What could change just about every aspect of the current disputes about digital disruption in the book trade? The revelation that the key traditional businesses are not being disrupted at all, right? Well, that may be overstating the case, but not too far – at least according to Hugh Howey. Under the headline “Two Important Publishing Facts Everyone Gets Wrong,” he’s put together an analysis, with a lot of its data drawn, interestingly, from the New Republic, to demonstrate that: “Almost everything being said about publishing today is predicated on two facts that are dead wrong. The first is that publishers are somehow being hurt by ebook sales. The second is that independent bookstores are being crushed. The opposite is true in both cases.”
In the case of publishers, Howey demonstrates, ebook revenues are more than making up for lost sales from more traditional lines, because “margins on ebooks are much higher than the previous cash-cow, hardbacks,” with the result that all of the Big Five are enjoying steady or improving overall profit margins. Meanwhile, although the overextended major book chains are suffering, “the independent bookstores that those big-box discounters nearly pushed into extinction are roaring back.” Howey points to a 20 percent increase in the number of independent bookstores over the past five years, and an 8 percent year-on-year increase in sales for these stores over the past three. Howey finds that the advantages enjoyed by the truly independent stores – “physical location, immediacy, hand-selected curation, a focus on local topics and authors, community events, fresh coffee, browsing, personal help, and so on” – are enough to sustain them against the likes of Amazon and the major book chains alike.
“Publishers and small bookshops are, on the whole, doing better now than they were in 2007, when the Kindle launched. That’s irrefutable,” Howey concludes. So Hachette and Authors United might as well give it up: They have nothing to fight for.
This is not to say that self-publishing is going to disappear. It continues to have a huge influence – on writing and literary production. And it has been round long enough for whatever disruptive influence it was going to exert to be fully manifest. And the result? Better margins for publishers, and thriving independent bookstores. It seems like self-publishing is in fact growing the whole ecosystem. What more cold, impartial proof could you have than Big Five publisher profit margins?
Quote: Howey points to a 20 percent increase in the number of independent bookstores over the past five years, and an 8 percent year-on-year increase in sales for these stores over the past three years.
My business sense says that 20% more stores and only 8% more sales (although over a curious selective difference in periods) isn’t good news. That translates into roughly 3% less income on average in a market where profit margins are razor thin. Less per-store income is not a good sign. It is a bad sign. If the stores are surviving, it’s thanks to the free WiFi and expensive coffee.
Quote: “Publishers and small bookshops are, on the whole, doing better now than they were in 2007, when the Kindle launched. That’s irrefutable,” Howey concludes. So Hachette and Authors United might as well give it up: They have nothing to fight for.
Where to start?
1. Hachete isn’t fighting about its present income. It’s fighting about its future against an aggressive and market-dominating Amazon that has its eyes on that added ebook income publishers are making. Amazon sees that money and wants it. Hachette doesn’t want to give it up. In no way can this struggle be interpreted as a win for the big publishers. It could very well end up a loss.
2. Authors United isn’t in this for the currently up profits of large publishers or the per-store decline in income of independent bookstores. Its name is “Authors United.” They are in this because Amazon has been kicking them and their readers around like a football its battle with Hachette. That they don’t like. That they want to see stopped.
And don’t forget, Author’s United has quite a few authors who know their business. They know that they’re far more likely to benefit from having a publisher flush with profits than from having an Amazon pocketing that same money and using it to grow other areas of its business.
And, yes I’ve learned that its almost impossible to persuade Amazon’s fanboys. They’re beyond reasoning. But the claims in this article are so flawed, I couldn’t let them pass without making some remarks in passing.