This morning over breakfast I listened to the latest episode of Alisa Krasnostein and Jonathan Strahan’s podcast, Live and Sassy. This featured an interview with the owner of one of my favorite bookstores: Alan Beatts of Borderlands Books in San Francisco. It is well worth a listen, if you are at all interested in the book business.
Alan talks mainly about the impact of ebooks, and Amazon in particular. The most notable point he makes is that if we, as readers, buy just 1 in 4 of our books online, without increasing the number of books we purchase, then most bricks and mortar bookstores will go out of business, because they can’t survive a 25% drop in turnover. The chain stores will go first, as indeed Borders already has, and independents will suffer a brief renaissance in their absence, but ultimately most of them are doomed.
Where I got most interested is where the discussion turned to “what next”. Assuming that bricks and mortar books stores do vanish, where will we buy books in future. Amazon obviously. ABE books for second hand? Oh, they are owned by Amazon. The Book Depository? Oh, they are owned by Amazon. See where I’m going with this?
Alan says that he thinks publishers will increasingly try to sell books direct to the customer. Gollancz’s SF Gateway ought to be a good example of this, except that it isn’t because they don’t sell the books themselves, just point you to Amazon. Angry Robot, with far fewer resources, managed to get the job done right.
Of course creating an online bookstore does cost. Alan says it is far too difficult for a small press. That’s not actually true. Lee Harris managed it for Angry Robot, and I used the same software to create my store. The problems here are twofold. First, there’s currently no off-the-shelf store software that does ebook purchase as seamlessly and conveniently as Amazon. Hopefully that will change soon (and indeed I’m working on something myself). The other problem is volume. Licensing the store software is expensive, and if you don’t have much turnover then you won’t make any money. One of the reasons I started a bookstore is to attract more customers and sell more books, because there is no way it would have been economic just selling my own books.
Alan also talks about websites that sell books through affiliate schemes. You can do that, and you might look like a bookstore, but it is really hard to make any money that way. If I sell books through a bricks and mortar store like Watestones they are liable to want 35% or more discount before stocking them. If I sell ebooks through Amazon they take at least 30%. My own store takes 15%, because I’m trying to help small presses. I’m not making money at that rate. Amazon’s affiliate scheme promises “up to 15%”, but you generally only get that much on big ticket items and selected best sellers. You normally get a lot less.
Also, as Alan mentions, Amazon has a patent on the way in which their affiliate scheme works, which makes it hard for other stores to do such things as well as they do. And of course if your “bookstore” is essentially just a front for Amazon then you are not really increasing competition.
There are a few people trying to do genuinely independent ebook stores. Baen’s Webscriptions, Small Beer’s Weightless Books, and my own store, are all examples within the SF&F community. But is it much more difficult to make this work than it is with a bricks and mortar bookstore.
How do you compete? On price? No, Amazon ruthlessly monitors rival stores and will reduce prices to match any offers. On selection? No, Amazon sells everything. On convenience? Very difficult, as Amazon has far more money and can develop much better software than you can. By being local? Well only if you live in a country without an Amazon store, and they are starting to expand.
The thing about online retailing is that it makes to very hard to differentiate yourself from anyone else. And that means that it is difficult to see any future for bookselling except direct from major publishers, or from Amazon.
As someone who has spent much of her career in economics breaking up monopolies, this worries me a lot.