Amazon has acquired a patent for “anticipatory shipping,” a system that predicts your future purchases based on previous buys, site searches, and how long you linger on a particular item. Then they ship the item to a warehouse nearest you before/in case you order it. In the future, they may even load it on a truck before you click “buy.”
Why E-Books Need Print to Thrive
Borders and Barnes & Noble killed independent bookstores. Amazon killed Borders. Now Barnes & Noble, which sells more than 20 percent of pulp-and-ink books in the U.S., is under siege.
If B&N collapses: the death of books.
You may remember such classics as “How the Internet Slaughtered Newspapers” and “How Napster Decimated the Music Business.” It’s always the same story: Digitalization destroys profits.
Whether it’s newspapers, magazines, CDs or books (“pBooks,” they call them now), the electronic assault on tangible media follows a familiar pattern.
First: Pricing is set too low; margins get squeezed.
I pay $43 a month to get The New York Times delivered; new digital-only subscribers get the app for $5. In the book biz per-unit net to publishers is actually a few cents higher for e-books. But that margin is deceptive. “If e-book sales start to replace some hardcover sales, the publishers say, they will still have many of the fixed costs associated with print editions, like warehouse space, but they will be spread among fewer print copies,” notes the Times. E-books also eliminate paperback editions, a big second chance for publishers to break into the black.
Second: Piracy runs rampant.
Piracy of print media was virtually unheard of. But digitalization makes piracy tough for even the most honest consumer to resist. It’s easy and it’s fast. E-book knock-offs look and feel exactly the same as the real thing. As of the end of 2011 an estimated 20 percent of all e-books downloaded onto Kindles, Nooks and iPads were pirated. That’s a 20 percent pay cut to authors, agents and publishers—a number that will only go up.
And “legal piratization” is on the horizon. On February 6th a federal court in New York City ruled that ReDigi, an online marketplace for “pre-owned” MP3 files, can continue to operate pending the outcome of a lawsuit by Capitol Records. And public libraries are already “lending” e-books to multiple “borrowers” with the click of a mouse—the same process as buying them. But free.
Third: à la carte sales whittle down revenues.
Twenty years ago if you liked a song you heard on the radio you paid $14 for a CD that had 14 songs on it—13 of which might be filler. iTunes’ 99-cent songs brought back the single—but cheaper. (45s used to cost $3.) The result: the collapse of the music biz. According to Forrester Research, total U.S. music sales and licensing revenues fell from $14.6 billion in 1999 to $6.3 billion in 2009—a decline of 57 percent in a decade. People still liked music. They just didn’t have to pay for it anymore.
There are already apps that sell e-books by the chapter. Some publishers give away free chapters as samples. Why should a college student assigned to read chapter two pay $40 for the whole thing? À la carte book sales will further depress profits.
Why should you care if traditional publishers go under? What about the democratizing effect of the Internet, which allows anyone—not just big-name authors hooked-up with fancy well-connected agents—to publish a book?
Granted, digitalization opens doors for writers who might never have been able to break through the “no unsolicited manuscripts” wall that surrounded old-media gatekeepers. Elitism was and remains a problem.
But there’s a bigger problem: removing the profit incentive from books means more titles about vampires and werewolves and fewer in the fields of history and sociology. Because lower profits make it tougher for publishers to invest in big time-intensive projects, it deprofessionalizes our highest form of popular culture. The historian Robert Caro began working on his brilliant five-volume biography of Lyndon Johnson in 1982. He expects to finish in 2015. Tiny digital royalties eaten away by piracy couldn’t have sustained Caro’s research for three years—much less 32.
“Inside [the Kindle’s] plastic case, other things lurk,” Sarah Lee writes in the UK Guardian. “Sci-fi and self-help. Even paranormal romance, where vampires seduce virgins and elves bonk trolls. The e-book world is driven by so-called genre fiction, categories such as horror or romance. It’s not future classics that push digital sales, but more downmarket fare. No cliché is left unturned, no adjective underplayed.”
Goodbye, Mr. Caro. Hello, 99-cent fan fiction.
You might not care. But you should.
Fourth but not last: the loss of a product’s brick-and-mortar distribution outlets reduces consumer consciousness of a product. In New York, where I live, all the music megastores—Tower, HMV and Virgin—are gone. So are most small record stores.
I used to spend at least one day a week hopping from one CD store to the next. I probably spent $50 to $100 a week on music. Now I spend the same amount in three months. I still love music. I just don’t think about it as often. iTunes is just a list of names and titles.
Now Barnes & Noble and what’s left of the independents are all that’s standing between an uncertain present and a disastrous—music-like—future.
“Sure, you can buy bestsellers at Walmart and potboilers at the supermarket. But in many locales, Barnes & Noble is the only retailer offering a wide selection of books,” notes The New York Times. A broad, deep book industry requires retailers willing to sell midlist titles and books that don’t do well—i.e., most of them.
Publishers say they want to save B&N, which is locked in an existential fight against Amazon. Things turned ugly after Amazon urged bookbuyers to visit stores in order to use their smartphones to scan barcodes of titles so they could buy them elsewhere—online, from Amazon, at a discount. B&N retaliated by banning books directly published by Amazon from its stores.
Amazon says it doesn’t want to drive B&N and other brick-and-mortar stores out of business. Their actions belie that. But if Amazon management were smart, they would subsidize stores like B&N. Remember what happened to the music biz when record stores disappeared—the overall music business cratered. All music sales, including those of iTunes, would be higher today if Tower et al. were still around.
Sadly, Amazon doesn’t seem smart. Like most American companies, it’s looting its own future in favor of short-term, quarterly lucre.
“Shopping on Amazon is a directed experience—it works best when you know what you’re looking for,” says Charlie Winton, CEO of Counterpoint Press. “But how does that help with, for instance, a first novel? When independent bookstores were in a healthier state, staff picks and hand selling could bring attention to great books people didn’t know they wanted. Now that’s much harder.”
And many of those bookstore “customers” would have eventually bought that book from Amazon.
E-books are here to stay. But there’s a way to save the overall book business for both print and electronic editions. The solution requires three parts.
Congress should join the other countries that have major book industries in passing a Fixed Book Price Agreement, in which booksellers and publishers agree on what price books may be sold nationally—i.e., no $25 books selling for $10 at Costco. In France and other nations studies have shown that FBPAs protect independent stores, increase the diversity and quality of titles sold, and support more authors.
Recognizing the unique cultural contribution of books as well as the threat to our national heritage posed by digitalization, Congress should exempt publishers from antitrust laws. This would allow publishers to collude to set prices and hold the line against predatory discounting.
Finally, publishers should flip the current arrangement, in which Amazon enjoys steeper discounts than brick-and-mortar stores. Even if Amazon gets charged a higher wholesale price they still have big advantages; many people don’t live near a store or are simply too lazy to visit one. And they carry everything.
It’s more than a question of preserving print as a fetish commodity. E-books won’t thrive if their print forebears vanish.
COPYRIGHT 2012 TED RALL
Borders Goes Bankrupt. Will Books Survive?
Borders Books and Music, which once employed 30,000 workers at more than 600 stores, is bankrupt. Those numbers have been halved. And even after these massive cuts, analysts say, Borders is probably doomed.
The next time you walk past the empty ghost store where your local Borders used to be, you may ask yourself: Are we becoming a post-literate society?
Everywhere you look the printed word is under economic siege. Despite a 20 percent increase in demand in recent years, libraries are laying off, closing branches and reducing hours. Newsweek, one of the most venerable titles in magazine history, was recently sold for a buck (plus a promise to assume tens of millions in debt). Twitter is priced at $3.7 billion, nearly twice the public enterprise value of The New York Times ($2.03 billion).
The key word, of course, is the one in front of the word “word”: “printed.” We are reading more than ever. Just not in print.
According to a fascinating new study conducted by the University of Southern California, 94 percent of all data is now stored in digital form. (That ticked up a point as you were reading this.) Thanks to the Internet and various gadgets we read about 4.3 times more words each day than we did 25 years ago.
The more words we read, however, the less we want to pay the people who write them. The Times of London lost 90 percent of its online readership after it put its website behind a $4-a-week pay wall.
Why does this matter? Quality. The Huffington Post, recently sold to America Online for $315 million, points to a possible future in which the rewards go to ruthless aggregators who cater to Google common search phrases with slideshows about kittens and Lindsey Lohan. They rely on free blogs for most of their content. We’re getting exactly what they pay for: crap.
If you think journalism is bad now, it’s going to get even worse. The message is as loud and brassy as Arianna: real journalism doesn’t pay. Inevitably the best and brightest are gravitating to other fields.
Another unintended consequence of the digital revolution is lower memory retention. I recall significantly more of what I read in print than online; I’ve found the same to be true of my friends.
Norwegian researcher Anne Mangen told Boston Globe columnist Alex Beam about a paper she published in The Journal of Research in Reading. Mangen believes that we remember more of what we read in print than on a computer screen. This additional retention is due to variables that serve as unconscious memnonic devices: fonts, position of text, images, paper texture, etc.
“The feeling of literally being in touch with the text is lost when your actions—clicking with the mouse, pointing on touch screens, or scrolling with keys or on touch pads— take place at a distance from the digital text, which is, somehow, somewhere inside the computer, the e-book, or the mobile phone,” argues Mangen. “Materiality matters…One main effect of the intangibility of the digital text is that of making us read in a shallower, less focused way.”
My personal experience convinces me that there is a difference. On the Kindle, everything looks and feels the same. When I read the Times on newsprint, part of what helps me remember a story is the ad that ran next to it and the photo underneath. Sure, Kindle readers remember much of what they read. But not as much as old-fashioned bookworms.
It is hard to quantify the value of a country’s intellectual life. But as Americans read more and more, less of it printed, it is difficult to avoid the conclusion that we are losing something precious and irreplaceable.
So what’s the solution? European booksellers, publishers and newspapers receive generous government subsidies. Here in the U.S., where pseudo-free markets are a national religion, the feds bail out billionaire bankers, not bookstores.
In order to successfully compete with online sales and e-books, brick-and-mortar retailers will have to learn the lesson of Borders: middle of the road equals mediocre.
Beginning at least ten years ago Borders buyers began eschewing risks. Buying into the “blockbuster mentality” of stocking stacks of sure-thing bestsellers, they stocked fewer books by midlist authors—profitable, but not bestselling, titles. Browsers found fewer surprises at Borders. As for top-selling books, they’re cheaper at Costco and on Amazon.
Barnes and Noble has been struggling too, but their strategy seems to stand a better chance than Borders. B&N’s inventory is wide as well as deep. The fronts of their stores feel “curated,” the way good independent stores bring in customers with the promise of discovery and serendipity. If consumers want something obscure, odds are there’s a copy or two in the back, spine out.
It’s a frightening thought: America’s intellectual future may depend on the fate of a superstore.
(Ted Rall is the author of “The Anti-American Manifesto.” His website is tedrall.com.)
COPYRIGHT 2011 TED RALL
Amazon has just released my first-ever Kindle edition, this of “The Anti-American Manifesto.” It’s $9.99 and can be purchased here: http://www.amazon.com/The-Anti-American-Manifesto-ebook/dp/B004E9S7TE/ref=sr_1_2?ie=UTF8&m=AG56TWVU5XWC2&s=digital-text&qid=1291823241