SALES OF PHYSICAL BOOKS SURGE; E-BOOKS LAG

Bookstores vanishing, e-books surging and all power to Amazon. That has long been the narrative of the publishing industry, with thousands of once-loved shops disappearing from high streets on both sides of the Atlantic.

Waterstones, the UK's biggest remaining book chain, seemed to endorse the shift to digital two years ago, when it started selling Amazon's Kindle e-readers in an attempt to break even. At the time, PwC, the professional services firm, ordained 2015 as the year that e-books would overtake physical books by numbers sold in the UK.

But the plot has twisted sharply, with publishers and book chains in the US, UK and Australia celebrating sales figures showing the resilience of physical editions and of bricks-and-mortar stores.

Waterstones said its sales had risen 5 per cent in December compared with the previous year –no thanks to the Kindle, sales of which "disappeared to all intents and purposes", according to James Daunt, chief executive. "Things are tough, but we have reached the bottom of the market," said Sam Husain, chief executive of Foyles, Waterstones' smaller rival. His company reported an 8 per cent rise in sales, despite its disappointing e-reader experiment.

The optimism was echoed in the US. Barnes & Noble appears to have ended a run of declining sales, and expects sales to be flat in 2014 and 2015. Its shares rose 5 per cent on the news. The change in mood comes after an anxious year for publishers, whose long-term profitability appeared in doubt during a bitter pricing spat between Amazon and French house Hachette. Amazon, the world's largest bookseller, has sought to use its scale to determine e-book prices, while promoting self-publishing, which cuts out traditional middlemen.

"The health of the books industry is pretty good," said Richard Kitson, commercial director of Hachette UK.

Overall the number of physical books sold in the US rose 2.4 per cent last year to 635 million, according to Nielsen Book-Scan, the second successive annual rise. In the UK, physical book sales fell 1.3 per cent –an improvement on the 6.5 per cent fall in 2013, despite the lack of a breakout hit to follow Fifty Shades of Grey or the autobiography of Sir Alex Ferguson, the former manager of Manchester United football club. Sales continued strongly this year.

Meanwhile, the growth of e-books continued to fade in the US and UK, and fewer new e-readers –which are crucial for the spread of digital reading –were apparently given at Christmas.

A recent survey by Nielsen found teenagers prefer print books, with fewer of those aged 13 to 17 buying e-books than their older peers. It suggested that parents' preference, or teens' lack of credit cards for online shopping, could be responsible. "But another explanation may be teens' penchant for borrowing and sharing books rather than purchasing them, which is easier to do in print," Nielsen said. Publishers have also tweaked their approach to print. They have invested in illustrated editions for less price-sensitive consumers, while cutting prices of romance and science-fiction, whose readers are more likely to opt for e-books and self-published works.

In predictions to be released next week, Deloitte will estimate that print will account for 80 per cent of all global book sales in dollar terms this year –and "to generate the majority of books sales for the foreseeable future".

That contrasts with previous industry expectations that e-book sales would soon become at least half of the market. "Everyone thought it would level out at 50-50. It's looking today like it'll be more like 60-40," said Larry Findlay, managing director of Transworld Publishers.

A key factor appears to be the stagnation in sales of e-readers, which have not become as ubiquitous as smartphones and tablets. Amazon does not disclose sales figures for its Kindle e-readers. But Gartner, the research firm, estimates that sales of the devices peaked in 2011, with owners having little reason to upgrade to new models, and other consumers opting for multifunctional tablets instead.

To read the complete article, see:
Books resilient as readers remain true to type (www.afr.com/p/world/books_resilient_as_readers_remain
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