Traditional Bookstores are Doomed-Becker

 

 

The traditional bookstore is doomed by e-readers and online sales of hard copy books. I use the word “doomed” in the same sense that online digital sales of movies and music have doomed movie rental stores, movie theatres, and stores that sell albums of music. Doomed does not mean that these stores will quickly, or ever fully, disappear, but that they have received deadly blows from Internet competition.

Joseph Schumpeter, an outstanding economist in the first half of the 20^th century, originated the term “creative destruction” to describe new technologies and other forms of new competition that wreak havoc on older and established industries. The process is creative because it provides consumers and producers with more effective ways of satisfying their wants. The process is at the same time destructive because it greatly reduces the value of services and products provided by older industries.

Extreme examples of creative destruction from the 20^th century include the complete substitution of cars for horses and buggies, movies with speaking for silent movies, and computers for typewriters. Less extreme are the large reduction in clerical and secretarial staffs caused by the development of computers and the Web, and the sizable reduction in demand for milk and eggs induced by better information on the health value of low cholesterol diets.

A similar creative destruction process began for bookstores with Amazon’s development of online book sales that offered huge inventories of books, convenience of purchase, speedy deliveries, online reviews of books, and various other services that made it more efficient and often cheaper to buy books online rather than in bookstores. Sales of books online started slowly, but they have accelerated as consumers became more familiar with the process of buying books (and other goods) online. I first started using Amazon at my summer home since it is not near any bookstore. Discovering the convenience of buying books online, I now buy online all year, although I still enjoy visiting bookstores.

Effective online readers, like Amazon’s Kindle, and Apple’s iPad, are only a few years old, but they have become big hits since they can be used both to purchase books online, and to read books in digital form. Hundreds of books can be stored digitally in a single Reader that weighs less than a couple of pounds. They are especially valuable when traveling, but are useful when reading in bed or eating, and also with traditional reading when seated on a comfortable chair. They are particularly useful for individuals with weak eyesight since print size can be easily adjusted. This is why digital readers will appeal eventually even more to older persons than to others, although mainly younger persons are the ones who so far have bought digital readers because old persons are less familiar with digitalization.

I do not expect bookstores to rapidly disappear the way the production of silent movies virtually ceased once talking movies were created. However, I do expect an accelerating decline in the number of bookstores as many close down due to bankruptcy and excessive losses. Some bookstores will continue to exist to cater to men and women who like to browse among physical copies of books, and because some owners of bookstores get great pleasure out of selling and being surrounded by books. Many bookstores that survive are likely to combine selling hard copy books with that of other products. For example, university bookstores usually also sell clothing that have the university logo, computers, greeting cards, snacks and coffee, and other goods that cater to students and faculty. Other surviving bookstores might combine selling of hard copy books in physical facilities with online sales of hard copy books, and online sales of digital books.

The decline of bookstores, theatres, laundries, and other retail industries with physical facilities illustrates a trend that runs counter to older ideas about the effects of economic development. The process of development has been presumed to cause a substitution of market activities for home production. For example, households in poor rural societies have not only grown their own food, but also made much of their clothing, washed their clothes, baked their bread, and cooked from scratch their other food. As countries underwent economic growth, many of these productive activities left the home and migrated to the marketplace. Factory-made clothing was substituted for clothing made at home, and bakeries and laundries developed to make bread and sweets, and to wash, clean, and dry clothes.

Further technological developments,however, such as small motors used in home washing and drying machines, and small machines that cooked bread easily at home, shifted many activities back into the home, and thereby saved on time and energy spent in the shopping process. The online digital revolution is a further major step in this trend of returning activities to the home. Time and effort are saved, for example, when instead of going to movie theatres, consumers both order and download films online to be viewed at “home”, either on television sets, or increasingly on computers.

From this perspective, what is happening to bookstores is not unusual. “Books” are still read at “home”, but increasingly they are also purchased at home, and not only in hard copy form. Digital books are a true revolution, but their effects on bookstores are only a small part of a broader technological development that has brought important activities into the home.

 

 

Comments

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[Patrick J Dickey]

I think that your point is cogent for large bookstore chains, which have to bear the overhead expense, distribution and inventory problems all the while not being able to provide a differentiated product or service, which has allowed well managed independent bookstores to currently thrive by providing literary knowledge the the National Chain cannot offer and creates premium value. Small bookstores that closed were those that terribly mismanaged or only had a solo profit line (new book sales) an could have boosted profits by engaging the more lucrative used book trade.

[GN]

Professor Becker makes a convincing case that the traditional bookstore is doomed by e-readers and online sales of hard copy books. His argument also has implications for how universities build and manage libraries. The University of Chicago, for instance, is on the verge of completing a facility (at a cost of over $25 million) that will hold over 3.5 million volumes. In an era when books can be stored digitally at a fraction of their physical counterparts, this seems to be a tremendous waste of money.

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[Jim]

There is probably a need for at least several major repositories of hard cover books, magazines and papers lest technical or social failure wipe out all electronic based knowledge.Save that, large bookstores and most public libraries will indeed disappear. In my own community recently there has been a lively civic debate about the need to save several branch libraries from the budget cutting necessity. The argument never contained an element of book availability in that there is a more than adequate main library. Rather the save the brances group argued that the branches were "meeting" places for them and their children. In the case of Bookstores, the opposite may be true. The large ones will fail; and the smaller ones will be places of quiet and comfortable thought for a community. I cannot imagine, for example a place like Shakespeare and Company bookstore in Paris disappearing. As for owning only electronicly based books, I cannot imagine not having Hard copy books around. I believe that they have a positive influence on a person even if never read. After all is said and done, Your analysis is quite correct. The entire discussion makes me wonder is large restaurants will close and we will evolve to a system of buying our meals from mobile trucks and eating them with friends in rental spaces which serve no food and have no employees.

[Citizen R]

To be honest, and I speak as an internet-soaked, computer-loving member of the Internet Generations, I don't see myself ever using an e-reader or anything else in lieu of a real book.

[Steve]

I've been an early and enthusiastic adopter of Amazon and ebooks. I no longer really like either, but suffer them. I'm trying to find alternatives, which is hard for convenience and cost reasons. Amazon is like shopping at Walmart and reading on ebook is like eating a frozen dinner. They are both cheap and convenient and utterly bland.

I *really* appreciate bookstores, and books, and can't imagine having to deal only with ebooks and Amazonish online retailers. Just as slow food, organic food, etc.. is changing what America eats and where it shops, there will always been books and bookstores challenging the cardboard experience of Amazon and ebooks.

Also, Ebooks are scrolls. Paper books are codex's. They are not the same technology. University students for example prefer paper books, as anyone whose tried to read end notes or flip back and forth between pages knows. Ebooks work great for novels and creative non-fiction.

[Danny Bloom]

Dr Becker re ''John'' wrote: "What is being lost is that the evidence shows that reading on the computer is not the same as reading a book or hard copy."

Dr Becker do you have any evidence to back that up, links, refs, citations? All I know so far is that some researchers are using MRI and PET scan studies to try to determine if in fact different parts of the brain light up when we read on paper surfaces compared to when we read on screens, and my hunch is that they do light up diff parts of the brain and that the parts are superior for when we read on paper, brain wise, brain chemisty wise that is, in terms of how the brain processes info, retains the info, analyses the info and thinks critically about the info just read. We do need more research on this. Because WHAT IF if turns out that reading on screens is vastly inferior to reading off paper in terms of the above items i noted just now? Ouch.

[true religion]

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[Jack]

No discussion of the difficulties of the book, or for that matter, newspaper and magazine biz would be complete w/o mention of those media tracking the inflation curve while wages for most working folk have not.

Books have probably doubled in price over the last 20 years even as publishers and authors may have tightened their belts, while wage gains have been essentially flat, making what was once a whimsical buy on the way home a far more serious "investment" decision.

The same is likely the case for other local businesses such as restaurants with the "white table cloth" dinner house yielding to the cafe, and the cafe ultimately to the "fast food" fling of obesity causing fame.

Geez! I guess it's now 20 years ago that in this "richest of nations" that I was handed a box of "buttered" popcorn at the show with some vile tasting, heart stopping corporate glop on it instead of real butter............ and no choice. Ahhh, progress, eh?

Guess the "digital copy" will be the way of the future if for no other reasons than our not being able to afford the "real book" should we wish.

[Gilgamesh]

Continuing his inimical efforts to amuse the reader, Jack writes:

"Books have probably doubled in price over the last 20 years even as publishers and authors may have tightened their belts, while wage gains have been essentially flat, making what was once a whimsical buy on the way home a far more serious "investment" decision."

The factual premise -- a doubling of book prices over the last 20 years -- is false. That aside, Jack's feeble efforts at commentary prove true Wilde's adage that a cynic knows the price of everything but the value of nothing.

[CRose]

Do these guys read? I mean really read? I admit to reading on an ereader on my smartphone out of convenience... It's a great way to deal with those inconvenient waits, places, and times. But the feel of a real book cannot be entirely replaced with an ereader... And the time spent browsing in a bookstore, exploring new genres, discovering new authors, scanning book jackets, chatting with fellow bookworms cannot be fully replaced by surfing at Amazon... Both are invaluable to real readers but maybe that value can't be fully apreciated if you're more about thee gadget and the technology than the book!

[Jack]

Geez, Gilga Sorry that you take my earnest efforts to trigger some debate and discussion, and to amuse the prospective reader as being unfriendly.

Since you state with such certainty, that by some means? the publishing of books has escaped the inflationary pressures of paper, transportation costs and cost for the retailers, I'm fairly sure readers here would be greatly charmed as well as amused were you to accompany your claim with some data? I offer a dab on textbooks below:

http://ctwatchdog.com/2009/08/25/college-textbooks-costs-rising-twice-as-high-as-inflation

BTW.......... how would "Wilde's adage" illuminate a discussion of either increased prices for books? flat wages for working folk and the resulting change in ratios? or even the loss of our bookstores from our communities? Thnx, Jack

[GreeceRUS]

Books are a free market so people’s desire for better and cheaper goods and services will be satisfied, which probably involves printed books becoming obsolete.

What seems more interesting from a public policy debate standpoint is what will happen to public libraries. Publicly funded monopolies that are likely to continue to spend taxpayer money in an ever less efficient manner as the utility of paper books keeps declining and their relative cost increasing. Has the funding and construction of new paper book public libraries followed the same decline as the brick and mortar bookstores? To the extent that they have not, it would make an interesting politico-economic story.

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[Christian Marks]

Amazon's creative destruction combines innovation with intellectual monopoly and rent seeking behavior. I used to have an Amazon Kindle. Amazon advertises low prices for electronic books. But those purchases are tied to an Amazon Kindle account, not to you. You cannot transfer ownership of a book you have purchased to someone else, as if it were a real book. The putative analogy between physical property and intellectual property breaks down. Amazon controls downstream copies of the electronic books you purchase from them. You pay $9.99 to Amazon for an ebook in the mistaken belief that you are saving money on the purchase of merchandise that purportedly behaves like physical property. In fact, that $9.99 helps Amazon stifle markets. If I sold you my Amazon Kindle with the books I purchased, and you re-registered the Kindle in your name, my books would vanish. It would be as if I sold you my bookshelf with books I purchased from Amazon, and Amazon removed the books once you claimed the bookshelf.

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The traditional bookstore is doomed by e-readers and online sales of hard copy books.

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