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The end of the independent bookstore (and a new golden age for books)

August 13, 2013
by seth godin

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ACT 1: The Book of the Month Club.

After World War II, a wealthier, better educated country started engaging in more culture, more often, in a more widespread way. We were more likely to watch the same movies, more likely to listen to more music, and much more likely to want to read the books others were reading. Paperback books really came into their own, making reading portable and cheap, and the Book of the Month Club began to dominate.

It’s difficult for us to imagine just how influential the board of the Club was. If they picked a book to be a main selection, it would be read, by default, by millions of people, discussed at the dinner table and at bridge club and instantly become part of the dominant culture.

This doesn’t have a lot to do with bookstores, except for the fact that as the Club faded due to the long tail of choice and the fracturing of the monoculture, the stores were there to pick up the slack.

ACT II: The magic of the dominant bestsellers.

Here’s the magic formula for a successful bookstore industry: Every month, a few new hardcover books are hand-sold, recommended by the local store. A few catch on and become bestsellers. Within its own cultural pocket, each book becomes a must-read, with the only source being the full-price local bookstore. The result? With a 40% profit margin and full return privileges, the local store can thrive. They don’t need to carry every book, just the books that sell. And in the early 1960s, it wasn’t unusual for a book to be a bestseller for a year or more.

ACT III: The New York Times bestseller list and Barnes and Noble end this magic moment

The insight was pretty clever—give up the juicy margins on the bestsellers and make up the profits in volume. Barnes and Noble had more inventory than just about any independent bookstore, but they needed traffic. So, they announced that if a book made the Times list, they’d sell it at 40% off (basically, at their cost).

This was a nuclear bomb for the independent seller. Suddenly, their core source of profit was in danger. Barnes and Noble was able to make juicy profits on the other stuff you’d buy in the store, and aided by the Times list, they bifurcated the market. Most people, most of the time, bought only the books on the bestseller list (the average American was buying and reading just a few books a year), but that’s okay if you’re the dominant player in a given town.

Harry Potter was the last gasp for many independents. They made that book happen, following their tried and true hand-selling approach. The word of mouth kicked in just as it was supposed to. With a profit margin of $6 or more on every book sold, the upside was nearly a hundred million dollars—but they got almost none of that, because Barnes & Noble (and the big box stores, which stole their strategy) sucked all the profit out of the bestsellers.

My mom used to run the independent bookstore she helped build at the Albright-Knox Art Gallery in Buffalo. I met sales reps when they came to our house for dinner, and saw the workings of what we think of as the ideal bookstore. Even during the pre-Amazon days, this was never a good business–without bestsellers sold at full price (and how many art books become bestsellers) it’s almost impossible to sell enough volume to make a small bookstore work.

THE END: Amazon and infinite selection, better service, more information and better prices, too

If you love books, it’s hard to see Amazon as a villain. More books sold to more people for more reasons than any other retailer in history. More cross-selling, hand-selling and up-selling too. The web pages of Amazon, on average, are better informed than many bookstore clerks.

Before Amazon and the web, we were on track for the bestseller inventory to totally dominate bookselling. Wal-Mart and Price Club and B&N had figured out how to dump huge quantities of certain books at really low prices, and there was pressure to avoid the long tail, and to guard shelf space zealously. I was new to the book world then, and there was just huge pressure to be on the right side of the bestseller line–everything else didn’t matter. Amazon fixed this, by embracing the long tail and carrying everything. If you love books, Amazon was a dream come true.

But if you love bookstores, Amazon is the final nail. In fact, it was the clumping the Times enabled, combined with the discounting that B&N started that did the stores in, but Amazon’s work in getting more books to more people meant that the discounts and selection they brought to readers removed the last bit of opportunity the stores had left.

Great independent bookstores deserve to thrive, and I hope they will. But they won’t thrive as local substitutes for Amazon. They will make it if they become hubs, connectors and gift shops. The book-as-gift concept is just now entering an important stage, and we don’t have to dumb down our local store to get there. More important, though, is the idea of a local place where smart people go to meet each other and the ideas they care about. We shouldn’t have that because it’s the last chance of the local bookstore, we should have that because it’s worth doing.

Vilifying Amazon, though, makes no sense. More people can read and write more books today (ebook and print) than at any other time in history.

I miss the magic of the local bookstore, but I would miss books more.

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