Sunday, January 9, 2011

New Years Begins With a Bang and a Whimper

Well, it's a new year and things have certainly gotten interesting quickly. Of course, for some that means interesting in the proverbial sense of the word. So, let's start with the elephant in the room and go from there.

The elephant this time is Borders. Or perhaps I should say the elephant is still Borders. The troubled bookstore chain started the New Year by laying off a number of high ranking executives. Then came the news that they had “stopped writing checks to key suppliers”. Going hand in hand with the latter was news that they were going to ask these same suppliers to push back payment dates for stock already on hand. What you have to remember is that these "suppliers" are the publishers. Publishers who are already feeling the pinch of fewer sales, the declining economy and such. Publishers who will be pushed by Barnes & Noble and other booksellers to extend the same concessions to them that they offer to Borders. Am I the only one who sees what a disaster this will be for all parties involved?

In related news, word of the probable implosion of Borders caused Credit Suisse to upgrade Barnes & Noble shares. In explaining this move, Gary Batler explained that B&N would benefit if Borders winds up closing all its stores. The increased sales for B&N should this occur is estimated to be 18% of Borders's sales. In the same article, it noted that since the introduction of B&N's ebook store, they have secured approximately 17 - 20% of that market, a much larger share than Borders which has no dedicated e-book reader coupled with a very late entry into the e-book market.

On the e-book front, USA Today reported that in the week after the holidays, e-books came out on top of print books. "
E-book versions of the top six books outsold the print versions last week. And of the top 50, 19 had higher e-book than print sales. It's the first time the top-50 list has had more than two titles in which the e-version outsold print."

Does this mean we're at that tipping point yet? Possibly. If not, we are so close it wouldn't surprise me to see it happen soon.

Finally, a report has come out noting that students still prefer hard copy textbooks over digital versions. (Scroll down to Notes: Students Like Printed Text Books). Remembering my own student days back in the Dark Ages, I can understand. There is still something about being able to highlight and write in the margins...or to draw descriptive pictures of a certain professor that you just don't get with most e-book readers.

So, e-books are on the increase despite all the cries from traditional publishers over the years that they would be nothing but a flash in the pan. Borders is in serious trouble and that trouble is flowing right back to the publishers -- with potentially catastrophic results for some of those publishers. Are e-books to blame? No. Or at least not in the main. Mismanagement, over-expansion and failure to understand the changing demands of their customers are all to blame. Add in a sluggish economy, people who don't read as much as they used to -- and, sorry, I don't buy the argument it's because we get all our entertainment from TV, etc. A big part of it is because stores aren't stocking books we want to read and that is because management has gone to regional or even national purchasing instead of allowing mangers to stock what they know their customers want. A larger part of the blame falls onto the heads of publishers who stumble upon a best seller and then decide that readers want only that sort of book and so they push it at us until we quit buying. How many poor clones of The Da Vinci Code were there? Worse, how many sparkly vampires and emo werewolves have we been forced to endure of late?

To combat this trend, a number of small e-presses have emerged (and, in full disclosure for those of you who don't know, I'm the senior executive editor for Naked Reader Press. But I am also a writer, so these trends are important to me on both fronts.). Authors are starting to bring their backlist out in digital format. Why? Because it is answering a need the readers have been voicing for years, a need that has been denied for any number of reasons -- not always good ones -- by traditional publishers.

Where this will end, no one really knows. But the next few months/years are going to be exciting, scary and tumultuous in the publishing industry. What do you think will happen?


C Kelsey said...

Where this is going is anybody's guess. A few things that have a occurred to me. Over the holidays I read W.E.B. Griffin's latest, "Outlaws" on my dads Kindle. It was simple, convenient, and the font and screen were pretty easy on the eyes. Also, I have an odd tendency to read in funny positions. This puts a lot of stress on my wrists if I'm reading large HC's (like Clancy's latest. That was a 950 page monstrosity!). The Kindle didn't do that because it's not that heavy. That's nice.

For real serious work though I have all of my manuals and whatnot in e-format. I usually have to print them out. It's faster to find the section I'm looking for in a print out than it is on the computer.

If I had to guess, I would think that we're shortly going to see ebooks truly dominate the casual reading market. Whether the same happens in the technical/non-casual markets will depend on formats and upcoming technologies. From my understanding there is actually more money in non-fiction than there is in fiction, so I expect that someone soon will develop an appropriate e-format and we will see other markets slowly start to pace the fiction ebook market.

MataPam said...

It's beginning to look like "How badly" needs to be tacked onto the question of "Will the industry implode?"

I'm boggling over the idea of the publishers having no outlets for their products beyond and the independants that survive.

Or will Borders take some publishers down with them, leaving B&N with empty shelves?

However, on the eBook front, I tracked down an old favorite fantasy writer who'd gone to mysteries, Barbara Hambly. I was delighted to find "Further Adventures" short stories from her discontinued fantasies available for download. Now they were pretty steep, at $5 a pop, but for a starved fan . . .

More and more established writers are finding eSales profitable.

What will happen, if the publishing industry implodes . . . and no one cares?

Chris Large said...

I agree that franchises who buy in bulk, and then push hundreds of books out into areas that don't want/can't sell them cause themselves big problems. It's just not good business, but this sort of thing occurs in most industries.

I commented on Sarah's blog that in Oz, a paperback novel will cost between $17 and $25, as opposed to $7-8 in the US. Yes this price includes tariffs for oversees authors, but Ozzie authors cost the same. From memory, there was a government pricing enquiry a few years back and the findings were that prices are justified.

Perhaps this is what's required to keep the print industry afloat? But to compete with e-books on that pricing scale... I'm sure Dave has some ideas on this.

I dread paper books disappearing. I love buying the physical object, opening it and smelling that new book smell -- Caressing the cover -- oh sorry. Too much information. Point is, I pay the extra money because I like books - as well as what's written in them. In my view, e-books aren't books, they're digital documents. I'm not saying there's anything wrong with the writing - but they're not books.

Though, I fear people like me are a dying breed.

sperf? A spooky smurf?

Amanda Green said...

Chris, I have the same issue when reading what I call the goat gaggers. I love a nice long story that is well plotted, with great character development. Unfortunately, those are about as easy to curl up with as a computer. That's when a kindle or nook or similar dedicated e-book reader comes in handy. It's the same basic argument about being able to travel. Since I have to have plenty of reading material, an e-book reader is pretty essential in this day and age of airlines charging for luggage (Okay, I admit it. I am cheap and refuse to pay extra unless I have to.)

I've found more and more manuals and tech related books are coming in pdf format. I can understand that, to a degree. The issue is that there are still problems translating pdfs into an easily read and navigated format for e-readers. The screens, on the whole, are too small for most pdfs and there's the whole image thing as well. I assume a lot of this is dealt with with the iPad and similar tablets. But then you get into not only a size aspect -- I've heard a lot of folks complain about how much the iPad weighs -- but also a cost issue.

But, with each day that passes, these issues are being solved. Look t how much the kindle has come down in price since it was first introduced. While the iPad may not do so -- Apple is notorious for not decreasing prices much -- there will be other tablets coming onto the market that will be more in line with the casual users' price point.

As for printing out your manuals -- I understand completely. I do a lot of that as well. I don't know if having it on a tablet would be any different. It might be interesting to find out.

The future of e-books and digital publishing is going to be say the least.

Amanda Green said...

Pam, I actually think the correct question is "how badly will certain parts of the publishing industry implode?" This is simply because there will be a number of publishers -- yes, a lot of them will be smaller, newer and less tied to old business models -- that manage to ride out the tidal wave that's coming. Some of the bigger publishers will as well. But they will emerge on the other side different from how they went in. It's just a question of how different.

I think there will be outlets beyond Amazon and the few independent booksellers simply because I think we'll see B&N reshape, especially if they see Borders go belly-up. Something like that does tend to shake you up and make you start looking at what's going on.

I read somewhere that part of the problem with Borders and B&N is that something like 70% of their stores overlap in territory. I'm actually surprised that figure isn't higher. All I have to do is look at the DFW area. There are, iirc, 19 B&N stores in this area. Add in 10 Borders and you have 29 stores within 25 miles of my front door. I can't help but think they have over-saturated the market.

Will Borders take any publishers down with them? I don't know. I'm afraid that it is possible. Especially if some of the publishers are operating as close to the edge as I suspect. But, that's when we'll see bankruptcy courts getting involved and reorganization plans and who knows where that will lead.

Amanda Green said...

Chris L, you may be right about pricing. We may need to accept the fact that physical books -- soft cover or hard -- will cost much more than we're used to paying. The thing is, I've got not problem with that. I don't buy that many physical books any longer. Those I do are by authors I really enjoy and want to be able to curl up in bed or before the fireplace and caress the book...oops, waaaaay too much information ;-p

The problem is, until the some of the publishers adjust to current tech and demands, they will increase the price not only of physical books but of e-books as well. Most folks have no problem at all paying $5.99 or so for an e-book. For a "best seller", $9.99 is acceptable although there is a lot of grumbling. But when publishers start charging $15 or more for e-books (and I am talking novels here), the cries of "Boycott!" and "No way!" go up loud and strong.

What really is needed is for the major publishers to undergo a major attitude adjustment -- not just about e-books but about what readers want. Book sellers like B&N and Borders need an attitude adjustment on stocking and hiring employees who know their stock. And, whether we want to admit it or not, readers need an attitude adjustment when it comes to taking care of the writers we enjoy. We need to BUY their books, in dead tree or digital, and we need to let them AND their publishers know how much we enjoy them. At least if we do that, the authors will know what of their backlist to bring out digitally when the rights revert back to them.

Anonymous said...

I don't think e-books will ever make print books extinct, at least not until they're easier to manuever. While I mainly read e-books these days, I still prefer the hard copies of anthologies. You just can't skim and reference quickly on an e-reader. That's one reason students prefer hard copies...they need to reference back and forth all the time. E-readers do not give you skimming and hunting possibilities like hard copies.

So, bottom line, straight-line read books will kick butt on digital format. But maybe not so much on the others.


Kate Paulk said...

Personally, I think it's going to get ugly. I suspect we'll see well-known authors shilling for their publishers and publishers using them for all they can get. I suspect we'll also see publishers refusing to release rights for books that have been out of print for a long time.

There's certain to be an even more desperate scramble to keep control of the entire crumbling edifice where editorial fiat could determine how many books sold (at least, how many appeared on the books as being sold. What happened to all those other purchased copies out there is an exercise for the reader).

Amazon will use its muscle to make sure it stays on top of the ebook distribution network. They don't seem to care much about what's selling, so long as they can keep making money from it - while this isn't ideal, it's better than certain chains refusing to stock certain publishers for ideological reasons.

I suspect there'll be a lot of consolidation into fewer brick and mortar stores, but probably not doing a better job of supplying books that people actually want to read.

It will be messy, it will be ugly, and a lot of people - authors, editors, and distributors - will find themselves chasing a new career.

What emerges out the other side? I hope it's an improvement, but I'm hesitant to suggest that things can't get worse because every time I even THINK such a thought, life promptly proves me wrong.

Let's just say that it would take a phenomenal dose of stupid in lots of places to get worse, and leave it there.

Stephen Simmons said...

Some random ruminations off the top of my head before I read all the commenst that have already been made ...

I'm in my mid-forties. That means that SF, "my" genre, has been referring to "old-fashioned paper books" literally since before I was born. Every one of these publishers has published at least one book carrying that phrase, and every one of the big-box booksellers stocks hundreds of titles bearing those words. Yet everyone was surprised by the onset of the changeover???

Big-box stores, like shopping malls, are facing a cultural crisis right now. Ten years ago, "acceptable driving distance" to get to a store or restaurant was about eight miles. Now, as the changing job market has pushed us into tolerating longer commutes, it's two to three times that, in most metropolitan areas. Which means that restaurants, malls, and big-box stores are finding themselves too close together for today's world. There's a great book about the cultural change from the nineteenth century to the twentieth, called "The Three Mile-Per-Hour World". We need to readjust our consumer models for the seventy-mph world, I think.

The decline in reading isn't, imho, because "people have other entertainment options". I have watched, sadly, as the school system has done its level best to teach my children's peers that reading is drudgery, an onerous burden to be endured when one can't find any way to weasel out of it. This is a FAR cry from the education I remember getting thirty years ago.

Okay, now I'll go read what other (almost certainly wiser) folks have had to say ...

Stephen Simmons said...

Okay -- Amanda, yes, I agree completely about traveling with large quantities of reading material. Packing for deployment, I was typically limited to roughly 50-60 paperbacks by the inescapable physical limitations of the space I had available on the submarine -- and that simply wasn't enough to see me through a six-month run. A Kindle or Nook would solve that with LOTS of space left for extra pairs of socks and unmentionables ...

More on the evolving business model: McDonald's pretty much invented the concept of "convenience food". And they still firmly lead their market-sector, despite the proliferation of competitors. Why? Because they know who they are, and they strive to be THAT, better than anybody. When Domino's Pizza invented a whole new aspect of the convenience-food business (the equivalent of what Amazon did to bookstores, almost literally), Mickey-D's DIDN'T hire delivery drivers. And they didn't branch out into pizza. I think that everyone in the business, at whatever level and in whatever role, needs to be very careful in the coming weeks/months/years to make certain they know what role they are playing, and be very careful not to lose focus.

Amanda Green said...

Linda, I don't think we'll see the end of hard copy books. There is always going to be a market for them. For the near future, that's going to be because there will just be people who prefer paper to electrons. Also, as you pointed out, a physical book is easier to scan or flip through. Even when those concerns become moot, I think there will still be niche markets for physical books. At least for a very long time to come.

Amanda Green said...

Kate, as you and I discussed last night, I agree completely with you. I think the final straw that will break the publishers' camel back will be when authors start asking for complete and accurate accountings. They are able to see through their own e-book sales and through their own subscriptions to bookscan what their numbers are -- or should be. There are competitors coming onto the marketplace for bookscan that will allow authors to double check those numbers. If a group of mid-list authors or even best sellers should ever get together and demand such an accounting, well, the fall-out probably will be very ugly.

Amanda Green said...

Stephen, I don't know it was so much as they were surprised by the changeover as they just didn't want to admit it was happening. And, when they could no longer deny it, they did their best to quell the change-over. Why? Because it didn't fit their business plan and it was easier, in their minds at least, to try to stop or at least slow down the new adoption of the new tech than to change their business model. Does that make sense? Absolutely not. But it is what appears to have happened. The sad thing is, most of them are still playing ostrich and sticking their heads in the sand.

Your comment about "acceptable driving distance" sounds about right, too. Also -- and this is a big issue with me -- these big box book stores don't act like book stores any longer. When you walk in, you see as many toys and non-book related items as you do books. Compounding the problem is a lack of knowledge of the stock by those who work there. I can't tell you the last time I actually received a recommendation from an employee at one of these stores.

And don't get me started on what the schools have done to kids and reading. I think I've mentioned here before how my son, who as a boy was an avid reader, hit third grade and quit reading. Why? Because the teacher used it as punishment. Then there are the books they assign as required summer reading. You know the ones I mean. The books that are "socially meaningful" -- in other words, books that paint all teenagers as having either mental or substance abuse problems, if they aren't pregnant or living with abusive parents. Thank goodness my son was fortunate enough to have a wonderful teacher in high school who assigned him such books as Good Omens and rekindled his love of reading AND of writing.

Amanda Green said...

Stephen, I love your business model example. It is true for McD's and others. The problem I've seen with the big box stores is they came in -- just like Walmart has been accused of doing -- and ran all the independent stores out of business. But, unlike Walmart that adapts to the neighborhood a particular store is in, these big box bookstores dropped their policy of allowing their managers have an input into stock and have gone to regional and national ordering. So, you can walk into a store in NYC and find the same books as you would in Ardmore, OK. Believe me, Ardmore does NOT have the same taste in books as NYC. Nor should it.

On a side note, this mentality isn't just in the bookstore business but is endemic to publishing related businesses. A couple of years ago, there was talk of outsourcing our local library. The company bidding for the contract -- the only company in the country to manage outsourced libraries -- used as a selling point the fact it would be just like Walmart. Because it could order books in bulk for all the libraries across the country it managed, it would save our city money. Needless to say, the idea of having a library stocked the way every other library in the country was stocked and not according to our community's desires was one of the main reasons we voted down the outsourcing.

MataPam said...

And a point that came up as I read Dave's post . . .

If writers think they've been systematically underpaid, at what point do they sic the lawyers and accountants on their publisher for an audit? If the company goes into bankruptcy, they need to get their claims in, no?

And with ebooks taking off, there's much less downside to a wrangle with your publisher(s).

That's one more debt than the publishers may be planning for.

Stephen Simmons said...

Amanda, there is a certain amount of irony here ... the one in my house who rants endlessly about the disservice our schools are doing in the area of reading is my seventeen-year-old daughter. Thing Two consistently shocks Enlish teachers, because she LOVES to read, despite mild dyslexia that makes her read very slowly. While she is a rabid Harry Potter fan, her favorite book ever is "A Tale of Two Cities". She is forever raging about the stupidity of the school system's choices -- and about her peers, many of whom don't read anything at all that isn't assigned.

People in stores who know what's on the shelves ... twenty-plus years ago, I went into a Waldenbooks in a mall in Albany, NY. When I asked where their SF/F section was, the girl walked me to it, rather than pointing, and asked what sort of stories I was looking for. I admitted that I had read a couple of Norman's "Gor" books, and I said that I wanted stories that good without the "ick" -- and without hesitation she turned around and plucked Saberhagen's "First Book of Swords" off the shelf. Try that today.

I've been revisiting my earlier comment about driving distance, and I think I only hit part of the question. Certainly, the big-box has orders-of-magnitude more overhead cost to support its inventory than a much smaller mom-n-pop shop would have -- but less than the five or six highly differentiated mom-n-pop's it would take to come close to approximating the range of that inventory. Theoretically, the economy of scale should enable one big-box to live on the same "turf" that supported those five-or-so indie stores, without them becoming too thickly-seeded. Except that online sales have to be considered too.

Because the savings come at the cost we were just talking about, that the staff CAN'T know all of the merchandise in those acres and acres of shelves. That's the real advantage Amazon has over Borders -- instantly-available customer reviews can take the place of those knowledgeable clerks. If they really want me to pry my posterior off of the upholstery and peregrinate to their proximity such that I might patronize their places of prose purveyance, they really need to provide some tangible service that will make the effort worth my while ...