Amazon is damaging the high street book trade and threatens to undermine the nurturing of new talent, argues James Heneage
The founder of the Ottakar's book chain has described Amazon as a "dangerous" force that is damaging the high street book trade and threatens to undermine publishers' ability to nurture new talent.
"If you are concerned about the sort of books that get published you have to look to the future and the amount of value that businesses like Amazon can remove from the publishing business model," said James Heneage, the businessman turned author who started the quirky Ottakar's chain in the late 80s. "If you look at great writers such as Patrick O'Brian and Joanna Trollope, these people did not start out as uniquely brilliant. Their [following] built gradually because publishers worked with them and had the money to invest, and pay for the expertise that spotted the books in the first place."
His comments came after the Guardian reported that Amazon.co.uk, the country's biggest online retailer, paid no corporation tax on the profits generated by last year's UK sales of £3.3bn – and is under investigation by the UK tax authorities. Ottakar's was swallowed by larger rival Waterstone's in the wave of high street consolidation that took place in the last decade as the internet first made its presence felt.
Today Waterstone's is the last "range" bookseller – the largest of its near-300 stores stocks 200,000 titles – of any scale left on the UK high street.
After weathering the first internet storm, what remained of the high street book trade has enjoyed a period of relative calm, but the dawn of the digital age has changed all that. Bookstore owners are now less worried about shoppers logging on to buy novels from the comfort of their armchair than they are by the fact that book lover is now sitting back with a Kindle and can buy the latest bestseller with just "one click".
In short order ebooks have grown to around a fifth of the £1.9bn UK book market, a huge shift that threatens the economics of physical shopkeeping on all but the strongest high streets. Industry figures show physical book sales have fallen 8% in the last 12 months. Neill Denny, editor-in-chief of the Bookseller magazine, said the number of "indies" had stabilised at around 1,400 but they now faced tough times: "The good indies are doing fine but the less good are under massive pressure because of the proportion of heavy book buyers that have switched to e-readers."
Critics argue that Amazon, which sells dog food and nappies alongside the latest Booker winner, does not have the same duty of care to the retail markets it operates in as other sellers, for whom the trade is their bread and butter. "With great market power comes great market responsibility and I don't get the feeling that the leaders of businesses like Amazon really understand that aspect," said Heneage. "If you want a long-term successful market in which to operate you need to invest in it and I don't think you would undermine the competition to the same extent."
The fate of bookshops is tied in with that of the high streets they are situated on. The recent review of the state of the high streets carried out by TV retail expert Mary Portas for the government highlighted that many were in a perilous state due to high operating costs and the deterrent of hefty parking charges.
If the wholesale closure of bookshops is not prevented industry insiders argue reader choice will eventually diminish as publishers find it harder to reach their audiences.
Joy of reading
John Makinson, the chief executive of Penguin, argues the government should support bookshops, pointing to the beneficial trading terms enjoyed by charity shops which get business rate concessions. "Bookshops are a mainstay of the commercial life of high streets up and down the country. But they are very much more than that. They provide a cultural focus for communities, introducing children to the joy of reading. We would be poorer, in every sense, without them."
Philip Downer, a books industry veteran whose career in retail included stints at Waterstone's, WH Smith and latterly Borders UK, which closed down in 2009, refused to prophesy the death of the "p-book" – an industry joke for the old school printed version.
While Amazon has emerged as the "sole credible" online bookshop, and the "sole credible" ebook seller, in the UK, Downer, who now runs retail consultancy Front of Store, argues that publishers have not done enough to provide an alternative to its domination.
"One strategy might be to support bookshops with more equable terms, but retailers and publishers would have to be very honest with each other about outcomes, so that publishers' profits weren't ploughed into supporting failing enterprises, or bookshops given a false sense of their own robustness."
As the last man standing, much rests on the shoulders of James Daunt, the founder of Daunt Books and former banker who was parachuted in to lead Waterstone's last year after it was sold by HMV to Russian billionaire Alexander Mamut for £53m. And he is up for a fight, recently describing Amazon as a "ruthless, money-making devil".
Some predict the traditional model of publishers, agents and booksellers could be washed away in a digital tsunami but Daunt told one interviewer recently: "I think either all three will survive or they'll all disappear, swept away, replaced by one big fat Amazon, getting his way. And if the bookshops go, they will never come back. So I have a responsibility."