"Change is Coming" - or - "Are Bookstores Obsolete?"

There's a lot of panic in the air when it comes to publishing recently, what with announced purchasing freezes (as opposed to unannounced ones, that happen all the time), layoffs, bad news from book retail, and so on.

On one hand, I think it's overblown. Publishing isn't going to go away. Books will still get bought. Books will still get published. It's time for us writers to hunker down, tighten our belts, and keep pushing ahead. It's the people that panic and give up that are going to wash out. I believe that most of the rest of us will get through.

Yes, a lot of dead-wood will be trimmed, poorly performing lines, editors, and authors will find themselves in a difficult situation. But that sort of thing can actually be good for the industry.

On the other hand though, there's a strong counter-sentiment out there that publishing is recession-proof, and nothing will change because of the economy. I'm not so sure about that, and I have a gut feeling that this attitude can be as dangerous in these hard times as panic.

This isn't like the last few economic slumps where publishing has done quite well. It's a different economic, technological, and social environment this time, and I have a feeling that publishing-as-we-know-it will come through the recession radically transformed.

Why so?

Well, first of all, the whole business of book retailing in the United States (and elsewhere, but I know less about that) is in chaos. For years we've been hearing about how smaller independent bookstores are in trouble, pushed out by the chains. But now Borders is on the edge of bankruptcy, and nobody is partying over at Barnes and Noble, so it appears that business model is in trouble too.

Other players like Wal-Mart, Amazon, and eBooks are of increasing importance, but mass-market retailers don't carry the depth of selection needed to support a healthy book industry, and there are plenty of pitfalls before on-line sellers and/or eBooks can become the predominate means of book distribution.

Meanwhile, publishing will suffer as we go through the transition to whatever is coming next. Expect this situation to get better before it gets worse.

The next big problem is that books (and magazines, and newspapers) are an overpriced niche product in an increasingly crowded entertainment environment. In previous economic downturns, entertainment options were limited. Movies were expensive, there was no internet, video games, if they existed at all, were crude and expensive, and television offered limited options.

Now the internet is ubiquitous, video games are sophisticated and offer lots of value, cable and satellite tv offer hundreds of channels, and movies are cheap on DVD, and stream in via the internet and pay-per-view.

Another big difference is that the internet and cable are now considered essentials of life. Facing hard economic choices, people are going to let their cable or internet service slip before they can't pay the rent or electric bill, but not much before. And by the time you've made that hard choice, you aren't likely to head over to Borders for a $30 hard-cover novel, or even a $10 paperback.

Which brings me to pricing. Books are just way, way overpriced for the value they offer. Gone are the days when trashy paperbacks and pulp magazines offered cheap entertainment in an uncrowded competitive environment. Books are expensive to make, expensive to ship, and the return system doesn't make books any cheaper.

Books are also expensive to sell. You can offer a pretty extensive selection of DVDs in maybe thirty feet of wall space, assuming most are displayed spine-out. A video/computer game section might even be smaller, even if it includes some hardware and supports multiple platforms.

In book terms, that's tiny. Maybe it's one genre in a super-store, or a read-and-dash airport newsstand, or a tiny specialty bookstore that doesn't even try to cover all the bases.

I've been saying for years that the disadvantages of print books were overwhelming the advantages, but print has coasted along well past it prime on momentum alone. Now we're in crisis mode, and it isn't clear what happens next.

So, what does happen next? Well, I don't have a crystal ball, but I do have some opinions. Here are the players, and some predictions on what might happen to them.

Independent bookstores: I think the crisis came for the indies a long time, ago, and that ultimately may be good for them. A lot of the weaker stores are already gone, and a lot more won't survive this winter.

But I predict a lot will survive, and the smart ones will do well. Whatever happens to print books at mass market retail, there are still plenty of people who love them and will seek them out. If chain-stores start closing, and that seems likely, book lovers aren't going to find what they need at Wal-mart, and many still love the browsing experience that Amazon doesn't offer. Independent bookstores can position themselves to take up that slack, and it may give them the niche to survive.

Another trend that seems to be happening with independent bookstores is to move into used and antiquarian books, either shelved along-side new books, or exclusively. I can see how, in many respects, it's a great time to be a used book dealer. There's still a world of information and fiction out there that doesn't exist in electronic form, and possibly never will. And a lot of baby boomers are downsizing, retiring, or dying, putting their libraries on the market. There's a flood of good used books out there. It's finding the particular thing you need or want that's hard.

Used booksellers fill that void by finding and concentrating the good stuff, and can back up their retail sales with online sales and auctions. They benefit in that the profit margins on a well-run used book operation can be much higher than the traditionally slim-margin new book business.

That's at best a mixed blessing for publishers and us authors. People reading old books aren't buying new ones, and in a way, used bookstores (and libraries) put us in competition with ourselves. But I suppose anything that keeps people reading can't be entirely bad, and if some stores continue to offer new books, that's good too, especially if offering the used stuff allows them to keep their doors open.

Chain bookstores: These stores aren't going to go away, but expect downsizing and transitions in how they operate. It's a hard time for retail in general, and not just because of the economy. The internet, gas prices, traffic, busy schedules, all are shaking up the ways people shop in general, not just for books.

Already, book superstores are struggling to find a mix of merchandise (of which books and magazines are only a part) that will keep them afloat. The Borders where I shop has DVDs, music, books, magazines, comics, games, toys, novelty items, stationary, gifts, collectibles, calendars, coffee drinks, pastries, and lots more. That sort of diversification has worked for the chains for years, but now it's breaking down, first more music sales, and now movies, are moving to on-line distribution. Those two categories had been major profit centers, propping up stores that less saw themselves as book retailers, and more as entertainment retailers.

Overall, I don't see the outlook here as good, unless the chains can find a new profit center in addition to books. I don't expect chain stores to go away, but I do expect them to become fewer and possibly smaller. It's true, these folks need to learn how to sell books again, but that alone isn't going to keep them afloat.

eBooks: Though it still represents a small portion of book sales, it's one category where publishers are seeing growth in the downturn, and that's getting their attention.

Awareness at publishers is also way up, as most editors in major houses are making extensive use of electronic readers to read submissions, and by most reports, they love it. After years of foot-dragging, publishing finally seems willing to embrace electronic books.

The problem is, nobody knows what form eBook distribution is going to take, what reader platform will predominate, or how a move to eBooks is going to change the form of books themselves. There's huge opportunity here, but also huge risk.

But I think a move to electronic distribution is inevitable, and good. If nothing else, it offers the opportunity to lower book prices to the point where they can be more competitive with other information and entertainment media.

Yes, I still hear lots about how people love books, how nothing looks or smells or feels like a book, and about how books are just better and more convenient than any electronic reader.

But I still think about 90% of that is crap. Yes, many of us love books, have a great deal of nostalgia for books, are even a bit fetishistic about the sensory aspects of books. That offers a niche that will exist for some time, maybe forever. It changes nothing.

Books are too heavy, too bulky, too expensive, too fragile, too inconvenient and poorly designed in a hundred different ways that book-lovers have trained themselves to ignore. They just can't be the predominate means of distribution any more, especially for a (hopefully) new generation of readers.

(By the way, speaking of the next generation, one writer friend of mine is fond of pointing out that she sees young-people routinely reading books on-line, and only then buying physical copies of the books they love. She takes that as proof that young readers still love books in the way us oldsters did.

I'm not so sure. In those cases, I have to wonder if the physical book is being read, or if it's being displayed as a tangible artifact of what they read and like. If so, the book isn't a book, it's a token for a book, and such a token could potentially take many forms. It could be replaced by a collectible plaque, or a button you could attach to a jacket or backpack, or a trading card, or a coin, or an action figure, or a wearable zipper pull, or a picture on a social networking site, or a book-list on a cell-phone that can be wirelessly traded with friends, or who-knows-what.

I have the feeling there are new exciting marketing opportunities there, but that's just one more unknown in the list of many that surround eBook publishing.)

Right now the "big three" in terms of hardware platforms are the Amazon Kindle, the Sony reader, and (surprise, from out of nowhere) the iPhone. The Kindle has an early lead, but I'm keeping a wary eye on the iPhone. The iPhone is pretty poorly suited to being a book-reader, but it has a huge advantage in that it's already an indispensable accessory for millions of people around the world. I'm skeptical that an eBook reader that's only an eBook reader is going to last, in the same way that you almost never see a phone that's just a phone any more.

Actually a problem with both the iPhone, and to a lesser extent, the Kindle, is that they could represent future monopolies in book retailing, the way Apple has an anti-competitive strangle on the music business now.

I'd much prefer that things shake out to a more open model, where readers (and publishers) can choose from a variety of retail sources and hardware suppliers, and where any reader, regardless of what kind of reader they own, will have access to any book from any publisher.

It isn't clear things are going to shake out that way. In fact, at best I'd give it even odds at this point. Apple and Amazon both would be happy with a monopoly, or at least, a dominating closed platform.

It also isn't clear what eBooks mean for the kinds and lengths of books sold. A lot of what a book is has always been defined by the physical format of the book and the mechanics of marketing it. If a book is too long, it's too big, heavy, and expensive to carry around or sell. If it's too short, it isn't cost effective to sell or market. If it's a series or trilogy, the chunks are going to come out in a certain size, at a certain interval.

It opens all sorts of new possibilities, and with them, uncertainties. I'm virtually certain, though, that we'll see new marketing models emerge.

For instance, MP3s all but killed the traditional music album, as people instead bought individual songs. Likewise, eBooks could kill anthologies and the few surviving fiction magazines, possibly replacing them with trusted fiction portals, where people kind find and purchase individual stories from trusted sources.

Some fiction formats, such as the novella, have probably been unnaturally restrained by print formats. Novellas are too short to be marketed effectively as books, but so big that it was difficult for magazines to publish them. Yet this is a natural length for storytelling that has the potential to prosper in several genres, especially science fiction, fantasy, romance, and possibly mystery as well.

ePublishing offers new opportunities for serialized and subscription-based fiction. Could we see a return to something like the pulps, where people subscribe to monthly novellas featuring series characters? Could we see something like the print-versions of soap-operas or telanovelas, where fiction is serialized in a longer, possibly open-ended form? Will eBooks ability to cheaply reproduce art or photos result in new kinds of heavily illustrated books and fiction?

All exciting possibilities. All annoying uncertainties.

eBooks are coming, that's more certain than ever. But it's far less clear what form that market will take, or what it will mean for writers.

Traditional Book Publishers: Again, much chaos ahead, but I don't see traditional publishers as going away. Finding good manuscripts and turning them into published works is still a complex and labor-intensive business. That won't change because of changes in retail or the advent of eBooks.

Yes, an eBook economy may offer new niches for small publishers, start-ups, players like Amazon or Apple who might try to publish the books carried on their platforms, and even self-publication by authors.

I predict we'll see some surprising new players emerge from all this. But I don't think the experience, resources, or brand value of the major publishers can be underestimated. They may look much different when this is all over, but they'll still be here.

To my mind, the important thing for conventional publishers is not to fight change, to remain flexible, and not to get greedy. A lot of experimentation is going to be necessary to find what works and doesn't work in this new publishing environment. They need to be ready, and to embrace this process.

They also need not to get greedy about the profit potential of eBooks. Prices for books must fall in the mass market to remain competitive, and they need to pass a portion of any additional profits along to authors and packagers. Failure to do this last thing will provide incentive to bypass them, either through new publishers, through small press, through self-publishing, or perhaps through new models like author-coops, that haven't even been tried yet.

And despite the inevitable shift, print books aren't going away soon, at least, if publishers play their cards right. One thing I think publishers need to think very seriously about, is to stop thinking about book, eBooks, and maybe even audio books, as separate products.

Compare this to DVD publishers, who have addressed sliding sales by, in many cases, including an electronic copy of the film along with the regular DVD. The purchaser can watch the DVD (and its extras) on a conventional player, a portable player, or even a computer. But they can also load their digital copy onto a variety of portable devices for easy viewing on the go. It's too early to know how effective this model is, but at least they're trying something different. And it's still a way of charging $20-30 for a new-release DVD instead of taking a cut of a $2-5 download.

Likewise, I think it would be a very good idea for book publishers to include a digital copy with, at least, new hardcovers, and possibly trades or even paperbacks. If people want only the digital copy, sell them that, and for less, but offer then a package deal at a price comparable to the printed book alone.

This addresses the younger "token collectors" my writer-friend has pointed out, and plays to the nostalgia value of printed books. A purchaser can read the print book in the tub or sitting in front of their home fireplace, and still have the convenience of reading the electronic copy if they manage to steal a few moments in on a commuter train, in an airport, or in a waiting room. It would give them a greater incentive to buy a hard-cover rather than waiting for a cheaper trade, paperback, or fully-electronic edition. (Another option would be to offer the electronic edition only with the hardcover edition, splitting it out as a separate item only after the paperback is released. Make it worth people's while to buy the hardcover.)

Just as importantly, it keeps traditional booksellers in the loop for some eBook sales, and allows for the kind of hand-selling that indie stores do well, and that isn't available to eBooks. Like I said, the trick is not to get greedy and try and sell the package for as much as the print and eBook editions would cost. If it costs anything extra at all, there should be a very substantial discount.

Audio-books, in file rather than CD or DVD format, can also be part of a "value-added, high convenience, high-flexibility" package that may be more attractive to readers than stand alone books.

Publishers may also want to consider adding other extras in the package, in the way extra features are offered on DVDs. This might include bonus short-fiction, photos, author interviews (audio or video), author readings from the text, and even documentaries for high-profile books.

No mix of publishing formats or materials should be ignored until the publishers find a new model that works and pushes books back into a sales and profit growth curve, for themselves, and their authors.

On-line sellers: This another growth area, at least for 500-pound gorilla Amazon, which is well positioned no matter how the shake-out of print vs. electronic editions goes. On-line sales are going to increasingly cut into the sales through traditional bookstores, large and small.

But there are still niches here. Amazon still hasn't replicated the browsing and social experience of visiting a bookstore, and given that their focus is increasingly on other areas of retailing, that doesn't seem to be a priority for them.

In the near term, that's a bonus for traditional bookstores, but it also might create opportunities for an innovative on-line competitor to Amazon. In particular, I think there's a huge opportunity for the first company to seamlessly combine the reading, book-purchasing experience with social networking sites and with Twitter-like phone services. Young people don't see reading as the solitary experience many of us baby-boomers grew up with. (To some extent, they don't see any aspect of their lives as solitary experiences.) There's a huge market there for the first company that figures out how to tap it.

What this means for authors: There are some hard and uncertain times ahead.

Ahead? Hell, they're here.

But it isn't all bad news, especially for those authors who are flexible and open minded enough to try new things.

Continue to write novels and books and market them as you always have. But keep your eyes open and your ear to the ground for new trends. Don't be afraid to take some risks and try new things. Yes, most of them will fail, but you could also be catching the wave of the Next Big Trend.

I'd also recommend that, if you haven't written short fiction, or haven't used those muscles in a while, it's time to polish your skills. I think eBooks will create new opportunities for shorter-form and serialized fiction, and the authors who are able to move into those areas stand to benefit.

Also be prepared for changes in how you have to market your fiction. Book tours and press appearances are being replaced by web sites, chats, forums, social-networking sites, podcasts and YouTube videos. Publishers increasingly expect these things of their authors, and I don't see that trend going away. Quite the contrary.

But this can be good for your sales, and offers opportunities for the author to cross-market their works, and make money from selling other merchandise. While the profit margins aren't great, the tools are out there to do these things without creating a huge distraction from writing, which should always be the author's primary focus. In this environment, any potential revenue stream is nothing to sneeze at.

Things are changing, and there's much uncertainty ahead. But (Star Trek geek alert) there's an old Ferengi saying that goes something like this, "even in hard times, somebody is making a profit."

I couldn't agree more.

Are you ready?