Maybe Bezos knows what he is doing after all!
See this Forbes.com article.
Publishing
Read It And Weep
Mark Lewis, Forbes.com, 11.26.01, 12:23 PM ET
NEW YORK - Amazon.com's Holiday Delight-O-Meter is delighting investors, who are bidding the online retailer's stock higher on hopes of strong Christmas sales and imminent "pro forma" profitability. But for the book industry, the news seems less delightful.
Amazon's (nyse: AMZN - news - people) Delight-O-Meter tracks orders from the firm's Web sites, including those it operates in association with other retailers. On the day after Thanksgiving, Amazon announced that its customers "are sending a clear message: that it's back to shopping as usual this holiday season."
But while DVD players may be flying off the shelves, it was not clear from Amazon's press release that books were doing especially well, apart from the inevitable Harry Potter boxed set. U.S. Bancorp Piper Jaffray analyst Safa Rashtchy today used the deadly phrases "mature and low-growth" to describe Amazon's books, music and video business. "While in the past, the core books, music and video [BMV] segment has been the main driver of top-line growth, this quarter we estimate that the U.S. BMV segment will be less than 47% of total revenue, down from 53% last year," Rashtchy said in a research note.
While Amazon diversifies its way to potential success, firms that still focus mostly on books are exhibiting a distinct lack of holiday cheer this year. Borders Group (nyse: BGP - news - people) last week reported that same-store sales fell slightly during the quarter ending Oct. 28. Earlier this month, Barnes & Noble (nyse: BKS - news - people) cut its profit estimate for 2001. This morning, the New York Times reported that Leonard Riggio, the Barnes & Noble chairman, is pressing publishers for better wholesale terms.
Riggio apparently is running scared, and for good reason. Something has gone terribly wrong with the book business if it cannot prosper in this post-Sept. 11 period, when people are seeking answers that only books can provide. Previously published tomes about Afghanistan, Islam and Osama bin Laden have rocketed onto the bestseller charts, giving people the kind of in-depth information they cannot get from television reports or magazine articles. Yet when Riggio issued his profit warning on Nov. 8, he cited the Sept. 11 terrorist attacks as part of the problem, due to "the lack of media exposure for authors amid the din of crisis coverage."
He means the authors of new books that have nothing to do with the crisis. Naturally, these books did not sell as well in September as they would have if the terrorist attacks had never happened. But the new autobiography of former General Electric (nyse: GE - news - people) chief executive Jack Welch is doing great, even though it launched in stores on Sept. 11--perhaps the worst-timed debut in publishing history. As Amazon noted last week, sales patterns are now returning to normal, as new books by Welch and John Grisham rise to the top of the charts. That should help the booksellers' holiday sales.
In the long run, however, the book industry can emerge from its current slump only by doing a better job of figuring out what the public wants to read. Case in point: David McCullough's recent biography of John Adams, which dominated the bestseller charts for months. If someone other than McCullough had offered a 750-page Adams biography as a potential blockbuster, most publishers would have guffawed. Yet this ponderous tome was lugged to the beach by thousands of Americans who usually settle for lighter fare--in part because they are offered little choice.
Clearly there is a huge market for books like this, which are entertaining and, at the same time, deliver a depth of information not provided by other media formats. The publishing industry needs fewer ghostwritten memoirs by semi-literate celebrities and more enthralling epics from such authors as McCullough. The baby boomers still read, and as they retire, they'll have more time to do so, so this market is not going away. It just needs to be better served. |
