Everything Must Go

Warning! Unless you're particularly interested in the book trade, this is a long, dull post. If you are particularly interested in the book trade, then you probably already know this...

I remember visiting the first UK branch of Borders, back in the late 90s and thinking that I had seen the future.

Compared to the average Waterstone's, it was bright and airy, with an exciting range of products (I was particularly impressed by the listening posts for CDs). The buzzword in those days was "lifestyle" and the whole ethos of Borders was to create a place where people could "hang out", meeting friends for a coffee, going to a poetry reading or listening to the latest World Music CDs.

A bit like being in an episode of "Friends".

Like most people, I had no idea that I was watching a firework in its final stage, releasing one last spectacular volley of flares. The new Borders store turned out to be one of the last examples of a type of retailing - large stores with huge stockholdings - that would shortly become an anachronism. Once broadband was introduced, internet shopping quickly reached the tipping point and those lovely CD listening posts suddenly seemed ridiculously antiquated.

I was completely wrong about Borders, but I was right about the internet. In 1997, during a drink with a senior figure in Ottakar's (not James Heneage, I hasten to add), I said that it was imperative that we launched an internet site as quickly as possible. He snorted and took great delight in telling me that only 1.5% of the population shopped online and that the figure would only change slowly over time, as most people still weren't comfortable with computers. I wish we'd bet money on it.

Over a decade later, the book chains all appear to be on the brink of collapse. In the USA, Borders are about to go bankrupt and whilst some commentators have blamed years of mismanagement, the truth is that they have merely accelerated the chain's inevitable demise.

Barnes and Noble had a strong management team and embraced the digital age, but it still wasn't enough. Recently Leonard Riggio, the founder of Barnes and Noble, joked "Sometimes I want to shoot myself in the morning."

On this side of the Atlantic, British Bookshops have just gone bust and the management team of Waterstone's have been congratulating themselves for only losing 0.4% in last year's like for like sales.

Given the overall decline in high street sales, -0.4% looks quite promising - certainly much better than its ailing parent company, HMV. But considering that Borders UK ceased trading at the beginning of 2010, it's a pretty dismal result. Waterstone's should have grabbed enough of the Borders market share to come up with some positive figures.

Now that Waterstone's is the last man standing out of the high street bookselling chains, it can only survive by closing its loss-making stores (of which there are a growing number). 20 have already been ear-marked, but I suspect this is only the tip of the iceberg (particularly if HMV are forced to sell the chain).

Nice poster, shame about the dumbed-down text. And where are the books?

It's not all bad news for Waterstone's. They still have a significant share of the UK market and there is a core of thriving, profitable stores that have many years left in them if they can free themselves from the shackles of HMV and return to their roots. But overall, I can't help feeling that the age of the chain booksellers was just a brief interlude in the long history of bookselling.

In an article I read recently, someone neatly summed-up the problems facing the bookseller:

The Seven Deadly Paradoxes of Bookselling:

1. The better the bookseller and the more representative their stock, the less chance they have of selling it.

2. The harder a book is to sell, the smaller is their reward for selling it.

3. (The converse, which is more deadly than it first appears.) The easier the book to sell, the greater the reward.

4. The sooner they sell their stock, the longer they must wait before they can replace it on the same terms.

5. In buying the season's new books for stock they must recognize at sight and sometimes at the sight of the jacket only - the merits of their contents.

6. Readers are increasing; purchases are dwindling.

7. The window is their most valuable, and almost their only, advertisement; to be effective it must be in the main part of the town. Few can afford that position.

You may be surprised to learn that these words were written 75 years ago, by Basil Blackwell in a title called "The Book World - a New Survey". Conditions may have changed since 1935 (in Blackwell's day, the enemy was the public library), but the basic principles are the same: sales can rise or fall; rents only go up.

Until recently, it looked as if it was a straightforward battle, with the high street chains losing a war of attrition against the supermarkets and internet booksellers. But just as we were adjusting to the new bookselling landscape, the Kindle suddenly appeared on the scene, shortly followed by the Sony e-Reader.

A couple of years ago I was congratulating myself for swapping high street bookselling for the internet. Little did I know how soon the goalposts were going to move again.

Keen to reduce their warehousing costs and stay one step ahead of the competition, Amazon have been aggressively promoting the Kindle. When e-books started to appear on Amazon's bestseller charts, they were accused of manipulating the figures to stimulate demand. But according to Jeff Bezos, millions of people now own Kindles and the demand is growing by the day, with Amazon selling around three in every four e-books.

In the UK alone, it is estimated that several hundred thousand people received Kindles for Christmas, so the tipping point has definitely been reached, but where does that leave the rest of the book trade?

This post is all ready far too long, so I'll be brief. Here are, in my opinion, the main issues facing the book trade today:

• The decline of the high street chains will be accelerated by the advent of the e-book. However not all book formats lend themselves to the Kindle, or even the i-Pad. Children's books will contiue to thrive on the printed page, particularly books for young children. Paperback sales will dip sharply, but there will still be a market for titles with high production values. Bricks and mortar booksellers who can adapt to these niche markets stand more chance of surviving.

• If the high street chains collapse, then publishers will find it increasingly harder to develop and promote the next generation of authors. Fewer titles will be published and first-time novelists will struggle more than ever.
  

• Amazon are taking a risk with the Kindle. If the encoding of e-books is cracked, they could be downloaded and shared as easily as MP3s. If that happens, then publishers, agents, booksellers and authors will see a substantial loss of income.

• With the advent of the i-Pad and its inevitable imitators, why would anyone want to buy a device that only reads books?

Where will it all end? Basil Blackwell saw difficult times ahead in 1935, but the Penguin paperback made reading more popular than ever. I suppose that ultimately, what matters is not where we get our books, or what format they're in, but the fact that we read.

BREAKING NEWS... In the three days since I posted this, Borders are trying to negotiate a $500,000,000 refinacing package and Amazon have announced that Kindle sales are now only 20% lower than their paperback sales. Also Waterstone's have asked publishers to reduce scale-down the new title orders and their head of e-commerce has resigned.