May 22, 2013 Sections
Winnipeg Free Press - PRINT EDITION
The settlement reached prior to Christmas between the U.S. Department of Justice and the Penguin Group in an ongoing anti-collusion lawsuit should be cause for a New Year's toast among those who think the brave new world of digital publishing cannot arrive soon enough.
It has been evident for the past few years, since the introduction of some high-profile electronic readers, that words and sentences, the coins of our culture, are continuing their inexorable migration from paper to screen. No doubt, this shift was hastened on Christmas morning when millions of bibliophiles received gifts of an iPad, Galaxy, Kobo, Kindle or any of the other competing tablets that have been rushed to market.
The new world affects all forms of print -- books, magazines and, yes, newspapers. Paper will remain a viable option for years to come, easily for the lifespan of everyone reading these words today. But with each passing decade, it will be seen as increasingly quaint. According to U.S. publishing industry figures in 2012, e-books accounted for between 20 and 25 per cent of sales this year. In Canada, the figure is about 15 per cent and growing.
One would think conventional book publishers would welcome this development. After all, e-books save them the costs of physical printing, distribution and storage, not to mention the burden of accepting returns. Yet the change has been disruptive, upsetting established ways of doing business. Traditionally, booksellers have operated on the wholesale model. They sell to bookstores at about 60 per cent of the retail price, and the stores pay their costs and take their profits out of the difference.
In 2007, as e-books were beginning to seriously catch on, publishers were selling to the online retailer Amazon for about $15 a copy. In order to dominate the market and secure sales of its Kindle e-reader, Amazon started selling popular titles for $10. Publishers were afraid this price would come to be seen as what e-books were worth. They only had to look at what happened in the music industry, where the price of a downloaded song, according to teenage consumers at least, was 99 cents at best.
The publishers' battle with Amazon has taken many turns. In 2009, five of the six major book publishers, all excepting the largest, Random House, struck a deal with the computer innovator Apple to sell their wares using the so-called agency model. Publishers would set prices and they would give Apple a 30 per cent commission.
Prices for popular e-books rose about 50 per cent, and this resulted in a U.S. class-action lawsuit accusing Apple and the publishers of anti-competitive practices to the detriment of consumers. Earlier this year, the U.S. Justice Department settled with three of the publishers, Hachette Book Group, HarperCollins and Simon & Schuster, and last week came word of the deal with Penguin. That makes Macmillan and Apple the last ones standing if the case reaches trial, supposedly in June.
It is widely believed Penguin has settled to ease the regulatory way for its announced merger with Random House. The big publishers feel they need to get bigger still to compete with Amazon, which has started its own publishing arm. HarperCollins and Simon & Schuster have reportedly been talking, too, about merger possibilities. All these companies operate Canadian branch plants, and cultural nationalists are already worried about fewer options for writers here, though there exists a strong network of regional publishing houses to pick up the slack.
On both sides of the border, bookstores have been arming themselves against the digital armies. But good bookstores, as with libraries, will continue to have a future as long as they emphasize their roles as community gathering places. The world does not stand still. In a decade, the tablet e-reader you received at Christmas will seem as laughably clunky as a 10-year-old cellphone.
Republished from the Winnipeg Free Press print edition December 27, 2012 A12