The Business Rusch: The Year of The Bookstore
A week ago Sunday, one of our local booksellers, Sheldon McArthur of North by Northwest Books, tossed me the April 22, 2013 Publishers Weekly. The issue has a good review of my upcoming Kris DeLake novel, A Spy To Die For, but it turns out that wasn’t why Sheldon gave me the PW. He gave it to me to see my reaction to the ad on the cover.
The ad, taken out by mega-bestselling writer James Patterson, appeared in PW, The New York Times Book Review, and Kirkus. It asks, “Who Will Save Our Books?” and it calls for impassioned editorials urging the Federal Government and everyone else to save our bookstores and libraries.
According to the accompanying PW article, Patterson believes the entire publishing industry is in trouble. He says that “everyone” can chip in to fix it. He did the ads to start a dialogue about the future of the book business, and ways to save it.
He says that publishers have to stop complaining and start doing. Then he adds,
The problem continues with media coverage, as Patterson said the same article about the book business being in trouble–with little information beyond that and little mention of possible solutions–is being written over and over. “That article is not worth running,” he said. “The New York Times needs to wake the fuck up.”
I do agree with his last point: The New York Times needs to wake up. But really, that’s beside the point. The industry is changing, and Patterson sees only one corner of it. He’s seeing it from the lofty position of being one of the biggest bestsellers in the world, and he doesn’t realize that looking down from the 87th floor gives you a wide, but often inaccurate, view of what’s happening on the street.
If you follow the above link to PW’s article on the Patterson ad, you’ll note that it quotes Patterson entirely, and adds no other analysis. Patterson, you see, is not just a big bestseller, but he’s a huge supporter of literacy. He’s donated hundreds of thousands of books to the troops, and he launched a great kid’s reading promotion site called ReadKiddoRead which at the moment, unfortunately, is also running Patterson’s ad.
PW, which is following most industry trends, isn’t about to point out that, with this ad, Patterson stepped in it. Not because they just made money off him for the ad. Not because he’s going to piss off the Times or because he’s wrong about the fact that the dialogue is inaccurate. But because his conclusions are wrong from the limited data he’s getting, and PW knows it.
Fact: The Number of Independent Bookstores has grown steadily since 2009. Look at the accompanying chart from the American Booksellers Association. The number of independent bookstores has grown from 1,401 to 1,567 in three years. But that’s not the interesting part of the chart. The interesting part is the location number. Yeah, the ABA counts only 166 new bookstores (only!), but the number of bookstore locations has increased by 249. That means the indies are expanding. They’re making money. They’re doing well.
Realize too, that the ABA doesn’t count all retail book locations. If a coffee shop sells books, but calls itself a coffee shop, it’s not a bookstore. It doesn’t count. And not every bookseller signs up with the American Booksellers Association. According to this somewhat pessimistic article , there were 10,800 bookstores in the United States as of October of 2012. That number includes chain stores as well as indies. 10,800 bookstores. Not places—like your grocery store—that carry books. And realize that when we’re talking about bookstores, we’re talking brick-and-mortar stores that specialize in paper books. We’re not talking about e-bookstores.
Get the difference here? There are a lot, a lot, a lot of book venues, and they’re growing.
Fact: Independent Bookstores have become players again. Sales at independent bookstores count for 10% of the market. Sales at Barnes & Noble count for 20% and Amazon for 29%. If sales continue the way they’re going, independent booksellers will capture even more of the market.
Sales at independent bookstores rose 8% in 2012 over 2011, while sales at Barnes & Noble were in the words of one writer, “tepid.” This growth prompted Wendy Welch, co-owner of Tales of the Lonesome Pine in Virginia and author of the 2012 memoir The Little Bookstore of Big Stone Gap, to declare to The Christian Science Monitor that “2012 was the year of the bookstore.”
In the same article, Texan Steve Bercu , owner of BookPeople and a founder of the Austin Independent Business Alliance, says, “We had the best year in store history in 2012. It was the third best year in a row. We’re up 12 percent so far for 2013.”
Fact: E-books haven’t killed the indies. In fact, indies can now profit from e-book sales. How, you might ask? Well, in August of 2012, Kobo partnered with the American Booksellers Association to help indies sell e-books. This is from the press release:
Booksellers will be able to offer a total experience for their customers including a full line of eReaders, eReading accessories, and ebooks from Kobo’s catalog of nearly 3 million titles. ABA members will share in the revenue on every sale. The program includes valuable training, in-store merchandising, marketing, sales, and logistics solutions to help independents be successful. ABA members will also be able to offer ebooks directly to their customers online.
The important part here is “valuable training, in-store merchandising, marketing, sales, and logistics solutions.” During the fall of 2012, participating booksellers closed their stores for a day or two or sent staff to a local Kobo workshop class. Participating retailers include large stores like Powell’s and small ones like Sheldon’s North by Northwest books.
If you’re wondering how the e-book part of this works, Galley Cat has a helpful little article here, explaining it all.
The press release states that Kobo expected 400 booksellers to sign on, but the last statistic I saw had 450 retailers already participating in the program. Here’s the list of participating bookstores in the United States. I didn’t count, but it might be more than 450 now.
Honestly, if you’re an indie writer or a hybrid writer and your book is not on Kobo, then you’re missing a huge growing market, not just internationally, but in the States as well.
This is why Sheldon handed me the PW with two fingers, as if someone had pooped on the magazine. He wanted to me to express my opinion of the ad since, as a friend, he knew without asking that I thought it unfortunate. I won’t say it was stupid, though, because, as I said, Patterson’s beliefs also come from statistics.
You need to understand a few things about a big bestseller’s career before you can understand why Patterson believes the entire industry is in trouble.
James Patterson’s first bestseller hit the shelves in 1993. The first movie based on one of his bestsellers, Kiss The Girls, appeared in 1997. When the big distribution collapse hit the industry right around that time, Patterson’s sales increased, unlike the sales of 90% of established authors.
A brief history—very brief, because we’re covering a lot here. In 1993, when Patterson’s first book came out, there were thousands of small book distributers scattered around the country. They were regional and they understood their region as well as you understand your hometown.
Toward the middle of the decade, large grocery store chains became major players in the book industry. Safeway, Albertsons, and others had large book sections, and they bought a lot of books. Corporate at the various grocery stores decided that it disliked dealing with hundreds of tiny invoices per month and declared that it would only buy from a handful of independent distributers. Those distributers got to “compete” for the business.
The problem was that only a few distributers got the bulk of the business right at the same time that chain bookstores worked to drive out the independents. In 1997, there were 12, 363 bookstores around the country. Because of the actions of the big chains, 1,000 independents closed between 2000 and 2007. We’re regaining bookstores (see above), but the effect of these losses was cumulative on the people who distributed to bookstores. The independent distributers went out of business first.
Chain bookstores had national in-house buyers, not regional distributers. The remaining business belonged to places like the independents (which were closing) and big non-bookstore chains like groceries. When those businesses demanded that they would work only with a handful of distributors, the distributors who won that lottery had to scramble. No longer could they sell the books of Oregon writers to Oregon readers. They had to sell national books to a national chain.
The problem was that these distributors did not know which books would sell nationally, so they punted. They only ordered bestsellers—and that included Patterson.
Indeed, if you look at all of Patterson’s book sales, the bulk of them occurred after the collapse of the distribution system. He’s one of the guys who benefitted from the shrinking book market.
Of course, he doesn’t know that or if he does, I’m sure he doesn’t realize his success occurred in part because he was already on the bestseller list at the time of the collapse. That he continued to have success when many other bestsellers didn’t is a tribute to his storytelling skills. But sales figures he enjoyed were partially inflated by the collapse of the regional market.
Now, look at the statistics for the last few years. Independent bookstores are back, and they have 10% of the market—and that percentage is growing. They also order differently than the chain bookstores and the other chains like Costco, Wal-Mart, and the grocery stores.
Local bookstores order according to the needs of their clientele. Sheldon, who used to own the very famous Mystery Bookstore in Los Angeles (and he “retired” to Lincoln City), specializes in mystery books and books by local authors.
According to ABA head Oren Teicher, the buy-local movement is one of the reasons independent bookstores are growing. The Christian Science Monitor article paraphrases him this way:
Independent bookstores are what urbanists call “third places,” like farmers’ markets, that add to a community’s sense of identity. And like farmers’ markets, some customers come for the atmosphere, not the prices.
What this means for writers like Patterson is that their sales are declining. These sales would have declined even if the indie-publishing revolution hadn’t happened. Centralized ordering only exists in a few chains now that Borders has vanished, and even then, the numbers are down. Barnes & Noble made news this year when it announced that it was going to increase the number of titles it carried in its store by de-emphasizing the Nook. B&N had tried to carry fewer book titles on site in previous years and add all kinds of other products, almost destroying its brand.
There are other reasons Patterson’s numbers are going down. There are fewer display slots for mass market paperbacks. Publishers are trying to get readers to go to e-books for the cheap option by decreasing mass market altogether. And print runs have changed, which Dean Wesley Smith explains in a blog post from earlier this week.
I’ll discuss all of this in depth next week and probably the week after, but here’s the upshot.
Not only are the sales figures for bestsellers declining across the board, but their income is as well. Publishers aren’t paying advances in such large numbers, but even if they were, the royalty payments have declined. Some of that is because ebooks have a different payment structure, but some of it is the leveling of the playing field.
Readers have a finite budget for books. There are readers, like my husband, who adore James Patterson’s books. There are other readers who picked up the latest Patterson because nothing else looked interesting. We all do that with books; our tastes vary (and let’s not discuss our tastes in the comments, okay?) and we sometimes buy books to read on a flight or while we’re waiting in a hospital waiting room because it’s the only book of its type in the gift shop or airport bookstore, not because the author is a favorite.
With the rise of e-books, that person waiting for a flight doesn’t need to buy the next Patterson. She can download whatever book she wants right there in the airport and happily read it while jetting across country—even if that book is self-published by the author.
Those choices cut into sales of bestsellers. They also cut into sales of traditional publishers.
At the moment, all methods of counting paper book sales across the United States only count traditionally published books. This will change in the next six months. Again, I’ll deal with that in future posts. But for the short term, what writers like James Patterson are seeing is this: their sales figures have gone down. Reports in PW showing industry print statistics also show a decline in print sales for the big bestsellers.
Traditional publishers are whining more than usual because the industry is changing under their feet and they’re struggling to keep up. I had to laugh at Mike Shatzkin’s piece today in which he discussed how the industry needs to grow its marketshare, and he decided the only way to figure that out was to ignore the successful new kids on the block who were using technology to their advantage, and to talk to the old-timers.
Yep. That’s how you grow a business. Talk to the people who are struggling to find a clue.
Which is what Patterson has been doing. He’s been talking to bookstore owners who are friends of his, talking to the heads of publishing houses, and talking to other bestselling writers. Patterson is a very, very, very smart guy. He understands business better than most writers ever will.
But what he doesn’t realize is that his information is corrupted.
The old-time booksellers are leaving the business. They’re closing their stores because running a bookstore the way that you did in 1995 no longer works. From The Christian Science Monitor:
Today’s [bookstore] owners often have researched the business and worked in other stores before they started putting up shelves. [Daniel] Goldin, for example, worked as a buyer for Schwartz Books and bought his storefront location from the former owners when the local chain closed in 2009 after 82 years.
In another encouraging sign, John Mutter, editor in chief of Shelf Awareness, publisher of two industry newsletters, sees more young owners than he did five years ago, when industry events “were a sea of gray hair,” he says.
These new people understand social media, technology, and how to use things like Kobo’s program. They order books differently, and they operate the stores differently. They also are new, and probably not the people that James Patterson consulted. Mike Shatzkin certainly won’t talk with them either, to the detriment of the folks at Digital Book World.
Other bestsellers believe that book reading is declining. Anyone who has read Scott Turow’s misguided posts for the Author’s Guild knows that. Patterson’s ad was in direct response to Turow. Patterson wants to do something to save an industry that, from the perspective of the People At The Top, is dying.
And for them, it is. A revolution is sweeping the book industry. Dean and I learned some lessons about that in April, which I’ll be sharing in the next few weeks.
Disruptive change like the kind that the book industry is going through will provide new players, new people who will rise to the top. They’ll do it in ways that would not have worked in the old system.
Here’s the confusing part: the old system will continue to work, just not at the numbers that it saw when everything consolidated at the beginning of this century.
Right now, mass market bestsellers can hit the New York Times extended list with anything from 17,000 sales to 30,000 sales. The numbers at the top of the list are much lower than they were in the past as well.
There are several reasons for this:
1) There are fewer outlets for mass market sales. Even the grocery chains, which precipitated the distribution crisis, carry fewer books in the store, and many of those books are trade paperbacks and hardcovers, not mass-market paperbacks.
2) The big publishers want readers to buy the ebook as the cheap edition, and some heavy readers are doing just that. But more importantly, the big publishers are deliberately publishing fewer mass market paperbacks to drive readers to e-books. (Forgetting, of course, that the bulk of mass market readers can’t afford a dedicated e-reader or may not even have a credit card so that they can shop online.)
3) Independent booksellers (10% of the market!) don’t always carry bestsellers, figuring that the chains can offer those books at better discounts. So 10% of the market ignores certain types of books in favor of niche books.
4) And of course, the readers themselves, faced with their own limited budgets and a plethora of choices aren’t always buying bestsellers when the books come out, figuring those books will be easy to find years from now, when a midlist book might not.
What’s the upshot of this besides the fact that Patterson’s ad did him no credit? It’s that book sales are growing in a healthy way. And if your book is in print, then you will have the opportunity to sell your book in a variety of venues, including chain stores. I’ll deal with that indepth in the next few weeks.
The growth in independent booksellers, the rise of Kobo which allows ebooks into local bookstores, and the growth of the book market is fantastic news for writers.
Our industry doesn’t need a bailout. The dialogue that Patterson calls for can and should continue. But it should include the small booksellers, the independently published writers, and readers themselves.
Oh, wait! We are having that discussion. We’re just not doing it on the pages of The New York Times, which is, after all, the company paper in a company town.
And if Patterson had asked me if he could put his ad on my blog, I would have told him that he could not. Not because I disagreed with it, but because I don’t take ads here.
This business blog is entirely funded by the readers—and I intend to keep it that way.
“The Business Rusch: The Year of the Bookstore” copyright © 2013 by Kristine Kathryn Rusch.