There isn’t a publishing company in Canada that does not spend a good part of its working day grappling with the challenges of the book trade’s new reality. The transformation to a mass-market frame of mind — one that sees a revenue stream in 40,000 units of a book, whatever its actual form, sold at $9.99 rather than 10,200 at $38.95 — is daunting, but publishers have no choice but to adapt. Not that the news is all bad; until this past year, iPhones and other mobile devices with MP3 and video capabilities were seen to be “competing for eyeballs,” in industry-speak, to the detriment of the traditional media. Now they are seen as part of the cure — the fount of a potentially dramatic increase in the total sum of reader hours. And digital technology may also be the thing that finally solves one of the industry’s most intractable problems, which is that of returns.
The practice of selling books on consignment was initiated during the Depression by the New York publisher Max Schuster as a means of bolstering the liquidity of bookstores struggling in cash-strapped times. The booksellers paid for the books on consignment, so that the copies they did not sell could be returned. The idea was the salvation of the industry, although its benefits have been distorted over time. Everyone knows that the system is expensive, wasteful, and often manipulated by bookstores as a means of settling accounts through the shifting of inventory over different costing periods. Everyone knows that all the unnecessary trucking of books only adds to the extraordinary carbon footprint of an industry that, according to Michael Tamblyn, the former CEO of BookNet Canada, annually produces approximately 24 million more books than it sells.
And yet, despite years of half-hearted debate, the system persists. According to a BookNet Canada study in 2008, retailers and publishers of all sizes are in favour of the system. Larger publishers use it to their blockbuster ends. Smaller publishers and, less reluctantly, independent bookstores favour the custom, too, as it is just about the only way that even a single copy of a novel by a lesser-known author, or even an important backlist item, is likely to be stocked at all. The returns system, says Silver, favours culture and the consumer because it allows Indigo, the biggest player in the industry, to keep its stock “fresh.”
Digitized publishing stands to revolutionize the industry as surely as Schuster’s returns policy did almost eighty years ago. Electronic books, delivered as digital downloads or as files to be printed as books on demand, eliminate the headache, expense, and waste of a warehouse and offer a reprieve for the environment, which customers completely disregard as they participate in an industry that permits the felling, in Canada alone, of approximately 200,000 more trees than are necessary to support actual sales. The remaindering of a book — or, more often than not, its pulping — is what used to end its life; but now, as a digital download, it can remain “in print” indefinitely. And the backlist that used to provide as much as 70 percent of a publisher’s profits (large publishers, as much as the small ones, note, would like to have this gravy back) stand to do well by digitization, too, as archiving books electronically is one way of making them “available” without allotting any significant expenditure to their place on the book world’s very long tail.
Some publishers, though none as yet in Canada, are actually moving toward the production of books solely as electronic files, with print runs made only after actual orders. In a press release, amusingly titled “The Point of No Returns,” Colin Robinson, previously at Verso (the early publisher of, among other notable authors, Christopher Hitchens), recently announced with John Oakes the formation of the new imprint OR Books. As did his previous press, OR intends to publish “progressive works of fiction and non-fiction” but to sell these books directly to customers, predominantly as e-books; the company will go to press on actual paper only for committed bookstore orders.
In the new world of digital book delivery, all sorts of models are being examined to see just what sums of money can be extracted from a limited pool of readers to pay for a product with inputs that nevertheless remain expensive. True, the digital delivery of books dispenses with a range of costs, from warehousing and inventory control to transportation — all the debilitating costs of the returns system — but it is, as Susan Renouf describes it, still a “fallacy” to believe that digitally delivered books cost nothing to make. All books require writers and editors and marketers and salespeople and accountants, and so on. And yet digital is where the puck is going to be, and publishers have no choice but to skate toward it.
Jeffrey Remedios worked with Virgin Records before 2003, when he formed Arts&Crafts Records, the musicians’ collective that put Broken Social Scene, Charles Spearin, Apostle of Hustle, and Feist on the world stage. Arts&Crafts might easily be compared to a mid-size independent Canadian book publish-er, and Remedios, who acts as manager, publisher, distributor, and general organizer to his collective, sells 25 percent of his company’s music digitally — roughly 10 percent higher than the industry average. “Generally speaking,” says Remedios, “the smaller the company, the higher digital sales will be, because the smaller the release is, the harder it will be to find a physical copy.” Eighty percent of Arts&Crafts’ digital sales are achieved through iTunes, where, as Remedios puts it, “everybody gets the same shelf space. The front page can’t be bought.” The iTunes pitches that show up in users’ inboxes are chosen by the company’s “curators,” and not through paid co-op. Remedios is a fan.
When I ask him what advice he would offer book publishers about to confront a new digital reality, he says, “Don’t fear change. Embrace it. Allow the technologies to remould your role. There is no future as a gatekeeper of the status quo.”
Remedios believes that, in time, the music industry will sell subscriptions to a library from which consumers will be able to download what they want, when they want — a consumer’s “pull” heaven. Joel Silver, whose Shortcovers.com has come the closest to imaginatively replicating the iTunes music model (and pricing scheme) also wonders if a club membership model will eventually come to pass. Of course, e-book and on-demand sales are as yet too small to measure. Last year, when I spoke to Morgan Entrekin, the American publisher of Grove/Atlantic, he’d sold more than 400,000 copies of Anne Enright’s The Gathering but only 250 electronic downloads. “Publishing stories in book form is what I do,” he said obstinately. Still, the market for digital reading devices, not yet two years old, is picking up pace dramatically. Sony Canada, the company that produces the Reader, claims sales of mobile reading devices already exceed those of iPods at a similar stage in the player’s evolution.
In 2008, Sony sold about 350,000 units in the United States. In the same year, Amazon, its principal competitor in the field, sold about 500,000 Kindles (which are not yet available in Canada because the company hasn’t sorted out compatibility issues with Rogers, the network that would enable its wireless downloads). Sony won’t supply exact figures but says that the rate of sale and market penetration in Canada has been almost double what it was during the initial period in the United States. (The PRS 505 model was released in Canada in May 2008 and retails for $349.99; the 700 model has a touch screen and an annotation program and costs $449.99.) Ironically, the mobile reading device that had a head start on all the others was Apple’s iPhone, but the company’s CEO, Steve Jobs, was famously disinterested, believing, as he told the New York Times website, that Americans had stopped reading. Now the iPhone is playing catch-up in a market that Sony Canada’s senior director of marketing Junior Ali says “is bigger than television.” Stanza, the free third-party mobile reading program produced by Lexcycle for the iPhone, was downloaded more than two million times in its first year.
It is difficult to pinpoint exactly when the acceptability of mobile reading devices reached its tipping point, but in Canada it may have been when Sony provided Random House and then smaller publishers with free first-generation Readers for office use. In my own house, it happened around the time that I acquired a Sony Reader 505, and my wife, a book publisher, borrowed and never returned it. I have yet to use it, and when I’m travelling, with perhaps a dozen books in my suitcase, I envy her the light and immensely portable conveyor of digital reading. At the same time, however, a psychological revelation occurred to me that was every bit as, if not more important. For at home, I found myself contemplating the stacks of books in the front hall, in the office, and in the libraries upstairs and down. Without having noticed when the tipping point occurred, I realized that, whatever my aesthetic preference for physical or electronic delivery, the books on my shelves had taken on an arcane aspect. Sure, I could share them, but they had become like museum pieces reflecting my tastes at particular moments in time. They no longer spoke to the way I actually read not only books, but also hoards of other material online. My library was as quaint as a Dodge RAM truck in a hybrid Smart world.
I was not about to dispense with my paper books, of course, but there was no going back. The future was already here, and e-books were a product I was wanting.
