Friday, July 23, 2010

I Am Not My Bookstore? You Are Your Bookstore.

First let me apologize for failing to do a Front List/Back List post this week. I'm busy, busy man these days with lots of change on the horizon. I promise to have one Monday.

Pushing that public service announcement to the side, please allow me to explain what I'm about to address.

A little over two weeks ago Mike Shatzkin of the Idea Logical company posted a, well, logical assessment of just what the book industry might look like in 2015. It's grim in many ways but mainly because Shatzkin's post is well-reasoned and drawn from trajectories set forward by leading book industry professionals.

The post is titled "Where Will Bookstores Be Five Years From Now" and approaches the brick-and-mortar bookstore from four main vantage points. The two major views are from the bookstore itself, namely big top stores (Barnes & Noble we're pointing at you) and smaller independent stores. The other two approaches are concerning large and small publishers and how they will impact the places where their books are sold. I highly recommend anyone even vaguely curious about where the industry is headed to read this insightful piece.

The grim protagonist of Shatzkin's post is the e-book and its dire implications. Taking the conservative estimates set forward by the CEOs of large publishers, Shatskin paints a picture of a world where printed books will have lost at least 50% sales to the electronic format (I agree 100% with Mr. Shatzkin that these estimates are probably too conservative).

The eventuality being portrayed is one that can already be seen and felt in bookstores now. It is one of diminishing retail space dedicated to books and an increasing push to compete in the electronic markets. Barnes & Noble is currently engaged in expanding their educational products, toys and gaming sections in order to offset eventual (or current?) losses in print book sales. Overnight shelf-moving shifts and large scale returns packaging is currently going on at B&Ns everywhere. I have friends that are on the ground floor of this process and it is one that unsettles them as much as it makes their arms sore.

The new look to the one-time 800 lbs gorilla is of course disconcerting to literary Luddites everywhere. B&N is trying to deleverage themselves from printed books and soften those losses with sales from expanded non-book channels and their cherished big great hope, the nook e-reader. What a name...

Shatzkin goes on to comment on the difficulties that large publishers like Random House or Macmillan will have in marketing and maintaining their multitude of titles in an increasingly electronic market. He goes so far as to say that the diminishing of Random House will lead to the diminishing of big-top stores and so on in return.

The fact is he's right. Programs like B&N's pay-to-display Topps program and whatever manifestation it exists as today will go by the wayside and suddenly it won't be as lucrative for B&N to display the next Dr. Phil book. Let alone manufacture a bestseller by ordering it by the ton.

Apparently there are things that print-loving pedants will one day thank e-books for.

So as you can seee, I'm all aboard Shatzkin's post. Until this.

We know Google harbors the hope that they can provide meaningful inclusion for independents in the ebook marketplace. But even if Google’s efforts are successful, they don’t support the independent store, they support the store owner. There is a difference.

It comes amidst a rosy optimism about opportunities for independent stores, and also indie publishers, to navigate these suddenly wide seas while the big guys struggle to stay afloat. Insert here: Sir Francis Drake and his English privateers versus the suddenly vulnerable galleons of the Spanish armada and other apropos historical metaphors.

This might be true but it is not as easy as all that. As readers (you know - those noble souls who are at the heart of this entire discussion) increasingly go digital with their purchasing it will become incredibly hard to convince them that a $24.99 hardcover is somehow better than a $12.99 e-book. Let alone if its Amazon running the show at ten bucks a pop.

So small publishers and bookstores can be as savvy and niche oriented as they want but as readers continually go to the new format it will matter less and less. Sure, you might have an awesome deal selling kids books to three area schools but when the school goes digital and you are excluded from the format, well, then the teardrops start.

Currently the exclusivity of e-book technology and sales channels (Amazon via Amazon/B&N via B&N) is one that threatens the little bookstore in an incredible way. You may have lived your whole indie bookselling life shaking a fist at the big stores but you will die with them and the only key to an afterlife is finding inclusion in some sort of electronic bookselling. Of course this all presupposes a world where e-books rule.

Again, the quote at hand.

But even if Google’s efforts are successful, they don’t support the independent store, they support the store owner. There is a difference.

When I was co-owner of Wolfgang Books my business partner Jason Hafer and I were Wolfgang Books. If either of us had hit the lottery then we'd probably still be working together. Alas we did not hit any lotteries despite all best attempts to do so. The reality is that Wolfgang Books, though an award winning success, could not support two salaries at the time I decided to leave.

Wolfgang Books ceased to be Jason and I and instead became Jason and his wife Rachelle. Well, metaphysically speaking it became a part of their essence, the outcome of their existence, etc, etc.

Anyone reading this that owns a small bookstore, or press for that matter, knows that you are your business. If you are truly lucky, or perhaps uber-talented, then you might have arrived at the enlightened point where other creative individuals like employees or advisers can create a direction for your business but lets be honest: that concept probably scares you a little.

It probably seems like somewhat superficial nitpicking, but to say that a sales channel that creates wealth for a bookstore's owner, let alone under the umbrella of the company they own, is somehow not going to always benefit the business itself is not only wrong it is in this case dangerously so.

Point blank: If small bookstores like Wolfgang Books are barred from ever engaging in retailing the dominant format (in this case the e-book) then they are going to have a very, very hard time scrapping it out with the big boys that control the format. Andrew Laties, of Rebel Bookseller fame (among others) jokingly summed up his series of engaged comments to Shatzkin's post with this:

For the past several days I've been vociferously commenting on a fascinating blogpost. Industry expert Mike Shatzkin believes that the rapid rise of eBooks will depress print-book sales so much that chain storefronts will not be able to continue to operate profitably. He thinks that a very large number of superstore locations will close. He is principally concerned about this because he thinks that the major publishing companies will be seriously damaged. However in a number of exchanges with him, in the comments section of his blog, I was able to elicit the opinion that unusual, quirky, creative and talented independent booksellers might be able to continue to operate bookstores during the coming eBook revolution, even if the large general bookstore corporations were in dire straits.

My conclusion here is fairly obvious. I won the war!

Laties is joking, or I hope he is at least, but the reality is that if Barnes & Noble is shutting its doors and going virtual because of a complete sea change in format, well, then that does not bode well for Laties and the privateer's doors either.

I mean no disrespect to Shatzkin's post. It is one of the better brass tacks sort of posts around. To be honest, I'm more or less expanding on one side note he made. It's just that I think that any booksellers reading it would do well to take somewhat different advice when it comes to countering the eventualities being described. Or at least not engage in a shrugging of shoulders when it comes time to address the potential of a Google e-books platform.

If e-books become the reader's choice then the road to success, or subsistence, for small bookstores and publishers will involve a hand-in-hand approach to e-books. The small stores like Wolfgang Books in Phoenixville, PA or Greenlight in Brooklyn, NY will need to have access to electronic sales, and the publishers whose works they chose to sell will have to provide them with electronic versions to sell.

The thing that seems interesting to me as a former bookseller, is that for some reason people seem to think one will exclude the other. There's no reason that I can see that a great bookseller like Jason Hafer will not be able to build a solid online following to go along with the remarkable space that is his brick-and-mortar bookstore.

Just don't forget that I stained and drilled all those bookshelves, Jason.

Basically I'm saying to all indie stores: start preparing to sell e-books. Hoping that someone like Google comes to the rescue might be a bit risky, naive or just plain lazy but at this point in the game it might be all you've got.


stevenallenmay said...

sheesh, time to take the poison pill and end it all. bleak and bitter end to thousands of years of book format in the "blink of an eye", is that it? Like the bubble that wouldn't burst?

JER said...

I think small book sellers should jump right in with e-book sales because that's the future, but they should also advertise the special qualities of owning the traditional book as I think people will always want to own something they can hold, look at, and put on a shelf or coffee table. It's only human to do so. Heck, maybe there's a real-book renaissance on the horizon.

The Devil's Accountant said...

I don't think it's as dire as all that. It is however going to be a reality.

When I first started out in the book business it was through selling used and collectible books via websites like ABE books, etc. The goal was brick and mortar and we succeeded in arriving at that goal.

We realized that it might have been slightly more sound to have just bought or rented a warehouse and expanded our online inventory. New books were nowhere near as profitable as used and collectible ones where you can enjoy mark ups in the range of 500%-1000%, if not more. We chose to open the store and sell new as well as used, because that's where our hearts were. We wanted to have a bookstore that represented new releases that were not enjoying featured positions in big top stores (or even shelf space). Even if that meant shorter profits and the occasional loss.

The thing I kind of failed to communicate in the piece is that it can be irrational. When you are your business, and you believe that what you are doing is important to society, you engage in a series of value judgments that do not always equate with good business practice. It is irrational.

So was Random House's decision to publish William Faulkner again and again despite his poor sales. They leaned on the Modern Library and more popular titles to fund this illogical but noble pursuit.

I would absolutely maintain a space for people to come in and peruse and interact with a real live bookseller.

rebelbookseller said...

Hi Paul,

Great post. I agree that Mike Shatzkin is oddly dismissive when he makes the blanket assessment that when indie booksellers sell eBooks it won't help them continue in business as print booksellers. I think his point is that the big publishers will have lost so much access to the market--with the collapse in chainstore shelf space--that these publishers won't be printing much in the way of print books for indie booksellers to try to sell. I was arguing with him that the collapse of chainstores will herald a rebirth of indie bookstores--which could forestall the decline in print-book publishing that he was forecasting. He disagreed heartily. I was delighted that Richard Howorth came into the conversation and pointed to Jack McKeown's extensive research this past year showing that people across the country love local bookstores and say they would shop there if they had them. Since Jack and Richard are, like Mike Shatzkin, longtime leading figures in bookselling and publishing, their opinions and data can be reasonably weighed against Mike's. Jack even opened a bookstore (he was CEO of Perseus Publishing up till a couple of years ago) on Long Island, just a month ago.

Jack proposed a few months ago that there should be a National Bookstore Investment Bank founded using capital supplied by players like Ingram. He thinks that there's huge latent demand nationwide for more indie booksellers and it is only the very tight banking/credit markets that are restraining this. I agree with him -- I think that the eBook revolution will in fact be taken in stride and eBooks will coexist with print books, and indie bookstores will once again be opened all over the place.....once the business-lending credit markets get relaxed. I don't know when that will happen. In the meantime, it is important that prospective indie booksellers educate themselves on how to sell eBooks as part of their business plans.

Andy Laties

The Devil's Accountant said...

Good to have your feedback, Andy.

I agree 100% that the credit freeze is hitting bookstores like all other small businesses. It's downright criminal too, since banks can borrow from the tarp at 0% yet refuse to engage in any risk.

I exchanged a series of emails with Mr. Shatzkin and was certainly impressed with the depth of his logical approach. It's practically Vulcan.

And that's essentially what he is saying. Namely that it is illogical for a bookseller who wants to maintain a brick & mortar to engage in a sales strategy that he believes will eventually eclipse/ help to render his brick & mortar obsolete.

My point was to respond to his thoroughly sound logic with a comment on why people own their bookstores.

Any full-scale exclusion of indies from the e-book market will be life threatening to many. Never mind how unconstitutional it is.

The google platform is certainly not an ideal bedfellow and booksellers need to push for a independent solution. Though I'd be surprised if even Ingram had the money to pull off such logistics.

So in the meantime... Open a bookstore people! You weren't going to do it for the money, were you?