Cover Story - Outlook 2010 : The Future of the Industry

Whose hands is it in?

What does it mean when a city of 230,000 loses its lone bookstore, as is happening to Laredo, Texas, in early 2010? With a world of books available to purchase online, is it merely a symbolic loss, or is there something more deep-rooted at work?

To answer that question, Thom Chambliss, executive director of the Pacific Northwest Booksellers Association, cites as an example the instance of a literary figure sitting in a matinee. According to Chambliss, on a recent edition of "The Colbert Report," poet and author Sherman Alexie spoke of having time to catch an afternoon movie while on a book tour. "He goes to movies during the day because he has nothing to do before [signing] autographs at bookstores in the evening," Chambliss says. "Newspapers and radio are not doing [interviews] anymore. There's no local outlet. We no longer have book awareness at the local level."

While there are big-box retailers selling books in Laredo, Chambliss says not to expect the next Sherman Alexie to be launched from those shelves.

"Who can sell poetry?" he asks. "If you don't have people coming into your stores and browsing, you lose an incredible amount of [book-buying customers]. In the long term, it snatches away the culture of books."

Price War Fallout
Last fall's much publicized "price wars"—when Walmart, Amazon and Target lowered prices of hardcover best-sellers to around $9 to draw shoppers—highlighted the increasing dominance of megaretailers in the book trade. In an October 2009 letter to the Department of Justice, the American Booksellers Association asked for an investigation of alleged predatory pricing tactics, warning that selling books at a loss allows a handful of retailers to win control of the market and spells disaster for independent booksellers, robbing readers of choice and "devaluing the very concept of the book."

"It's also important to note that this episode was precipitated by below-cost pricing of digital editions of new hardcover books by Amazon.com," the letter states. "We believe the loss-leader pricing of digital content also bears scrutiny."

While Amazon is notoriously close-lipped about its strategic plans, company executives have stated that it focuses on overall margins, not specific product margins. (Many have speculated that Amazon's goal in pricing digital editions below cost is to sell more Kindle e-readers, bigger-ticket items with larger profit margins.)

The upshot of this, according to many in the book trade, is a book business in the hands of those whose businesses are not built on books—retailers looking to draw consumers in to purchase clothes, toys and electronics, forcing an unsustainable model on an industry still reliant on high-cost acquisition and production processes. It leads to scenarios like that of a writer/publisher described by Chambliss, whose book on walking tours of Seattle was picked up by Costco. Thrilled, the woman printed a huge order, only to see massive, damaged returns a year later. Costco had moved on, but she couldn't—and she was driven out of business.

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