What If the Book Business Collapses?

Question: What would happen if, tomorrow, every publisher, and every book store, went out of business? What would you do?

The Big Stores

About fifteen years ago I walked into my first of the new breed of big book stores, Chapters in Toronto. I thought to myself: how can the book business support such a huge store? How can book selling pay for all this real estate? How can there be so many books?

At first I was encouraged by these stores. The choice of titles seemed endless. They were comfortable, well-designed. There was attention to detail. The coffee-shops were a nice touch, especially in the old days when you could get a stack of books from the shelves, get a coffee, and flip through books to your heart's content. If these book stores could be profitable, I thought, maybe there was hope for humanity after all.

Soon these big book stores were everywhere: Barnes & Noble and Borders in the US, Chapters and Indigo in Canada (now merged, but with separate branding to create the fiction of competition), Waterstones in the UK, and others elsewhere. They invested massive amounts in real estate, getting huge commercial spaces in prime locations in major cities, and bigger spaces in the suburbs. They stocked their stores with a dizzying array of books.

Boon or Bust?

But things started to go a little sour early on. The first indication that the new book behemoths might be bad for the long-term health of the book ecosystem came quickly, when the little guys started going out of business. Economies of scale and and pricing clout meant that the big stores could charge less than their smaller competitors; and because of their size, their selection was always bigger. Following their in-store caffeine partners, Starbucks, they liked to choose their locations near existing successful independents. The little guys couldn't compete, and went out of business, or got bought up, and absorbed into the book selling borg.

So now, there are precious few independent books stores left even in big cities.

The indie stores weren't the only ones complaining. Because of the volume that goes through these stores, they could squeeze the publishers, on cost of books and return policies. They could charge for prime shelf-space. Small publishers found it harder to get the attention of the readers. But even the big publishers complained about the policies of these stores - and a little later, the other behemoth on the scene, Amazon.

Then there's that odd feeling of being in a book store staffed by people who don't know much about books. Any inquiry about a more obscure title more often than not ended up in front of a terminal. It seemed as if book stores, if their hiring policies were any indication, no longer cared much about books.

More: as time went on, it turned out that book sales weren't really the most profitable kind of business these stores could do. Solution: reduce the shelf-space for books, increase the shelf-space for candles and trinkets. In Canada Chapters/Indigo has reduced book shelf-space from 75% to 60% (with Canadian fiction losing, and publishers cutting their lists in consequence). If the trend continues, books will be the minority in bookstores, and we might consider renaming them smelly candle stores that carry books.

The book business has stopped caring much about books.

Step One: Make Profit

These big stores are public companies, and big businesses. Like all businesses listed on stock exchanges, the people running them (boards of directors, and executives), have one central responsibility: to increase shareholder value.

The problem is that "shareholder value" has been defined almost exclusively as: "increased profits." The owners of shares of Borders or any other large company don't give a shit about books. They care about increased profits and increased share prices. The same is true in all businesses listed on stock exchanges. Mutual fund managers and institutional investors don't buy stocks because of what a company does; they buy stock in companies whose stock prices will rise. And stock prices rise when profits go up.

But extracting profit is not necessarily related to long-term creation of value. In the book business (selling and publishing) what we've witnessed in the last couple of decades might be considered a stripping of true value, in order to deliver shareholder profit.

The "fault" does not lie with the big companies. They're driven by a particular motive - profit. It's built into the DNA of public companies, and the way stock exchanges work. There's no use blaming them, might as well blame beavers for chewing through trees. But we should all remember that these companies are not driven by "value," if you define value as healthy long-term prospects for readers and writers.

The state of the book publishing business is dire. Publishers are cutting back staff, editors are getting fired, or leaving. Amazon is putting the squeeze on everyone, and bookstores across the land are having a hard time, with major closures expected.

The Future?

So the rest of us, readers and writers and lovers of books, entrepreneurs and technologists, those of us really interested in the voracious appetite of the powerful and relatively affluent group, are going to have to come up with new and different ways to get books written, published and in the hands of readers.

Imagine: what would happen if every publisher in the world went out of business tomorrow? If every book store closed it's doors?

Here's what I think: I think we would see a flourishing of innovation and the kind of excitement the book business has not seen since the printing press was invented. These companies (sellers and publishers) aren't all going to close their doors, but a good number might.

Lamentable? Maybe. Or maybe this is a fabulous opportunity for something new.

I'm optimistic. New technologies are coming along that change the economics of books: ebooks, ipods, print-on-demand, the web, and more to come yet. The readers are there, maybe fewer of them, but no less passionate. The writers are there. And let's face it, if the doom and gloom in the business is right, whatever model these companies were using hasn't worked all that well.

So it's up to us -- all of us who care about books -- to figure out what the book business is going to look in the next decade or so.

Exciting times.

Follow Hugh McGuire on Twitter: www.twitter.com/bookoven

Comments

[middleoftheroad]

The things that excite you..."ebooks, ipods, print-on-demand, the web" are not really books, but a way to sell Intellectual property. They just spell more doom for the "book store"! Also, you mention Amazon, but it and the internet retail biz in general need to be given more credit with bringing down the brick and mortar location. Does not matter if it's a shirt or a book, everything that is bought online means less sales at a real location, which means a hurting business, which mean less NET, which means less real jobs. Online shopping is one more way of turning our country into super consumers. Not only do we not MAKE things here anymore, we don't even have Americans SELLING them anymore. Good thread.

[Hugh McGuire - Huffpost Blogger]

E-books, ipods, print-on-demand, the web may spell doom for the book store (certainly for the current Borders/B&N model), but they are not any more "a way to sell intellectual property" than a traditional "book" is. The package looks different, or, in the case of print-on-demand, the production process is different.

Still, there are thousands of ebooks that are not sold, but rather given away for free - for instance the wonderful selection of public domain works at Project Gutenberg. I'm currently reading a free ebook version of War & Peace on my ipod. The only bit of commerce that actually happened was my purchase (second-hand) of the iPod. So while business models will evolve around ebooks, collections like Gutenberg are a huge free library accessible to all, rather than a place to sell IP. Though for the publishing business to survive as a business, we'll have to work out how and where the business gets done.

My interest is a thriving space for writers to write, and readers to read. I think in the past 15 years the book business has not done a great job of encouraging that ... and it is my hope and my belief that in the coming years, as the traditional models implode, we'll see a flourishing of reading and writing, and a new kind of publishing business emerge.

[lvdragonlady]

I am a big reader and hope this does not happen. But, like everything else, the price for the average book has become ridiculous and unaffordable.
What is a reader to do?

[NoSandwiches]

Walk into the Borders where my husband works, and throw your obscure inquiry--he is the MASTER. These are stores that pay lower wages than McD's, so yes, you get a lot of kids on their first job and therefore will end up in front of a terminal. Those who stay with it, however, do it for the love. My husband would work for books. He gets to read advanced copies and check out new books as if it were a library, and the employee discount is a biggie. (They used to also give a small amount to each employee to spend on their products in order to encourage them to be more familiar with what they sell, but that is gone, as is the free employee coffee.)

We need the larger store instead of the indie, because we need health care, and 401Ks and some sort of loose guarantee that the store will be able to make payroll. Unfortunately, even the big bookstores are on shakey ground.

Ghostbusters 1984, Dr. Egon Spengler: "Print is dead. "

2009 may make that true, if the bookstores don't make it, and the library budgets get cut further.

[Hugh McGuire - Huffpost Blogger]

Yes, my criticism about bookstore employees was directed at the general approach of the companies that run the stores, rather than at the employees themselves - many of whom do not deserve any criticism. Point was that I don't get the impression that book knowledge is part of the hiring criteria in big bookstores, though that too might be unfair.

[Retrofuturistic]

There's a new Barnes & Noble near where I live, and it has NO CHAIRS. No nooks to sit down in and read the books.

Also, they have some kind of screwy policy where you have to pay $25 before they will give you a discount. So I go and look at the books, decide what I want, and go home and buy them from amazon, where I can get a discount without paying $25.

Or, if it's not an important book that I feel I have to own and underline, I write down the titles and order them from the library.

[rbryanh]

"There's no use blaming them [big companies], might as well blame beavers for chewing through trees..."

Sorry - dangerous false analogy. Beavers are a species with a genetic predisposition to certain behaviors. Big companies are human institutions - abstractions designed and supported by human behavior. Humans invented the corporation, and if it doesn't serve our needs we can invent something else. To pretend otherwise is to succumb to the lemming rationalizations of the doomed, self-designated victim.

In barely-regulated capitalism, you get not only what you buy, but who you buy it from, and who they bought it from. It's like the early days of HIV, when people realized that sexual contact with an individual included all of that individual's partners as well.

Where we buy what we buy is the single most powerful social decision we as individuals make. A corporation is no match for informed, responsible consumers who reject advertising propaganda and act in concert.

[Hugh McGuire - Huffpost Blogger]

Yes, indeed. My point was that there is no reason to expect big book companies to behave differently, unless there is a) economic pressure to do so or b) a different model of book business.

Where & what we buy is one part of changing things, but I think the more powerful part of the equation will be finding new models that give us a choice. I've got no idea what that means in book buying exactly, but I imagine we'll see some interesting experiments in the coming years and the bog box book model starts to really collapse.

[cylindar]

The paper book business had collapsed many years ago. Essentially it is a distributors business nowadays not a publishing thing. I have been involved in the book business in one form or another since the late 70's. My instinct is that the book biz will go to about 60% ebooks in the next 10 to 15 years. Ebook publishers such as Wheelock Mountain Publications and other pioneers in the ebook biz are models to look at for big publishing concerns. The advantages of upcoming leaders such as the Kindle will provide a good base for the transition from paper to electronic.

[Hugh McGuire - Huffpost Blogger]

Well, I'm an e-convert, reading on an iPod - much more compelling to me than buying a stand-alone device like Kindle. I think 60% is a good estimation for ebooks - and the question is, are the big existing companies going to be smart enough to use the examples of the music biz, and price right & make sure that DRM does not cause more hindrance than good. (I'm skeptical of a good DRM model; I just don't think it makes sense in the long run).

[tomas0808]

It's quite possible that, just like the auto industry, the big publishers will fail. My book made the rounds of the NY publishing houses this last summer and six editors wanted to make me an offer but they had to talk to 'the board' first. Meaning, they had to talk to the corporate and marketing people, who said no. So they have created this situation where the editors, the people who love and know books can't get the books they want published, the books that have something to say, and where the trendy schlock gets the green light. There's always been a tenuous, push and pull relationship between the forces of art and the forces of commerce but they used to have enough sense to defer to the people who knew books and who knew what readers wanted to read. No so anymore.

I think it's going to take a while for the e-book thing to get going. Until then, writers like me will have to keep starving and small publishers will thrive. My agent told me the big publishers are going to focus on re-issuing back catalog titles and keep their eye out for small indy books on the move and then swoop in and buy them out. Makes sense, I suppose, as the corporate forces running them now have utterly failed to know what people want to read, like The Gargoyle, which basically sunk Doubleday.

[Hugh McGuire - Huffpost Blogger]

So indeed it seems like the nimble, small publishers will have to fill the vacuum - which, in the end, is how it's always been. Bold new writing will not come from giant corporations, and I'm surprised that so many people are surprised that this is the case. I just don't think the book business is a profitable-enough business to sustain all these big corporations and their profit requirements... so: long live the indies.

[drymartini1]

A management of a publicly listed company have one and only one goal. to increase shareholder value. If they dont want to do that and making shareholders happy seem like a too much of a trouble to them, then they can always "buy out" the shareholders and go private. then they wont have to worry about those crazy shareholders.

[KSMullins]

The Wall Street "shareholder" virus plagues this industry as it does every industry. Companies don't manufacture or service stock value...yet that seems to be all that they or Wall Street care about. But do shareholders actually purchase the products and services provided by the companies whose stock they own...my guess is rarely if at all.

Companies need to stop worrying about Wall Street and Shareholders and worry about their paying customers...the reason they are in business in the first place.

[djwfutbol]

Much of the hand-wringing discussion is skewed towards the pull side of a push-pull situation. You want a particular title, for little money, you buy it on-line. Me, I go into a bookstore, pick up a stack of interesting titles and pay for it. The extremes of middle-aged behavior.

In running several small companies, I have learned a few things. Number One: Pay attention to what people are telling you. Current interest in books is coming from the "hook-up generation", ie young 20-somethings. My sons' friends are driven to add books to their lives and express absolutely no interest in e-books or electronic readers or anything else like it. To them, a serious book about a grown-up theme sitting on their table top at home makes a statement, as well as adds depth to their conversations. I am convinced that there is a future for an edgy boutique bookstore in a trendy neighborhood and, I am thinking of opening one this year, staffed with young writing majors.

Lastly, I have written a specialist book and sold several thousand copies using specialist venues, Amazon and Barnes & Nobles on-line, doing all the legwork myself. I am not ashamed to say that the book has made money. I am working on a revision as well as another title. Regardless, Barnes & Nobles has rejected it for their store shelves. Go figure. I have my doubts that their business model maximizes profit.

[Hugh McGuire - Huffpost Blogger]

I think you've got a good model there, and I expect booksstores will increasingly be niche/luxury stores catering to a particular group of consumers. Huge stores are going to face increasing pressure from online sales and electronic books, both of which will continue to cannibalizing bricks & mortar stores, but leaving space I think for smaller craft-type stores for the true book junkies.

I disagree though about your assessment of ebooks - I'll bet you that in 5 years your son & his friends will be reading books on electronic devices, but I doubt it will be a Kindle or a Sony Reader. It'll be on a smart phone.

[hey0there]

i never understood why they make you wait forever for the less expensive softcover editions to come out. wouldnt it make more sense to have both versions out at once.
also in general they charge too much for books, hard or soft.

[NotMcCain]

Speaking as a small publisher....the internet and various kinds of digital technology have revived publishiing.

Innovations may not be benefitting the profit margins for big publishing houses--or the traditional bookstore--but the future of books (in both digital and paper form)--is more robust than ever. Decentralized publishing, thanks to technological advances, can definitely benefit both writers and readers--even if the traditional publishers lack the flexibility to adapt.

[Hugh McGuire - Huffpost Blogger]

Yep - I think some exciting work has to be done to bring a decentralized model to approach the standards of the mainstream - but all that will happen, I have no doubt, and a whole new world of publishing will open up.

[BlackJAC]

The book business won't collapse. Books are relatively cheap and don't depend on a steady flow of electricity to use. Its only flaw is its overemphasis on author backstory than entertainment value.

[Hugh McGuire - Huffpost Blogger]

I don't think the book biz will collapse, but much of the structure of the big book business is going to go through some traumatic times in the coming few years.

[bangkokblonde]

Lilke many others here, I also liked many things about Borders at first. the coffeeshop where i could sit and browse - much nicer than the old style 'do not read here' book shops - , the vast selection, the friendly atmosphere. and like others i was disappointed when the choice went down, when i couldn't find anything interesting, when anything that worked with language and told unusual stories was no longer available.

I think that there are a lot of similarities between the publishing business and the banking business - both destroyed the environment they needed to thrive. Both have no values. Both have no clue what they are doing.
I don't think the loss of many or even most big publishers is bad for readers, and it's certainly not bad for writers. Global publishing for people who live in small countries - great! Global book buying for everyone - even better!
Yes, this is a very exciting time.

Many film makers pay for their first few movies themselves and they are not undermined by 'you are not a proper film maker'. So what's wrong with writers doing the same?
Publishing is not a divine judgement dividing the good from the bad. And right now, the big publishing companies make no attempt to do that anyway.

It's a long time since I read literature, new ideas, anything intellectually exciting published by the big companies, certainly in fiction.

Can't wait what's going to happen next...

[Hugh McGuire - Huffpost Blogger]

And I think we'll have to see a shift away from the stigma associated with vanity press - and more of a DYI spirit in writing - much as we've seen with graphic novels, which went the other way. 20 years ago it was all DIY, now gaining mainstream attention, but still built on DIY.

[stephentiano bkdesignr]

I alternate between worrying about the demise of books and thinking said demise, like Mark Twain's death, is greatly exaggerated. As a book designer/layout artist, I am, of course, biased, but I can't see trading in the comfort of stretching out in bed on a lousy, cold day with a good book for reading one electronically.

[Hugh McGuire - Huffpost Blogger]

Well, what's a book? I've been stretched out in bed reading War & Peace on my ipod for a couple of months now. Still, what you & I think isn't too relevant; what's today's 10-year-old going to say when she's 20? That's the question to be asked of the future of books.

[RobinLandseadel]

FWIW, I've been using my copy of War & Peace [bought at A Borders where I used to work] to hold other books down on the copy/fax/s­canner---I can soak up pages of "Slow Leaner" and "Vineland" for an online group reading. My first reading of "Heart of Darkness" was via an online text. The musty smell of mouldering books is being subsumed by the hum of electronic reading machines.