The Changing Publishing Industry Discussed

The publishing world is changing rapidly. No one knows what the book publishing and book selling landscape will look like if Borders Books is gone or if they will be closing all their stores. But Borders, which is said to control about 10-12 percent of the bookselling market, is already closing stores around the country. With the worsening recession and the decline of the music bricks and mortar stores where albums and CDs once were sold prior to the purchase and download of individual songs and music sharing over the Internet, Borders has reportedly seen its position in the retail of books and music seriously erode the past few years, which is good reason to start purchasing books at Borders and other independent booksellers to ensure their survival during this recession.
Then there is the affect on the publishing business by the big-box merchandisers such as Wal-mart, Target and Costco that now account for 30 percent of the book market. These stores carry a limited number of titles and reportedly sell them for below cost as a loss leader to attract people inside their stores. Book publishers also wholesale their books to these large merchandisers at a discount.
Independent book stores combined only account for approximately 10 percent, Barnes and Noble approximately 20 percent and Amazon the rest. With those numbers, if Borders disappears completely, book publishers have little leverage to play one bookseller off against another in order to sell more books. One can only hope that the economy turns around quickly and that Borders survives.
Large publishing houses have been laying off their employees as they have seen their sales decrease. While in some cases this is the result of the recession, in other cases its the result of bad bets by these publishing houses as to the type of books they have gambled will appeal to the general market. When a publishing house provides a large advance to an author and the book does not recoup that advance and all the other costs of publishing and distribution, the book publisher suffers a loss that can be substantial. If they make too many of these bad bets, they can go out of business.
In addition, Google has been increasing its databank of books. Google scans books and makes them available on their search engine and pays book publishers for the right to do so. There are already over seven million books already scanned by Google.
On the positive side, one can look at the increase in online reading and the flood of people coming into public libraries as a result of the recession to come away with the belief that the demand for books in the future will experience a considerable growth. Libraries cant keep purchase enough copies of new books to satisfy their ever-growing number of patrons. On top of the increased numbers of people flooding into libraries, reading rates among Latinos and young people in general are rising rapidly.
Amazon has also seen its sales grow for all media products, and books in the romance category at all booksellers have recently been enjoying a 7 to possibly 10 percent growth (no one is quite sure since Bookscan, the industry tracking service, doesnt track sales at the big box retailers. Its believed that Bookscan only tracks about 70 percent of book sales as these big box retailers now account for 30 percent of the market.
Some book publishers, however, fear that with Kindle, Amazon may be intending some day in the not too distant future on being a vertical publishing conglomerate of its own, avoiding any middlemen, any publishers, and taking the entire business from acquisition to the purchaser. The future of going straight from acquisition to Kindle is already here with two recent biographies going straight to Kindle before ever being published. Simultaneous releases, however, may turn out to be only a short term experiment that is soon forgotten.
There is also concern that if Amazon were to corner the market, they could force publishers to accept whatever they demanded, and many if not most publishers simply would no longer be able to exist. Some agents see the demise of book publishers if Amazon with their Kindle and other acquisitions in the publishing industry take over 10 to 20 percent of the book publishing market in addition to their already strong bookselling dominance online.
While Kindle is the leading product in the e-reader category and now prices its books at just under $10, the Sony Reader is also attracting attention and one can only suspect it wont be long before Apple and other companies join in the competition for e-readers. Recently, Sony has joined Amazon in charging a flat price of $9.99 for books on its e-readers and lowered the prices of its newest models.
While some publishers are expressing alarm about Amazon and the effect the growing use of e-readers may have on the industry, others are less worried. Some publishers believe they will still be able to charge the same amount to Amazon which it is believed takes a loss on the books that it then sells at a lower price. Book publishers still get approximately half of the hardcover retail list price. Consequently, other publishers fear that eventually Amazon and Sony will beocme tired of losing money on the books they sell on their e-readers and demand that publishers take a discounted price for the books they wholesale to them.
While Kindle and other e-readers may in the future offer more books released simultaneously in hardcover form and on digital form, the increased availability of these books could lift sales across all forms of distribution, just as audio books did. It is more likely, however, that with e-books selling at the discounted price of $9.99, if Amazon and Sony demand lower wholesale prices, publishers will want to delay the release of books on e-readeers just as film studios delay the release of movies to DVD in order to capitalize on the higher prices for hardcover books. This leverage is what the publishers have on their side to counter any demands by Amazon or Sony for lower wholesale pricing.
At least one publishers imprint is trying to work out contracts with booksellers and authors capping advances at $100,000 and reducing the number of returns pitching profit-sharing proposals to authors as the way of the future. Some independent publishers sees the future as one where eventually, books will be produced and distributed electronically for little cost.
Just as the music industry suffered under its years of transition to the current situation where individual songs are downloaded or shared and the sale of entire albums or cds will never again see sales of the magnitude of Michael Jacksons Thriller album, so to in the publishing world, as their world changes around them, some publishers will adapt to change, some will not, and some will die a slow or surprisingly fast death depending upon how fast e-publishing takes hold and Amazon gains market share, how quickly they adapt to the changes in the publishing industry and depending on whether they continue to make good bets or bad on what they believe the public will want to read.
While the bar may be raised for new authors to have their works accepted by mainstream publishers as these publishers become more careful in what they publish and the advances they offer new writers, there will always be independent publishers willing to take chances and able to take advantage of the opportunities offered when those mainstream publishers focus on more established authors.

One thing is clear. The industry is changing and change will come faster than most can imagine it. The other thing to remember is, books will always be with us. They may be in different forms as e-readers gain in popularity and audio books continue to be popular, but in general, new technologies tend to help an industry rather than hurt it. In this case, the new forms of distribution will probably help the book publishing industry to become more flexible and reach a wider audience than ever before.
As a California publishing lawyer and literary rights attorney with knowledge of the changes taking place in the publishing industry, Sebastian Gibson provides legal services to his entertainment clients in the literary and publishing world. As a California lawyer for writers and authors, Sebastian Gibson is a knowledgeable attorney in the publishing industry and experienced negotiator. Sebastian Gibson does not accept unsolicited submissions. Indeed, unsolicited submissions must unfortunately be returned unopened and certified mail submissions are regretfully refused.
ABOUT THE AUTHOR: R. Sebastian Gibson
Sebastian Gibson graduated cum laude at UCLA in 1972 and received law degrees in the U.S. and U.K., graduating with an LL.B. magna cum laude from University College, Cardiff in Wales and a J.D. from the University of San Diego School of Law.
Mr. Gibson began his legal career in San Diego before practicing for years in London, England. Today, he has offices in Rancho Mirage and Palm Desert, Newport Beach, and the firms Of Counsel office is in Carlsbad, San Diego.
Mr. Gibsons firm practices law in a wide variety of areas of law including publishing, copyright, literary rights, entertainment, trademark, sports law and modeling law throughout Southern California from San Diego, Orange County, Irvine, Anaheim, Los Angeles, Huntington Beach, La Jolla, Temecula, Buena Park, Riverside, Escondido, Costa Mesa, Laguna Beach, Santa Monica, Santa Barbara, Ventura, Oxnard, San Luis Obispo, Indian Wells, Fullerton, Orange, Palm Springs, Palm Desert, and Newport Beach to Carlsbad.