I spent Monday with the Booksellers Association Conference at the University of Warwick, and wrote up my immediate reactions in this piece, published by The Bookseller.
I do believe that there is a robust future for the best independent bookshops. But they’ll have to evolve, and to stay ahead of their customers’ expectations rather than trailing behind them. I hope that bookshop owners, publishers and their trade associations can work together to ensure that there is still a role for these businesses.
Do add your comments.
Some Twittering this morning, inspired by a couple of articles spotted by Jellybooks‘ Andrew Rhomberg. One is a market report from Publishing News, the other a blog entry distributed by ebookporn.
Low prices are transforming ebook buying behaviour from “buying to read” to “buying to collect” http://ebookporn.tumblr.com/post/28845301698/why-publishers-are-having-difficulty-settling-on-a …
Collect, or just accumulate?
bit of both? Some is accumulate “wanted to read” (and then forgot), but also collect “don’t want to miss out” (deal!)
the post certain rang a bell with me in that ebook buying and physical book buying are evolving somewhat differently
you now have genuine impulse buying from the comfort of your home and at genuine “impulse prices”
Front list/back list ratio is 40/60 for print, books, but 20/80 for ebooks! http://www.publishersweekly.com/pw/by-topic/industry-news/bookselling/article/53430-what-happened-to-the-long-tail-.html …
Concepts like frontlist/backlist, based on print runs/reviews/marketing, increasingly redundant in ebook world.
PN notes that Nielsen Bookscan has reported a fall of 30%, almost one-third, in US sales of fiction backlist titles in printed book form, for the period ending 22nd July 2012, compared to one year earlier.
The shift in market shape is accelerating, not slowing down, with the article noting a significant fall in physical book space at retail outlets (over and above Borders’ US closure). One major American publishing group is reporting that 80% of backlist sales are now in ebook format – the pbook long tail is getting shorter and shorter. Assuming Amazon still accounts for a large part of those backlist sales, backlist bread-and-butter in bookshops must be looking very stumpy indeed. And without backlist sales to prop up the discounted frontlist, the book-specific store model looks very troubled. Booksellers need to diversify, and to recognise that the “general bookstore” is probably unsustainable.
But hell, you know that already. What’s piqued my interest today is the effect that all of this will have on publishers – and not so much on the grand strategies of media groups (many of which are quite forward-looking), but more on the basics of seasonality, range management and changing consumption patterns.
Amazon made one of their opaque announcements this week, proclaiming that for every 100 physical paperbacks and hardbacks they had sold in 2012, UK customers had downloaded 114 titles to its Kindle e-reader. Such is Amazon’s dominance in the UK book market that this was headlined “Readers are now buying more e-books than printed books“, ignoring the enfeebled minority of book-lovers who are doltish enough not to use Amazon.
Ebook customers aren’t behaving like pbook customers. Are you a traditional “heavy book buyer”? If so, how many books might you buy for yourself at a time – four, five? Any more, and the weight/bulk will be too much to carry, and once you get home, there’s the imputation that all those pages piled up at your bedside must be read.
Whereas ebooks – pah, easy. Click, download. Click, download. Moby-Dick – always meant to read that. Click, download. À la recherche du temps perdu, twelve volumes for £3.25 – no problem. Click, download. Having it on your Kindle is almost tantamount to reading the thing anyway.
Back to that ebookporn piece. As the writer notes, people are downloading “huge chunks of content that will never be read”. The piece concludes:
If your download 70 books at $0.99 each you are spending $70 and acquiring years of books to read. Very soon this reader stops purchasing and that sales bubble bursts.
If instead they were to spend not $70 for 70 books but $7 a month for access to 7 million books this reader spends $84 a year, year in and year out. Knowledge is light and it stands to reason that access to all books can be sold like a utility such as electricity, water, and internet access.
This is what might be described, broadly speaking, as the Spotify principle, and it’s one that slashes through publishing, bookshops and libraries as we know them. Which has more value to a reader who has no desire to surround him/herself with dead tree content – 70 ebooks, most of them unread and never-to-be-read, or an almost infinite quantity of content, from classics to trash, all available from the cloud at a moment’s notice?
This brings us back to frontlist and backlist. I can understand how new ebook content can break through and succeed, whether a title starts with word-of-mouth build, typical of self-published hits, or is driven by a professional marketing campaign. However, that approach divides ebooks into Monster Hits and Everything Else. When publishers were putting out a few dozen pbook titles each season, they were reasonably certain that most bookstores would carry/display/promote most of those titles. The books would get their place in the sun, and then (if they’d sold a few copies) earn a position in the backlist, where sales could tick over unto eternity. They would move from frontlist to backlist; most of them heading ultimately to oblivion, and few lasting for lifetimes.
There is no straightforward translation of this old world into the land of ebooks, where hits will be bigger and faster, but will probably also be forgotten more swiftly. The solution, of course, is not to try and force a frontlist/backlist pbook mindset on the ebook world, but to adapt methods that works best for readers – who now have the freedom to behave in a totally different, less considered way.
Note, methods. Sales will fluctuate; surge, recede and return again. Content will no longer be defined by its copyright date, but by its relevance to a particular reader’s needs. Publishers will require a whole range of different sales tactics which are reliant on understanding the end customer. This is best achieved through partnership with sellers, sharing sales data and market understanding, though it runs counter to Amazon’s established strategy – Seattle is determined to hold on to its data and control the customer relationship.
The “Spotify” approach is a rational response to the hangover that will follow downloading excess; alternatively, publishers may have to assume that a high proportion of ebooks will be sampled, but never read, and price them accordingly. Neither solution represents a straightforward ”format shift” (in the way that hardcovers were succeeded by paperbacks in the mid 20th century). Consumers aren’t thinking in those terms, so publishers are going to have to change their model fundamentally. And because the book has been such a successful object for so many centuries, that’s a difficult shift for people and corporations alike. Ask any old bookseller – we know…
And to close, a gratuitous photo of about seventy pbooks, all of them pretty well-read…
The Bookseller has run a piece on the speech I gave to the World E-Reading Congress earlier this week, so I’m reproducing the text in this blog entry.
Whilst I’ve edited out some of the more obvious “lecture” elements (eg “Good afternoon, my name’s Philip Downer”), this is still a talk, so in places you may find it (even) more rhetorical than some of my usual writing; similarly, the grammar and syntax will be a little sketchy or forced in places!
My audience consisted of publishers, and those who provide publishing services – distribution, analysis, technical support, media coverage, plus a smattering of creatives (writers, illustrators, designers) and some online sellers of books and/or content. There were no bricks and mortar retailers present.
* * * * *
My theme for this afternoon is Bookselling: The past is another country, but the future is another planet.
This is a bit clunky, but on an agenda full of brave new worlders, keenly identifying opportunities and breakthroughs for the future of eReading, I am the lucky person who has elected to talk about shops.
I’ve given a few talks over recent months, and as I approach each one, the news for specialist booksellers appears to have got a little bit more challenging. At Frankfurt last year, I observed that “We are entering a world where a handful of corporations own proprietary formats through which all the books, and a great proportion of all other creative content, are channelled. New technology can do great things, but it can also damage supplier diversity and consumer choice.”
I stand by these words. The bigger and more powerful the mega-corporations become, the more entrenched they’ll be. They operate out of highly protected walled gardens, and their goal is to tie you, very tightly, into their specific eco-system. It isn’t in their interests to allow this situation to change – even though I would argue, it is clearly not in the best interests of every author, publisher and reader, for a handful of tech-driven organisations to own books and reading.
I’m talking to you today about retailing, rather than the broader outlook for publishing. However, the old author/agent/publisher/bookseller/reader model is significantly fractured and everyone in this industry needs to decide whether monopolies or diverse markets are more appropriate for its future.
As this is an eReading Congress, I think a show of hands would be appropriate.
Who uses an electronic device in their leisure reading – an eReader, a tablet, a smartphone? [Practically everybody in the room.]
Put your hand down if your principle device is a Kindle. [Around half of those present.]
OK. Now, lower your hand if your principle device is an iPad or iPhone. [The other half of the room.]
Sony? Kobo? Nook? AN Other? Samsung phone? PC? [No, no, no. Everybody used Amazon or Apple devices.]
Although they play very different roles, there are of course two, big dominant players in our new world, a retailer and a consumer electronics company. But Amazon and Apple are an odd couple
Amazon: is setting a course to becoming the world’s biggest retailer, and en route laying waste to the established author/publisher/bookseller ecosystem.
Take a look at its performance for the first quarter of this year:
Profit: $ 130,000,000
Amazon sells ebooks and pbooks at low margin, break-even or a loss. This (we are assured) benefits the customer.
Amazon has very patient investors, who support a high P/E ratio, currently running at over 90x. I assume they work on the principle that, once world domination is assured, the profits tap will be turned on. Otherwise, where’s the value?
How many sectors and countries does Amazon have to dominate before this happens?
Apple: is producing the products that everybody wants, selling phones, tablets and other hardware and content at a spectacular profit.
Notwithstanding Samsung, it pretty much leaves all its competitors in the dust. It also, by-the-bye, runs a highly successful and much-respected retail chain.
Looking at its quarter one performance:
This extraordinary margin, we understand, also benefits the customer; so Amazon’s 1% is a good thing, and Apple’s 29.6% is also a good thing.
Naturally, Apple’s investors are as happy as can be, and they’re even being promised dividend payments in the future. Oh, and Apple’s P/E ratio is a rather more rational 10.5.
Jeff and Steve have made this world for us in which consumers are happy to pay top dollar for the best hardware, and the lowest conceivable prices for content.
In the past month, of course, a new alliance has been formed – something of a 1990s supergroup. Is the Microsoft/Barnes & Noble alliance strategically brilliant, or a last throw of the dice? Microsoft has a track record of alliances with previous cycle winners, like Yahoo! and Nokia.
However, publishers and many readers are looking for alternatives to Amazon’s hegemony. The deal enables B&N’s Nook and College divisions to separate themselves from the old superstore business, and provides the firepower for the Nook to be launched worldwide, with a solid retailer base in the US.
Are Barnes & Noble the future, or is this just a coming together of legacy businesses? And what is a legacy business, anyway?
Ten years ago, if I’d said “legacy” to you, you’d have understood it in the old sense – “Something handed down from an ancestor or a predecessor or from the past”. A legacy was a good thing – real value created by previous generations, and a solid foundation for the present and the future.
Today, the word “legacy” is used as an unthinking term of abuse – essentially, any business that has a history longer than a few years is a “legacy” business, and thus unfit for purpose, and ripe to be taken down. Established publishing houses are described as “legacy businesses” by teenage entrepreneurs seeking to discredit them. Perhaps they fail to distinguish between a business that has a valuable inheritance, and has the capacity and the drive to embrace the new world, with one that isn’t in control of events. Or perhaps they confuse all established businesses with the fireworks of the tech sector, the Netscapes and MySpaces that crashed and burned; the Yahoos and Research In Motions whose innovation has been eclipsed by other, newer stars.
It’s inevitable that what appears to be change-making today will become – necessarily – protective and fixed tomorrow. Perhaps, in this sense, “legacy” simply means “grown-up and responsible”. Well, there are worse things to be, and, companies that once behaved radically will start to behave protectively instead, in order to maintain their primary income streams.
But let’s talk about retailing, because this is where a physical legacy can become really toxic. In the 1930s, Woolworths opened nearly 400 brand new stores across the UK. When I say “opened”, I don’t mean “rented a tin shed and screwed their name to the front”. I mean, they acquired freeholds, and built big, brand-new stores. This was a massive investment of cash and confidence in the market. The crowning glory was the Blackpool store, which opened in Spring 1938. Five storeys over 75,000 square feet, including two vast restaurants. Woolworths was one of the biggest and most powerful consumer brands in the world.
Building all those stores guaranteed Woolworth a strong presence in every town in the country. This was the legacy of its period of supergrowth, but as time passed, the retail offer lost its focus; the freeholds were sold, and the legacy of great stores was no longer a valuable inheritance, it was a millstone of failing retail premises.
Historically, this is what retailers have done – opened stores, and carried on opening them until sometime after the market cries “enough”! Clintons Cards and Game are two of the most recent examples in the UK – and then, of course, there are the challenges facing the remaining booksellers.
Right, here’s a scary prospect for you.
Imagine you’re running a chain of bookshops. We may be talking about hundreds or a handful; we may be talking about any country in the developed world. Two or three years ago, the era of the superstore came to an end. Now, I would argue, the era of the chain bookshop is going to follow, unless the model is radically reinvented.
So, if you’re running a chain of bookshops today, you have to do two impossible things.
The first is to deal with your straggling real estate, because, as I’ve discussed, the single biggest challenge for any bricks and mortar retailer is their legacy of old stores. However carefully that estate has been built, however appropriate it was five years ago, it is now shot through with toxicity. All of those shops are tied to long leases, with upward-only rent reviews. Landlords are operating in a shrinking market, so are in no position to give concessions to any business that wants to close a shop while the lease still has years to run. This leads to pre-packs and CVAs (company voluntary arrangement), but these acts of desperation are usually the prelude to administration.
All retail businesses have an unproductive tail, and any location that’s bad at the moment has the scope to get worse.
Archie Norman, Asda’s former CEO, has observed that retailers should close 5% of their estate every year, and he’s absolutely right – but I can think of no retail business that has heeded that advice until it’s much too late.
As a bookseller, your bricks and mortar shops have to be super-viable. You must close today’s loss-makers, and tomorrow’s loss-makers too.
Plenty of retailers are facing this problem right now – Argos, French Connection, Mothercare and Thorntons have all been in the news in recent weeks. However, although they’re vulnerable to online sellers, it’s still difficult to digitise a romper suit or a box of chocolates.
So, close your under-performing stores. Then define your customers and their interests, and close any further stores that don’t match that profile.
Your second impossible challenge, and one that is at the heart of this conference’s purpose, is that you have to compete in an omni-channel marketplace, and you have to do so against some of the richest corporations the world has ever seen. Logically, this is impossible, because it requires huge resources, and your chain of bookshops can’t do this alone.
This is where the book trade needs to pull together. This industry is at a crossroads where it either allows the global corporations to progress from being walled gardens to becoming super-fortresses; or it fights to ensure plurality. I salute unreservedly the stand that Macmillan and Pearson are taking, alongside Apple, in the Department of Justice case regarding agency pricing. A couple of weeks ago, Amazon decided to give away the Hunger Games eBook free of charge. Now, maybe I’m just losing it as I get older, but can anyone explain to me how giving away the best-selling book in the world helps to secure current income, or to create a future value proposition, for anyone other than Amazon? It may be that the publisher and thus the author still got paid, but at the long-term cost of proclaiming their work to be without value.
Booksellers today need the freedom to participate in the omnichannel world, and it is in everyone’s interests to lower those barriers. That means removing DRM, so that content becomes device-agnostic; customers can buy the hardware that suits them, and the content, at an appropriate price, from the retailer who can do the best job for them.
I would love to see thinking of this sort emerging from Microsoft and Barnes & Noble’s NewCo. If B&N thinks it now has the firepower to challenge Amazon without also changing the ground rules, then they will find that Amazon can always out-gun them. Anybody else with a stake in ebookselling needs to do likewise. You won’t beat Amazon by being a pale imitation of Amazon, pleading with consumers to do what’s best for the long-term health of the book trade. Consumers have enough to worry about. They will respond, though, to a different, better offer.
Your retail goal – because you’re running a chain of bookshops, remember? – has to be an integrated ebook and pbook offer, with full online visibility of stock by branch for your customers. You’ll need a financial model that supports “showrooming”, because it’s a fact of life. You’ll offer Click and Collect, targeted social marketing and all the rest of it – everything a sophisticated pure-play online retailer does, with a shop attached. You’ll need to understand more about your individual customers than ever before.
Your online and ebook offer can of course cover all categories. Your pbook offer must be reshaped to reflect the new reality. That means fewer fiction paperbacks, and fewer reference books, because the day of the “general bookshop” is over. You need to be known for doing a few things extremely well, not everything tolerably competently.
All of this sounds scary, and you will all be aware that the number of specialist bookshops in the UK has declined by over 20% since the credit crunch kicked off.
Booksellers – and, by extension, our suppliers and our customers – invested far too much energy in worrying about supermarkets, and not enough in recognising that Amazon wasn’t just another specialist competitor in a healthy eco-system, with a novel twist. Today, if we take all the UK’s true specialists, the Waterstones, the Foyles, the academic chains, all the independents, and add them together, I don’t suppose their unit sales are as great as Amazon’s are now.
There’s a school of thought that says, well, you pesky booksellers, you should have done more. Should have done it sooner. More fool you. I think this is a little like acknowledging that a fine historical building has caught fire, and saying “they should have installed a better sprinkler system. I’m not calling the fire brigade” – when there is still plenty of merit worth saving, and plenty that you’d miss if that magnificent building was gone.
Specialist booksellers – including independents – are now barely competing with each other at all any more. They’re competing with Amazon and Apple; they’re competing for time as well as spending.
However, here’s the interesting thing. At the risk of sounding like Clement Freud on Just A Minute, I’m going to run through a diverse list of retailers. Here goes:
Anthropologie • Argos • Asda • B&Q • Bentalls • Blacks • Comet • Conran Shop • Cotswold Outdoor • Dobbies • Eden Project • English Heritage • The Entertainer • Fortnum & Mason • Habitat • Halfords • Hamleys • Harrods • Harvey Nicholls • HMV • Historic Royal Palaces • Hobbycraft • Homebase • John Lewis • Lakeland • Morrisons • Mothercare • National Gallery • National Trust • 99p Stores • Oliver Bonas • PC World • Pets At Home • Poundland • Royal Horticultural Society Wisley • Ryman • Sainsbury’s • Selfridges • Tate • Tesco • Toys ‘R’ Us • Urban Outfitters • Wyevale Garden Centres
Most of these businesses are thriving, successful enterprises. Some are struggling – but all of these chains are also booksellers.
Some, like the supermarkets, are big, important players. Others offer books as a value proposition, or as part of the lifestyle offer they’re promoting, or as a souvenir of a day out.
But they all believe that there’s a place in their shops for physical books. Most of these retailers have a much clearer understanding of their brand, and of their customer, than general bookshops have.
The physical bookshop struggles, but the physical book can thrive.
We tend to look at the problem from a “growing online, declining physical” standpoint. But if the solution is to ensure that all physical stores have multichannel capability, surely the same applies to pureplay online retailers?
As Sarah Wilson of the Egremont Group has argued persuasively, without a high street presence, without the ability to see and touch the goods you want to buy, online sales will plateau. After all, if we all really wanted to, we could stop using bricks and mortar shops tomorrow, and just buy everything online – it’s all there, after all. But we don’t. Consumers of the future will be looking for an “integrated experience… as they choose to shop across channels and increasingly look on pure plays as employing yesterday’s model”.
OK, this is where it gets interesting. You’re running a chain of bookshops, remember? But chains are inevitably bland. Chains are corporate. Chains are bound by process; necessarily managed to lowest common denominator standards.
I’d posit that more good managers leave book chains and open their own bookshops than happens in most other sectors. They do it because they love what they do.
So, at this stage in the development of the bookshop, I think it’s time to acknowledge this. You could create a partnership model, like John Lewis’s.
Or you could be bolder, and create a franchise model. The centre would provide the technology, the systems back-up, the buying power. The managers acquire ownership of the stores, buying an interest in them or purchasing them outright, customising their shops as appropriate for their markets.
You cease to have a chain of stores. Instead, you have a network of individual specialists. They may go down the children’s route, open cafes, build non-book sales. Or they may, like the Harvard Bookstore, invest in Espresso Book machines; providing a real specialist service, with same-day delivery to local addresses, and next-day around the world.
That network of stores doesn’t have to be restricted to your core business. You can sell your chain’s expertise to other independent bookstores, and reinvent yourself as a bookshop service organisation.
We have a number of good businesses supporting UK booksellers. Gardners’ networked Hive website, offering pBooks and eBooks online; the Bookseller and Nielsen, providing news and reliable data; and of course the support of the Booksellers Association. I’d like to see all of these organisations – and others – committed to supporting everyone who is a bookselling specialist, whether they’re primarily selling eBooks or pBooks, online or instore. If anyone could pull this together it would be the BA, but the organisation would have to repurpose itself appropriately.
There’s a way forward for individually managed and owned shops that have full access to ebooks, and yet can localise their offer to suit each physical location, each local residential, business and academic population, in a way that chains inevitably struggle to deliver.
And funnily enough, your carefully tailored local offer could be exactly what individual customers around the world are looking for. And today, you can reach out to any potential customers. You can identify where there are similar populations, elsewhere in the country, elsewhere in the world, and serve them too.
Of course, this means that you and your shop need to have to have an opinion. A point of view. A personality. All of these things rolled up into a specific and saleable competence. Please some of the people most of the time, because you can’t be all things to all people.
Supermarkets have done their damage, and will reduce their book ranges as the mass-market transitions away from paper books. This is an opportunity for our industry’s specialists, who need to improve in quality and consistency. Some of our best bookshops are among the smallest and most independent, in every sense of the word.
Customers will still seek out good, well-run shops, and I suggest that the distinction between “independent” and “specialist chain” is a whole lot less important to everyone’s future, than the distinction between “specialist” and “non-specialist”.
A healthy bookselling sector is in the best interests of everyone in the trade – authors, agents, publishers, readers. Bookselling needs to remodel itself for the future, and do so in partnership with all the other key players in the publishing business.
But books and bookshops still matter, and there are still people who want to sell books. If those specialist bookshops focus on competing with each other for ever diminishing returns, they might disappear altogether. The more effectively they can work together, the more robust our retail offer in the future.
To comment on this blog post, just click on “leave a comment” in the Tags block above.
* * * * * * *
My eBook, A Year at Front of Store, is available in these Amazon Kindle territories –
A scintillating day yesterday at the FutureBook Conference at the QEII Conference Centre in the heart of Westminster.
2011 has been the Year of Change, with digital content and eReading becoming established across the sector, thanks to the explosive success of the Kindle and (to a lesser extent) the iPad. The potential of smarter and more versatile devices, allied to social networking in the very broadest sense, has got people like Stephen Page rethinking the whole publishing paradigm – and it was great to see experienced but independent leading publishers like Page, Rebecca Smart and Kate Wilson being recognised for picking up the old business models and giving them a damned good shake. It was also refreshing to see more young and/or independent delegates, who will reshape the face of publishing over the next 5-10 years.
Dominique Raccah, CEO of Chicago-based Sourcebooks, kicked off:
Ereader users believe they are purchasing more titles. The evidence suggests, yes; but the industry still lacks a reliable eBook “chart” in the UK and the US, and Amazon/Apple are notoriously tight-fisted when it comes to sharing their data.
Ereader users believe their overall spend on books has risen. As overall spend (eBooks + pBooks) has fallen, this is hard to prove.
Ereader users believe they’re reading more. Again, ths is unproven, though there may be a link to “dual screen” use, whereby the user browses a device (most typically, an iPAd) at the same time as they’re watching TV.
A snapshot of the Top 85 Kindle charts in the US: 66% of titles were published by “traditional” publishers; 18% were self-published; and 16% came from “non-traditional” (ie digital) publishers. nb for the traditionalists, this compares to about 95% (my guess!) trad publishers in the average print bookshop.
Evan Schnittman of Bloomsbury divided the audience with his “hardcover + eBook” proposal (he’d charge a 25% premium for the bundle, which presumably would include a VAT element). Personally, I’m gung-ho for this idea, particularly as Evan reminded us of the difference between “books” (objects that deliver permanence and permit display), and “reading” (which is all about content).
I sometimes chuckle at the “convenience” argument around eBooks. Is it really a whole lot more convenient to carry an eReader than a single book? (Do you remember, in the dim, dark days before Kindle, when you used to say “I’d love to read more, but carrying a book is so inconvenient“?) It’s the enhanced convenience of carrying lots of books, and being able to purchase when you wish. These are great qualities, though perhaps they encourage the grasshopper mentality of the dual-screener? (Research suggests that 26% of Kindle users do this.)
Meanwhile, while the take-off trajectory of eReaders has been, and will continue to be, spectacular; though bear in mind that 76% of book-buyers have yet to buy any kind of eBook and – according to BML research – over 50% of those aged 35 or over don’t at present intend to do so.
Finally – I think this was an AT Kearney stat – European eBook sales currently break down as follows: 52% of all eBook purchases take place in the UK. Germany – where Thalia’s Oyo is making the running – delivers 28%. After that, France is at 7%, Italy 3%, and the rest of the continent 10%.
This brief run-down of stats doesn’t give the reader any real flavour of the optimism, enthusiasm and boundary-breaking that characterised great ideas and discussion from William Higham, Valla Vakili, Charlie Redmayne, John Mitchinson and many, many more. But we need to press on…
OK, let’s talk about bookshops
It fell to me to wave my accustomed bucket of cold water around the Fleming Room, and to remind the Conference that this once-in-300-years reshaping of the industry is taking place during the worst consumer downturn, and the worst set of economic forecasts, for many, many years. New devices, formats and ideas are being launched into the teeth of last Wednesday’s Autumn Statement, which promised austerity beyond the next election, and a return to 2001 living standards in – 2017? 2020? Providing the Euro doesn’t implode, of course – then things will be much worse.
So, book people need to be thinking not just about how to reshape their industry in such a way as to preserve copyright, encourage new talent and stop Our Friends in Seattle (or, more broadly, the “GAFA” group*) from dominating commerce and innovation; they need to embed that change at the same time as Joe Public is devoting his dwindling income to candles and tinned food.
I was chairing a discussion panel that brought together Kobo vendor relations manager Cameron Drew, Hive development manager Julie Howkins, Middle East bookseller/publisher Jeremy Brinton, Retail Week Knowledge Bank director Robert Clark, and Leo Burnett marketing strategist Dr Alan Treadgold. Here are some of our key points:
The UK pBook market has consoidated to one specialist (Waterstone’s), one generalist (WH Smith) and one website, which between them meet most of the needs of committed book-buyers. (Of course, there are also three participating supermarket chains, though they aren’t specialist by any definition.) This represents a real narrowing of the market – but perhaps that market will now start to broaden again, driven by feisty and more self-confident indies, the arrival of eReader alternatives to the Kindle (specifically Kobo), and an expanding reach (devices, channels, formats) from the Stephen Page-defined world of broad publishing.
However, no one has yet resolved the “showroom” conundrum: once its sales have fallen by around 20%, a physical bookshop becomes untenable, and has to close. Bookshops can move to cheaper premises, can sell a broader range of products (toys, coffee etc), but unless they are actively participating in eBook sales, their market share will be eroded beyond recovery. This will leave those 50% aged 35+ who don’t intend to buy an eReader for Amazon to scoop up into their search-excellent, browse-lousy world.
The panel recommended some solutions to this problem:
Ereader manufacturers that partner with retailers can encourage consumers into a bookshop relationship without committing them to a non-transferable, Amazon-type scenario. Hive-affiliated bookshops (currently about one-third of serious indies?) can sell eBooks in multiple formats, and share in the revenue they generate, as well as creating local incentives for their customers. And Kobo’s retailer partnership model (WHS, Fnac, Indigo etc) clearly has legs.
Physical bookshops must use their websites to drive store footfall. One of the UK’s most consistently successful retailers, Richer Sounds, has a strong eCommerce site, which nevertheless acts primarily as a driver to get customers into personality-saturated stores, where they can test the product and take advice from trained staff. There’s a bookshop model here.
Click-and-Collect is growing swiftly as a preferred distribution channel for many customers. 26% of Argos’s business is Click & Collect, and M&S, John Lewis and Sainsbury’s are among the retailers investing heavily in this service. Click & Collect allows the customer to pick up their goods at a time convenient to them – and of course exposes them to personal service, and many more buying opportunities.
Social networking through eReaders (Kobo Vox) can bring reading communities together, and could be curated by bookshops who currently support reading groups. Events and literary festivals not only bring together readers with shared interests, but underline a bookshop’s specialisms. (And deliver healthy book sales to boot.) In short, community runs through good bookselling like the words in a stick of rock, and good staff matter more in bookselling than perhaps any other retail sector.
Everyone in the world of books – publishers, authors, retailers, analysts – needs to be focusing more on their end customer: the person who buys the book. Historically (ie until a few months ago) publishers tended to view retailers as their customers, with (as John Makinson has noted) a B2B mindset at odds with the creation, marketing and selling of consumer products. Book trade people need to be aware of retailing best practice, and to understand how consumers and retailers are behaving in sectors far away from their own. We cannot integrate ourselves into 21st century lives while still behaving at one remove from our readers.
Finally, there is a common retail trend running through all sectors - fashion, homewares, electrical etc – and that’s a trend for fewer, better shops. We certainly have fewer bookshops than we had five years ago, and it seems likely that the number will continue to fall. Those that are left must be digitally integrated, and committed to a programme of continual improvement.
*GAFA: Google/Apple/Facebook/Amazon. Each is developing a vertically integrated suite of services and functions, as follows:
The walls around each of their gardens vary in height.
If you’re in the UK and have any interest in books, publishing and digitisation, can I commend the Bookseller’s FutureBook Conference to you.
There’s a packed day of activity on Monday, 5th December, at the QEII Conference Centre in Westminster. There’ll be keynote addresses from Stephen Page, Dominique Raccah and Evan Schnittman, and about 40 of the sharpest minds associated with the trade participating in discussion sessions throughout the day. Sessions will be covering digitisation, start-ups, gamification (no, me neither), and international opportunities.
You can read a full programme here – I understand some tickets are still available, but hurry.
I am chairing a discussion on the theme of “The new retail landscape”, with an excellent panel:
Jeremy Brinton, publishing consultant and former CEO of Dubai-based booksellers Magrudy’s
Robert Clark, Senior Partner at Retail Week’s Retail Knowledge Bank
Cameron Drew, head of Vendor Relations at international eReader developers Kobo
Julie Howkins, Commercial Director at Gardners distributors, responsible for the launch of the Hive
Alan Treadgold, Head of Retail Strategy at global creative agency Leo Burnett
It should be an excellent session. Hope to see you there.
And I’m not referring to squillions of self-published eBooks either.
Here are three chunky articles published over the past couple of weeks, digesting the Kindle game-changer:
1. Bloomberg Business Week on “Amazon, the company that ate the world”. When you read phrases like “Best Buy has watched Amazon undercut it and commoditize whole product categories, and is now trying to shrink the square footage of its superstores”, you appreciate that this is about a whole lot more than bookshops.
2. Digital Trends: “Rewriting the Rules: How Amazon could cut eBook prices by cutting out publishers”. ”Is Amazon championing the little guy here, cutting out the middle man and democratizing the publishing process? Or is the company primarily concerned with cutting publishers out of the loop so it can make more money on digital sales?”
3. Business Insider: “How Amazon makes money from the Kindle”. ”The Kindle ecosystem is also Amazon’s fastest-growing product.”
Thanks to the Twitterati for disseminating all these links.
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.
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.
I’ve just reminded myself that The Bookseller published an earlier blog from me, which arose from a splendid July day at the Chalke Valley History Festival. It went live while we were away, and it’s a bit more mellow than some of my industry overviews – mind you, I’m writing a presentation for Frankfurt at the moment, and the scope is overwhelming.
But we’ve got a little breath of Indian summer in Middlesex this afternoon, so here is an opportunity for you to read the piece.