What next for Barnes & Noble – and trade publishing?

The US press has been dusting off its “death of the bookstore” pieces following the Borders liquidation announcement.

There has been plenty to read, much of it as fresh as an old haddock, but the summary is: Borders made a series of bad management decisions that hastened its demise, but Amazon and digitisation have fundamentally altered the landscape, so – as the weaker player – Borders was bound to go down anyway.

Here’s National Public Radio’s synopsis of the familiar tale:

The Wall Street Journal offers a decent summary:

It includes this table, which is worth focusing on for a moment:

This indicates that:

• The US market for physical books will fall by 11% in 2011, compared to 2010.  It will have dropped by 21% since 2008.
• Amazon grew share through to 2010, and its share of the physical market in 2011 will rise from c.24% in 2010 to c.27% in 2011.
• The increase in eBook sales is not compensating for the decline in total industry unit sales.
• Given the lower average selling price for eBooks, this will significantly lower overall industry revenues.

And by the way, all of this will happen in the UK (and progressively in other non-English language countries) as well.

Actually, I believe the WSJ’s premise is in danger of being optimistic.  After Borders closed in the UK, it’s estimated that 40-50% of the company’s book sales simply vanished.  The impulse purchases, the gift buys and the self-indulgences evaporated; customers who were spending miillions of pounds a year at a big store in Ellesmere Port had nowhere local to transfer their purchases to – book-buying became inconvenient and, in recessionary times, an unjustifiable luxury.  (And Borders UK folded before there was any significant eBook market in this country.)

This AP article offers quite a good perspective on format changes, and customers drifting away from books:

Adrian Sierra, 36, a real estate agent from Westchester, N.Y., walked out of a Borders store in Penn Station in New York without a shopping bag filled with books.  He was, however, carrying his iPad.  ”I’ll miss them,” he says, but, “I’m not going to buy another paperback in my life. There’s no reason to anymore.”

The Motley Fool goes on to remind us that ”last man standing” is no kind of strategy in a world where buggy whips are passé.  What is their prognosis for Barnes & Noble?

Meanwhile, as book retailers have serially exited the market, the publishing community has been making robust noises throughout the storms of recent years.  But structural change is likely to come.

What happened to the record companies

The music business is far further  down the the path of digitisation and collapsing sales values, than book publishing.  Back at the peak, the music industry in the UK was dominated by five huge corporations, each with their own A&R, studios, manufacturing and distribution.  They were:

• EMI (HMV, Parlophone, Capitol, UA/Liberty, Harvest, MfP)
• Polygram (Polydor, RSO, Phonogram, Vertigo, Deutsche Grammophon, Philips and Decca)
• CBS (US Columbia, Epic)
• RCA (Victor)
• WEA (Warner Bros, Reprise, Elektra/Asylum, Atlantic)

These were the global players.  Also significant were the big independent labels, such as Island, Arista, Tamla Motown, A&M, Virgin, MCA, Ariola, and Chrysalis; parochial leftovers like Pye/PRT; and feisty post-punk indies like Stiff, Factory and Sire.

Every one of those labels, and all of their output (notwithstanding the fall-out from individual licensing deals) is now subsumed into four businesses:

• Universal Music
• Sony BMG
• Warner Music
• EMI

(And it should have been three – EMI and Warner tried and tried again to merge.)  Of course, new independents have appeared, from indie and hip-hop through to Naxos.  They’re better suited to the multi-channel era, but none of them has the reach or ambition of the old giants.

Former Waterstone’s MD Dominic Myers was lambasted when he suggested that the UK book industry has too much distribution capacity – but he was right.  What will be the shape of “old publishing” in five or ten years time?  Discuss…