TOPICS > Economy

Kindle, Price War Changing the Way We Read

November 2, 2009 at 5:35 PM EDT
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Jeffrey Brown explores the shifting world of book publishing, and examines how technology and readers are changing the industry.
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GWEN IFILL: Finally tonight: What is a book anyway, and where can you get one?

Jeffrey Brown looks at the changing world of publishing, selling and reading books.

JEFFREY BROWN: In the world of books these days, the stories keep coming, but not only the ones written by authors.

First, there’s the “How low can you go?” story. In the latest chapter, superstore Wal-Mart recently announced it will sell popular hardbacks online for just $8.98, after offering the titles at low prices which Target, another big-box store, quickly matched. Those are well below the typical retail price, which can reach $25 or more.

Good for consumers? Well, perhaps, but the American Booksellers Association, which represents independent stores, calls it predatory pricing, and has asked the Justice Department to investigate Wal-Mart, Target, and online giant Amazon.

One fear: independent bookstores, like Denver’s Tattered Cover, one of the largest in the country, will be driven even further into hard times, if they can survive at all. Stores like this, of course, already face huge competition from national book chains like Barnes & Noble and Borders.

Then there’s story number two, not only what we read in the old-fashioned sense of picking a certain author or genre, but, literally what we read, an actual book or an electronic reading device which allows readers to choose from thousands of titles and stores hundreds at a time.

Amazon’s Kindle, which has been updated and expanded several times, remains the market leader. But competition here, too, is growing. Sony’s Reader has also been updated to support more books. And Barnes & Noble will soon release its new Nook, which will allow readers to browse and sample books for free.

All these devices have come a long way from early prototypes, and they’re catching on. According to Forrester Research, some three million e-readers will be sold this year, and the number is expected to double next year.

At Kramerbooks, an independent bookstore in Washington, D.C., we found mixed reaction to the e-books.

E-Books a different experience

WOMAN: It's the whole experience of going to the bookstore, reading the reviews, reading the backs of the book, being in a bookstore, and then buying the book, and having the book, and cuddling up in bed and reading the book.

WOMAN: I was hesitant to use one because I thought maybe I would not -- I would be aware that I was holding something electronic the whole time. But, yes, I -- you don't realize -- you get lost in whatever it is your reading, and you don't realize what you're holding.

JEFFREY BROWN: As for the store's owners, there was no ambivalence, but, rather, a clear warning on the front door: Use cell phones or Kindle at your own risk.

And we explore some of this now with two careful watchers of the book business. Kassia Krozser is founder and editor of Booksquare.com, a Web site that focuses on the digital publishing industry. Lev Grossman writes about and reviews books for TIME magazine and is himself a novelist.

Kassia, start with the latest pricing war, with Wal-Mart and Target pulling down the cost of some new books. What kind of impact do you see that having? And who is most affected?

KASSIA KROZSER: This purpose of this entire war -- it's called a pricing war -- is for Wal-Mart to actually build traffic for its Web site. They don't really care about the publishing model, as much as they care about building their customer base.

It's basically, "come for the books, stay for the tankless water heater" strategy. And I'm not sure it's going to work. The problem for the industry at large is, if these wars take, and consumers really start to see -- start to shift from their independent booksellers -- and booksellers are telling us that that's not likely to happen, because their customer base is different -- then the publishing industry needs to look at its pricing strategies, and rethink how they sell books to -- throughout the food chain.

JEFFREY BROWN: But you're saying it's not likely to happen that people would shift from the independent bookstores?

KASSIA KROZSER: We're looking at maybe I think it's 10 books total that are actually impacted by the so-called price war. It's the Sarah Palin book, the Stephen King book. These are books that actually already come with a pretty heavy solid built-in audience. People who are going to buy these books are going to buy these books regardless.

And the publishers are still making the same amount of money. The various retailers are subsidizing the difference between what we will call the wholesale price and the price that they receive. So, unless these books track really well and build great word of mouth, I think that they might be an interesting experiment, but I'm not quite sure that they're really impacting sales in other outlets.

JEFFREY BROWN: All right, Lev Grossman, what do you see happening? Do you see this as just a little passing experiment, or having some real potential impact?

Warning to independent book stores

LEV GROSSMAN, TIME: Well, I wouldn't characterize it so much as a passing experiment, as a bit of a warning shot.

Independent bookstores operate on fairly slim margins, and their product line is not diverse. You have these big-box stores, they can afford to take a loss on a few books, because they will make it up elsewhere. But if they start discounting books across the board, beyond this little scrap of -- of 10 books, then independent booksellers, it's a bit scary. It's a scary scenario for them.

JEFFREY BROWN: Lev, fit -- fit this into the larger picture, which, of course, is this evolution of value and pricing and of the content and product itself raising, you know, all the questions. How does a writer get paid? How does the publisher get paid? How does a bookstore get paid?

LEV GROSSMAN: Right.

Well, you know, the old model has a -- a great deal of life in it yet. Let's not -- let's not abandon it. But parallel models are rising, self-publishing, for example, in which, you know, an author might forego conventional publishers completely, forego conventional bookstores completely.

Just take a word document, upload to it the Kindle store on Amazon. And -- and they're in business for themselves in a matter of 10 minutes. That model is still kind of gestating, but it's -- it's growing real fast. And it will be interesting to see where that goes.

JEFFREY BROWN: Well, Kassia, where are we with e-books? I mean, in a sense, they have been sort of the next big thing for a few years.

KASSIA KROZSER: Yes.

BROWN: Has it reached a point where they're real now, and they're starting to change the way -- change the nature of the book business?

KASSIA KROZSER: Yes, they are actually finally a real force in the publishing industry. They're still a minor percentage of overall sales.

And what we're -- what's going on is that, not only is the publishing industry talking about e-books, but media is talking about -- the tech industry is following the development of the readers. And the -- and the major media, Newsweek and other outlets, are picking up on e-books and talking about books, as well, which is a kind of a different way for the media to cover this industry.

Usually, it's the splashy stuff. But there's a lot more news about books. And, so, the e-reader, the Kindle, the Nook, the Sony Reader, they're permeating the consumer consciousness. And people are more willing to give it a try, because it's not scary anymore. It's not weird.

JEFFREY BROWN: But you mean news about books, as in which e-reader works better or -- or in different ways? It's -- I mean, it's a different way than thinking about news of the books -- books the way we used to think of it, right?

Talking about reading again

KASSIA KROZSER: Right, because what -- what we're hearing is, it's about the device. It's about the retailer, Amazon, Barnes & Noble, but it's also talking just about books.

All of a sudden, the idea of reading is once again in the public consciousness. It's not necessarily that this is a new way of reading, but we're talking about reading in the media and how we can bring books and people together. And I'm not just talking about devices, as much as I'm talking about our phones and other ways of reading.

JEFFREY BROWN: Lev, where -- where do you think we are with the e-book and how it's starting to have an impact on both the business and how people read?

LEV GROSSMAN: Well, there's sort of upsides and downsides.

It's great when anybody reads anything anywhere. And e-readers create this great new retail channel for selling books, because you can buy them -- buy books impulsively wherever you are, just download them wirelessly. And that's fantastic.

But they do come at a bit of a cost. For example, the e-reading experience, it's not particularly elegant. The elegance, the beauty of a -- of a wrought paper book hasn't really survived the transition to digital.

And it sounds a little technical to say, also, but people have not really figured out how much an e-book should cost. Amazon tends to sell them for $9.99, but Amazon takes a loss on each book. And $9.99 is -- it's not enough for publishers to recoup the cost of producing an e-book.

So, unless they figure out a new pricing strategy pretty quick, either publishers are going to go or e-books are going to go. But the two can't really both survive in -- in their present form.

JEFFREY BROWN: Lev, not only the marketing of books or the actual thing you hold in your hand, but talk through for a minute about the way that -- that -- the way things are changing where books are written, who writes them, what they write about, because the Internet changes all of that as well, right?

Transforming the novel

LEV GROSSMAN: Yes, very much.

Well, you know, the novel was born in the 18th century in this period of enormous sort of social and -- and -- and financial and technological upheaval, the development of new printing techniques, the evolution of a new marketplace.

And we're seeing the same thing happen right now, totally new ways of distributing text, totally new ways of buying and selling it. And I think the novel will totally transform as a result of it.

An obvious thing is just that a lot of people are making it -- are being read who were not being read before, before the sort of New York establishment publishers were the gatekeepers. People are flooding around that gate. And we're seeing voices that never used to be heard getting online, getting read.

And it's wonderful. I mean, it's -- I'm looking forward to this great sort of Cambrian Period of -- of literary fertility and innovation. So, in that respect, it's -- it's a really exciting time to be reading.

JEFFREY BROWN: Well, Kassia, do you see it that way as well? Cambrian Period?

KASSIA KROZSER: Oh, I...

JEFFREY BROWN: But, at the same time, I mean, talk about who -- the losers as well in these changes.

KASSIA KROZSER: It's very possible that big publishing will be a loser.

Lev mentioned that the current model cannot support the $9.99 price point that Amazon is setting, whereas my perspective is, right now, Amazon and other retailers are setting a price point, saying, these books have value. You have to pay for them. They're not free. And I think that's important.

What we're also seeing is new publishers coming into the mix. We have had several new publishers announce in the past year where they're going digital first, print maybe. This allows them to lower their overall costs and introduce new and interesting authors and new ways of telling a story.

And I think that's what we're really talking about when we talk about books, is telling a story. And the more ways we can create to tell story and bring in new readers -- one of the things I didn't mention earlier with the iPhone is, we're opening up an international marketplace for readers who don't necessarily have a bookstore or library infrastructure.

So, all these different ways of telling story and bringing readers to books is opening up just more possibility, because then they write more. They create more. And the wave of creativity we have going on right now is incredible.

JEFFREY BROWN: All right, story to be continued.

Kassia Krozser and Lev Grossman, thanks very much.

KASSIA KROZSER: Thank you.