Why We Should Get Ready for a Plunge in Print-Book Sales

I wrote earlier this week that publishers need to prepare for a decline in print-book sales that's much steeper than what we have seen thus far, and that is likely to accelerate the reshaping of the industry. The reasons why this seems inevitable derive not from any intrinsic superiority of e-books, nor any growing technophilia or screen-tropism of readers, but rather from the structure of the market. 


For one thing, e-book sales don't replace p-book sales on a one to one basis, as my colleague Evan Schnittman points out in his post "E-Books Don't Cannibalize Print, People Do." Evan argues that once you have adopted an e-reader--whether it's Kindle, Nook, or your iPhone--you soon give up buying print books. You become so happy with the convenience of instant purchase and the bookshelf-in-your-briefcase that you virtually give up purchasing hardcovers--in fact, he argues, you'll simply forgo a title that's not available in e-format. 


I don't think this holds true 100% for all readers--I read e-books aplenty but still buy p-books. But my hunch is that Evan is pretty much on the money: the graph of p-books purchased by an e-reader owner is a step-function. It doesn't slope down gradually, it drops almost straight down once someone becomes an e-book convert. (The good news for publishers is that (a) those e-book sales can be more profitable than print and (b) the graph of e-books purchased by the new e-thusiast is of course also an upward step function, from zero to lots. Lots of evidence suggests these e-thusiasts buy more books than ever, partly because it's so easy to do. But right now I'm focusing on print, which is a less happy story. Keep in mind that those e-reader owners are usually avid readers, i.e. they are our best customers for print books.) 

So at the level of individual consumers we're losing not just one print-book purchase at a time, but potentially scores, or hundreds, as that person adopts e-reading. Now look at this at the level of bookstores. Right now e-book sales constitute, at a rough guess, 10 percent of the market and their share is growing rapidly. For many small businesses, especially in a low-margin industry like ours, losing 10 percent of your sales volume is the difference between profit and loss. Even a 5 percent dip is a challenge; imagine looking at a 10 percent dip and thinking, next year it'll be 15, and the year after, who knows? Yesterday I linked to an NPR story about a couple of independent booksellers who have prospered despite the difficult market, and hats off to them. But over the past several months, stories of bookstore closings have, alas, been more common. This week, two beloved indies in Minnesota announced closures, explicitly pointing out that they have lost customers and sales to the e-book revolution. One store owner made the complaint, common among booksellers, that customers browse her shelves to decide which books to download at home. " We're really now a showroom for books." You can see why these folks may decide it's time to call it quits.

This, too, is a step function. When a bookstore closes, the sales at that location don't slope down, they drop to zero. Multiply this across many bookstore closings--including locations now being closed by the chains. Furthermore, many surviving stores, in self-defense, are devoting more shelf space to nonbook items, which means fewer print books stocked, and fewer sold. With all this, it seems clear to me that print sales are going to fall, if not off a cliff, down a teeth-rattling escarpment. Just to tighten the spiral, we're also going to see smaller print runs, thus higher per-copy costs, thus higher prices for printed books--which is only going to push more consumers toward e-books! 

What all this means is: up to now, e-book sales have been growing faster than hardcover sales have been declining, so overall big publishers have been seeing growth. But we may soon reach a tipping point where because of the loss of sales outlets, print sales drop off much faster than e-books replace them. I remember the wailing and gnashing of teeth--and the austerity programs and downsizing-- among publishers back in the 90s, when the chains' great expansion of superstores leveled off (that is, when sales merely stopped growing, never mind declining).

I'm not predicting apocalypse here, or even calamity. As I said in yesterday's post, I expect hardcover books, bookstores, and publishers to survive, and some even to prosper. But I am predicting major disruption. 

(Photo: Cliff diving in Cyprus, via Wikimedia Commons)

More on P- versus E-Books: Bookstores, and Printed Books, Aren't Dead. But...

Yesterday's post, in which I mused about whether we were living through a "phony war" period in publishing, generated thoughtful comments in several places around the web.  Several readers questioned my statement that we were likely to see a steep drop in print book sales in the near future. One said that e-books had been boosted by the Kindle, but "they could just as easily be just another fad like Tamagotchis, as I personally ascribe the drop in hardcopy book sales to a mix of the recession and the fact that there's just nothing out there I really want." Another said print and hardcover sales were not really "at war" and that they could continue on parallel tracks. Another said that e-book sales had enormous room to grow (inarguable) and that it was more likely print sales would grow alongside of e-books.

I'm afraid I must disagree with all these commenters. I do think the decline in print book sales is inevitable and probably irreversible, as I'll explain. But I want to emphasize a couple of points: First, I hope it's clear that I am not celebrating this trend. I personally love bookstores and all those other things that are part of the print-book experience--yes, the smell of books, the pleasure of reading a beautifully designed volume, and even the book sitting on my shelf as a souvenir of the experience of reading it. I'm too young to have known Fourth Avenue when it was New York's Booksellers' Row, but my idea of paradise is Harvard Square in the 1970s when practically every block had a bookstore on it.  I think any community without a bookstore is impoverished, and I certainly hope never to see the day when new books aren't available in print form.

Second, although I believe the number of bookstores and amount of shelf space is going to shrink drastically, I'm not in the least suggesting that wonderful stores (and beautiful printed books for that matter) aren't going to survive. In fact, it's the wonderful stores that will survive--the RJ Julia's, the Books & Books, and, I trust, my neighborhood's tiny jewel-box of an indie, Three Lives & Company. Stores like these, creatively run, deeply connected to their clientele, carefully curated, and a pleasure to visit, can thrive just as other creative retailers do even under tough conditions.  Thankfully, booksellers like this can be found all over the country. Just yesterday, NPR highlighted some first-rate booksellers who are beating the odds (read the piece or listen here.) And although I find many chain bookstores disappointing, there are some that serve their localities well. (In Encino, CA, 3250 local residents have liked a Facebook page devoted to saving their Barnes & Noble.)

Likewise, the printed-book-as-object, though it may become more of a luxury item, is always going to be one of the world's best gift items (including gifts to oneself, of course). And much as I like reading on my iPad, I'm always going to prefer a paperback in the bath or at the beach. For this and many other reasons, printed books are not going to disappear.

BUT a publisher has to accept the realities of the marketplace, and for better or worse, like it or not, the market is going to see a steep falloff in brick-and-mortar retail and a corresponding downslope in the sale of printed books. Those two facts are closely connected and I'll expand on why in my next post.

(photo of Shakespeare & Co., Paris, by Ian Britton. Creative Commons license)

Moomsday Is Coming, or Kindle, Hardcovers, and Deep Blue

For some years in New York I was inexplicably amused by the broadcast ads for Einstein Moomjy, a local carpet retailer, who called their annual sale “Moomsday.” In portentous tones over rolling drums, the spot told us, for days before the event, “Moomsday is coming… Moomsday is coming,” and finally (thunderous drums), “Moomsday is HERE!!!”

I couldn’t help thinking of Moomsday when I read this week the equally portentous announcement from Amazon that Kindle books have outsold hardcovers over the last three months, apparently at a growing pace. The statement got a lot of press attention and inevitably spurred talk of a “tipping point” where e-books start to displace hardcovers as the dominant format. Equally inevitably, this breathless attention provoked a “not so fast” backlash, with commentators hastening to point out that a) not withstanding all these sales, e-books are still a tiny fraction of the overall market b) by some measures the growth of e-book sales has actually slowed since last year, c) Amazon’s figures are notoriously vague and uncheckable –and so on.
Some of this hard-nosed commentary reflects a healthy skepticism toward Amazon’s obviously self-serving publicity and credulous, tech-dazed media. Unfortunately, I suspect a lot of it, especially within the book business, reflects a less creditable willingness to ignore the reality that our business is about to be massively destabilized as print sales fall off, e-books soar, and bricks-and-mortar stores will be culled like baby harp seals. That’s a brutal way of putting it but I suspect the process will be about as shocking to our delicate sensibilities.
Like Moomsday, the day when e-books displace hardcovers , is coming…it’s coming… and one day it will be HERE, whether or not the moment is marked by Amazon’s arbitrary announcement. (Should we call it, e-oomsday?)

For the foreseeable future, e-book sales are only going to grow. And as Mike Shatzkin has been hollering from the rooftops, e-book sales don’t have to get even close to parity with hardcover sales to make the numbers of a lot of retail bookshops unsustainable. It’s a bleak fact that the margins of retail booksellers are not that large. If print book sales drop significantly, as they must, we will lose some indie stores and almost certainly see chains closing many locations—thereby decreasing retail exposure for printed books, depressing their sales and driving e-book adoption even faster.

Please note, I am not celebrating this trend. I love printed books and real bookstores. I’m simply trying to look dispassionately at what’s happening. The e-book vs. print contest reminds me also of the famous chess matches between world champion Garry Kasparov and Deep Blue, IBM’s chess-playing computer. When Kasparov first played Deep Blue in 1996, he won, to cheers from those all over the world who wanted to believe in the superiority of man over machine. But a year later, an improved Deep Blue beat Kasparov. I would have loved to believe that human genius could go on outwitting ever brainier computers forever. Sentiment aside, though, I had to accept it was inevitable that massive computing power would at some point simply be able to flash through potential moves quickly enough to outmatch even a Kasparov, however inelegantly.

However much we love printed books, we have to accept that within a short time, they will no longer be the dominant format. I’m not prepared to guess what percentage of sales they’ll represent a few years from now, but I’m sure that the pie chart will look drastically different from how it does today—and that the follow-on consequences from that will be much greater than many of my colleagues are yet imagining. E-oomsday is right around the corner.

image of Garry Kasparov from thinkquest.org

Cutting Through Some of the Nonsense about E-Book Prices

I’ve been trying not to let e-books monopolize this page, but it’s a subject that’s hard to avoid with so much happening. This week we had a New York Times article about the ever-contentious topic of e-book prices, on which vast quantities of hot air are expended.

The Times notes that many readers are complaining, not to say outraged, about the idea of paying more than $9.99 for e-books—the price that Amazon has aggressively promoted in its effort to sell Kindles. 

At Publishers Lunch, his indispensable blog/newsletter, Michael Cader had a terrific piece yesterday debunking some notions implicit in the NYT article, and urging publishing people do to a better job of explaining to the public the widely held fallacies about e-book prices. I’ll write more about this myself, but his points are so cogent that I might as well start by quoting some of them:  

* $9.99 never was the top e-book price; people pay more than that every day
[When there was no Kindle, many e-books, including those for Sony Reader cost well above $9.99. And from the beginning of the Kindle store, plenty of titles were above that price. As Cader notes elsewhere, three recent surveys, two presented at Digital Book World, one this week by Goldman Sachs, strongly suggest that while price is important to e-book buyers, there are—as you’d expect--more important elements to a buying decision, such as author reputation.]

* The implicit, false promise of cheap e-books was made by the people who profit, at very nice margins, from selling the devices, not by publishers. Please blame them if you feel deceived.  [Right. Amazon has sold “millions” of Kindles by Jeff Bezos’s account. Which means, at the prices they charge, they are raking in hundreds of millions on Kindle hardware. Was it a coincidence that Amazon had its biggest profits ever last year?]

* Publishers are lowering their ebook prices
Most stories say publishers are raising prices. We in the trade know that publishers are preparing to lower their ebook prices by 50 percent or more, and reduce their own profit margins. But customers don't; they hear that publishers are raising prices. [Another key point. Publishers are actually looking to take less per book than they have been getting from Amazon. And in general e-book list prices are coming down.]

* The new "top price" is going to be $12.99 more often than not
[Cader notes that this will depend on what deals publishers arrive at with Apple, but in general we’re talking about a rise of a couple of dollars.]

Cader’s piece also makes one other important point:

Publishers are hoping to protect smaller and local retailers and ensure that customers have a wide range of real bookstores and online e-bookstores to choose from.

Right again. Low prices are a weapon used by big, deep-pocketed merchants, typically chains, to crush their small, local competitors. Publishers don’t want to see a marketplace that consists of nothing but Amazon and Barnes & Noble. This is, to be honest, partly because most of us in the business have a sentimental attachment to old-fashioned bookstores, the kinds of places where most book-lovers love to hang out.  It is partly because we know that it’s in those independent stores that surprise, hand-sold hits can catch fire and turn into bestsellers. But it’s also because we don’t want to find ourselves with nothing but 600-pound gorillas for customers.

New Advances in Bookselling Metrics: The Saltometer

Looks like we may have a major snowstorm in New York and the Mid-Atlantic in the next few days. Bad weather is always tough on retailers, bookstores included. But I learned from the excellent bookselling blog, Shelf Awareness, that at least one bookstore has found a hidden benefit to winter precipitation: a new customer "metric."

Although the current trend in bookselling is toward ever more computerized inventory control systems, Boswell Book Company, Milwaukee, Wis., shared its unique customer tracking device, known as the Saltometer:

"When there's a heavy snowfall in Milwaukee, it means one thing: massive piles of salt on the sidewalks of our fair city," noted the Boswellians blog. "We here at Boswell welcome it, of course. Not only does it keep the sides of Downer Avenue clear for pedestrians (come on by and see us!), it allows us booksellers to use that most hallowed of marketing tools: the saltometer. What is the saltometer, you ask? It's a highly sophisticated system by which we can look at the white-lined footprints all over the store and see what sections are really the most popular. Sure, we know what books you're all buying, but what about the books you read while you linger in the store on a frosty evening? Yes, the saltometer is the bookseller's friend."

New York City is not supposed to be hit very hard by the storm. I'm secretly disappointed. What could be better than getting snowed in for a day or two with a big pile of books to read?

(Photo of Washington Street, Providence by Jef Nickerson from Flickr)