Rise of E-books Will Benefit One Group: Readers

MIAMI — “Vanishing stores are sad way to close book,” read one headline. “The last days of once upon a time,” said another.

Last month’s news that the giant Borders bookstore chain had collapsed, taking 400 stores and 11,000 employees with it, leaving behind only a couple of hundred millions of dollars in IOUs to publishers, was for many the seventh sign of an impending apocalypse: for bookstores, for the art of reading, for the very concept of literacy.

But rather than the first steps of a funeral cortege, the death of Borders is really just the first little dip on a wildly careening roller coaster ride for the people who write, publish, buy and sell books. It’s going to shake us up, down and sideways, industry figures say, and some people may get thrown from their cars. But one group is sure to be happy at the end: readers.

“The whole book culture is changing, and in some ways, I think it’s worth worrying about,” says Jack Shafer, who writes about media at Slate.com and spent years working at bookstores before turning to journalism. “But we are so much better off now with what we’ve got. There’s a cornucopia of books out there. It may be that the bookstores are vanishing, but readers are going to have more choice and cheaper books.

“Is it good for bookstores, for writers, for agents, for publishers? We readers don’t care. It’s really good for us.”

Enter the e-reader The little device at the bottom of all these changes is an 8-by-5-inch digital gadget on which you can read — and, more importantly, buy — books. E-readers, as well as tablets such as the iPad, can turn reading into a multimedia experience: Imagine reading a book on the Beatles while video of them singing “I Want To Hold Your Hand” on the “Ed Sullivan Show” appears beside the text. It can also turn your local bookstore into a desolate cybercemetery, roamed only by the ghosts of customers downloading their books from the Internet while they sit at home.

The e-reader has been around for well over a decade, supposedly slouching toward commercial Bethlehem if you believed tech nerds and Wall Street analysts, but never seeming to actually arrive. Until now.

“We’re seeing triple-digit percentage growth in e-books from last year,” says Andi Sporkin, spokeswoman for the Association of American Publishers, which later this month will publish the industry’s first-ever comprehensive statistical look at book publishing. “In February, e-books were actually the leading seller in all book formats — hardcover, paperback, whatever.”

Those astonishing sales numbers for February were actually a bit of a glitch, reflecting a surge in downloading by people who got e-readers and e-book gift certificates for Christmas. But nobody doubts that they’re the headlights of an oncoming e-locomotive that will roar through the publishing industry, smashing anything foolish enough to get in its way.

“There is a massive change in this business due to e-book technology,” says Mitch Kaplan, owner of the Coral Gables, Fla.-based Books & Books mini-chain. “And it’s happened faster than I could ever have imagined. A couple of years ago, e-books were maybe 2 percent of the business. Now we think it will be 25 percent by the end of the year, and there’s no end in sight yet.”

E-readers first went on the market in the 1990s. But high prices ($400 and up) of early models, coupled with their clumsy technology and a general skepticism about the technology, relegated them to the fringe of the market. It was only in 2007, after the launch of the Amazon Kindle and the Sony Reader — both of which used a new technology known as e-ink to give their text a more booklike appearance — that consumers really got on board. Sales of e-books rocketed more than 1,000 percent over the next four years, from about $32 million in 2006 to $441 million in 2010, and are expected to top the $1 billion mark this year.

That cascade of dollars is already remaking the entire book industry.

“I think there’s been more change in the last two years than in the last centuries,” says David Young, chairman and CEO of the Hachette Book Group, one of the world’s largest publishers.

Other industry figures say that’s too mild by half. “E-books make the Gutenberg system, which still characterizes the industry after 500 years, absolutely obsolete,” insists Jacob Epstein, the veteran publisher who invented trade paperbacks and founded the New York Review of Books.

Cries of doom have been the publishing industry’s favorite pastime for the past 70 years, since the introduction of paperbacks, derided as “throwaway books” that devalued reading itself. In the 1940s, the creation of so-called trade paperbacks, with better binding and bigger type, triggered predictions that hardbacks would die. In the 1960s, the rise of national bookstore chains like Waldenbooks and B. Dalton was supposedly going to homogenize and shrink the industry. Every time a doomsday prophecy failed, a new one, inevitably more dire, took its place.

“When Borders and Barnes & Noble opened the superstores, everyone decried the end of publishing because prices would be too cheap to support books,” recalls Marion Maneker, a former HarperCollins executive who now heads the fledgling e-publisher ReadThisNow.com. “Then it was Costco and Wal-Mart and Target undercutting prices, and finally Amazon. E-books are no different than any of those things, just another transition to people buying books in the cheapest, most convenient way.”

But that transition is going to be a rough one for much of the industry.

The collateral damage is likely to begin with brick-and-mortar stores.

Who needs the hassle of limited store hours, crowded parking lots and out-of-stock titles when your e-reader has a wireless link to Internet booksellers like Amazon?

“What you’re really selling with the e-reader is convenience,” says Rachel Bressler, vice president and associate publisher at Ecco Books, a division of HarperCollins that has moved aggressively in electronic publishing. “You can be at home at 1 a.m., decide you want a new book, and have it by 1:05 a.m., even though your local Barnes & Noble closed two hours ago.”

E-books played a small but deadly role in the demise of Borders. Most industry analysts believe the firm got into trouble through poor strategic decisions, spending too much money to build new bookstores in a saturated market and investing too heavily in products like CDs that were on their way out. But they also agree that when the financial crunch came, potential investors were driven off by Borders’ failure to develop its own e-reader or online presence through which e-books could be sold.

Meanwhile, Borders’ rival Barnes & Noble is also for sale, with potential buyers showing more interest in its online operation (which prominently features downloads for the Nook, B&N’s proprietary e-reader) than its 700-odd stores. Many industry figures say it’s only a matter of time — a short time — before stores and even publishers must reinvent themselves or perish.

“E-publishing radically decentralizes the marketplace,” Epstein says. “You’re talking about every book ever written being stored at virtually no cost and delivered instantly on demand. Stores and even publishers are going to have to reinvent themselves.”

For now, publishers are mostly distributing e-books through traditional booksellers. (Though, fearing a repetition of the digital price-cutting debacle that reduced the music industry to economic brain-death levels, they’ve outlawed discounts. E-books, whether you buy them at Amazon or from the website of your local bookstore, sell at list price, usually $12.99 for a recent book.) But they could set up their own websites and eliminate the middlemen.

On the other hand, what’s to prevent an author from cutting out his middleman — the publisher? J.K. Rowling, author of the Harry Potter books, has just taken a giant step in that direction. She’ll make the Potter novels available in e-book format for the first time in October — but only on her own website, pottermore.com.

“Stephen King could easily say, ‘Why do I need a publisher? Why don’t I just sign directly with Amazon? Why do I need somebody to print pages and make cardboard covers if I’m writing an e-book?’ ” says John B. Thompson, a University of Cambridge sociologist and author of Merchants of Culture: The Publishing Business in the Twenty-First Century.

“This is why e-books are very different than paperbacks and superstores and all the events that have shaken up the publishing world before. This goes to the very foundation of the industry’s business models. What is the role of a publisher in this new world? How is a publisher adding value to a book?”

The possible ripple effects continue throughout the industry, from tiny conveniences (footnotes could be replaced by digital links) to what might be major annoyances (animated advertisements in your books). Books might get longer.

“Suppose you wanted to write a cookbook on chicken that contained every chicken recipe ever produced, written down or even thought of,” says Hachette’s Young. “In traditional publishing, you couldn’t do that, even if you printed it on Bible paper. But with e-books you could, at least in principle.”

Or they might get shorter. “I think you might see a lot of serialized books,” says Brendan Cahill, publisher at the e-book company Open Roads. “Some of these epic novels might be published in smaller chunks at shorter intervals.”

There’s agreement on only one fundamental truth: Nobody really knows where things are headed. “All of a sudden, we’re not constrained by the limits of physical printing, distribution or price points,” Cahill says. “Things that have been troublesome to the industry for years and years, like returns of unsold books — that can be 30 or 40 percent of what’s printed — are suddenly out the window. I don’t want to say everything is up for grabs, that sounds kind of callous, but for the first time, the book industry is rethinking from first principles.”

— Glenn Garvin – McClatchy Newspapers (MCT)