POSTED ON FEBRUARY 22, 2012:
How to Save Books
Why e-Books need print to thrive
Borders and Barnes & Noble killed independent bookstores. Amazon killed Borders. Now Barnes & Noble, which sells more than 20 percent of pulp-and-ink books in the U.S., is under siege.
If B&N collapses: the death of books.
You may remember such classics as "How the Internet Slaughtered Newspapers" and "How Napster Decimated the Music Business." It's always the same story: Digitalization destroys profits. The electronic assault on tangible media follows a familiar pattern.
First: Pricing is set too low; margins get squeezed.
I pay $43 a month to get The New York Times delivered; new digital-only subscribers get the app for $5. In the book biz, per-unit net to publishers is actually a few cents higher for e-books. But that margin is deceptive. "If e-book sales start to replace some hardcover sales, the publishers say, they will still have many of the fixed costs associated with print editions, like warehouse space, but they will be spread among fewer print copies," notes the Times. E-books also eliminate paperback editions, a big second chance for publishers to break into the black.
Second: Piracy runs rampant.
Piracy of print media was virtually unheard of. But digitalization makes piracy tough for even the most honest consumer to resist. As of the end of 2011 an estimated 20 percent of all e-books downloaded were pirated. That's a 20 percent pay cut to authors, agents and publishers.
And "legal piratization" is on the horizon. On February 6, a federal court in New York City ruled that ReDigi, an online marketplace for "pre-owned" MP3 files, can continue to operate pending the outcome of a lawsuit by Capitol Records. And public libraries are already "lending" e-books to multiple "borrowers" -- the same process as buying them. But free.
Third: à la carte sales whittle down revenues.
Twenty years ago if you liked a song you heard on the radio you paid $14 for a CD that had 14 songs on it -- 13 of which might be filler. iTunes' 99-cent songs brought back the single -- but cheaper. The result: the collapse of the music biz. According to Forrester Research, total U.S. music sales and licensing revenues fell from $14.6 billion in 1999 to $6.3 billion in 2009 -- a decline of 57 percent in a decade.
Why should you care if traditional publishers go under? What about the democratizing effect of the Internet, which allows anyone to publish a book?
Granted, digitalization opens doors for writers who might never have been able to break through the "no unsolicited manuscripts" wall that surrounded old-media gatekeepers. Elitism was and remains a problem.
But there's a bigger problem: removing the profit incentive from books means more titles about vampires and werewolves and fewer in the fields of history and sociology. Because lower profits make it tougher for publishers to invest in big time-intensive projects, it deprofessionalizes our highest form of popular culture. The historian Robert Caro began working on his brilliant five-volume biography of Lyndon Johnson in 1982. He expects to finish in 2015. Tiny digital royalties eaten away by piracy couldn't have sustained Caro's research for three years -- much less 32.
"Inside [the Kindle's] plastic case, other things lurk," Sarah Lee writes in the UK Guardian. "Sci-fi and self-help. Even paranormal romance, where vampires seduce virgins and elves bonk trolls. The e-book world is driven by so-called genre fiction, categories such as horror or romance. It's not future classics that push digital sales, but more downmarket fare. No cliché is left unturned, no adjective underplayed."
Fourth but not last: the loss of a product's brick-and-mortar distribution outlets reduces consumer consciousness of a product.
I used to spend at least one day a week hopping from one CD store to the next, spening $50 to $100 a week on music. Now I spend the same amount in three months. I still love music. I just don't think about it as often. iTunes is just a list of names and titles.
Now Barnes & Noble and what's left of the independents are all that's standing between an uncertain present and a disastrous future.
Things turned ugly after Amazon urged bookbuyers to visit stores in order to use their smartphones to scan barcodes of titles so they could buy them online, from Amazon, at a discount. B&N retaliated by banning books directly published by Amazon from its stores.
Amazon says it doesn't want to drive B&N and other brick-and-mortar stores out of business. Their actions belie that. But if Amazon management were smart, they would subsidize stores like B&N. Remember what happened to the music biz when record stores disappeared -- the overall music business cratered. All music sales, including those of iTunes, would be higher today if Tower et al. were still around.
Sadly, Amazon doesn't seem smart. Like most American companies, it's looting its own future in favor of short-term, quarterly lucre.
"Shopping on Amazon is a directed experience -- it works best when you know what you're looking for," says Charlie Winton, CEO of Counterpoint Press. "But how does that help with, for instance, a first novel?"
E-books are here to stay. But there's a way to save the overall book business for both print and electronic editions. The solution requires three parts.
Congress should join the other countries that have major book industries in passing a Fixed Book Price Agreement, in which booksellers and publishers agree on what price books may be sold nationally -- i.e., no $25 books selling for $10 at Costco.
Recognizing the unique cultural contribution of books as well as the threat to our national heritage posed by digitalization, Congress should exempt publishers from antitrust laws. This would allow publishers to collude to set prices and hold the line against predatory discounting.
Finally, publishers should flip the current arrangement, in which Amazon enjoys steeper discounts than brick-and-mortar stores. Even if Amazon gets charged a higher wholesale price they still have big advantages; many people don't live near a store or are simply too lazy to visit one. And they carry everything.
It's more than a question of preserving print as a fetish commodity. E-books won't thrive if their print forebears vanish.
--Ted Rall is the author of "The Anti-American Manifesto." His website is tedrall.com.
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