Book Industry Enters Shaky Chapter

The publishing world is still trying to absorb this week's bad news: Several publishing houses announced layoffs or salary freezes, and a major reorganization at Random House left two major players in the business without jobs. All this comes as booksellers head into the holiday season — when 25 percent of all book sales occur.

No one thought that publishing would be spared from the current economic turmoil. But when the fallout from the Random House reorganization was announced on the same day that Simon & Schuster and the Christian publishing company Thomas Nelson announced layoffs, it stunned the book world, says Sara Nelson, editor-in-chief of Publishers Weekly.

"It's a microcosm of what's been going on in the real world, as it were — I mean, in the larger world," she says. "But I think, while many of these things were not unexpected, the kind of volume of them just was shocking and really sobering."

Even as the bad economic news was bearing down, most people in the book business were trying to be optimistic. Books, they said, are recession-proof because they're cheap. But Larry Robin, who has been in the bookselling business since 1960, doesn't buy that conventional wisdom.

"In today's world, it isn't cheap entertainment anymore," he says. "With the computer and with iPods and Netflix, I mean, you can get all sorts of other entertainment."

Robin's Book Store has been a fixture in downtown Philadelphia since 1936. But now Robin is getting out of the business of selling new books and will sell used ones instead.

"If it was a matter of hanging on for a year, I could do that," he says. "But I don't see it changing. I don't see the economy getting better for a long time. I don't see that economic model of a retail store coming back."

Struggling To Survive

Independent bookstores have been struggling to survive ever since the advent of the chain stores. But now, even the chains are under threat, with competition from big-box stores like Costco and, more significantly, from Amazon, the online bookselling behemoth. Barnes & Noble, Borders and Books-A-Million all reported a decline in sales in the third quarter, and there's some concern that Borders may not survive.

Bookstores around the country reported mixed sales over the Thanksgiving weekend. But there was good news for some, like Becky Anderson of Anderson's Bookshop in suburban Chicago. She says so far, business is better than she expected. It's next year she's worried about. She says she expects to pull back on everything — including book orders.

"There may be some of those books that might have been a smaller buy that maybe ... we're going to let go for now," she says. "And if it's something that we're hearing some buzz on after the fact, then we'll definitely pick it up. But there are some things that we, you know, we may not be buying as much of, or maybe skipping."

The prospect of fewer book orders and tightening credit has already led one publishing house to make a decision that set off alarm bells throughout the book industry. Just before Thanksgiving, Houghton Mifflin Harcourt, a newly merged company, announced it was putting a temporary halt on the acquisition of new books.

Ellen Geiger, an agent with the Frances Goldin Literary Agency, says the move made people nervous.

"Because acquisitions are really the lifeblood of our business," Geiger says. "It's the pipeline, it's the food chain, and if one company is halting their acquisitions, it's really a cause of great concern."

New Chapter: Digital Advances

Like other industries caught in the economic downturn, publishing is being forced to take a hard look at how it does business.

"We were already facing certain big challenges before the recession came along, and those challenges were connected to the traditional mechanisms of the book business," says Jonathan Burnham, the CEO, vice president and publisher of Harper, an imprint of HarperCollins.

Burnham says the economic downturn means publishers may be forced to find an alternative to the system of returns, which allows stores to return unsold books to warehouses, resulting in books being shipped back and forth across the country at great cost. Beyond that, Burnham says, the industry must now truly grapple with digital advances, like electronic readers, that are already leading to dramatic changes.

"It's making us focus even more intently on how to make sense of a digital future and how quickly we should move toward it, given that publishing digitally will liberate publishers, and indeed readers, from the costs and the problems of producing physical books," he says.

Burnham says book lovers will always be able to buy beautifully produced copies of books. But there could be fewer of them as booksellers and book publishers search for a new way to do business in the new economy.