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Publishing Industry Confronts Changing Reader Habits

July 16, 2009 at 6:40 PM EDT
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As the recession pushes more readers into cash-strapped libraries, some are turning to electronic books to satisfy their literary appetites. Ray Suarez looks at this nascent industry with two publishers.
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JIM LEHRER: And finally tonight, the future of book publishing in the digital age. Ray Suarez has our Media Unit story.

RAY SUAREZ: When you hear talk about the book business, this isn’t what most readily comes to most people’s minds. But, more and more, readers are trying electronic reading devices like Amazon.com’s Kindle.

Although the Kindle has been the market leader in e-readers, with the latest edition out this winter, others, like the Sony Reader, are also attracting eyeballs, too.

Early electronic prototypes like these e-books from the beginning of the decade have evolved into sleeker, smaller, faster units, some of which can store as many as 3,500 books at a time.

The uptick in online reading is only the latest wrinkle in the unfolding story of how people read and where they get their books. It’s an industry, like many, in the middle of change.

The trend is rippling across the country at the same time as dwindling tax dollars are forcing libraries to close branches, cut hours, and end programs.

At this public library in Virginia, librarians say they can’t keep the shelves stocked quickly enough as they’re experiencing an upsurge in the number of people who are coming to visit. As the economy spirals downward, people are looking for information, the Internet, and escape by reading.

SUSAN MCCARTHY, librarian, Arlington County, Virginia: We’re really happy to see new customers coming in. And at this library, we have 300 to 500 new users every month coming in to register for library cards. But we are beginning to see the strain on staff as we work harder and faster.

RAY SUAREZ: Meanwhile, independent bookstores, like the Tattered Cover in Denver, one of the largest independent bookstores in the country, are hitting hard times. This one has laid off some workers.

Author and faithful Tattered Cover customer Asma Hasan says she’s trying to provide life support.

ASMA HASAN, book buyer and author: The people at independent bookstores really get to know you, really start to look out for the kinds of things that you like, and can make personal recommendations. I heard that the Tattered Cover wasn’t doing well, and I immediately made it a point to come out, and I did some binge book-shopping.

Publishers lay off employees

RAY SUAREZ: Independent bookstores have long struggled with competition from national chains, such as Barnes & Noble and Borders and online booksellers, such as Amazon.com, which themselves are now losing sales to the recession and to a growing online market for used books.

All of this, in turn, affects publishing houses, like Random House and Simon and Schuster, which have laid off employees as their books don't sell like they used to.

Meanwhile, there's a growing Google book databank. The behemoth Internet search giant settled a landmark legal settlement this past year in order to scan books and make them available on the Internet, while paying book publishers and authors some money for their works. Google has already digitized more than 7 million books.

As the next chapter in the story of the book is written, you may be able to go to a kiosk and print out a brand new book on paper, just as you can with so-called digital newspapers now, for those people who still like the feel of a physical written document.

What is clear is that Americans are still reading. In January, the National Endowment for the Arts reported the first upward reading trends since 1982. Reading rates among Latinos have climbed steeply, by 20 percent. And adults ages 18 to 24 saw their reading rate up 21 percent after it 20 percent in 2002's survey.

And with me now to examine the book industry's present and future are Raphael Sagalyn of the Sagalyn Literary Agency. He has over 25 years of experience as an agent representing journalists and other authors.

And Jonathan Karp, publisher and editor-in-chief of Twelve, a publisher of both fiction and non-fiction book titles.

And looking both at your company -- well, I'll call you Dr. Karp, if you take out your diagnostic material, and looking over the industry as a whole, what's the health of the book business right now?

JONATHAN KARP, publisher and editor-in-chief, Twelve: Well, I think that, like a lot of businesses, we're experiencing the effects of the recession, but I don't think that things are headed toward any kind of an apocalypse.

RAY SUAREZ: If you look at the latest statistics that show the dollar volume slightly up, but the unit sales slightly down, what does that tell you about the market for books in 2009?

JONATHAN KARP: Well, the joke is that flat is the new up. But I don't think we should overlook the reality of this, which is that book publishing is basically a form of legalized gambling and you can't really know what's going to happen.

RAY SUAREZ: Rafe Sagalyn, legalized gambling? What does that mean to people who want to write books, not just read them?

Publishing is a betting game

RAPHAEL SAGALYN, Sagalyn Literary Agency: Well, what it means is that publishers do make bets. It's a business which doesn't do a lot of market research. It's a business that now uses terms like, "What's your platform? What's your track?" These are terms that are now everyday terms in the book publishing business, when publishers makes decisions about what books they acquire.

RAY SUAREZ: And it didn't used to be, you're saying, platforms?

RAPHAEL SAGALYN: No, no. I mean, it's very useful to look back at the context for this, which was, during the 1980s, the 1990s, when before, just as the discount stores were coming on to the market, bookstores were a growth industry and publishers were acquiring across the board to fill their list to supply the stores.

RAY SUAREZ: Well, into this kind of market, as you and Jonathan have described it, comes the electronic book. Who's helped, who's hurt by that? What are the various effects it has on people who write, people who read, and the intermediaries who publish these books?

RAPHAEL SAGALYN: Well, there are a lot of question marks about all these issues, because we're still in the very first inning of the electronic revolution, which is most well-known through the story of the Kindle.

But it's not just the Kindle, because the Kindle represents one or two other key issues, and that is the issue of pricing, because the hard-cover book, which is $25 to $30, is now being severely challenged by the Kindle, which Amazon has priced at the just-under-$10 price point.

RAY SUAREZ: Well, Jonathan Karp, when Amazon.com would like you to distribute a work of 120,000 words or so, you want to put it out between cardboard covers. What's the deal? How do you proceed? What's new about the way you do business?

JONATHAN KARP: Well, I think that there are a lot of people who are expressing worry about Amazon, but I'm not as alarmed. If you look at it another way, Amazon may be the equivalent with its Kindle of the Sony Walkman, and Google could be the equivalent of AOL or Google -- AOL or Yahoo. We don't really know which way it's going to go.

I think that the e-books are going to be another form of distribution. I mean, this is the literary equivalent of plumbing, and this is a form of distribution.

RAY SUAREZ: But when a new title is ready to be released to the public, would you rather that people buy black ink on paper and not yet buy it in electronic form? Do you have some profit that you want to make upfront from selling it for $25 bucks?

JONATHAN KARP: It's not going to matter to the publishers, because we're still charging the same amount. Amazon is taking a loss on the books that it's buying and selling at a lower price.

RAY SUAREZ: What do you tell your authors, Rafe, about timing? And what do you want from publishers? I mean, would you rather have something new come out to protect your author on paper and only later have it come out in digital form?

RAPHAEL SAGALYN: Well, a lot depends on what the nature of the book is. For a work of history, Civil War history, World War II history, a new novel, those are not time-sensitive books, so there is the gestation period, which is generally 9 to 12 months, between completing a book and coming to the market, is less of an issue, whereas especially relevant is for very topical books, which might migrate much more easily to the Kindle, along with things like reference books, cookbooks, travel books, which I think are going to be the first kinds of books to migrate to the Kindle in a very successful way.

Kindle competes against hardcovers

RAY SUAREZ: Is this part of the negotiation that you do now when you're crafting a deal on behalf of an author, when and how a book is released in digital form?

RAPHAEL SAGALYN: Very much so, is that -- the timing. Just this week, there were a lot of very key tests of this, of whether it's a good or whether it's a bad thing to release a hardcover book simultaneously, the $25 hardcover book simultaneously with a $10 Kindle.

The jury is still out on this, but I tend to agree with John, is that the additional attention that you're going to get for the Kindle could lift all boats and increase sales across the board.

RAY SUAREZ: I think we should be clear, Jonathan Karp, that we're still talking about a technology with a very small penetration, right? I mean, it's 1 out of 100 books or so?

JONATHAN KARP: Well, I think that about a million Kindles have sold. I think that actually quite a few books are available on it.

RAY SUAREZ: But of all the books being bought around the country.

JONATHAN KARP: Oh, yes. Right.

RAY SUAREZ: So is this just the book business equivalent of the debates that are being had inside the publisher's office at newspapers and magazines about when they release the material that they bought and paid for, after all, in a digital form?

JONATHAN KARP: I think it's quite similar. And you can't really overlook the idea that these publishers are just trying to make their way through this. And I think that there's going to be plenty of opportunities for distribution.

RAY SUAREZ: When you say just trying to make their way through this, is it inopportune that this happens to come along at a time when the book business is not having its best times?

JONATHAN KARP: Well, look, I think some companies are going to go the way of General Motors and Chrysler, but the good companies will survive, and they'll adapt.

RAY SUAREZ: Rafe Sagalyn, would this have been an easier negotiation to have...

RAPHAEL SAGALYN: Oh, for sure.

RAY SUAREZ: ... during a time when things were selling and flying off the shelves?

New technology democratizes reading

RAPHAEL SAGALYN: Because there's this confluence of events that's there in technology, the issues about distribution. We are now -- I mean, many of us who have been buying books for a lot of years remember the independent bookstore. The independent bookstore, as you showed in the Tattered Cover story that preceded us, there are far fewer independent stores than there used to be. Borders is in deep trouble. So the distribution question is a very significant issue.

But I'd just add that I think it's also true, when new technologies come into the book business, I think back 20 years ago to the rise of the audio book, there was great concern that the audio book would cannibalize the real book. And that is not true. It helped increase the sales of books.

RAY SUAREZ: How did it do that?

RAPHAEL SAGALYN: Well, because I think it increased the distribution, increased the desire for people to own storytelling, and storytelling is at the heart of what books are all about.

RAY SUAREZ: So, eventually, Jonathan Karp, you get not one that eats the other, but a fragmented market, where some people just like having books on an electronic reader and some the old-fashioned way?

JONATHAN KARP: I think so. I think audio books are a very good example of that. And, obviously, people who are traveling are going to really take advantage of e-books. People who have sight issues, the visually impaired, older readers will be able to increase the size of the fonts on these readers. There are a lot of advantages to them. But, certainly, the books aren't going away.

RAY SUAREZ: At the end of this process, Jonathan, will we have, because of problems in the publishing business, because of problems all throughout the economy, will you have fewer people deciding what Americans end up being able to read, what gets published, what gets printed?

JONATHAN KARP: I don't think so. I think that actually what's going on is a democratization of reading, and people are finding readers so much more easily. The barriers to entry are so much lower. There are thousands of independent publishers in this country, and they're going to get the best books out there.

RAY SUAREZ: Do you agree?

RAPHAEL SAGALYN: I do. I very much agree with that. But I do think what's happening in the book business that John and I generally are referring to, the mainstream publishers, it's a much higher bar for entry into that world, because I think they're pruning their lists. And what was very much of a sellers' market is much more of a buyers' market now.

RAY SUAREZ: Rafe Sagalyn, Jonathan Karp, thanks to you both.

JONATHAN KARP: Thank you.

RAPHAEL SAGALYN: Thank you.