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File 10.2009c FYI France Essay :

 

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"Research Project: Printing in London..."

 

A new correspondent writes,

Dear Mr. Kessler,

I am spending this semester studying in London. As part of my studies here, I am required to do a research project. My project is on the publishing industry, with a focus on a few specific London bookstores.

I was wondering if it would be possible for you to answer a couple of questions for me. It would be greatly appreciated!

...

 

Reply:

November 24, 2009

Thanks very much for your note. I'm happy to reply -- I've interlined my notes in your text which follows.

Incidentally I spent a time in London myself, long ago, some of it working for a Charing Cross Road bookseller named John Calder.

I even managed his little "Penguins Bookshop", nestled into a tiny space in Villiers Street, right next to and in fact somewhat beneath Charing Cross Station.

It was cold down there in the mornings by the river. But I had a little "electric fire": by now you know what those are, as you're in London -- also that while they do not "heat", they do "warm" at least, and in the London damp that can be a wonderful thing. And fish 'n chips were 'round the corner in front of the Tube station, too, plus the famous odd-hours Wine Bar was nearby, both for keeping warm.

Fond memories, for me -- early 1970s.

 

In my research, I came across your bibliography, "Preservation in a Digital Age."

That bibliography is greatly out of date, now, although its basic tenet still holds: "digital" continues to be both a curse and a blessing, for book preservation --

* On the one hand much that once was read in "print" now gets ignored, and neglected and even destroyed -- as the world turns rapidly to digital texts, neglecting old library shelf printed volumes -- and as attention spans shorten, and as "those who do not remember the past are condemned to repeat it", and so on.

* On the other hand, though, "digital" also is giving print preservation its very best chance to ensure survival of that Past, now -- as neglected printed texts at last may be removed from shelves, given acid-paper treatment baths, and finally stored in controlled environments where heavy usage and poor weather conditions and peanut-buttered fingers no longer will tear them apart -- the Librarian's Dream, for fragile printed books, no Users! :-) And their contents will get read, now, in their new online digital formats, more than they ever were read before.

 

Here are the questions:

OK... :-)

1) As you very well know, the publishing industry is changing. In my research, I found a lot of reporters discussing how industry giants like Amazon are to blame for smaller bookstores and publishing companies going out of business. Do you think that this is true?

No I do not: neither do I blame Amazon et al., nor do I even believe that any sort of bookseller competition has been forcing out the smaller stores and firms.

In fact the opposite is true. People are reading far more, now, than ever before. Much of this is digital reading: on-screen, online. But we also are reading -- and publishing, and printing -- far more printed-on-paper books than we ever have before, as well.

Any good reference librarian can guide you to the global industry statistics for this: there are several industry sources for such data, in the US & UK & France & Germany & other places -- firms which regularly compile lists and numbers of "total titles published" and so on. You will see that, far from shrinking, the total number of printed books produced and consumed yearly has increased, in fact the numbers have exploded, over the last few decades while the digital revolution has been ballooning too. Libraries barely have kept up, in their book-collecting.

I even would credit Amazon, and Google and the other "digitizers", for much of this, rather than blame them -- their deeper and broader reach has provided excellent advertising and marketing for the printed book industry as a whole.

What has happened instead -- instead of the erroneous picture of an enormous predatory Amazon driving out little bookstores -- is a structural shift within the book production and distribution industries, one driven not by the publishers' and bookstores' newest competitors, such as Amazon, but by the readers themselves, by the customers.

The customers now want what Amazon sells, and the way Amazon sells it, and at Amazon's prices -- not what the small independents / indies or most of them were offering -- it's as simple as that.

It's like the old historians' saying about Napoleon, that conditions in Europe at his time brought his "era" about, not him, that "If Napoleon hadn't come along, it would have been necessary to have invented him.": it's my feeling that if Amazon had not come along it would have been necessary for the book trades to have invented them, too!

See: http://www.bowker.com/index.php/press-releases/563-bowker-reports-us-book-production-declines-3-in-2008-but-qon-demandq-publishing-more-than-doubles

 

Is it fair to blame companies like Amazon for forcing these smaller companies out of business, or is it just a natural process?

It's a natural process, yes, a famous one: it's simply "competition". Karl Marx wrote his famously-logical book Das Kapital about it, sitting right there in London, in the Reading Room at the British Museum; Joseph Schumpeter many years later at Harvard coined his nearly-as-famous term to describe it, "creative destruction". It's the idea, very American altho not-so-European, that economically one must compete in order to survive, that there is "no free lunch", not even for elderly & much-loved & very congenial industries such as book-selling and the other book trades.

Also that, in this competition, there will be casualties...

I was a wholesaler, for many years -- long after Mr. Calder let me help him sell his books in London -- and in wholesaling I learned a great deal about retail survival, from my customers, and about the strategies of small business competition.

I was wholesaling giftware, not books, but the principles are still the same:

* Never put your eggs in one basket -- which is what so many small merchants do, in specializing -- even if they carry different "lines" of books, as many began to do in the 1960s, broadening out their previous special bases of "just fiction" or "just medical" or "just law", adding "general reader" or "childrens" or "magazines".

But few of those folks ever dreamed that the entire "book as a thing", regardless of its subject-matter, ever would undergo such extreme changes as it has gone through in the digital era, rendering it not obsolete -- as change did the "buggy-whip", which once was a differentiated and thriving industry too -- but yes upsetting its market tremendously.

Such folks put all their eggs in the one "printed books" basket -- the little publishing house or bookstore, publishing or selling only printed books -- so when that basket dropped, or better-put when its industrial model shifted to cd-roms & dvds & thumbdrives & cloud computing, they lost all their eggs.

* Spread your risk -- another way of saying the same thing -- small stores notoriously have very little to "spread", they plow every extra penny they have "back into the business". But unless they do spread risk -- as any banker will advise you, although those folks haven't practiced what they preach very well recently either -- then "reserves" do not get built up for "a rainy day", or for a chance to "buy low / sell hi" to make some extra money, or for catastrophic business losses or for massive industrial structure shifts.

This is just classic Marx, in his book on how capitalism works, or Schumpeter on how its industrial cycles regenerate themselves: "creative destruction", the latter said -- that is what happened to most of those small booksellers, they were the ones "destroyed" in the cycle so that other new ones like Amazon could be "created".

But it wasn't their competitors such as Amazon who did that, it was their own customers' changing habits, and their own lack of foresight in not changing sufficiently with that trend, and failing to build up adequate reserves beforehand to finance such change when the need for it broke upon them.

* No free lunch -- still true... In France the government tried desperately to save the small publishing houses and bookstores with their famous "loi Lang", which regulates book prices very tightly. Yet the phenomenal successes of La FNAC and other large mass market retailers there have proven that "price isn't everything", that the new customer trends since the 1970s favor factors other than simply price discounts: for example wider merchandising range, thinner stock with "just-in-time" systems, massive and very "hip" advertising, mail order & Minitel & Internet sales -- the little indie publishers and bookstores who didn't "get" any of this, and thought the simple pricing point of the loi Lang would save them, all mostly are out of business or swallowed by conglomerates, by now.

So what you have left are the complainers: the reporters whom you say you've been reading, who now worry that competition from "Amazon" and from "digital" are putting nice little bookstores out of business -- but such folks, or folks like them, have worried about these things before.

Every innovation has its Cassandras: a few have been correct -- as Cassandra herself was -- but most are wrong, and simply make a profession of it, become a personality type, crying the same thing about every innovation.

The system needs new ideas, approaches, methods, techniques -- per Marx or Schumpeter or anyone else who ever has analyzed it -- and per John Cage, who famously has declared, "I'm not frightened of new ideas, I'm frightened of old ones".

 

Conservative worriers about current trends in the book trades, moreover, usually have not read its history. Let me offer you just three examples to consider, of book trade innovations which frightened conservative critics but in fact greatly expanded the book industry, and brought us to where we are now, with those same critics still worrying that once again "the end is nigh":

* Gutenberg -- there were "books" long before there was "printing", after all...

Elizabeth Eisenstein has done the best and most complete job of documenting and analyzing the social acceptance of the "movable type" innovation, but her conclusions nevertheless still are controversial.

It seems certain, however, that there was at least some initial resistance to the new idea, among book collectors and librarians -- much resistance, if the entire Reformation and Inquisition waves of censorship are included, as attempts to control the development and growth of that mass market innovation, let alone all the other waves of censorship and marketing control which have happened since.

* Foyles -- a little closer to home, for you at the moment -- right there in London, on Charing Cross Road. I still remember resentment among the smaller bookshops there -- not Calder's but others -- of the local giant Foyles, "that great barn of a place", where supposedly quality was bad, selection poor, service non-existent, even if prices were admittedly "a bit less".

Little did such 1970s sceptics anticipate the "great barns" of later decades such as La FNAC, Borders, Barnes & Noble, much less sale of books in "supermarkets", and the online giants of Amazon's ilk.

* Penguin -- even that little Calder bookshop in which I worked attracted its Cassandras, decrying "the end of the book world" and attributing that entirely to cheap paperback "pocket books", of which Penguins were their prime example.

London had a vast number of "paperback snobs", when I was there in the 1970s -- folks who refused to accept that Penguin's little inexpensive knockoffs were "books, really". Unless the texts contained therein were presented in fine calf-bound printings with goldleaf crests emblazoned they were not worth reading, went the logic... which didn't cut it with me, there on my impoverished student's budget... I collected and devoured lots of Penguins -- and pace their fading and brittle acidic paper I still have some on my book-shelves.

But, yet again, as with "printing", and "mass marketing" such as Foyles', the Cassandras were wrong about Penguins. I began with them, yes, but I moved to hardbound and fancier presentations later: so, rather than kill the market, such competitive innovations instead do the opposite, they establish and extend it.

Had it not been for such innovations as the above three, "reading" might still be stuck in the old pecia system of 12th c. scholastic Paris, when the single manuscript might be broken up into pieces, each loaned out for a fee to various groups of students, who then would take turns laboriously copying its contents out by hand -- not too much marketing & distribution got done that way, and not much got read.

Each innovation may have looked threatening at first -- the way digital does today -- but step by step they created and extended the market. That is exactly what digital is doing now.

Someone once asked AOL's Steve Case, in his heyday and long before his Warner Bros. trouble, whether he was worried about competition from Microsoft and other online portal and community giants. He replied that as far as he was concerned there was plenty of room for everybody, because at that point everyone was competing for very tiny slices of what he was convinced was going to become an enormous online digital information pie.

That was my view too, and it is still: the market for "text" is huge, and for various geopolitical reasons at last it is rapidly growing -- particularly now for digital text, as 3/4 of the world's population only now are gaining access, via their very recently received cellphones, in Asia and Latin America, and large and growing populations in Africa and everywhere else still do not even have that access yet.

 

So what's a poor bookseller to do? Well, here's what many have done, very successfully: I'm not sure whether the following can be found in Marx or Schumpeter or other such loci classici, but it's standard retail wisdom --

a) move up-market -- go digital, go-with-the-flow, do the large capital outlay / high startup cost move, from lo budget cash-register-plus-eyeballed-inventory small bookshop selling, to online Twitter-marketing & downloaded eBooks & cloud computing inventory -- as Amazon does very successfully, and Barnes & Noble is trying to do altho they own too much real estate still, and other old-style retailers like Powells and The Strand are getting better and better at.

For these purposes upmarket does not necessarily mean more expensive pricing. An example of that from computer retailing would be Apple, which when "personal computers" became common and lower and lower priced, with lower and lower profit margins, did make the dramatic and in-retrospect very wise decision to focus on high-end users, producing only the very "best" in equipment and services, tailoring everything to highest standards in design, charging high prices, and protecting very high profit margins.

It was a gamble which paid off handsomely for Apple: when other firms such as Dell and Compaq went in the other direction, lo-market, to lower-end users where price is far more important and price competition ferocious, they ran into trouble -- IBM sold their personal computing division to Chinese investors to become Lenovo, Compaq sold out to Hewlett-Packard, Dell has been sliding and scrambling, and none of them have anything near the profit margins which Apple now enjoys.

Up-market in this context though may mean simply digital: that can require a large initial capital outlay, for a small store, to get to the point where it can do the same mass market deep discounting which Amazon now does.

So publishers and bookstores do what all other markets do. One current metaphor for hi-market / lo-market distinctions there is "coffee-table books vs. Danielle Steel": nowadays you can make your money selling a few copies of very expensive books, or many copies of very inexpensive books -- print runs of 500 copies or 5000 -- unit prices of $100 or $10 -- the gross income on both would be the same, 500 x $100 = $50,000 and so does 5000 x $10 = $50,000 -- but as Apple wisely realized, finally, 35% profit margin on that amount is a lot more than 5%!

On the other hand rich folks are finicky -- in some senses there is a lot more risk in Apple's market strategy -- and it is really tough and can be expensive to make something or provide a service of absolutely "best" quality.

b) move down-market -- And the lo-end is the realm of "economies of scale": one pillar of conventional wisdom thinking on capitalism being that it always is better to sell lots more units albeit at a lower price per unit... Altho it is even better, as Apple's most recent experience proves anyway, to sell lots more units at a higher price per unit! :-)

So publishers and bookstores have to choose. Harry Abrams Co. goes one direction, Delacorte Press another; Quaritch goes one way, Foyles another; different markets, approaches, methods, risks.

 

Two other distinctions, though, may be even more useful for you to consider, and for bookstores:

1) Used Books -- There are much bigger margins here. A bookstore which acquires a used book for $1 and sells it for $5, with almost no add-on overhead cost -- having been exceedingly careful, at the original purchase, to examine the condition of the cover and the pages! -- makes a much bigger profit than a bookstore paying $20 for a new book it sells for $25, or $24, or $23. New books have plenty of add-on fees: greater returned items from customers -- "I didn't like it... you promised I would..." -- vendor charges, paperwork. But the 5x price markup on the used book cost is all straight profit, with no or few charges against it.

So one strategy successful indie bookshops pursue is mixing-in "used" books -- well-examined "used" books -- among the new books which they offer.

Amazon does this, now.

The most successful bookshop knows, though, that Amazon still, despite ongoing best efforts, is a "known item search": users go there knowing that they want a particular item -- the marketing effort then is to guide them to other "recommended" or "same or similar" books.

The neighborhood bookstore, however, is a "browsing" search: the lure there is to "find something to read" -- a much easier "sale" than convincing someone to buy something else, instead or in addition, when they had another thing very specifically in mind -- all the bookstore has to offer, to the "browser", is a delectable array of interesting-looking books and the customer, half-sold already, will complete the sale by making the choice.

Amazon's greatest marketing task, then, is to convert itself from a "known item" to a "browsing" service: it knows this, and has devoted enormous resources and talents to it, expanding product lines, adding "recommended" and "wish list" and many other features, molding itself into a digital mall shop or the entire one-stop-shopping mall, as much as it can.

But the bookshop has these advantages already: it already is in the mall, or on the shopping street, open and ready for browsing. That is an advantage which bookstores which know how to do it use, not just against but also taking advantage of their giant competitor Amazon: "Amazon has it? Well, yes, but we have it right here!"

2) Digital and Global -- The above is not enough, however, unless the bookstore also picks up on the two prime pillars of the Digital Era creed: it must "get" both "digital" and "global".

Nowadays any firm or organization -- whether it makes cars or repairs them, offers medical services or legal advice, does gardening, sells shoes, buys factories, mines coal or makes electricity from sunlight -- needs computerized "just-in-time" systems to keep inventories thin, and paperless offices, and distance communications.

All this means folks must be "good with computers", so much so that they not only no longer "fear" them -- as folks I trained in 1990s classes still did, some greatly -- now they must actually "take them for granted".

The employee must know, innately now, whether it is proper to Twitter while at work -- the question can't be, any longer, "What is a Twitter?" -- even better, the employee and the boss need to able to figure out how to use Twitter, & Facebook & GoogleGroups etc., in their work.

Also they must realize that supplies, and customers, come from anywhere now. The digital business world has "gone global". The fruitstand's citrus comes from New Zealand and Chile and Australia, now. The email enquiry is from South Africa.

The bookstore can do what some small retailers always have done, then -- say Chile and South Africa are "just too far away", and do without winter fruit or that extra Capetown customer who will pay the extra freight via Paypal.

But that is why the US Small Business Administration has such a high casualty rate: simply the lack of imagination / fear of the foreign of some small merchants -- the ones who can make the "globalization" leap can thrive.

 

2) What are your feelings about Amazon's Kindle, and other products like it?

I am very unhappy about the Kindle, in fact -- qua Amazon shareholder myself, I am worried about Bezos' investment in it and financial reliance upon it.

It's just another "device" -- like the "iPhone" on which I am writing and sending you this, or like the "computers" on which I used to work -- all of these are just packaging, of various configurations of digital capacities and tools which some firms simply hope you and I will need & use & pay them for, to obtain and manage our information.

I never have used 2% of any of it, though, myself -- certainly never 2% of the very many "computers" -- "mainframes", "personal computers", "distributed systems", "laptops" -- which I have owned, since I bought my first from IBM many years ago.

Even my little iPhone, which I love dearly: I am up to 30-40% of its enormous capacities, now -- far more than I ever used of any "computer", so-advertised -- but still there is a great deal about it that I do not need, and never touch... but have paid for...

This is the trouble that hit the big "hardware" producers some time ago, to which I made reference above -- IBM, Apple, Compaq, Dell.

It's what has had Bill Gates so worried: why he has pushed his own firm into every new non-"computer" digital idea that has come along -- from the Internet to smartphones, not always successfully. Gates knows Microsoft is just in the packaging business, and that when the customers no longer want the DOS/Wintel "computer" package -- preferring cellphones, perhaps, or something else -- then Microsoft will be in trouble.

As Intel's Andy Grove put it about Silicon Valley, succinctly and pungently, in the title of his autobiography, "Only the paranoid survive"!

So the Kindle is just another "package"... The start-up costs on such devices always are enormous: it took Minitel a decade to amortize theirs, and they only did it with a lot of fancy mumbo-jumbo bookkeeping. Apple spends enormous amounts getting their new products "launched".

And the risks of launch failure are great, as all the firms have found: RIMM, Motorola... Digital devices have become fungible commodities, largely -- like wheat, or a pair of pliers -- the moment customers sniff a lower price or a new feature, somewhere else, they move away -- no "customer loyalty" whatsoever...

And anyway the firms make their money now off their applications / apps, not their devices: Apple's iPhone AppStore is the current famous example -- Android models currently are furiously at work building theirs -- but Dell and H-P also have their printer ink, on which they make great amounts of money while they practically give away their printers.

It's become a "services" economy, no longer a "manufacturing" one: that's a lesson GM refused to learn and the major reason it went bankrupt.

The economy went "global": fungible "agriculture" went to the Third World, in the 1950s -- folks there now suffer from tiny price rises & falls, the way our grandparents and great-grandparents did back in the 1930s and before -- and "manufacturing" went to China under the geopolitical deal we did with them in the 1970s, wisely, to prevent a third world war.

So now we are "services". That means Kindle Apps, but not Kindles.

And, besides, a Kindle won't fit in my pocket, while my little iPhone will. :-)

 

Do you resent the fact that books, magazines, and newspapers are all heading away from paper and towards computers?

Resent? Nope. Best thing that's ever happened to me: I've always been a news junkie, ever since Jr. Hi School -- can't begin my morning without breakfast, and can't eat that without my "morning paper", stretched out in front of me as I eat -- no matter how much blather there is in it, and as long as it contains at least a little international news, I'll read it.

This was true in school. And it became a necessity as I lived overseas and traveled, for study and for work and on family vacations: any traveler needs "the news" -- or you never will know what the weather will be like, at your destination, or what civil wars and other disasters might be brewing there.

But the only "paper" I still need is that morning read -- that's more ritual than informational, and I won't read one which inkstains my fingers!

Otherwise, though, nowadays nearly everything is digital: here's my daily / weekly reading regimen, nowadays -- nearly all in fulltext just like the paper versions, thanks to iPhone, no "mobile lite", and in fonts I can make larger and actually read better than a "paper" --

-- pretty easy -- only one left on-paper, now -- no longer necessary for the rest, gratia iPhone.

 

Those are all of the questions I have right now, but feel free to add any other comments you may have.

I've added a lot. There's more, too -- but I'll stop here... :-)

 

Thank you so much for your time.

Sincerely,

You are very welcome. Please ask any further questions you'd like to add -- or comment or discuss or argue or whatever -- all fascinating subjects, well worth the attention.

 

Jack Kessler, kessler@well.com

 

--oOo--

 

 

--hjlm--

 

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