A turbulent start of the year for Waterstone's

Peter Kilborn | 02/01/2010

The Christmas season, blighted by the slow and messy death of Borders UK, has produced another casualty: Gerry Johnson, Managing Director of Waterstone’s, has lost his job after presiding over an 8 percent drop in like-for-like sales over the festive period. Yes, this is a digital blog, but the long-predicted shake out on the high street is significant for a book trade which is seriously unsure of the direction it is heading.

Waterstone’s is part of the HMV Group, a music retailer. How many times have we heard that the music industry is a disaster zone and that publishers must avoid the mistakes the music industry made in order to survive? Yet HMV stores had a remarkably good Christmas, albeit bolstered by the acquisition of a number of the better stores from the failed Zavvi chain and by selling games. The group is now diversifying into cinemas and live music venues; and Waterstone’s has begun to look distinctly unglamorous by comparison.

Waterstone’s has made many mistakes – not least its changes of mind about its commitment to an online presence (moving to a branded Amazon site and then feebly attempting to challenge Amazon by taking it back again) – and there is optimism that there will be a radical change of direction under its new management. But it cannot afford to go on losing sales at current rates, whatever the underlying reasons, so we shall see…

As far as digital publishing is concerned, it has been an eerily quiet start to the year. There have been no published figures for UK sales of e-readers or book downloads and that may in itself be evidence that neither were up to the most optimistic expectations. There is no indication that the availability of Kindle in the UK has made a significant impact. Despite all the noise around new e-readers – every electronics company apparently determined to have one of its own – they are mostly copycat devices, and prices are not falling to a level where a mass market is emerging.

There is in any case no sense in which the UK is at the centre of technical developments for digital publishing and the publishing world’s eyes remain fixed on the major US players - especially Apple at the moment. It is strongly rumoured that UK publishers are negotiating content deals with Apple for its long-awaited tablet. Content is what the UK brings to the digital party: as one of the key centres of English-language – and therefore world – publishing the UK is an extremely important focus. But at the moment this often tends to mean licensing of content rather than either the dissemination or the consumption of it.

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Borders UK Closes its Doors

Peter Kilborn | 01/19/2010

Since my last post in November, much of the trade talk has been around the slow and painful death of Borders UK (no longer a relation of the US business) which expired with the closure of all its forty-five stores two days before Christmas.

You might say that that’s hardly a digital issue – no one is claiming Borders’ demise is a direct result of digital competition – but of course in today’s world everything is connected to everything else. The significance of this event lies in the changing pattern of publishers’ trading and the end of a chapter in book retailing. Since Tim Waterstone changed the face of high street book retailing in the early 80s, we have had competition from excellent nationwide bookshops from Dillons (bought out of administration by Waterstone’s), Ottakar’s (acquired by Waterstone’s), and Borders (now defunct). Now we just have Waterstone’s as a dedicated bookseller and, even with a near monopoly, struggling to find a role. We still have W H Smith, of course, successfully doing what it does best, but not really a range bookseller.

It didn’t take the death of Borders to say that Amazon is the big winner: they were a big winner already. They have a commanding share of the UK online market, and they have range, heavily discounted prices and outstanding customer service.

The Nielsen BookScan sales tracking service, which tracks in excess of 90% of all retail and online book sales, reported that sales held up well in 2009, with a volume decline of just 0.5% (1.2% by value). 235.7 million book units were sold at a cost of £1.752bn.

It’s impossible to say, though, what these results reflect: the impact of the recession, substitution by e-books, or special factors like Stephenie Meyer and Dan Brown. But it’s certainly a lot of books! What is clear, though, is that the impact of e-books on overall book consumption so far is next to negligible. Whether this will continue to be true as those people who unwrapped e-readers on Christmas Day start downloading e-books will take some time to emerge, but it seems unlikely that Christmas 2009 was any kind of watershed moment for digital content.

2010 will undoubtedly be an interesting and challenging year for the publishing industry and it seems certain that ‘digital’ will continue to dominate the headlines. There may not be anything dramatic that marks out the end of the book trade as we know it: it will be the gradual growth of digital alternatives to books and the appropriate strategic responses which will be the preoccupation of book trade executives.

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A mind numbing prospect

Peter Kilborn | 11/25/2009

The Digital Publishing Forum of the UK Publishers Association held a seminar last week on legal issues for digital publishing, addressed by the well-known media lawyer Laurence Kaye and the PA’s copyright counsel Hugh Jones. Unsurprisingly, high on the agenda was the future of copyright in the networked society. Perhaps more surprising was the greater degree of confidence apparently being shown by the UK government in the broad structure of present copyright protection. Much was made of the fact that the ‘content industries’ are the largest single contributor to the nation’s wealth, especially after the financial services industry crumbled to dust in the banking crises of the last two years. Politicians and their officials have become fearful of undermining another of the UK’s dominant industries.

It is widely believed outside the content industries themselves that copyright is dead, especially copyright in any kind of territorial context, as free content on the web becomes ever more available and ever more taken for granted by users. There has been a proliferation of official reports in recent years which could have given momentum to this assumption. But the Gowers Review of 2006  gave broad support to the principles of copyright – that creators and licensors are entitled to a reward for their labours – and the Digital Economy bill now before parliament, which I mentioned in my last post, has emphasized the point by proposing sanctions against illegal file-sharers. A new publication from the Intellectual Copyright Office, entitled ‘Copyright: the Way Ahead’ , further endorses the value of the existing system.

The speakers at the seminar, however, made it clear that there was still much to be done by the industry to shore up the fragile principles of copyright protection in the digital world without frontiers. There would be a need for industry-coordinated action and some positive proposals. The most helpful route appeared to lie in an extension to collective licensing arrangements to cope with the massive increase in the use of copyright material on the web and the distribution of revenues to copyright holders – and in making it more transparent and automatic. At the same time the industry may have to become more flexible in some areas, working with legislators to allow new exceptions to add to those which already exist for libraries, education and for disabled people.

Mass digitization is not just about Google, even if copyright holders outside the US have long realized that the Google settlement has repercussions for them too. A portal uncomfortably called Europeana (www.europeana.eu) already exists within the European Digital Library and contains much copyright content; and the British Library is in the throes of a massive digitization exercise for its book and newspaper collections. The issue of orphan works (works where no known copyright holder can be traced) is being taken seriously in Europe; and European law does not currently allow orphan works to be republished without permission (by definition impossible to obtain). An EU project called ARROW is looking to link up various national databases containing information about rightsholders to create a Europe-wide source of information to those seeking permission to republish orphan works, and the Digital Economy Bill is expected to allow orphan works to be licensed under strict control by the government, with provision for payment should a rightsholder emerge. It is hoped that this may as a result of these initiatives alleviate the orphan works problem, a problem which existed only in a much diluted form prior to mass digitization.

All this is a long way from the glamour of e-readers and i-phones and the mass market dissemination of digital content; but it shows how complex the landscape has suddenly become and the issues the publishing industry must confront in the future. It must be remembered that, though these initiatives and the quest for legal clarity are taking place in the UK, or at best in the European Community, the same issues confront every country and every publishing industry, in the context of each legal system, case law and precedents. Meanwhile, the internet continues to operate largely outside the law, defying territorial boundaries and making local regulation next to impossible.

It is a mind numbing prospect.

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