ABDVol.30 No.1
Impact of Online Bookstores

The US Editorial Office of The Book & The Computer


The Stunning Success of Amazon.com

In the summer of 1997, before online bookstores had become popular, we prepared to launch our online journal The Book & The Computer: The Future of the Printed Word (http://www.honco.net/). Amazon.com (http://www.amazon.com), now internationally renowned not only as an online bookstore but as a standard-bearer for e-commerce, had only just begun. Soon afterwards, as it rapidly expanded into a major company, its fame spread and it became an Internet success story. At its height, the value of amazon.com stock multiplied eleven times. One reason for its stunning success was that, from the reader's point of view, it offered the ultimate in convenience. The U.S. editorial office of The Book & The Computer is located in Berkeley, California. (There is another in Tokyo). As a university town, Berkeley is distinguished by its many bookstores, several offering both an excellent selection of titles and superior service. Yet even for people living in a place like this, amazon.com is convenient.
 Amazon.com's inventory is vastly superior to that of any local independent bookseller. Moreover, there is no need to travel to a bookstore and search among the shelves for a particular book. You can simply order over the Internet using a credit card and a computer, and once your address and credit card number have been registered, any further transactions can be completed with a simple click of the mouse. The books you order are delivered to your home within a few days and the price (including postage) is sometimes less than that of any local bookstore-thanks to careful rationing and the use of bulk consignments.
 Amazon.com's user interface adroitly captures some of the essential characteristics of books and bookstores, and it is very easy to use. Just as you might visit a bookstore and search through its shelves for a particular book, you can search the amazon.com database by inserting a keyword, the title or the author's name. You also can read portions of selected books, as well as reviews from newspaper or magazine columns, comments from other readers, and sometimes even interviews with the author. In addition, other books frequently ordered by readers of a particular book are listed, making it easy to find works with the same theme or in the same genre. The online bookstore creates the illusion of a real bookstore, mimicking the process whereby the consumer walks down the aisles and browses through the bookshelves, often purchasing far more than originally intended. This aspect has been so successful that the phenomenon has been given its own label: amazon.com addict. If the strength of its appeal is sufficient to produce these so-called addicts even in a university town like Berkeley, one can easily imagine just how convenient the services offered must appear to consumers living in towns and cities where bookstore stock is often limited to bestsellers. Total sales for amazon.com in 1998 amounted to US$610 million, including US$330 million in proceeds from CD sales. Yet, because it is currently investing all its capital in expanding its network, amazon.com has not yet reported a profit-although it expects to show one beginning next year. The success of amazon.com will doubtless result in the emergence of more online bookstores.

Global Strategy in Book Distribution and Sales

Of amazon.com's potential rivals, the union of Bertelsmann AG of Germany, the world's largest publishing company, and Barnes and Noble, a major American bookstore chain, poses the largest threat because of their extremely aggressive approach and comprehensive global strategy. In March 1998, Bertelsmann purchased Random House, Inc., America's largest trade publisher. Combined with the other publishing firms already under its umbrella, this move gave Bertelsmann control over almost half of all trade books sold in the United States. Subsequently, in October of the same year, Bertelsmann purchased a fifty percent stake in barnesandnoble.com. A month later, Barnes and Noble announced its intention to buy Ingram, America's largest trade book distributor. The book world was rocked by these sudden events, precipitating a suit filed by the American Booksellers Association, Amazon.com, the New York-based Authors Guild, and other organizations. After the government of the United States was prepared to rule that the purchase of a major book distributor by a large bookseller like Barnes and Noble would violate anti-trust laws, the plan was abandoned. With the development of online bookstores, obvious and drastic changes are taking place in American bookstores and their distribution system. And the momentum generated has resulted in rapid global expansion of major American online bookstores into Europe and Asia.
 Despite the apparent convenience of these stores, problems do exist. One major conflict is with independent bookstores. This issue was presented in an article entitled "The Corporate Takeover of Bookselling" in the June 1999 issue of The Book & The Computer. Giant online bookstores which launch massive advertising campaigns, purchase popular books in bulk and sell them in enormous quantities at low prices undermine the vitality of independent bookstores. The latter insist that they have consistently protected and nurtured the culture of books which are not on the bestsellers lists. Much of their argument hits the mark: however, online bookstores do not sell only bestsellers. They have a huge inventory or, more accurately, a database which includes many limited print editions, and these can be easily located and usually delivered within days- which cannot be said for independent bookstores. Quality independent bookstores may have protected the culture of books in the United States, but the contributions of online bookstores in this area cannot be completely dismissed. Both the conventional and online bookstores need to find ways to co-exist, for without such an arrangement, local bookstores in the United States will suffer a severe blow.
 A different type of online bookstore- which might serve as a new model- is booksense.com (http://www.booksense.com/). The American Booksellers Association announced that this site would begin operation in August 1999. Many local bookshops in the United States operate small online bookstores and booksense.com will be a network joining those run by Association members. According to information received so far, 1,700 independent bookstores have decided to participate. Unlike amazon.com, which is one huge bookstore, booksense.com will be composed of the aforementioned network of small bookstores (many specializing in subjects like history, travel, sports, mysteries, etc.) and will most likely provide information such as which local bookstores carry a particular book and which offer the best price. The details of this site have yet to be disclosed. If it has an easy-to-use interface and if its search engine responds at the same speed as amazon.com, it may prove to be an effective solution to the problem facing independent bookstores-while at the same time providing a new model for online bookselling. Up to this point, I have primarily discussed online bookstores in the United States, but many similar enterprises are rapidly emerging in Europe, China and Japan and these include the second hand book market in addition to new publications. A gateway connecting regular and second hand bookstores in Europe and the United States is bookfinder.com (http://www.bookfinder.com) and it is extremely convenient for finding books in many languages. For more information about this useful site, read our interview with Anirvan Chatterjee, founder of bookfinder.com, in our February 1999 issue The Future of the Printed Word.

Use of Newer Electronic Media

All the online bookstores described above handle books on paper, but there are also other types of Web booksellers-including those that provide print-on-demand titles and electronic books. Borders, a major American bookstore chain (http://www.borders.com), has announced it intends to commence selling print-on-demand paperbacks next year. Other sites, such as Barnes and Noble (http://www.BarnesandNoble.com), sell books as digital data (e-book) downloaded to an electronic device.
 Until recently, books, magazines and newspapers have all been published on paper, but they do not necessarily need to be limited to this medium alone. The concept of communication and publication certainly can be applied to other media. Although the printed word may lose some characteristics when transferred to digital media, it gains new qualities at the same time. Books, magazines and newspapers, because they fundamentally developed through the use of paper, continue to rely on this excellent, easily used medium.
 Most likely, paper will continue to dominate for sometime to come. But gradually, a movement towards the use of newer electronic media for books, magazines and newspapers has begun. At some juncture, this trend will spread suddenly and rapidly around the world, like floodwaters when a dam breaks. At The Book & The Computer, we are rapt witnesses to this course of events.

The Book & The Computer: http://www.honco.net/