EBooks Threaten Brick-And-Mortar Book Stores

Analysts see a struggle for survival by traditional booksellers thanks to a growing shift to electronic books and Internet sales.

Borders Group said in late January it would delay payments to vendors, landlords and others as it seeks to restructure its debt, but many analysts see bankruptcy or a sale looming for the second-largest U.S. bookseller.

Barnes & Noble said last year that it was in discussions of a sale or other strategic options.

“Disruptive change is coming to the book businesses of the world and they’re looking to the US experience to understand the nature of that change and what to do to prepare for it,” Mike Shatzkin, head of the consultancy Idea Logical Company and organizer of the Digital Book World conference held recently in New York, told AFP.

According to Shatzkin, ebook sales have more than doubled in each of the last three years.

He said he sees the market for traditional booksellers tumbling from 72 percent of the sales to about 25 percent of the sales.

He told AFP in an email that this would mean a loss of 90 percent of bookstore shelf space over the next 10 years, and a drop from over 1,200 large bookstores in the U.S. to “maybe 150 decent-sized stores.”

Amazon.com said last month that it is now selling more Kindle books than paperback books in the U.S. market.

“Bookstores lose customers two ways: to e-book sales and to print (books) sold online,” Shatzkin told AFP’s Rob Lever. “Print online is now about 25 percent of print sales and e-book sales are about 10 percent of print sales.”

A Pew Research Center report found that five percent of Americans owned an ebook reader last year, but that may underestimate the trend because other devices like smartphones can be used for the same purpose.

Forrester Research said Americans spent $1 billion more on ebook downloads in 2010 than in 2009 and the market is surging.

Forrester’s James McQuivey told Lever that an estimated seven percent of Americans read ebooks and that “this small, energetic group will grow so rapidly that it will easily spend nearly $3 billion on e-books in 2015.”

Analysts said the lower cost and convenience of getting electronic books instantly has threatened big book chains.

“The traditional bookstore is doomed by e-readers and online sales of hard copy books,” Nobel laureate economist Gary Becker said in a blog post, describing a type of shift economists call “creative destruction”, like replacing horse-drawn wagons with automobiles.

He said he still sees bookstores, but mainly to serve particular market niches.

Billy Hulkower, senior technology analyst at the research firm Mintel, told AFP that bookstores face a “trilogy of threats,” including online competition, ebooks, and public libraries offering free books and digital content.

“Retailers need to focus on creating compelling reasons for patrons to visit bookstores, like concierge or recommendation services,” he said.

Laurie Brock, president of the consultancy Brock Associates, told AFP that a recent survey by her firm shows consumers increasingly like their reading devices.

Brock said that in many cases, ebooks are sold to “avid readers” who want more to read.

For now, ebooks are less expensive than printed books, but the lower cost shakes up the economics of the entire industry.

“If people are only going to be reading ebooks, are publishers going to be able to keep them at the lower price point?” Brock asked. “Probably not, but Amazon has set the price low, and that’s where the big debate is going now.”

Shatzkin told AFP that the economics of the industry are being turned upside down by the digital revolution.

“Yes, it will be harder to make money,” he said. “The prices of books will continue to fall. It will be easier to get published — anybody will be able to do it — but it will be damn tough to make much money at it.”

He also said book merchants around the world will also soon feel the impact.

“The rest of the world isn’t so noticeable yet, but we all expect they will begin to very soon,” Shatzkin said.

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