Bricks vs. Clicks: How Publishers Are Affected by the Loss of Traditional Booksellers

One of the most prominent concerns in publishing today is the competition between printed books and ebooks. However, the means through which books are sold, rather than the general containers for books, is the more pertinent issue for the publishing industry (Shatzkin, 2014). With the loss of Borders and other brick-and-mortar bookstores, more and more book sales are being made online, helped in part by ebook sales (Pressman, 2014). While that may not initially sound like a bad thing for publishers, the online retail environment does not provide a level playing field. In fact, it introduces more obstacles.

Just like the majority of print book sales are made at retail chains like Chapters, online sales are dominated by Amazon. The original advantages of small independent bookstores possessing a knowledgeable staff and a variety of obscure titles cannot be replicated online where  customers can obtain information easily through search engines, book review blogs, and social media. They can then choose to purchase a book with better discounts and shipping at Amazon, who can afford to offer such deals over a little-known online bookseller.

Book retailers like Barnes & Noble are unable to compete with Amazon due to the latter’s dominance over both the print and ebook markets–the company has a 50% market share for books sold online (Rhomberg, 2013). No other retail chain possesses a prominent international and online presence either (Shatzkin, 2014). The concentration of sales made on Amazon produces other problems, considering Amazon has very different goals than those of publishers. Publishers want to make a profit from books, but Amazon is not concerned solely with sales. Instead, it is willing to offer cheaper prices because the company receives a 60+% discount on the books it purchases from publishers (Bercovici, 2014). What Amazon is focused on is gaining more customer data in order to expand its market (Esposito, 2014). Unlike book publishers, it supplies more than one type of product. In fact, books only account for 7% of the $75 billion Amazon has earned in total annual revenue (Bercovici, 2014). This is why Amazon can sell books without making a profit and not worry about how it affects the company’s overall revenue.

Besides Amazon, what has contributed to the increase in online book sales is the ebook format, which is only available in the digital market. Yet ebooks sales have, for the first time, begun to slow down, owing to a number of factors such as reduced sales in e-readers and blockbuster titles released the year before (Milliot, 2013). This alone does not mean that offline bookstores will experience an upswing in sales. The market has become more diverse and stable with regards to the different reading containers, but the conveniences offered by online bookstores, including a sense of immediate gratification, outweigh what their offline counterparts can provide to consumers.

Brick-and-mortar stores have attempted to alleviate their financial woes by selling more than just books. However, there are two issues to address. One, the independent stores simply cannot compete with Amazon, Chapters, and other retail giants based on supply or convenience because the retailers have the resources for expensive systems that can quickly and effectively process orders and inventory. Two, the other products offered in-store means less shelf space for books and likely less prominent space (window displays, for example, will possibly be devoted to other items, and books will be placed farther from the entrance of a store in favour of more commercially appealing products). Bookstores that are no longer just bookstores will offer fewer choices in terms of reading material, and publishers, particularly the smaller houses, will have to struggle even more in getting their titles into stores.

Because of the reduced opportunity in print sales, publishers will have to look elsewhere to sell their books. Namely, online. However, the digital market is far different than the traditional retail environment. In the online world, publishers do not have a marketing advantage over amateur publishers, ie. self-published authors; there are effective and inexpensive ways to gain widespread exposure for a title online such as word-of-mouth channels like social media and blogs. A second problem for publishers is the existence of Amazon, which, as mentioned earlier, does not share the same business viewpoint as publishers.

If getting books into physical stores becomes less important, publishers will struggle to gain new authors (Shatzkin, 2014). Though the more established firms may face less adversity because they can still provide attractive deals to high-profile writers such as larger advances. That said, with the change in how books are being sold, authors  may reconsider how they want to publish their works. Either they turn to the self-publishing route or they attempt to sign contracts with the bigger houses. In the latter case, only the most commercial manuscripts are likely to be published. Content will become homogenized in order to maintain consistent audience appeal (Shatzkin, 2014), and fewer experimental and unconventional titles will be released not only because there will be more difficulty in finding a large enough readership for the work but because there will be a lack of traditional bookselling venues for it.

For publishers to survive in the industry, it might mean finding a specific niche. General content will not sell unless the publisher has a well-developed brand. Despite how reading habits have declined (Weissmann, 2014), there will still remain audiences for certain genres. Yet this might not work for all publishers who will then compete with each other for an even smaller slice of the bookbuying market. In order for publishers to do more than survive, they will have to look for additional revenue streams. Like offline booksellers, publishers could consider offering something other than books, something that might tie in to their niche (Shatzkin, 2014). For example, outdoor books and outdoor supplies. In that case, book publishers will cease to be traditional publishers. As in the scenario earlier laid out for brick-and-mortar stores that choose to sell other products, publishers might be swayed into spending less time on developing new titles and more time on profitable products.

How publishers will fare in the future is uncertain. What is clear is that the digital market is becoming the choice for consumers. What publishers can do to offset the loss in offline sales is to find ways to take advantage of the online environment. One of the benefits of online stores is that there is no inventory cost and thus no returns. Publishers can make more of a profit selling backlist titles without worrying about stores returning their books. And though they still have to keep their stock in warehouses, the amount published and stored is likely to decrease because online orders can give a better sense of how many copies are desired by customers. In order to take full advantage of the digital market, publishers need to embrace non-traditional marketing methods and engage with their customers online. Though they will have to contend with Amazon’s reign over book sales, they can at least ensure that there is a place for their products in the online environment.

Bookstores themselves will not completely disappear. So long as readers continue to exist, so too will the demand for books, in either print or digital format. The traditional bookselling venues, however, will diminish in capacity, and the transition to a primarily digital market will change how books are both produced and marketed. If publishers can develop effective strategies to make use of the online environment, the publishing industry will continue. However, it will evolve into something that is no longer associated with what we now consider publishing.

Bibliography

Weissmann, J. (2013, January 31). The Decline of the American Book Reader. The Atlantic. Retrieved from http://www.theatlantic.com/business/archive/2014/01/the-decline-of-the-american-book-lover/283222/

Rhomberg, A. (2013, July 23). Is Amazon Invincible? Digital Book World. Retrieved from http://www.digitalbookworld.com/2013/is-amazon-invincible/

Milliot, J. (2013, November 15). A Mixed Blessing in Slowing E-book Sales. Publishers Weekly. Retrieved from http://www.publishersweekly.com/pw/by-topic/digital/retailing/article/60030-a-mixed-blessing.html

Esposito, J. (2014, January 22). Who Can Rival Amazon? The Scholarly Kitchen. Retrieved from http://scholarlykitchen.sspnet.org/2014/01/22/who-can-rival-amazon/

Shatzkin, M. (2014, January 23). The future of bookstores is the key to understanding the future of publishing. The Shatzkin Files. Retrieved from http://www.idealog.com/blog/future-bookstores-key-understanding-future-publishing

Shatzkin, M. (2014, January 29). Book publishing may not remain a stand-alone industry and book retailing will demonstrate that first. The Shatzkin Files. Retrieved from http://www.idealog.com/blog/book-publishing-may-remain-stand-alone-industry-book-retailing-will-demonstrate-first/

Bercovici, J. (2014, February 10). Amazon Vs. Book Publishers, By The Numbers. Forbes. Retrieved from http://www.forbes.com/sites/jeffbercovici/2014/02/10/amazon-vs-book-publishers-by-the-numbers/

Pressman, A. (2014, February 14). The book industry isn’t dying, it’s thriving with an ebook assist. Yahoo Finance. Retrieved from http://finance.yahoo.com/blogs/the-exchange/the-book-industry-isn-t-dying–it-s-thriving-with-an-ebook-assist-191025547.html

One Reply to “Bricks vs. Clicks: How Publishers Are Affected by the Loss of Traditional Booksellers”

  1. Jesmine, I think you did a fantastic job balancing out the advantages and disadvantages of brick-and-mortar vs. online bookselling environments. They have their specific benefits but I particularly appreciated reading your comparison of their motivations. I think it was a unique angle for assessing their impacts on the publishing distribution model. I think most of us agree that hand-selling at physical stores is an irreplaceable service – gaining recommendations first-hand and sparking personal connections is a priceless characteristic of this industry. It’s an experience that just can’t be replicated in the online environment, despite chat functions, comment boards, etc. I don’t think we’ll ever lose these social hubs, and physical bookstores won’t go away but they will absolutely evolve. I was in a current issues in publishing classes in Melbourne and we talked about how libraries and bookstores will become less of physical book repositories, but more like “book showrooms”.

    I think it’s very important that you brought up the issue of space. “Real life” conversations generate excitement about a work or an author, but it’s difficult to nurture these talents without sales – and you can’t make a sale if you don’t have the room to stock the books you’re recommending. So in comes Amazon and they have the resources to handle this immense inventory and bring books to market that couldn’t make their way on physical bookshelves in chain and independent stores. And let’s not forget the upside to this – it encourages people to buy more books at a cheaper price, could increase literacy, the expansion of imagined communities/subcultures, etc.

    I did appreciate your focus on how we should be suspicious about WHY Amazon sells books. They could do just as well without this market it seems, and it does appear rather selfish that they’ve monopolized this arena and taken sales away from booksellers to track consumer habits and push complementary products that have wider profit margins. This is going to sound ridiculous, but I’m reminded of the John Carpenter movie, They Live (1988). Bear with me. So the main character Nada played by Roddy Piper – or “Rowdy” Roddy Piper for those WWF fanatics out there – lives in a world where aliens have taken over and comprise the ruling class. They imbed subliminal messages in mass media to encourage the public to spend more money and conform to their hegemonic rule. But Nada’s got his hands on these special glasses that reveal the manipulative and consumerist messages behind these ads. So I’m not saying that Amazon is a ruthless group of money-hungry aliens, BUT, I think it is pretty sneaky of them to appeal to booklovers for more self-serving reasons. So I applaud you for providing us with a clear lens, just like Nada’s, for exposing the reality of their business.

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