Why Booksellers Ain't Rich by Craig Stark #21, 21 June, 2004

How about some good news first. Used book sales are up. Growing fast, in fact. You can thank the Internet for this. Never before in the history of bookselling has it been as easy to buy and sell books as it is now. Better yet, search capabilities and online inventories are so advanced over what they were 5 or 10 years ago, that, with a small number of exceptions, if a book exists, you can find it for sale somewhere, almost instantaneously.

More good news. When Global Reach first began compiling statistics of online usage in 1996, it was estimated that there were 40 million English-speaking people with Internet access. Today that number is approximately 288 million. Rate of growth has flattened out some in recent years, but keep in mind that there are about 508 million English-speaking people overall. The potential for more growth, therefore, is huge - and inevitable. Factor in Non-English-speaking people, and the numbers become astronomical.

Looking back, I think it's abundantly clear to those of us in the business that the ca. 1990's marriage of bookselling to the Internet has been a fabulously successful one. Books, it seems, were born to be sold online, and more and more, despite some evidence of consumer complaint, buyers are trusting in the process. Untold millions of books have been sold, and, as more users gain Internet access and, just as important, as the percentage of users who buy books online grows, book sales should, by any calculation, go through the roof.

Growth, growth, growth. Aren't we fortunate to be booksellers. The problem is most of us ain't getting rich at it. Also, if you think riches await you next year or the next, my guess is you'll be sorely disappointed. Why? Let's look at more numbers.

In a detailed study of the US used book market (A Portrait of the U.S. Used Book Market) recently published by Susan and David Siegel, there are clearly some signs that booksellers, as a group, don't drive Porsches and won't anytime soon - and this isn't because the trunks are too small to fit boxes of books into. The Siegels, whom you may recognize as the authors/publishers of the Used Book Lover's Guides reviewed in a recent BookThinker newsletter, based their study on the responses to a survey conducted of 827 booksellers.

I read the entire report. Twice. 60 pages of hard information, single-spaced in small font on 8 ½ x 11 pages. There's a lot here, and if you're interested in getting a clear, up-to-date snapshot of Used Bookselling American Style, not some vague indication of what's happening based on anecdotal evidence in book forums, this is the place to go. It's the only study of its kind, carefully prepared and unflinchingly transparent in its methodology and potential inaccuracies, and at $25, definitely worth it, especially if it helps you buck the trends I'm getting ready to talk about.

I'll start with something that probably won't surprise you. The percentage of books being sold online is going up. Significantly. Any online bookseller with two functioning eyes knows this at an instinctive level, but here's some reality. In 2001, 48.84% of all books sold by surveyed booksellers were sold online. In 2003, 54.37% - an increase of 10.17%. Considering that prior to the 1990's books were sold almost exclusively offline and had been for centuries, a 10%+ change in two years is dramatic. Push these numbers out a few years, and I think you get the idea. Online is not only where it's at; it's going to be even more dominant soon.

Now for something that may surprise you. Overall, these 827 booksellers, who comprise dealers of every type (open shop, online, by appointment, etc.), reported that sales have declined. Huh? Here are the numbers: for used books and ephemera, total (gross) sales dropped from $73.5 million in 2001 to $67.5 million in 2003, a drop of 8.18%. The Siegels are very careful to point out that these and other numbers may be skewed by a number of factors, many of which are detailed in the first several chapters of the report, but 827 is still a significant sampling, and I think we can safely assume that, taken individually, booksellers have in many cases not experienced a growth of income commensurate with the growth of used book sales over the same period.

Here's something even more troubling for online sellers. The average selling price for hardcover books sold online fell into the $0 to $29 range over 60% of the time with the largest percentage of books falling into the $10 to $19 range. 39% percent of these dealers sold less than 50 books a month; 29% sold between 50 and 100. Based on this, the most typical bookseller sold less than 50 books a month at prices between $10 and $19 - in other words, total sales, on average, were well under $1,000 a month, and remember we're talking about gross income. Factor in expenses, and the numbers look much worse. Granted, these numbers include both full-time and part-time sellers, but $500 to $1,000 a month, given the time-intensive nature of bookselling, doesn't break any records for part-time work either.

What's going on here? Shouldn't things be looking up? The answer can be summed up in one sentence - bookselling is too damn easy to do. It may not be easy to do well (and what is?), but grab a few books, turn on a computer, and you're in business. When things are easy to do, you can absolutely count on facing overwhelming competition, and when things are easy to do from home, duck. Given the absence of overhead, we can be a lot more content with much, much less at home - a place where we may have to be anyway and perhaps have nothing better to do. Moreover, with books, we're not talking about hunting for elusive, underground truffles with trained pigs. Supply is above ground and abundant. A book is more like the common button mushroom; they pop up everywhere, are purchased everywhere, and sold where else? Online. No expensive French pigs required.

An aside: one aspect of this ease-of-bookselling phenomenon that may not be widely recognized is that many books now circulate continuously among buyers and sellers. Since they're much easier to acquire and get rid of, many of us don't hold onto them as long. We buy, resell, buy resell, and so on. The effect of this is to depress prices even further.

The question every bookseller wants answered is, will things eventually shake out? Will the penny-ante bookseller grow frustrated at spending huge blocks of time listing, emailing customers, packaging, waiting in line at the post office, and everything other repetitive, mindless activity that has nothing to do with the simple joy of living with books? To some extent, of course, yes. It's inevitable that some sellers will get out because this is obviously no clear and open path to riches. Others will stay, however, some for reasons that may have little or nothing to do with making a good living, and still others will arrive with fresh enthusiasm. I could be wrong, but I truly doubt that enough sellers will leave to make a significance difference to those of us who stay.

There are some other things to consider too. The book industry isn't going to sit back and watch the growth of used book sales without a fight. There was plenty of bad news for them this year. The Book Industry Study Group, a not-for-profit research industry, recently reported that sales of new books fell from 2.245 billion in 2002 to 2.222 billion in 2003, and this was despite the appearance of three blockbusters - The Da Vinci Code, a new Harry Potter installment, and the memoirs of Madame Clinton. The reasons for falling sales may be several and complex, but it's clear that the increase in used book sales is a big factor, possibly the biggest. You can put this in the bank: there will be strategies implemented (and some already have been) to recover market share.

Here are three examples:

1. Pulping (as opposed to remaindering) overstock. Remainders have significantly fueled used book sales in recent years, and some publishers are discovering that it makes more economic sense to pulp (recycle) some overstock and withhold the rest from the remainder market, selling them instead at full retail price as backlist titles. Poof, there goes a market segment for used book dealers.

2. ebooks. When retailer Barnes & Noble and publisher Gemstar-TV Guide summarily abandoned, respectively, sale and production of ebooks last year, it was pronounced by some as the death of the ebook format. However, according to the latest OeBF eBook Statistics Report, sales of ebooks in the first quarter of 2004 have increased by a dramatic 46% over the same quarter last year and are currently the fastest growing sector of the book market. There are a number of reasons for this, including technological advances in and increased availability of MP3 players and a grudging but growing consumer acceptance. But here are two especially interesting contributing factors: one, reference books seem peculiarly suited to the format both because they're often expensive in print form and more readily searched electronically, and two, libraries increasingly beset with shrinking budgets have discovered that ebooks reduce costs significantly by way of saving space, requiring less staff to service, not being subject to theft or degradation, and providing 24/7 availability. As ebook interest grows, count on it - used books purchased for content will suffer.

3. POD's. The same technology used to produce digitized texts for reading in electronic formats can be utilized to produce print-on-demand books or POD's. Simple. A book is ordered. A book is printed. At present many POD's are too expensive to produce to compete favorably with used books, but look for this to change soon, and also look for targeted titles to be those very books which bring us the best profits now.