April 30th, 2011

Utopia vs. Reality (Independent Bookstores)

http://www.baitnbeer.com/content/will-independent-bookstores-seize-day

This was originally in/on Publishers Lunch.

Here, Jack McKeown and Don Linn argue that the Borders bankruptcy and wave of store closures is an opportunity for independent bookstores to rebound. They don't mean existing independents; they mean a wave of _new_ independent bookstores. Here is how McKeown and Linn argue for demand for these stores:

First, just because chain stores closed due to internet bookstores and their arbitrary shelf space does not mean there is no market for independent booksellers, specifically ones with: "finely curated inventory, hand-selling, and a robust program of local events and community outreach", which would simultaneously make use of internet sales themselves with "programs such as Google eBooks and the American Bookseller Association's IndieCommerce web-hosting engine."

Second, because even McKeown and Linn recognize it's going to be a little tricky financing starting up all these stores, they propose a special purpose financing vehicle, a Neighborhood Bookstore Development Bank. Apparently something like this has helped get groceries into neighborhoods without them and bookstores are just as essential as grocery stores. I mean, every urban planner knows that, right? (<-- Part of their argument, sarcasm mine.)

Third, they bring some numbers to the table in arguing a "supply gap" for bookstores (that is, that people out there are pining for a neighborhood bookstore. Lots of them). The argument is as follows:

Borders stores closing are more than five miles from the nearest independent. (They produce this sentence, and if you can make it mean anything, you're a lot more clever than they are: "The average and mean distances are 13.2 miles and 10.7 miles respectively to the nearest independent.")

"Most of these one hundred-plus sites are close-in suburbs, within commuting range of top urban markets."

"we can estimate that about 15 million Americans will be directly affected by the sudden reduction in bookstore availability."

Yes! They did indeed just argue that closing a Borders in a suburb affects everyone in a nearby city. Kind of a weird way to think about the world.

I can't bring myself to reproduce the dollar argument.

"Even if a substantial majority, say sixty percent, of the supply gap is captured by Amazon, B&N, or by a conversion to digital reading, there remain tens, if not hundreds of millions of dollars of annual book sales up for grabs in towns like Southbury scattered across the United States."

Perhaps the best bit, however, is this:

people don't like reading on screens. we know this because they say so on surveys.

especially people over 45 don't like reading on screens. they buy most of the books

they'll buy even more books as they retire and become an even bigger fraction of the book market

so obviously, print wins.

Apparently, books are going to age out and die with the boomers. Wow.

I don't know what to make of arguments like this. I've done my best to faithfully summarize it, because I think when you reduce the distracting verbiage, the silliness becomes self-evident. In case you're not sure which silliness I mean, the argument of this post is that we should create a special purpose financing vehicle to help create new independent bookstores because the collapse of the Borders chain created a vacuum of need for local bookstores. It's a big need, and while you might think Amazon and others will be filling/have already filled this vacuum, it turns out that the only people who read and buy books are old people who will never adopt the kindle and similar (never mind that they already are in droves, and _that's_ why Southbury, CT lost its last bookstore) and it's a good idea to spend a bunch of money starting small, labor intensive businesses aimed at the middle-class with no expectation that more youthful people will ever patronize them, even as they become middle-aged.

When Carl Paladino ran for Governor of New York, Rachel Maddow presented a fairly detailed argument in support of her theory that he wasn't _really_ running a campaign; he was engaging in performance art. Donald Trump's recent shenanigans have inspired a similar response. When I read something like what McKeown and Linn wrote, I have to wonder if they're serious. They _seem_ serious. But sometimes really, really excellent satire is difficult for the targets to "get" -- Stephen Colbert proved that.

Any guesses?

I want to be _utterly clear_. I like independent bookstores. I used to like them a whole lot more -- lately, it seems like every time I go into one, the tables are plastered with political books of a conservative nature (and I live in a very blue state). But I like them. I would love a world which enjoyed a renaissance of independent bookstores.

I'd also love a lot of other things that I don't think are going to happen.

Browsing Pbooks to Buy Ebooks

I know this is sort of a cliche among bookstore owners and I have no doubt that people do it and that bookstore owners and employees see it happen. Not a doubt in my mind. I don't think I ever have, altho I do know I've been in a bookstore, seen a book, and bought the book on a later occasion online. I did this with Mukherjee's book about cancer, because the prospect of dealing with a pbook of that size just appalled me. But if I'm in a bookstore browsing, it's because I intend to buy what I find in pbook form (generally, nonfiction that I then plan to donate to Mayberry's library).

Here's Joe Wikert describing his experience with pbook browsing and ebook buying.

http://jwikert.typepad.com/the_average_joe/2011/03/helping-bookstores-remain-relevant.html

He says "can't tell you the last print book I bought" because he's "gone almost exclusively with ebooks". But he still goes to brick-and-mortar stores to browse, where he then downloads the free sample, if available, and sometimes just buys the book outright on his iPhone through the kindle app.

"I feel bad, sort of, but it makes me realize the enormous opportunity brick-and-mortar bookstores are missing out on."

Hard to imagine what this opportunity could possibly be! But he'll tell you. It's basically: install a bunch of IT and potentially privacy violating stuff so that when you are in the store, your device will recognize that, offer you a screaming deal, and then pay for it using a payment technology that does yet exist (using phone as payment by running it past the register) and which Oracle recently put out a release saying it'll require you to hold the phone next to the register for about 6 seconds if you want to pay AND use a coupon AND update other account information.

Oh and do a Groupon thing, as well. And a few other things.

At the end of all this, he says:

"If you do all this I promise I'll start using your apps and I guarantee you'll see more purchases from me."

If False then ... anything at all. Logic 101, right?

I think I would prefer the freeloading _without_ the earnest advice to just "walk on water, come on, _then_ I'll buy stuff from you, it's really simple oh and make it free".

ETA: I'm going to quit after this, because I've now remembered why I don't normally read this blog.

http://jwikert.typepad.com/the_average_joe/2011/02/ereaders-for-kids.html

Hey, how about a $50 ereader with no wifi that instead gets content via a cord that connects to a smartphone?

Yeah, that'd save $50 off the price of an ereader. Dude, go reading the fricking parts breakdown.

Also, a whole lot more people are handing even younger kids iPads than Wikert seems to realize. Maybe his cohort hasn't reproduced yet?

Amazon bid for Amanda Hocking 4 book print deal (and a weird market share number)

http://www.crainsnewyork.com/article/20110401/FREE/110409990

The claim is made that Amazon with Houghton Mifflin Harcourt put together the highest offer, but wanted exclusivity for the e-book and thus lost to SMP. The same anonymous source is quoted: "“[Amazon] has less than 65% share of the e-book market and dropping, and 20% to 30% of the print market,” the executive said. “[The author and agent] would have anticipated significant lost sales.”"

The idea of doing the print deal with Houghton Mifflin Harcourt was they could get the books into Barnes & Noble. "But there was a question whether the bookstore chain would stock a book published by its biggest rival, even if the title carried the logo of a respected trade house."

Just in case anyone was thinking that we should feel sorry for any of these participants, this should help reduce any sense that there are any innocent bystanders in this transition.

ETA: I'm trying to figure out why the executive believes that Amazon is at 65% market share in e-books and falling. It's not true -- that's not in question. The question is _why_ would that person believe that.

Here's what I've found:

http://www.bloomberg.com/news/2011-02-22/barnes-noble-falls-after-dividend-halt-same-store-sales-rise.html

"The Kindle has a market share of 67 percent in the U.S., followed by the Nook at 22 percent, according to Goldman Sachs Group Inc. Amazon.com also generates 58 percent of e-book sales, followed by Barnes & Noble’s 27 percent, Apple Inc. at 9 percent and Borders with 7 percent."

In the first sentence, "Kindle" refers to device sales. In the second sentence, I believe "Amazon.com" refers to content sales. The percentages supplied do not include SmashWords, Sony, etc., and add up to more than 100%.

None of these numbers are broken out in any kind of official release or accounting from the companies involved (please, please, please prove me wrong. I'm begging you to do so.).

ETAYA: I've done some more digging on who has put out ereader analysis. There appear to be a couple heavily quoted sources, Yankee Group and Goldman Sachs. I seem to recall some Forrester analysis also but I'm not seeing references right at the moment.

A bunch of the analysis was put out last year after numerous readers debuted at CES but before August, when several of them went bust -- definitely before the end of the year when the Cool-er and some other readers finally went down. Without seeing the original reports (which were for-pay and not cheap when they came out, and presumably not free and possibly not available now), it's hard to know precisely what assumptions went into their analysis. I would imagine that they assumed at least a few of those ereaders would successfully take off as a product, and that they would take away from Amazon's market share altho everyone would enjoy growth. These assumptions were prevalent last spring and early summer -- those ereaders came out at a lower price point than Amazon with fewer features. In August of last year, the wifi only cheaper kindle came out (with a better screen and at a lower price point), thus destroying any chance those ereaders may or may not have had to take root in the marketplace (and I believe with the kindle 3, the regular kindle was cheaper than the wifi or nofi new entrants). Another assumption last year was that the agency model and the entry of the iPad would render irrelevant Amazon's catalog and/or pricing lead (another assumption which turned out to be false, altho obviously some ebooks are more expensive everywhere than they were before).

I'm going to post separately about data quality, publishers and so forth.