I would say to these websites: look at the kind of taste leader I am. Give me some money. If they were not interested, I would go ahead and set up my website, and then use as proof the volume of my clickthrough traffic to their sites.
And if that didn’t work, and other methods of monetising my site didn’t work (eg advertising from publishers), I would shrink my store to a small size, and focus my business operations on books as objects or my bookstore as a cool place to be (see below).
Try-before-you-buy:
Bookstores also allow you to try before you buy. But this function will be easily replaced by online bookstores. Kindle allows you to download a sample section of a book to peruse. And the price of online or e-books is so good as to make the risk much easier to take. And as bookstores close, the online functions will probably become more sophisticated, as they will for taste-setting.
The only possible issue may be around trying books as objects (see below) – eg what will this pop-up book about dinosaurs really be like? But this could partly be addressed by providing a simple video example of a child opening the book, and a mag app style of representation, where you can flick through an online catalogue or “book.”
Books as objects:
This is where bookstores may continue to have a role as physical shopfronts, and books a physical, print existence in the future. Beautiful art books, graphic novels, children’s books, collectibles and illustrated books are the only types of books people will want to physically buy in the future. Because these types of books are physical experiences, they are also the type of books people will want to handle, feel, smell and admire before they actually purchase. And so they are the type of books where bookstores have an edge over online stores.
This may also be eroded if the book can be viewed in a bookstore and then bought online later. In which case, it will be in the bookstore’s interests to focus on handcrafted books; limited runs; local artists; rare and collectibles – basically, a sense that this is the time and place to purchase this book. Bookstores may also, in part, need to accept that they may start trends, and cash in at the outset, but not finish them. To compensate, bookstores may want to branch out to include other unique objects – including other, carefully chosen objets’d’art in their retail offering. If they went this route, they would need to scrupulously avoid becoming a generic gift store – this would destroy their core remaining asset – their trusted taste and curatorship.
Berkelouw’s has the edge on rare collectibles already, and Ariel and Kinokuniya on large art, design and foreign language (Kinok.) books. There may be more of a market for illustrated books as objects than publishers currently realise, as these books become the only ones that are actually printed and purchased.
I know I am biased here, as I am trying to publish my illustrated Mr Middleton’s Teleporter. But honestly, I can’t understand why publishers haven’t twigged – people already buy books because they are pretty; unique; they say something about who they are as gift givers; and statements about their personal taste and identity. As books go electr(on)ic, books as objects will have some big shoes to fill in people’s personal space as indicators of how very cool/chic/geeky/smart/interesting/whimsical they are.
And also, more to the point – books are lovely objects. And the lovelier they are as objects, the more attractive they will be to buyers.
Bookstores as cool places:
Bookstores – the nice, independent ones with cluttered shelves and comfy seats, the ones that remind me of coming home and being safe amongst all that sound absorbent, stilling paper – are cool places to hang out. They are little oases on busy roads, and the best ones are the ones that are open late, unexpectedly surprising you with the chance to wander in after a show or a dinner with friends and reclaim some part of your less social self on your way back to being alone and OK with that. They are even better again when you can buy a cuppa and a muffin, or a glass of red wine, and be surrounded by words. They say: it’s snug in here. Don’t hurry away. The music will always be something you don’t mind, and the people will be the unobtrusive, real type.
So bookstores as cafe/bar/hang outs will, I hope, continue to have a role. But their core business will be in selling coffee, not books (except maybe books as objects, or books on a whim, books as nostalgia, and maybe books as gifts). The books’ real role here is atmosphere, giving urban passersby a feeling of homecoming, a rare sense of belonging in a place which can be sometimes forgetful of who you are. Without the books, there would be no reason to stay.
Hi there, nice article with only one major fault. The article you refer to in the business spectator is full of industry rhetoric and is largely not a true reflection of the coal face of bookselling (of which I am at). People were predicting the demise of the printed word decades ago and you will still be hearing it in decades to come. Sure ebook and online sales have a place in the industry but there will always be bookstores selling all sorts of books to all and sundry for generations to come. All of the scaremongering that has obviously influenced you should be taken with a grain of salt. Maybe you would do well to do a bit of research and use more than one questionable source for your material next time. Regards.
We hope you’re right too PJ. We (Jackie is my wife) both love quality book stores and certainly don’t want them to go.
Re sources, just pick up a newspaper from last week, and you’ll see the collapse of Angus & Robertson and Borders not only in Australia, but the separately held Borders in the US. E.g. James Thomson (who also writes for BusinessSpectator) “10 lessons from the collapse of Borders…” 18/2/11; “Online shoppers write unhappy ending for Borders, Angus & Robertson” SMH 18/2/11.
By coincidence, the day after Jackie wrote her blogpost, I picked up the Australian Financial Review (Friday 25/2/11) where there is a scarily similar point of view written by Daniel Petre, who is one of the early dotcom high flyers, having headed up Microsoft’s Australian operations from a young age. Mr Petre goes somewhat further than Jackie does.
As I said, I sincerely hope we’re all wrong.
Chz
Yen
Hello both and thanks for comments.
As Yen says – I hope you’re right, PJ. I would be interested to hear from you what sort of differences you see in the nature of books to make them more resilient to the digital shift in consumable media than say, music? In my post, I speculate that “books as objects” might survive the shift. What else (and why) do you think will manage to survive?
Thanks again for the conversation!
Lot’s of those articles you are reading are from people that know nothing about the book industry (they might have some business knowledge but they are speculating on what they ‘think’ is wrong but because they have no intimate knowledge what they are really doing is guessing), or have agendas to run from the publisher’s/distributor’s view. The collapse of Borders is more about their management of the business than the business itself. Are you yourselves avid reader’s of fiction yourselves? If not, find an avid reader and ask them why they don’t have a high regard for ebooks or ereaders. Some of the things they will say is 1. A real book doesn’t run it’s batteries flat. 2. How do I get my ebook signed by the author? 3. A real book doesn’t hurt my nose when I fall asleep reading in bed at night. 4. I love the smell and atmosphere of my book shop, it makes me feel good to go there 5. I love the look of books and bookshelves in my home decor. 6. When I loan a book to my friend I don’t have to give her the whole ereader and likewise for her when I borrow a book from her. 7. When I drop my book it might bump the corner but it doesn’t cost me $120+ if I break it. Honestly guys, I could go on and on and on but have I made my point yet?
There are so many different issues you have raised here Jackie. Strangely enough I think Electronic books and Online books point to two opposing premises that exist about what a book is “the text” or the “totality of the book” as the object. And in many ways ordering books Online points to a rejection of Electronic books. It would be interesting to find the percentage of people that do both.
This whole Online/E book has at its heart the cost of books here. If you are a big reader, cost in Australia is prohibitive. Whenever I go to Japan i am always amazed at the cost and quality of indigenous books there.
I should clarify their Novels are actually real paperbacks not even the cardboard covering we have…I guess in those cases you could judge them as possible E books as it really is all about the text.
Anyway for me this is still academic, I still buy books from a retailer, anyway I have been on here longer than planned and blame your groovy music selection.
Thanks PJ and Saul. Good discussion and food for thought. You’re both right – it’s more complex than it seems!
PJ – in response about being an avid reader – the short answer is, yes. I read quite an inordinate amount of fiction. I tend to buy books on my Kindle (my e-reader), or online from The Book Depository. I also very occasionally borrow them from the local library. I used to also buy books from regular bookstores – mainly airport bookstores or independent bookstores, sometimes Kinokuniya or Borders, but that was before I got the Kindle and websites like The Book Depository and Awesome Books undercut price so much as to make it worthwhile buying from them.
There are definite drawbacks with the Kindle – for me, mostly the limited backlist and sometimes limits on what is available to Australian users. And the issue of not being able to lend a book to others (although I think I am allowed to share e-books with up to five other devices – haven’t tested this yet though). I think though, like the music industry, at least the issue of availability will be rectified in a fairly short time. And the other issues you mention have basically not been enough of a priority for me to stick to physical books. I have enough of them on my shelves; I’ll still buy beautiful ones, as I said in my post; and although I miss lending them to people, eventually the price of e-books will be so low that it will probably be acceptable to just recommend them – which I can still do quite freely, and also not lose all my favourite books, which has been an occupational hazard for most of my reading life!
For me, the pluses of the Kindle are the price, how very lightweight it is, the long-lasting battery (about a week), the easy to read screen; I can carry loads of different books on it, and I can buy a new book pretty much whenever I want to and get it straight away. Also the availability of out of copyright books for free via Project Gutenberg. And it doesn’t hurt my nose nearly as much as the weight of say, War and Peace ;-).
So in response to your post, I guess individuals’ decision will depend on what people do prioritise. But I do still think, if trends in other media are anything to go by, that there will be far fewer bookstores in about five years time than there are now. I’m not saying I think that’s good – I like bookstores – but I think it is an eventuality worth preparing for, if you are in the book industry.
And Saul, I like your point that there is a lot more going on here, in terms of price, and text vs object. I guess, the way prices are now in Australia, it is hard to compete with the overseas-based websites. For me, buying books from the online stores is definitely about price. Buying them from my Kindle is also about price, as well as immediate availability. Once the Kindle back catalogue improves, as well as the list that is available to Australian Kindle users, then I daresay I won’t bother with the online purchase of books any more.
PJ, “Yes”, I am an avid reader of fiction as well as non-fiction, and I can certainly vouch for Jackie being an even more prolific (and much faster) reader of fiction and a lover of good book stores. Suffice to say, that even if she dropped (nay, KICKED) her Kindle to damage it sufficiently (Jackie wisely opted for the tough and light plastic cover – more durable than even a hardcover) she would easily have saved more than the $120+ dollars it would cost to replace it. I suspect the casual “half an hour before bed” reader would get 3-4 weeks ore more out of a Kindle in battery life, whereas Jackie only gets 1 week (to be conservative) due to her voracious appetite for fiction. This battery issue is largely beside the point most of the time anyway, as you can charge a Kindle as you read it if you have neglected to charge it. Clearly you don’t know much about the Kindle, but more importantly don’t know what the new generation of readers want. It is the Y generation and beyond we are talking about when we talk about the “Future of bookstores”.
Regarding the sources I was referring to (“pick up any paper from last week”), I think many of them (traditional print media e.g. SMH, The Australian) share the same issues and concerns as the publishing industry – having their former oligopoly in production and distribution challenged by the advent of the Internet. I somehow doubt they have an agenda against the traditional print book publishing industry.
Regarding these sources “thinking” and “guessing” and being “wrong” because “they know nothing about the book industry”, I think this is an important point, but which again you are sadly mistaken.
Firstly PJ, you should also realize that you too are “guessing”, as we are discussing the issue of what will happen in the future to book stores. For you to disagree with our conjecture that retail book stores as we know them today will decline in number and sales revenue, implies you are conjecturing into the future that “book stores as we know them today will NOT decline in number and sales revenue.
This will only be resolved for certain once the future has transpired into the present or past. But not all “guesses” are the same, and alas, even the most experienced record label executives with all their knowledge of that industry have not saved the retail music stores from massive decline. It took a different type of knowledge to understand what would work in the new context, and this knowledge came, not surprisingly, from 1) a “business” type – Jeff Bezos was a financial analyst with D. E. Shaw brokers before founding Amazon (Source: http://en.wikipedia.org/wiki/Jeff_Bezos); and 2) a technologist in Steve Jobs whose company created iTunes, the iPod and the iPad.
Regarding my own track record on “guessing”, I recall in 1997 upon hearing a record executive complaining about online piracy, I asked why his label didn’t sell his music online for a lot less. iTunes was founded in 2003 some 6-7 years later.
This is an excellent piece, Jackie, and I couldn’t agree more with the recommendation that good bookstores look to capitalise on how they add value via recommendations. Like you guys, I am an avid reader, and owning (and loving) my Kindle hasn’t stopped me buying many, MANY physical books as well. I would pay for quality guidance on what I should read by people I trust.
On books in general: price is an important factor to consider – I am very happy to pay for good (and not so good) fiction, but each time I have visited Australia in recent years I have been utterly astonished at the prices in book stores. Here in the UK the standard paperback RRP is about £7, which is about AUD $11. Books in Oz seem to sell for as much as three times that price. Can you really blame consumers from buying from overseas when the price is that much better?
And while Borders collapsed in the UK some time ago, there are plenty of major chains and independent booksellers that continue to do very well indeed.
Guys, I think you miss my point a bit, maybe it is because you are attuned to regularly being online and using the latest technology, whereas the vast majority, although they might be online regularly in one way or another, are not. I am not saying that there will be no-one using kindle’s and like devices, ebooks and ereaders have their place in the industry. What I am saying is you are predicting the rise of them much too quickly and you are predicting the fall of the printed word much too quickly. Do you guys have any ideas of the market share of ebooks at the present time, it is about 2-5% in multi-billion dollar industry. The price problem in Australia with physical books is the result of greedy publishers failing to drop the wholesale price of books to adjust for the now strong Australian dollar. Is it hurting the Australian industry, yes it is. However, that will not last forever and market forces will force them to drop their wholesale prices so retail stores can adequately compete. Sure it’s not happening fast enought for my or anyone else’s liking but it will happen sure enough. The parrallel import rules are all about protectionism of the australian publishing and distribution industry than helping out book retailers. You guys might like your Kindles, but there are millions out there that don’t and they will keep the physical book industry alive and well for decades to come. Even you yourselves say that you still buy physical books from time to time.
Thanks guys! I think we probably agree a little bit more (though perhaps not entirely 😉 than we at first thought. I agree that bookstores will kick around for a while to come – just as CD stores are still around, although their sales are declining overall (PWC Entertainment Industry Outlook stats), and some shops are, sadly, closing.
I still think that it would be wise for bookstore owners to consider early – at least earlier than the music industry did! – what their point of difference is, and how they will cope as competition increases. E-books are only going to increase the competitive pressure that online book stores have already applied – particularly, as I think we do all agree, with current conditions in Australia, where prices in bookstores are just not competitive, and through no fault of theirs.
My vision of the future, with bookstores as a largely niche type of store selling unique or collectible books, is probably 20 years off – the time it takes for generational change. But as I said in my last comment, I do think that pressure is going to come to bear much sooner than that on bookstores which don’t have a point of difference already, and we will see some close as they bow to that pressure.
In the meantime, let’s all keep reading, in whatever format!
Ditto