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

[OnetimeVisitor]

Word of mouth is the only way to sell books. The large publishers waste millions on named celeb who have nothing meaningful to say. If you find a good book, talk it up and pass it on to your friends. Advertising dominates the book world, and produces a glut of bad books on the shelf. Look to the self- published area for real passonate writing. The writer has invested his time and money, against all odds.

[Hugh McGuire - Huffpost Blogger]

Indeed. The problem, as someone says below, is: a) quality control, and b) separating wheat from chaff... both those tasks will have to be addressed for self-publishing to really do what it could do. I am optimistic.

[BlackJAC]

Define "good book." I lambasted PRAYERS FOR THE ASSASSIN at Amazon on the grounds that it was completely implausible, and got savaged for it by its fans.

[Sapphdia]

Dammit! I loved that book. You have a right to your opinion though...

[brassminnie]

This is another 'inevitable.' The opportunity for good new publishers and authors existed in the nineties in e-books, but big corporate publishers (90% of all publishing, print, TV and radio were/are owned by six multimedia giants) savaged them with a vast 'if it's not in print it's not REALLY published' campaign, then bought up and closed online review magazines, pulled advertising in print magazines which dared to review e-books and finally bought all electronic readers that allowed people to format their book choices and the print on demand companies that had hundreds of titles from those good little publishers with good editing and cover art. The POD companies 'lost' titles and put 'get your book published' ads on publisher order pages, destroying the reputation-building they were doing. By 2000, most were going under, but the business model created sustained a few.

What did those publishers offer the print publishers didn't? First and foremost, books not written at seventh-grade reading level, the national-average mass-market requirement for genre fiction. They also offered books that criticized and warned of the effects of corporate deregulation and several predicted exactly what we're seeing now. Bowker raised prices on ISBN numbers, unless you were a big corporate publisher and... They knew it was coming. They worked to prepare books for the Bill Gates contest and paid the fees, then learned their books weren't read because 'everybody knows.' The book that won wasn't available as an e-book.

[Hugh McGuire - Huffpost Blogger]

My guess is that the time has come for ebooks and print-on-demand ... in 2000 the web was present, but not the force it is now. Wikipedia was in gestation, the word "blog" was but a twinkle in the eye of a few dreamers, mass collaboration was a theory. In short, 2000 might have been early for an e-book/POD revolution. Now's the time. I hope.

[zak822]

If the book business collapses, it will be a sad, sad day. But that's not necessary if the industry leaders act like their business matters to them.

What strikes me is that Borders Books, for example, hardly advertises at all. I see a bit of on-line stuff, but nothing like you would expect from a company trying to boost the bottom line.

I'm a partner in a sucessful consulting business. We work on marketing very hard; if you have something to sell you have to tell people it's available and why yours is the best for them. Borders doesn't do that.

Booksellers don't push the joys of books and magazines. They're perfect in a recessionary time. Unlike many other forms of entertainment, a book or magazine takes some time to consume--you have the pleasure over a period of days. When you've finished a book you like, you can pick it up again, at no additional cost! Try that with pay-per-view movies. For that matter, if you buy a DVD, you can watch it again and again at your convenience.

I don't think the CEO's of these companies actually have any faith in their products.

[Hugh McGuire - Huffpost Blogger]

I remember hearing a joke a long time ago:
Q: "How do you make a small fortune from publishing?"
A: "Start with a big fortune."

I'm not sure that publishing books has ever been a hugely profitable business, and yet craft publishing was shoehorned into giant media conglomerates, with all the little houses bought by Random House. Well, we will see the results soon, I think it won't be pretty.

But there are writers, and readers and small business to be had for those who want to cater to them. So I *think* we'll see a resurgence of the craft, niche, book business, or so I hope.

[likeicare]

I'm old-school -- I like to browse in the store/library -- but the music in the stores makes me want to run out of there as soon as possible! and the noise levels in libraries is unbelievable!

I've never ordered anything from Amazon -- they're too big, like WalMart -- and we all know how that turned out. No thanks.

I don't know what the answer is -- all I know is, what we have now sucks.

[Hugh McGuire - Huffpost Blogger]

Well, Amazon has it's faults, but it also means that any small publisher can distribute to the world. So Amazon is a bit like Wallmart, but with essentially unlimited inventory of books from almost all publishers - a powerful kind of thing, if what you want is to get books that the stores & libraries don't carry. Better still would be book stores that catered better to book lovers - and maybe we'll start seeing more of them as the big shops collapse.

[carrieanna]

I lost my love for Borders a couple years ago when I noticed how dismal their offerings had become. I used to go to Borders at least once a week and spend a few hours looking at the books, music (some hard-to-finds even!) and magazines. But then they grew their "gift" section, cut down on their international magazines, let their music selection get sloppy and my visits trickled into once a month.

[Hugh McGuire - Huffpost Blogger]

Yep. And I bet you (and I) are a pretty great niche market segment, for the stores (online and off) that figure out how to tap into our love of books.

[e-gal]

I've been saying this for about four years. I'm so tired of saying it, I'm just going to cut and paste from a post I made elsewhere:

It's too late now, but Borders could have saved itself...by a complete rebranding. Refocus on the original core business...ALL of the core businesses including music. What's that you say? MP3s have killed music stores? I'm a tail-end boomer, and consider myself an early adopter...but I don't download. I still want to buy CDs. Classical music fans don't download. Jazz fans don't download. Classic rock fans don't download. They want to browse, and hold something in their hands...

Borders should have rebranded itself as the place to go for the immediately available selection that you can't get anywhere else - whether it be books, music, or DVDs. Remember when we boasted that our flagship stores carrried 200,000 titles? Anybody and everybody can sell the top 200 bestselling books, movies and CDs. But ten years ago, if you decided to go on a Japan kick, and wanted to pick up a Kurosawa flick, a coffee table book about netsuke, a sushi cookbook, and the latest J-Pop CD, you could do that all in one trip to Borders. It was destination shopping - recreational shopping of the highest order. Shopping at a bookstore is justifiable even to those who resist commercialization and big box retail, and even when money is tight.

http://seekingalpha.com/user/313172/comment/321217

[LMarley]

"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."

This is a great article. I have to say, though, about this passage, that this would not be an easy transition. Quality control is the biggest issue outside of mainstream publishing. I.e., vanity presses publish anything, and small presses flood the market with short-run books. The challenge is for the reader to sort the good from the bad or even the merely mediocre.

And for me, as an avid reader and professional novelist, the loss of independent bookstores in the wave of big-box store growth has been a very real tragedy, seriously limiting both opportunity and selection.

Louise Marley
www.louisemarley.com
www.tobybishop.net

[Hugh McGuire - Huffpost Blogger]

True enough, I don't think it will be easy; but it will be exciting. Quality is the big challenge, true (but just think: what if you mixed many unemployed editors with passionate web people - maybe there is a solution there). As for sifting the good from the bad, the web is a brilliant tool for doing just that - and will become more powerful still.

[pgobrien]

I write books (Pat Goudey OBrien -- look me up), and I help other people write their books. I try to work on only books worth the time and trouble, but anyone who has the energy and can foot the bill (not always that high a bill) can get a book to print and bring it to market.
As someone here has said, it's separating the good ones from the bad ones that hasn't been adequately worked out yet (though some book review services are trying to do something about that, there's still a lot of work to do on that front).
What small presses and self-publishers need is a huge Festival that vets their books and brings them before the world -- a Cannes for Books. A Sundance for Books.
Lots of excellent books get published by their authors. And lots of self-published books clearly needed a bit more editing and design before going to press.
It's coming along, though, that whole world of books. The little world of publishing (as opposed to The Big World of Publishing) is coming along.
Happy to say ...

[Novista]

Ask Tom Englehardt about book publishers.

As for "one central responsibility: to increase shareholder value.", hahaha ... a typical corporation has eight facets in their charter: the first seven are for the health of the corporation and the last is for the shareholders IF it doesn't diminish any of the first seven.

I, for one, love Amazon. Trying to get new releases in Australia of American political and economic books is largely hopeless. Amazon learned early on that FedEx et all is not a go-er for overseas orders, and offers USPS for economy and the costlier options for people with more money than sense.

[Hugh McGuire - Huffpost Blogger]

Yes, just read Tom's latest, great stuff, like a prequel to my article...As for corporate charters, it seems to me the overriding guiding force for the last few decades has been increasing profits year on year. The results are, I'd argue, all around us now.

[larry278]

Book retailing is a troubled business. When I buy books, I buy books online. I've found that I must have 4-6 online sources since the biggest book retailer often does not have the title which I'm seeking. There are times when I must use an UK online retailer to get a current title published in the USA. As for publishing, who knows? US publishers seem to be responding to the meltdown by laying off employees & not buying or printing new titles. American authors may find that only foreign publishers are buying & publishing new works.
It may be that unless you have access to the www, you can't buy new books written in English by Americans. Book selling & publishing represent an unknowable, arcane, enterprise-at least in the USA. You have to really love books to learn how to buy books in the 21st century. If you are not resourceful, all too often you can't buy a title you want. If book publishing & retailing go to hell in the UK, there are India, Australia, NZ, SA, & the English speaking islands.

[Hugh McGuire - Huffpost Blogger]

And yet, just about any book you want *is* available somehow on the web - that's encouraging at least. I suspect physical book stores are going to become more niche & less mass as the current economic & publishing meltdown takes it's toll. The stores of the next decade will be smaller places, designed for book lovers, rather than for selling candles. That's my hope, anyway.

[nancyhira]

For years now, I've been selling books online as an independent contractor for Alibris, B&N, Amazon, Borders, etc. I too have a great love for books, and I have a world market to sell to. Most of the books I sell are new or nearly new, and they are carefully described prior to sale, always with a money-back guarantee. We online sellers have a great advantage -- no overhead and a huge consumer base. Just go to the book you want on Amazon and look for the "used" booksellers on the same page. You can get the same book that Amazon is selling, brand new, for a huge discount. Sadly, unless you can stuff the book into flat rate Priority mailer, you may end up paying $40 to send the book to Europe. I agree with you on the changes coming quickly now. I have a Kindle (or did until my daughter "borrowed" it). But I still love the feel of the actual book in my hands -- and passing it on to a friend when I'm done. When I finish my Great American Novel, I'll probably self-publish...that is, if i ever get it right.

[larry278]

Book lovers will go to these book lover friendly stores, buy their books, be happy & the book shop will make money. That means that everybody involved in the transaction will be happy. Bookish people tend to be very happy. Book sellers are bookish people & delight in making people happy. Publishers, too, are bookish; they delight in making people happy. Authors are also bookish people; they like it when their works are published & most become joyful if their works sell well. Bookish people seek knowledge constantly & are very happy when they get more knowledge. Most, if not all, of those in a bookish world are pleasant people who desire joy for all people. We are easy to keep happy.