Home > books, chapters, ebooks, kobo > Book business is indeed facing its digital reckoning

Book business is indeed facing its digital reckoning

April 13, 2011

The Globe and Mail ran a fascinating story on Heather Reisman’s “digital reckoning” over the weekend. Reisman is the CEO of Indigo, Canada’s book chain monolith, and the story is about what she is trying to do in the face of the shift to digital books. Like I pointed out last month in my predictions for the next decade, book stores are on the endangered species list because of the rapid growth of e-books.

Indigo’s strategy, which has been apparent for some time now to anyone who has ventured into one of its stores, is to shift away from books and toward knick-knacks like candles and picture frames. According to the story, Reisman is looking to ramp up those non-book sales over the next couple of years to 40 per cent of the business from the current 15 per cent.

That’s a pretty dumb strategy since it effectively means Indigo is going into competition with Walmart. There seems to be little one can’t get at its “book” stores that can’t be had at the superstore chain, where such goods likely sell for half the price. A better plan would be to fully concentrate on Kobo, the e-reader and e-book store combination Indigo launched last year. The venture has lost money so far, according to the story, but building it into a legitimate competitor for Amazon’s Kindle and shutting down huge and expensive stores seems like the logical way to go.

Indeed, the whole book business is changing. Indigo and other book store chains would also be wise to start building ties to writers directly by cutting out the middle men, which is what publishers are rapidly becoming. Check out the graphic that accompanies the Globe story, which attempts to detail one of the publishing industry’s closely-guarded secrets: the breakdown of who earns what on the sale of a book. A $25 hardcover earns an author only $2.50 while a $10 e-book gets them $1. Many, many authors - myself included - have harped before on why this is far from equitable distribution on a product that is entirely dependent on the writer’s intellectual property.

The graphic, along with this article about an author finding success through self-publishing, pretty much tells the story of how the business is changing. There have been numerous anecdotal stories about self-published writers hitting it big, but this particular article is notable in that the author supplied sales reports backing up her claims of making millions of dollars. Physical book store chains such as Indigo therefore need to adjust to this changing reality before pure-digital plays make them completely irrelevant, much like iTunes did to HMV.

What was most surprising about the Globe and Mail story, however, were the reader comments. It’s true that such forums are often a repository of negativity, but I’ve always found the Globe’s comments to be a little bit better than most, either because the readers are more intelligent or the sign-up process is more rigorous. Nevertheless, the sentiment toward Reisman and Indigo was one of universal condemnation. If the comments are anything to go by, Canadians are wringing their hands at the prospect of the book chain’s inevitably collapse. From its inexplicable U.S.-to-Canadian currency price discrepancies to its protectionist attempts to keep Amazon out of Canada, the book-buying public is clearly ready for Indigo’s inevitable demise and the larger changes to the business as a whole.

Categories: books, chapters, ebooks, kobo
  1. Sam Davies
    April 13, 2011 at 8:36 am | #1

    I’m curious - it must have crossed your mind to consider self-publishing SB&B. What factors made you take the traditional route?

    • April 13, 2011 at 10:52 am | #2

      I never considered self-publishing initially. I was pitching SB&B (back when it was called Bombs, Boobs and Burgers) to Canadian publishers in 2007, around the time when the Kindle was first released. Before Amazon’s e-reader came along, e-books were really nowhere. In 2010, after failing to find a U.S. publisher, I was literally on the verge of self-publishing in the U.S. through Amazon - I had the e-book formatted with a new cover designed and everything. That’s how fast things had changed, since e-books were now everywhere! At the last minute, though, my agent found a buyer. I actually mulled skipping the traditional route and self-publishing anyway, but the key factor against doing so was legitimacy and the press coverage it brings. Although the negative stigma around self-publishing is disappearing, I’m not sure it’s there yet - certainly not to the point where traditional media will cover a self-published e-book as anything but a business story. It’ll still be a few more years before a self-published e-book author appears on Stephen Colbert simply to talk about his/her book. I’m actually very excited about my next book - my plan is to pitch it to publishers and see what comes of it. If nothing, or I don’t like the offers, I’ll be more than happy to self-publish, to see what happens.

  2. Torontoworker
    April 13, 2011 at 9:47 am | #3

    Heather would have gone under years ago if it were not for the BIG pockets of Oxex and hubby Gerry. Shes a member of the annual Bilderberg conferences which says it all for me. Interesting in that her uncle was the force behind the free trade agreement yet she is all about using her Ottawa connections to put up walls around Canada when it comes to book retailing. Her daughter flushed a lot of Mommy and Daddies money down the tubes a few years ago on some lame online pet retail business. A drop in the bucket I guess, 10 mins business at their Boeing plant.

  3. Hub
    April 13, 2011 at 12:18 pm | #4

    Indigo / Chapters / Heather are what’s wrong with business in Canada. Maintaining protectionism does not serve Canadians. Does not serve CanCon (or Canadian authors). It only serve shareholders and distort a market. This time is seems that competition is coming from a different angle and hit them hard.

    Once I ordered some books from Chapters. The inventory was not the same online and on the “in-store” kiosk ; nor were the prices. Most of the order was delayed, several items cancelled, etc. I have to admit that’s not a very enjoyable experience and it just show how they don’t keep up. This has never happened with Amazon.

    (and no they didn’t have the books in store either)

    I think that instead of trying to sell candles and other junk like they do, they should go back to the basic and carry a larger selection of books. I haven’t found anything lately on their shelves I wanted to buy beside some new release.

  4. Chris
    April 13, 2011 at 2:36 pm | #5

    Hub, it’s amazing how your comment reflect most people’s comments about the lack of choice at Netflix Canada and retailers in general when comparing identical brands here versus the United States.

    And you guessed it right: it’s all about protectionism. Our choices are not less and our prices higher because our retailers want to, but because they simply can’t acquire the same products from distributors here without paying very dear and simply can’t bypass them because of existing protectionism.

    The 10% return to authors is very much like the return in the music industry. My brother in-law is an accomplished jazz musician and, to this day, he only gets a nickel for every tune that sells on a traditionally marketed CD. Although self publishing online hasn’t made him rich, it hasn’t made him poor either and it still gives him the exposure he needs for his bread and butter (his concerts). But the best part is, it has allowed him complete editorial freedom to explore the genre and still make money out of it.

    If there is any lesson to take from it, it is that the online revolution is now making it possible for consumers and producers to deal directly with each other without intermediaries. As before these intermediaries were necessary and, indeed, added significant value in the process of bringing products to market, they have now taken the opposite role as they are now more and more interfering with the process, literally sabotaging it just like guilds did 150 years ago during the industrial revolution, when the term was invented, or, perhaps more accurately, when the few who controlled information in the middle ages lost their “privileges” (in the literal sense of the word) when the printing press revolution made it possible for anyone to disseminate information.

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