Home > Australia, Books, Business, Politics, Social Commentary, Technology, Writing > E-books & the death of book stores

E-books & the death of book stores


With the arrival of e-books, people in publishing are deeply worried about:
A. the survival of brick ‘n mortar book stores; and
B. the future of traditional paper publishing.
What the conversation is missing, is the consumer.

What do consumers want?
Do they want paper books to continue as they are?
Do they want physical book stores?
Do they prefer e-books and e-stores?
Can they continue to have both?
Will they mind waiting longer to get Print On Demand books, instead of just taking something off a shelf?
What about the cost of books and e-devices?

In this post, I’ll focus on the effect of pricing and invite your thoughts.

The price of books & the death of book stores

The price of books in Australia is always a contentious issue. They seem expensive and yet, very few authors can live off their writing and book sellers are bleeding. People in all aspects of publishing live modestly. There’s lots of love, but not a lot of money. Why?

Book shops are diversifying more into gift lines and coffee, since book selling is becoming uneconomic due to:
* on-line selling;
* predatory discounting practices of department stores; and
* e-book retailers because (in Australia) brick ‘n mortar stores aren’t able to sell e-books (why?!).

I’ll briefly touch upon the main players in the price wars.

Parallel importation?
Over a year ago, book sellers, led by Dymocks, thought that parallel importation would save them. The New Zealand uptake of that policy proved disastrous. You can’t have eggs without chickens. Killing local publishing to save local book selling is at best, wonky thinking.

Predatory pricing
Big department stores sell books cheaper because they demand around 70 per cent off from the publishers, and they use cheap books to lure more people into the store to spend money on other things (to offset the discount). This dynamic works for consumers until the competition is killed off, then prices go up and choice goes out the door. It’s not competition; it’s a killing field.

GST
In Australia, GST is applied to all stages of a book’s production. No government has been open to dropping it. Economists tell me it’s because book sellers will apply the GST savings to their own bottom line and not pass it on to consumers.

So the choice is: GST revenue to the government to churn and burn, or leave it in the industry so that more businesses can keep their doors open (and possibly, pass on price reductions to consumers in the line of normal competition?). Frankly, I would’ve thought that an “Education Revolution” (to use a Labor Party slogan) might’ve included books.

E-books will be the final blow to Aussie book stores, unless…
E-books are currently retailing around $9.99 on Amazon and according to Michael Hyatt, there’s no likelihood that prices will sustainably drop below that point. E-publishing and e-distribution, perhaps surprisingly, doesn’t deliver big cost savings.

I think that once publishers work out all the other funky things they can do in the e-world, prices will eventually go up because they’ll be producing more on-line content to sell their books. Publishers will rise from the ashes of burned out book stores insofar as they’ll be selling directly to online consumers.

In America, e-books are rapidly gaining popularity. The Aussie uptake has been slow and the publishing industry has been reluctant to respond to the new paradigm. Australia doesn’t have the population to shoulder massive market changes as readily. That being said, we can’t put it off any longer.

Conclusion
So, what will e-books do to the price of books in Australia? Not much, it seems, unless the government removes the GST from the equation and revises competition law. With the GST in place, more people will shop on-line to avoid it and brick ‘n mortar book stores in Australia will continue their rapid decline in the face of anti-competitive practices by bigger players.

People will go to book shops to have coffee, browse inside books and then purchase them (either in paper or electronic format) elsewhere, online. That’s not a sustainable business model. Book sellers had better come up with something new, quickly, to value-add to the experience of loving books.

While $9.99 for an e-book is up to half the price of a traditional book, you have to buy the e-reader as well. And even though they are coming down in price, will you be buying one for your kids this Christmas? They aren’t so forgiving when dropped. And how many e-books do you have to buy to make up the savings as against the cost of the device?

I’m not against e-books. I’m not advocating for them, either. I love what’s inside books and where those books take me. People should have a choice. I just hope that the Australian government and industry get the balance right, before our favourite book shops bleed out.

QUESTION:
What do you wish you could tell the government or publishing industry in Australia? Do you think book shops will survive?

N.B. I encourage all respectful views. Feel free to disagree, without being disagreeable. No-one has all of the answers. Sharing is caring.

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  1. Melissa
    November 9, 2010 at 7:03 pm

    Ah Theresa – you know you’ve touched a topic close to my heart. Despite being frantically busy, I couldn’t resist replying to this one.

    I want both. Physical books and ebooks.

    Physical books for the joy of it. To have the feel of a book in your hand. To be able to read at the beach without risking theft of my ebook reader (whatever kind it is). To be able to read in the sun despite the screen.

    I also want ebooks for the same reason I like mp3 and mp4s and my iphone with its ready internet connection – to be able to take with me. Wherever I am – waiting for the train, in the doctors office, even waiting the 2 min at a traffic light, I do not need to be bored (and don’t get me wrong, I’m comfy with my own thoughts when I want to relax, I just dislike waiting and having no input when I choose not to). Ebooks (and audiobooks on my iphone) are especially useful in bed when DH (darling husband) wants to sleep without the light on. They are lightweight and fit in your handbag and you can take twenty of them on an overseas trip without luggage issue. (Sadly I have not yet bought an ipad … waiting for the next generation … and so my last trip back from 2 weeks working in Singapore involved some 20kg of books & papers …. in addition to clothes, presents, cool new stuff etc, most of which only made it onto the plane by judicious packing of the hand luggage and the rest will arrive in 3 months or so courtesy of Singapore post (thank you terminal 2).
    Can’t wait for the time when my funky new ipad will make such trips (& repacking in the basement of Changi airport) a thing of the past πŸ™‚ For those of you looking for a quiet spot to repack luggage – go down to the basement of terminal 1, as if you’re heading for left luggage but don’t exit to the street – instead, behind the lifts, under the escalator, there’s a quiet little nook where no one can see you and you can repack your luggage to your heart’s content for hours (I managed 3) with complete privacy and no questions asked!

    But on a more serious note – I never considered GST as the reason why books were cheaper overseas (even with postage) than here but I’m sure it’s a concern and it should be abolished on books. All books, not just the obviously educational ones. All books educated – just in different ways.

    Re Prices
    I personally believe that the rules against parallel importing are themselves a cancer on competition. Why should Australian consumers pay higher prices for identical books that were written by Americans (and printed in China for Chinese prices) than the Americans do? Parallel importation may protect some of the domestic publishing industry – and I’m not involved in it in any way except as a ferocious consumer of books – but it seriously disadvantages the Australian consumer who wishes to purchase books and build a library. Why should an Australian pay far more for the same book than an American?

    It’s not just about America either. I do regular work trips to Singapore and Malaysia and the english language novels there are FAR FAR FAR cheaper than here. (Hence my luggage problem …). Yes many of them are of much lesser quality in terms of paper … but to a ferocious devourer of books, sometimes that doesn’t matter as much as the ability to obtain decent books at reasonable prices. If you want quality paper and binding they are also available there, and still far cheaper than here.

    Why should we, as consumers, sustain an Australian publishing industry that does not have the volume to be competitive? Let me make it absolutely crystal clear – I do support Australian authors. And I agree their royalties make them paid far less than they deserve for the work they do. I myself have co-authored two university textbooks and while the royalties are a nice little bonus, they barely pay for an expensive full-on 3 hours in a hair salon with dye, foils & a good cut twice a year. But with my limited knowledge of the Australian publishing industry – even those books were actually printed in Asia to be price competitive. Where are novels by Australian authors printed? Are we sustaining expensive costs of printing in Australia?

    Next: protecting the australian industry
    And while I love the feel of a good bookstore, and definitely bemoan the trend towards department stores rather than the personal service of little stores etc – I also appreciate the prices that once can obtain when big corporates use their buying power to obtain great discounts – provided there is still a modicum of competition in the market. Example: Coles & Woolworths: yes they are driving out the independents and yes I dislike that. But with Coles battling Woolworths, each trying to outdo the other, we as consumers only benefit from the price increases … and yes we also suffer when they no longer stock our favourite lines. I am now suffering from a deprivation from my favourite yoghurt brand after Woolies cut it. But would I add $30 to my grocery bill to shop at an independent – probably not.
    And don’t we all have a love/hate relationship with big bad cheap bunnings?

    Is it a bad thing to buy books from kmart at 1/3 the price of the local dymocks?
    Why should we (Australians) have or pay for speciality stores charging higher prices but trying to compete with the big conglomerates? Wouldn’t it be better to see the big conglomerates specialise in the bulk volume material – with enough competition to ensure that they are incentivised to discount material for consumers – and then have very few small speciality stores, selling the very special Australian stuff at higher prices that people would pay because it’s very special and exclusive and hard to get?
    In the long term – just like google books allows virtual browsing – I can see this happening for new books too. And I think the conglomerates will be the first into this technology. (But yes, sometimes I just want a physical book and don’t want to wait for either postage or print on demand).

    I hear the counter arguments – that a lot of stuff won’t get published if we don’t have an Australian publishing industry; that consumers won’t pay for the Australian content if they can get American novels of equivalent standard so much cheaper; that these factors will lead to a dearth of Australian literature & consequently culture.

    But I would counter them – as a prolific reader and a person who owns (and has read in the last 34 years) some 25,000+ books (mostly novels, which I read at 120 pages per hour in case anyone is doubting the statistics … and yes, you need to allow for increased ability to read on holidays and as a teenager & university student) – with the following:
    – we live in a global world. If Australian works are good enough to compete globally, they will compete and be published and be successful.
    – (& I know I’m going to find critics here) many Australian novels that I have read are lacking in the quality that I find in many internationally-published novels. What can I say? I’ve read a LOT. I appreciate quality. And it is a very big shame, but I often don’t find it in Australian novels. I sometimes do – which is a joy – but often not. Sometimes I find that because of the support of the Australian publishing industry, many novels get published here that in America – if written by Americans – simply wouldn’t be published because there are many far better novels. When I’m in a bookstore and see a book I’m preliminarily interested in – and this is borne out of decades of book-shopping – if I see that the book is published by an Australian author, I now give it much more of a once-over before purchasing it than I would for an internationally published author … and the reason is that I have found, after decades of book buying and thousands of books, that many many Australian authors just do not live up to the hype of publishers when compared with their international counterparts. I’m sorry if that makes it hard for local authors. I’m very sorry. But as a consumer of books, I’m a harsh judge, and don’t want to pay premium price for products that are (sometimes/often) less than premium. Just because a novel mentions Brisbane or Melbourne, doesn’t make it great or culturally worthy. It needs to be good too. So why not pour resources into developing those authors who are or can be truly great …. instead of publishing (often) mediocre works, merely because they are Australian?

    If an author is good enough, if the book is good enough, they will be published anywhere. I do not believe that a publisher in another country would reject a book from Australia, merely because it was from Australia. Why should we have a publishing industry here, if it’s not competitive?

    Perhaps it’s not competitive because the works it publishes aren’t competitive internationally?

    Would or could the Australian publishing industry seek works from abroad?
    Why don’t Australian authors seek publishing contracts abroad?
    Do we minimise printing costs by printing in Asia?
    How is the Australian publishing industry using globalisation to its advantage?

    Despite my comments above, I do want to emphasise my support to authors everywhere. I could not live without books and authors and the work they put in to bring joy to my life really does sustain my life.

    I just would like to see authors treated more fairly. Authors who are producing books that are not sustainable globally (maybe because they are not of a quality that would not be produced in a bigger country with more author competition and less support of the publishing industry) shouldn’t be encouraged to pursue this path. On the other hand – those who are great (including you Theresa!) – I’d love to see you pursue an international path rather than be primarily (at least in the first instance) restricted to an Australian audience. (Maybe I’m making assumptions here – don’t mean to). But why should Australian authors first send their works to Australian publishers? If sent to American ones, the payoff in terms of market share could be so much bigger … do we really need an Australian publishing industry, or is it a luxury we can no longer afford?

    Just a postnote: it occurred to me that my father would have something to say about non-fiction Australian books, especially about Australian history. Such books will always be published if there is a market for them. No publishing company in their right mind would refuse to publish a book that can make a profit. And even if a mainstream print run won’t make a profit, the availability of ebooks, virtual browsing via google books and print on demand means that SO many more books can be printed than would be available if print on demand / ebooks were not available. So I see both as great developments. And $9.99 for an ebook is still less than you’d pay for a physical book.

    Would welcome additional comments.

  2. November 10, 2010 at 12:01 am

    Melissa, wow! This is great. I’ll do what I can to get the right eyeballs onto this.

    In the meantime, my reactions:

    1. I agree that it’s not fair to Australian readers that they should pay more than other countries, but that’s the way it is with everything, not just books. Economies of scale. Competition and Free Trade aren’t perfect models, nothing ever is. Publishing, in a sense, gets singled out unfairly.

    2. If we want any Australian content and culture, this is pretty much the way it has to be, unless we want to socialise publishing (make it fully dependent on government support, funded from tax payers – no thanks) instead of keeping an independent (mostly) industry where most of its content sinks or swims on its own merit.

    3. Another reader privately asked me whether the situation would be improved if parallel importation was allowed on overseas content, but not on local content (to protect culture, but to drive down prices of books first printed overseas). This sounds enticing, however, Australian publishers fatten up for winter on the ‘sure things’ – the books which have performed well overseas, which they have the right to print and sell locally. Take that away, and you’re back to point 2 of either socialised publishing or no local publishing. Publishing can take risks on new content and local content, only if it has a margin on the sure things. Woolies, Coles & Big W don’t discount everything in-store at once – they’re very targeted in their discounting and know that discounting draws in buyers who usually end up spending on other non-disounted items as well. It’s the way private businesses cross-subsidise their products and spread their risk.

    4. The best outcome would be that consumers retain the choice to buy from brick ‘n mortar stores or on-line (paper and e-books) and recognise that these are just different market segmentations. If you’re in a hurry to be in on the next big thing or to get helpful personal service, go to a book store and get reading then and there, or download an e-book if it’s available. If you need to save your pennies, delayed gratification is the name of the game – keep focussing on the pleasure of opening that mail package in 3 weeks time. Perhaps it’s like flying in cattle class as opposed to first class, but you still get there in the end.

    5. Removing GST from every stage of production of a book would make a big difference. It’s not just added at the end: it is added on in early development; printing; marketing; distribution; retail selling. The government has its fingers in our pockets several times over. I agree with you Melissa, that all books should be GST exempt, not only because all books improve literacy and educate, but because making exemptions leads to lawyers and accountants having a time of it and politicians fluffing up the explanations like John Hewson did when trying to work out whether GST would apply to a plain cake or fancy birthday cake.

    6. Every country needs its own publishing industry. People I know who’ve published in America found it extremely difficult to break into and were shocked at how mangled their books became when they had to be rewritten to suit American tastes. Not only are the words used in their own way, but content (and humour) is different. For children’s publishing especially, everything’s different, right down to the style of illustrations that they’ll accept and what might be in those illustrations. One author told me how the picture of a loaf of bread had to be changed to sliced bread; and that a farm animal book couldn’t show young animals at the mother animals’ teats because it’s regarded as offensive over there! Australian humour doesn’t translate on paper in the US market, either.

    7. Even if there are plenty of Australian authors who don’t grab an Australian reader’s delight, there are plenty who just might. The big names in Australian publishing, who make it internationally, almost don’t need the traditional publishers who got them there, once they enter their own stratosphere – and that’s also going to be a big problem for publishers if they’re abandoned by their babies just when they start making some serious money. Stephen King is already doing this in the US.

    8. Being discovered overseas usually requires being discovered over here first (if you’re an Aussie). The UK and US have enough of their own authors – just google NaNoWrMo (National Novel Writing Month) website in the US and see how many people are writing novels and talking about them on that one website. It’ll make you physically ill. Early next year, millions of those sweated-over manuscripts will find their way onto the slush piles of anxious and overworked agents and publishers. Many of them will try the Aussie market, because they’ve spent years being rejected by their own. Besides that statistical crap-shoot, there’s the fact that the US and UK markets aren’t interested in stuff written about Brisbane, or Melbourne, unless it’s also set in the US or UK or somewhere super sexy that might look good for a movie set with Brad Pitt.

    9. In answer to your question: “Do we really need an Australian publishing industry, or is it a luxury we can no longer afford?”, I would answer that we do indeed still need one, more than ever.
    (a) We’re only now escaping the cultural cringe of being an embarrassing, flea-ridden colonial outpost. Living in Australia, being Australian, is totally different to being anywhere else.

    (b) Now we’re getting Aboriginal stories. And migrant stories. Having people produce those stories at all is important. People identify with those stories if they’re similar to their own experiences; people learn to empathise with those stories if they’re about people who are not like them.

    (c) Having them printed here by our fellow Australians is also important if we believe in reasonable rates of pay and living standards, safety in the workplace – encompassed in the perhaps unfashionable “Australian Made” logo. We all love cheap stuff, but we don’t want to work for cheap (like the Chinese) ourselves – it’s an awkward love / hate dynamic. We hate to think of ourselves as insular or protectionist, yet we’d hate to think of ourselves as doing a mate out of a job. That’s why any model that any economist dreams up, will be imperfect.

    10. You make heaps of pertinent comments and observations and sympathetically note the plight of authors. I also thank you for your lovely compliment and congratulate you on your own publications!

    11. Love your postnote about non-fiction. To add to this, I believe e-books will benefit the education segment greatly. With your academic text books, you have a greater chance to get a better royalty with a traditional publisher, if it’s in the e-format than on paper (at least, that’s the case overseas – I’m not sure about how it’s going here yet).

    12. Thanks for caring so much. We’re united by a love of books. Hopefully, if more people come out and talk about their hopes and fears for the future, those in the positions of influence will lead us all to the land of milk and honey and great stories.

    Feel free to add any postscripts πŸ™‚ Hope I’ve addressed your questions adequately.

  3. Melissa
    November 10, 2010 at 7:19 am

    Racing out the door but had to add – I hear what you’re saying about migrant stories and aboriginal stories about those stories that deserve to be heard – and yes you did convince me there. I agree with your empathy point. I’ve just finished reading the Barbara Demick’s Nothing to Envy: Real Lives in North Korea and I must say, it totally changed the way I saw both Koreas. It really did live up to the Times’ quote: an outstanding work. Truly extraordinary & I recommend it wholeheartedly. These stories definitely deserve to be heard. I just checked & it was published in Great Britain by an American author. Perhaps it was too ‘international’ for the American industry.

    I was surprised to learn (but when I think about it, not surprised) that Aussie books would need to be rewritten to suit an American audience. Ok, so we need a publishing industry. You convinced me.

    But does it need to be doing all that it is currently doing? If Australian stories don’t generate the volume of sales of printed books necessary to sustain suitable prices in bricks & mortar stores, isn’t it great that the ebook phenomenon (& print on demand) will allow so many more such stories to be available to readers?

    In the future, I can see there being software available for any author to convert any word file into an ebook format that is readable on an ebook reader / ipad and then list it on itunes for downloading. (Wait a minute, we already have that in a basic form, it’s called pdf and the internet!) Doesn’t the advent of ebooks mean that anyone who wants to be published, can be? It’s then just up to the author (or word of mouth) to convince people to buy it. The publishing industry may turn into an ebook book marketing/advertising industry … but eventually won’t be required for authors to get published.

    I for one am willing to give up the current luxury of having my Aussie books in printed format in a medium to high price range if instead I can exchange that for international books at the price you would pay elsewhere in the world (plus freight) plus access to all the aussie ebooks I could want at reasonable prices with the option of paying huge amounts of money for the one or two I really want in printed format.

    Also – royalties completely aside – I firmly believe that most textbooks should be primarily in ebook / electronic format. These days, most learning does take place in front of a computer screen anyway. And there’s no excuse for giving our children back problems by carting around heavy tons of books when there is a valid alternative. Printed textbooks age and weather and date and there’s no need for that when an electronic update can keep them as fresh as when they were published, even for decades. I still don’t know what I’m going to do with the leather-bound 1963 set of encyclopedias my grandfather gave me before he died … not a bit of use nowadays …. but how could I part with it? I comfort myself in the thought that one day it’ll be 100 years old and interesting because of its age alone πŸ™‚ so I keep it another year πŸ™‚ There is something rather beautiful about beautiful books πŸ™‚

    I’m sure there’s more to say but I’m already late. One thing is for sure, I agree with you about our love of books & would also thank you for caring about our industry enough to generate this debate.

    • November 10, 2010 at 8:59 am

      Melissa, I totally agree about text books – just remembering the weight of them – and the guilt of throwing out outdated Taxation Law in Australia and similar massive tomes, year after year. My mother-in-law also deposited Dear Husband’s childhood encyclopaedias with us and I know not what to do other than scream on the inside and continue to beg Santa for compactuses.

      Self-publishing in the e-format is already available to would-be writers. Anyone can use sites like CreateSpace for self-publishing and then selling through Amazon. You correctly identify the challenge which then becomes one of self-promotion. If you get around to looking at self-published titles on Amazon, I’d be interested to know your impressions and experiences. Waving, not drowning; or, drowning, not waving? I’m not sure how one discerns the quality of a book in that new environment, although, I’m sure there are plenty of good ones in there. It certainly opens up opportunities for niche markets and for those who are great at self promotion.

      You raise lots of excellent points. Things are a-changin’ and need to change, whether we like it or not. As long as we recognise the cause-and-effect, and see the potential for great things in the future, that’s all any of us can do for now. I do think the different segments of the industry have to get together and work out how they’re going to work co-operatively through the challenges. Each needs to stake out their territory and not encroach too much on each other. Rights and pricing does need bedding down too, otherwise the Australian reader’s dollar will be increasingly going overseas and absolutely everything else will be moot.

  4. November 12, 2010 at 5:35 pm

    I barely need to note that this is a complex issue with many different perspectives. I find myself agreeing (perhaps predictably) with Teresa regarding the need for an Australian publishing industry. And just to note, the reason why we see less American and UK crap is that only the good stuff tends to get here, the dross is on the $1 table – just like ours is over here.

    I spent six years working for a Queensland based academic and trade publisher. If we take the novel away for a moment (stop screaming, I’ll give it back), these kind of publishers are absolutely essential for non-fiction writing. One of the biggest books for the publisher I worked with was on how to go from 1-100 investment properties in two years. It would never have sold in the US. It sold a million copies here.

    Other books, say those for primary, secondary and tertiary education, would never be publishable outside Australia, but without US books being brought in (and many of these are discounted to attract market share in the university market), there would be no money to publish local titles to suit our curriculum. No more SOSE books or Australian history books for our pre-teens.

    Educational publishing is getting with the times. Much of the supplementary material is online and some books are offered licensed online for a semester or two at a discounted rate.

    The novel is only one component, perhaps the closest to our heart, of the whole publishing picture.

    Bookshops need to move with the times too. I was speaking with a local independent and they have people browse the shelves, photograph the book covers and purchase online – particularly e-books. Personally, I am too eager to wait for the post and I’m not a fan of e-books – although I recently started listening to audio books while driving.

    I don’t see all independents dieing, but they do need to adapt and perhaps get together. Authors still want places to do signings and independents are ideal venues. If independents offered a place to download the audio book, e-book and purchase the hard copy in the one spot, that would be very attractive to buyers. And, of course, a high quality merchant site/online presence for purchasing, to complement their bricks and mortar, is really essential.
    I am all for supporting the Australian publishing industry in any way we can. But we need to remember the booksellers and publishers, like everyone else, must adapt or die.

    I’m still hopeful we will all be around a bit longer.

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