The end of books?

July 22, 2004


You won't find very many Chicken Littles in the upper echelons of the publishing industry. Not only is the sky not falling, several top executives said at BookExpo America in Chicago in June, it's bright and sunny, and on a clear day you can see forever.

"I'm completely optimistic about the future of book publishing," said Jane Friedman, president and CEO of HarperCollins Publishers. Jonathan Karp, editor-in-chief at Random House -- publisher of Dan Brown's megaselling The Da Vinci Code -- pronounced himself "very bullish." And George Witte, editor-in-chief at St. Martin's Press, insisted: "I hear people all the time saying, 'Oh, the sky is falling,' but I've never been able to do that gloom-and-doom thing for very long. So I'm optimistic; I hope I'm not being a pollyanna."

But underneath this chorus of optimism at BookExpo, you could detect an ominous bass line of warning. Among the chief Cassandras was Albert Greco, a principal author of a new report by the Book Industry Study Group, a trade association, showing that while the industry made slightly more money in 2003 than 2002, it sold fewer books -- 23 million fewer, to be exact.

"Revenues are up, but that's mostly because publishers raised the price of books," said Greco, a Fordham University Business School professor who has studied the publishing industry for years. "The bottom line is, people are reading and buying fewer books. This is an industry that's being kept afloat by price increases."

Other reports issued at BookExpo -- including one by the Association of American Publishers, a trade association chaired by HarperCollins' Friedman -- painted a much rosier picture; the AAP report showed a 6 percent increase in consumer book revenues.

"But when people were bullish this year, they're really comparing that to last year, when you had the Iraq war and an uncertain economy," said Jim Milliott, senior editor for business and news at Publishers Weekly. "Nobody would dispute that unit sales are stagnant at best."

Greco pointed out that while the AAP survey excluded several major book categories and relied on reporting data from only 24 large publishers, the Book Industry Study Group report includes all book categories and factored in numbers from about 2,800 publishers. In the end, he noted, his tabulations were within less than 1 percent of those reached independently by the U.S. Department of Commerce, which also tracks book sales.

"I'm very confident of the strength of these numbers, and they're not good news," he said. "The sky may not be falling, but there are some dark clouds gathering, no doubt about it."

Barrie Rappaport, the Chicago-based chief analyst for Ipsos BookTrends (which monitors the book-buying habits of 16,000 representative U.S. households), agreed that the book industry, while hardly in danger of immediate collapse, is in for tough times. She noted that the percentage of households buying at least one trade book during 2003 slipped from the previous year, down one point from 56 percent to 55 percent. Those same households, she said, also cut back on their trade-book purchases by about 6 percent compared with 2002.

"The problem is that you can only grow by attracting new customers, but the industry is not attracting new customers; in fact, it's losing customers," Rappaport said. "That means it's relying more and more on the heavier book-buyer -- the more affluent, higher-educated customer -- but we're seeing some slack in that area as well. There's only so many books that those people can buy."

The root of all evil

Why the slippage? One major factor, several experts agreed, is the recent growth of the used-book market, which has been cutting into sales of new books. If you can get a perfectly good used copy of a book for less than half the price -- which is easier than ever now, thanks to used-book Internet brokers such as and, increasingly, Amazon -- why buy new? The used-book trend is especially notable among heavy book-buyers, Rappaport said, and in the college textbook market, in which Greco estimates that $1 out of every $3 is now spent on used books, with the trend heading toward $1 out of every $2.

But the deeper problem -- the root of all evil, from the publishing industry standpoint -- is the fact that as entertainment choices multiply, Americans are reading less. According to numbers crunched by Veronis Suhler Stevenson, a New York-based investment bank that specializes in media companies, Americans spent 120 hours a person a year reading consumer books in 1998; by 2003, the number of hours had fallen to 106. By 2006, the projected number of hours we spend reading will be 103.

By contrast, according to the VSS findings, television-watching took up 1,551 hours of our time in 1998, and is expected to rise to 1,679 hours two years from now. Internet use is also skyrocketing, from 54 hours in 1998 to a projected 213 hours in 2006.

And "Reading at Risk," a new survey released this month by the National Endowment for the Arts using data collected by the Census Bureau, shows that the percentage of Americans who read novels, short stories, plays or poetry -- and, in fact, any sort of book -- has steadily declined in the past two decades. The drop-off was especially noticeable among young adults, with literary reading among 18-to-24-year-olds dropping from almost 60 percent in 1982 to about 43 percent in 2002.

"In 1980, life was very different," Greco said. "You didn't have cable, you didn't have satellite. You didn't have VCRs and DVDs. You didn't have the Internet. These new technologies, while they're wonderful, have diverted people away from a lot of things, including reading."

As Robert Miller, president of Hyperion Books, put it: "Mindshare is a big issue."

How big? It depends on whom you ask. "Television, the radio, the Internet, video games -- all the things that are supposedly taking up consumer time -- I only see them as giving us an advantage and helping us to market our book product," HarperCollins' Friedman says. "There's a lot of this gloom and doom, and I don't believe it at all." Added Witte, of St. Martin's: "There are still a lot of people out there who love to read, in spite of all the other entertainment options they have."

But Catherine Kitcho, a California-based author and independent publisher, is less upbeat. "It's basically a question of attention span," she said. "There are just so many ways people can spend their time -- everything from watching 300 channels on cable to listenings to their iPods -- that take time away from reading. That's the basic problem, and it's sad."

Then there are the demographic trends, which, especially in the longterm, are worrying. "The population that buys most hardcover books is an older one," Miller said. "And as the baby boom ages, we may or may not have a younger audience there to fill in at the same level."

Which leads to the question: In the video-game age, are we failing to raise a new generation of readers?

"I think that's a huge challenge for publishers," said Andrew Grabois, senior director of publisher relations at R.R. Bowker, the firm that issues ISBN numbers for books in the United States."The primary target customer for books is folks over 35, 40 years old. Children are exposed to books for the first few years of life, when they're read to, and then for the next 30 years or so, they're mainly exposed to music and movies and all that other stuff. The hope is that they'll come home to books when they're in their 40s, but can publishers really afford to wait that long? That's probably not the best game plan."

But with the Harry Potter craze still in full swing, aren't more children reading, and isn't it reasonable to expect they'll continue the habit as adults? According to Ipsos, children's books had a fairly good year in 2003, with early lackluster sales jolted by the June release of Harry Potter and the Order of the Phoenix. But despite the Potter phenomenon, Rappaport said, the consumer base for children's books is actually shrinking, with 33 percent of American households buying at least one book for someone under the age of 14 in 2003, compared with 35 percent in 2002.

"Even with exciting, new and value-added books on the market," Rappaport reported recently on the Ipsos Web site, "the children's book industry has not managed to substantially increase the volume of children's book purchases or share-of-wallet."

It's not all bad, though

Not all the news is bad. According to the AAP study, children's and young-adult hardcover sales grew by 19 percent in 2003 over the previous year, while religious publishing grew by a startling 37 percent. Audio books (13 percent increase) and e-books (45 percent) also had good years, although they continue to represent only tiny slivers of the market.

"E-books might actually take hold," said Publishers Weekly's Milliott. "But there's no reason to think that publishing will do anything other than march along at 2 to 3 percent sales growth, with unit sales flat to declining."

In the short term, Greco expects 2004 to be "a banner year" for juvenile books, with an increase of perhaps 200 million units, mainly because of several blockbuster movies ("Shrek 2," "Harry Potter and the Prisoner of Azkaban" and Pixar's upcoming "The Incredibles") with book tie-ins. Overall, he said, trade book sales will likely be up 100 million in 2004.

Overall, though, Greco sees the publishing industry at a precarious and crucial stage. "The book business has had to go through the same experience that other industries have gone through with respect to television," he said. "When TV was introduced in the 1950s, the motion-picture industry and radio had to change. Now, with increased competition from cable and the Internet, they have to change again, and the book industry does, too. The good news is, they're all still there; there's no media format that completely died out as a result of TV. So publishing will probably survive. But we have to be realistic about what the numbers tell us."

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