Front of Store has been a little quiet through April – a pleasant week in the Brecon Beacons (and a trawl of Hay bookshops), combined with a variety of other activities has kept me away from the keyboard.
One area of focus has been the presentation I shall be giving at the World e-Reading Congress, which takes place in London at the Jumeirah Carlton Tower on 15th-16th May. I’m on at 1:30pm on Weds 16th (the popular “pay attention after lunch” spot), and my theme is: “The future of retail is another planet”.
This isn’t the most grammatically correct presentation title anyone has ever had, but I only have myself to blame, as it quotes my Frankfurt punchline: “the past is another country, but the future is another planet”.
It is startling to go back to Frankfurt (October last year) and reflect on the number of changes that have taken place across publishing and bookselling in that short time. The most interesting is, of course, the DOJ case which Apple, Pearson and Macmillan are defending. Tens of thousands of words have been written on the subject, but this recent piece from the Guardian is a pretty good account of the impact that Amazon and other tech giants are having on the consumer’s best interests.
In my presentation next month, I shall be reflecting on where Amazon’s domination leaves everybody else who is trying to sell books and content, and putting up one or two pointers for the future. Let me know if you’re going to be there – I promise to provide some energising food for thought for everyone.
My monthly column in The Bookseller is now available online. This time around, I contrast the American multi-platform strategy of Barnes & Noble (stores, bn.com, Nook) with the less three-dimensional approach to eBooks that WH Smith/Kobo are pursuing in the UK.
I flitted in and out of a busy Frankfurt last week. For anyone who hasn’t been to the Messegelände, the scale is spectacular – vast hall after vast hall, interconnected with numerous escalators, corridors and security checks. A dead whale full of Audis and antiquarians was parked in the centre of the complex, and wifi support (notwithstanding the BlackBerry Crumble) was lousy. Earls Court is being demolished next year, but if it ever saw Frankfurt, it would die of shame.
From the perspective of this blog, the big buzz was eBooks, and the point at which their penetration of English-speaking markets will extend to the rest of the world. Kobo’s new partnership with Fnac (as well as their new relationship with WHS as a UK-exclusive partner) suggests both that Europe will start to feel the eBook hurricane through 2012, and that there may be some alternatives to the Amazon hegemony starting to emerge.
My presentation at Tools of Change has been extensively (and sometimes sensationally) reported, though my determination to rouse my audience with touches of revivalist preaching meant that I got what I deserved – anyway, I thought it would be useful to reprise my key points, then we can move on to the next chapter of this brave new world.
1. Bookshops cannot survive as economic entities
UK bookshop chains, a few years back:
Progressively, most of the businesses on the first slide disappeared over the past ten years – they were acquired and subsumed, or they failed and closed down. In a more benign economic environment (less price competition, less online competition, less severe banking crisis) more of them might have survived; of course, some were more robustly structured or better managed than others.
These bookshops (and the hundreds of indies that have also folded) didn’t disappear because no one wanted to buy from them any more; however, in a world of upward-only rent reviews, rising utilities costs, and very tight net margins, bookshops can only survive losing, say, 20% of sales before they become uneconomic, and plugs get pulled.
This leaves the remaining 80% of their customers unhappy and disenfranchised; it speeds the drift to Amazon and supermarkets (and in due course Kindle), or it causes those customers to stop buying books altogether.
The “eBook Revolution” (one for the cliché file) will accelerate this process. I’ve never prophesied the death of the physical book (or pBook, as the eBook-people prefer), but publishers need strategies for a bookshop-free world, and I’m not yet convinced they’ve found them. One strategy might be to support bookshops with more equable terms, of course, but retailers and publishers would have to be very honest with each other about outcomes, so that publishers’ profits weren’t ploughed into supporting failing enterprises, or bookshops given a false sense of their own robustness. Interesting to read Hachette Livre Chief Executive Arnaud Nourry’s views on these matters.
2. Retailer diversity matters
Regular blog readers will have seen my “Amazon takes over everything” sketches before. Click here for the Fantastic Dystopia. I used these old sketches to illustrate the peculiarly British phenomenon, whereby Amazon has emerged as the sole credible online bookshop, and the sole credible eBook seller, in the UK. I’m concerned that the publishing community hasn’t done enough – collectively? – to ensure that there are alternatives to this level of domination.
There is a limit to the amount of business you can do with a “frenemy”. John Ingram, whose family owns the dominant American book wholesaler (and much more) defined his company’s relationship with Amazon – on a Tools of Change panel discussion – something like this:
Amazon will make use of our services and expertise for as long as it makes sense for them. But as soon as they can do it themselves, they’ll shoot us in the head.
I had something of a Damascene conversion over the summer, shopping for books in the regulated French market, where book discounting is limited by law to 5%. I saw a greater choice of books in mass market stores, and a greater choice of interesting bookshops. It started to look as though price protection might be assisting plurality, and helping to keep good bookshops in business. Consumers may pay more for their books – but (beyond academia) no one has to buy books. More realistic pricing would be a benefit to everybody.
Here’s a table of pricing that Rüdiger Wischenbart presented at the TOC wrap-up. Rüdiger calculated the average RRP and discounted price of six major nations’ top ten fiction books, and benchmarked them against their eBook equivalents. The results confirm that we get cheap books in the UK – though we have got ourselves into a “high RRP, big discount” mentality that favours the most powerful merchants, and disadvantages the small specialist.
3. Keep books special:
I’m worried about books being subsumed into “the seduction of colour, movement and noise” represented by tablet devices. My slide showing all the things you can stuff into an iPad looked like this:
Of course, the tablet environment is ideal for many non-narrative formats, but I fear for the distinctiveness of long-form narrative if it is left to fight all of this miscellaneous (and often more seductive) content. I believe that standalone eReaders are important - indeed, I’d like to see the focus move away from what is a fairly basic and straightforward piece of technology, to a point at which the eReaders are free of charge, and the content – the stuff that really matters – is ascribed the value it merits.
4. A couple of contentious observations:
a) Publishers need to promote more, younger firebrands to positions of real responsibility. My generation grew up with paper (and telephones, vinyl, 35mm film and all the rest), and we are inevitably “translating back” – subconsciously - much of the time. The bigger the publishing house, the more disruptive new media will be to their established business model, and thus the more disruptive the people they should be hiring to ensure they prosper. We’re saying goodbye to our bookshops; professional publishing is economically and culturally essential.
b) It’s great coming to Frankfurt, and talking books, books, books, to all and sundry. But most book buyers (the actual customers that publishers need to get much closer to) don’t eat, sleep and breath books. They have other things to worry about. Publishers will have to fight for their attention, so they need to ensure the public still value what books give us, and their fundamental role in a strong society – the ideas, the knowledge and the power that they ultimately confer on us all.
If you want to talk to me directly about any of these matters, you can contact me at firstname.lastname@example.org.
Afterword: Apologies to the long-established and very fine booksellers John Smith & Sons, whose name should have appeared on both of the “bookstore” slides above.
My friends at Kingston University, where I am a member of the Publishers’ Advisory Board (Publishing MA) have very kindly splashed me on their blog, following yesterday’s rhetorical burst the the Tools of Change Conference here at the Frankfurt Book Fair.
I may have mentioned that I’m speaking at Frankfurt next week. With Google announcing Google Books, the BA seeking a degree of charitable status for bookshops, and Apple rolling out another product launch (those iPhones will carry a lot of eBooks in the Far East), trying to settle my content is like nailing jelly to the wall. “I’m sorry,” I shall have to say, “but I have been unable fully to reflect developments in our sector covering the past four days”.
Anyway, I dug out this graph, which Book Marketing Ltd created (and in which they own the copyright) and shared it with you earlier this year:
Now, my apologies for presenting the same data in two different formats. But the 2008 and 2010 bars in my table show exactly the same data (millions of unit sales by channel) as the BML graph.
What I’ve then done is to extrapolate. This hasn’t been based on anything much more than informed guesswork, but here’s my rationale:
- All sectors will be impacted by the growth of eBooks, which will increase the total number of book unit sales, but take a progressively bigger bite out of physical sales. eBooks are not represented in this data.
- The chains – essentially Waterstone’s and WHS – will sell fewer books as a result. For Waterstone’s, this will cause many of their stores to tip into unrecoverable unprofitability, and closures will follow. Whether the tangential link with Barnes & Noble established through Waterstone’s new board structure paves the way for an alliance and for Nook licensing (as I’ve encouraged in the past) remains to be seen.
- Internet only – essentially Amazon – will continue to attract physical book sales from the bricks and mortar players, but will also see the greatest uptake of eBook sales (of course). So its physical book sales start to flatten from 2012.
- Supermarkets – assuming that the bulk of eBook sales are in narrative formats (fiction, biography), and given the broad age-range of Kindle users, I’m guessing that book sales, and in turn book commitment, will fall noticeably at the supermarkets.
- Bargain books could go either way. The Works already carries much less fiction than it used to. Plus, if gift books and value publishing at garden centres, heritage attractions etc are included in this line, this channel could continue to grow.
- Book clubs/direct – if physical books become more marginal, this channel – reliant on sales to less “bookish” customers – will continue to contract.
- Independents – the established trend continues, regrettably. As with Waterstone’s, too much fiction, history and biography will transfer to Kindle; though indies that diversify beyond books can continue to trade well as good merchants.
(I omitted “Other” from the table.)
One other thing. Crystal ball gazing never works out the way it’s predicted. So, my graph isn’t saying, this is what will happen. It’s saying this is what could happen.
And, if you’re in a position to do so, you may want to do what you can to have things turn out differently.
Right, back to the Frankfurt presentation…
Before the Fair Proper kicks off and all the focus turns to rights sales, Frankfurter Buchmesse visitors might want to consider the Tools of Change seminar on Tuesday 11th October.
Tools of Change Frankfurt 2011 will take place at the Frankfurt Marriott Hotel (Hamburger Allee 2) from 8:30 a.m. to 6:00 p.m.
From 10:20 until 11:05, I will be partnering Jonathan Nowell, President of Nielsen Book, under the heading:
I shall be gazing into my crystal ball with particular intensity, and delivering a presentation that will, I hope, provoke plenty of discussion. I’d be delighted to arrange meetings with industry watchers, movers and shakers in the course of that day, or on the morning of Wednesday 12th.
Looks like a technical, commercial and marketing triumph for Amazon with the multiple launch of new Kindle devices. If you are even vaguely interested in the topics this blog discusses, you will already have read fifty different pieces on the Kindles. I don’t have a bright new point of view to add, but I’d recommend you read this longform piece from Bloomberg on Amazon’s history, and where they go next.
I’ve been locked away with cold compresses clamped to my head, crystal ball gazing and writing lectures. The first was delivered yesterday to fifty bright, informed and open-minded MA Publishing students at Kingston University, and I’ve now got to distil its themes into a much shorter address for EDItEUR/Tools of Change at Frankfurt in (gulp) about ten days’ time, where I imagine the audience will be a little older and more battle-worn.
Here’s how I did my best to rally the young publishers and creative writers at Kingston:
- You’re young, you’re setting out on careers in one of Britain’s most exciting and economically successful sectors. We export more books than anyone else in the world; our per capita book consumption remains high, and we have more world-class authors per head of population than any other country.
- Consumers are more open to new ideas than ever before. There are more ways to say you like something, more ways to express a preference, more ways to get your voice heard, than ever before.
- There are plenty of tools available to you – you just don’t know which tools are going to be dominant in ten years time.
- Publishing needs a few 35 year-old CEOs. Become one of them.
- The state of the world economy is parlous. Old sources of income will dry up, and businesses will have to be restructured and repurposed to survive. This includes publishing houses. You need to find the thing you’re good at – as an individual and as a business – and evolve it, but stick with it – content is more important than format. The past may be a foreign country, but the future is another planet.
FOR THE FUTURE:
- Don’t let “books” get lost in the welter of different online applications. Support eReaders/eInk. Tread carefully around the supposed holy grail of amalgamating the eReader and tablet – the seduction of colour, movement and noise.
- Don’t let the tech providers get over-mighty. A dynamic market requires multiple players.
- Work together with other publishers to impose common eBook/pubvloishing standards. Don’t have them imposed upon you.
- Assume that most narrative content will go “e” in the course of the next couple of years in English-speaking markets. Other languages/cultures will take longer.
- Impose pricing sanity on the eBook market. Physical books have a nominal, understood value, based on their physical existence. eBooks start at “free”.
- Hire more young staff, who have grown up in an e-enabled world. Purge those who can only think in terms of physical books. You need to understand not how to rep books into bookshops, but how to develop consumer properties in digital media.
- In an eBook world, the traditional bookshop is dead. Find alternative sales channels for the books that you publish.
- The discounting of physical books has done enormous damage; and many eBooks have insanely low prices. Many eBooks also deliver insanely low quality too.
- In the digital world, the non-narrative book is a threatened species. Define the service that you as a publisher are going to provide. Your future revenues will be wholly or partly online, as travel guide publishers and the like already recognise. Be prepared for this.
- Don’t turn your back on the physical book. Create collectible books. License more content to specialist binders and printers, and give them the opportunity to do wonderful things with your book. And sell every physical book with a download thrown in free.
- The customer doesn’t eat, sleep and breath books like you do. They have other things to worry about. You will have to fight for their attention, so you need to ensure they still value what books give us.
- And finally, don’t lose what’s special about books – the ideas, the knowledge and the power that they ultimately confer on us all.