Tag Archives: Bookselling

Further Thoughts On Waterstones And Amazon

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Yesterday I wrote a post that was generally favourable to the deal between Amazon and Waterstones:

If I was to think of one single reason for the move being a good though I would say it is this, it allows Waterstones to stand still and observe for a little longer. The value of inaction is often underestimated and right now when the ebook retail and distribution space is changing rapidly and requires such a huge investment, this move brings revenue, options but most crucially of all, time to just see what happens while rebuilding the core bookselling business.

I still think the above holds true. One major issue has begun to loom larger in my thinking though, and that is the impact of Waterstones dedicated heavy readers converting to dedicated digital readers on Amazon’s platform. The sales those dedicated heavy readers drove will be lost to Waterstones.

That brings me to the issue of lock in and whether, in the new ebook world, it exists in any real sense. The truth is that it does in a modest form, but without doubt it is relatively easy to move away from any individual content silo or platform to any other platform because unlike music, which we listen to repeatedly, we only occasionally re-read the books we buy once we have have read them for a first time.

So the fear of lock in is a misplaced one in my view. As publishers see sense (which I think they will) and move away from DRM systems an ever greater interplay of retailers and devices in the ebook space will be enabled and lock-in will be even less important.

That means it might even be possible for Waterstones to re-gain its lost heavy readers at some point in the future. No doubt the company hopes that the short- to medium-term play it has gambled on with Amazon pays off and enables them to refurbish and revitalise their physical estate and in doing so regain customers, rebuild profitability and take charge of their own future when they have done that.

I still think the logic of this move works, if they CAN make the print side of the business more profitable, more slimline and more flexible. Otherwise, we will look back in five years and it will look like a huge mistake. It’s a big gamble, but I think it’s worth it.

Eoin

Thoughts On >> Waterstones & Amazon

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I have to say, this notion didn’t once enter my mind when I thought about Waterstones options, not because it’s a bad idea (far from it) but because I never thought Waterstones and its management would even consider it. It’s fairly radical and the implications are pretty dramatic:

UK bookseller Waterstones is to sell Amazons Kindle book-reader and launch other Kindle digital services.Waterstones says the deal will dovetail with its current store refurbishment scheme, which is creating dedicated areas for digital books, free wireless internet and new coffee shops.

via BBC News – Waterstones to sell Amazons Kindle book reader.

If I was to sum it up I would say that it indicates Waterstones does not believe it can compete with Amazon in the digital space and has decided to concentrate on the print market.

Is that a good decision? Or is it making the same mistake as Borders made in allowing Amazon run its website so many years ago?

Alternatively it could be very seen as a sensible decision. It relieves Waterstones of the burden of competing with Amazon on more fronts and crucially reduces the need for a huge capital outlay on technology R&D (the kind B&N has committed itself to). It also enables the management to concentrate on making the stores profitable and on selling print books (still the company’s core product). It makes the decision about selling Amazon’s print books easier (I would think that’s a big one for authors). It probably presents more opportunities than it closes off for Waterstones in other words.

If I was to think of one single reason for the move being a good though I would say it is this, it allows Waterstones to stand still and observe for a little longer. The value of inaction is often underestimated and right now when the ebook retail and distribution space is changing rapidly and requires such a huge investment, this move brings revenue, options but most crucially of all, time to just see what happens while rebuilding the core bookselling business.

Impressed by the cojones if nothing else!
Eoin

Digital Growth At Quercus, And Beyond

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There has been some grumbling (I’ve a note coming on that later) about the slow pace of digital take up in the US in the last few days and weeks. I’ve a feeling that has as much to do with the now higher benchmarks the digital market is growing from.

By which I mean if the ebook market is worth $1 million then to double it need only increase by $1 million however when the market is $100 million it needs to increase by $100 million to double and when it is a $1 billion it must grow by a full $1 billion in order to double. Needless to say whereas $1 million in increased sales is hard to find, $1 billion is considerably harder.

On top of that, there is a real need to break analysis into markets to account for different market conditions. The UK is not the US and Ireland is not the UK. What’s more a UK publisher must react to UK market conditions. This has echoes of some of my thoughts about different rates of digital change from 2010. For instance, the UK is in the midst of a huge shift to digital BUT that shift has really happened over the last few months. 1.3 million ereaders were sold over the Christmas period and the UK market has as a consequence flourished since December.

Which makes the Quercus numbers all the more interesting. In 2011 digital sales accounted for 11% of their revenue, but grew 270% in December 2011 when compared to December 2010 promising a nice digital year in 2012.

We continue to benefit from our significant investments in digital publishing and marketing, website development and social networking. For the year as a whole, Quercus generated approximately 11% of its income from digital revenues, while the growth in ownership of eReading devices over the Christmas period contributed to an increase in eBook sales of 270% in comparison with the previous December.

via Quercus Christmas trading update | Quercus Books.

It’s entirely possible that many of those ereaders will remain idle, many will fall out of use, but enough will remain active to shift yet more readers who were once print dedicated into either digital dedicated reading or hybrid print/digital status. If those readers are heavy readers (as I suspect they will primarily be, after all why give someone who reads one book a year an ereader?) that will shift considerable numbers of digital units in 2012.

So the UK situation is very different to the US situation. We should avoid blanket statements.
Eoin 

Go Read This | Can WH Smith defy gravity forever? | Business | The Guardian

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Love this piece, and not just because I agree with EVRYTHING written there. No, I like it because it’s the kind of clear-eyed analysis that is sometimes lacking when people write about bookshops and the book industry (I’m a  victim of this fault myself).

But mottos are one thing. Common sense also says that no business can suffer declining sales indefinitely without running into problems. Take a look at those like-for-like sales statistics on the high street side since 2005-06. The run has been: minus 7%, minus 6%, minus 3%, minus 6%, minus 4%, minus 6% and, if current trends hold for the rest of the financial year, minus 6%.

A quick back-of-the-envelope calculation suggests that, on a same-store basis on the high street, WHS is selling roughly £68 for every £100 of custom seven years ago. Surely that spells trouble one day: running up the down escalator is not easy.

via Can WH Smith defy gravity forever? | Business | The Guardian.

Go Read This | OFT gives go-ahead for Amazon/TBD merger | The Bookseller

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Not a huge surprise but still, interesting …

The Office of Fair Trading has cleared Amazon to take over The Book Depository, ruling the merger would not lead to a lessening of competition within the UK book industry.The OFT decided there was limited pre-merger competition between the two companies and found that competition within Amazon Marketplace would continue to be strong after the takeover. It said The Book Depository only accounted for between 2-4% of the online market for physical books, and that TBD had most of its growth in overseas markets rather than the UK.

via OFT gives go-ahead for Amazon/TBD merger | The Bookseller.