The bookseller and the net threat

March 2, 2001

Academic booksellers are facing a range of stern challenges, as Chris Sugden explains.

Changes in higher education are posing a major challenge to academic booksellers. Over the past ten years they have become increasingly dependent on the sale of textbooks. At current levels of profitability, a very small drop in textbook sales could see the disappearance of a significant number of campus bookshops. In addition, other structural changes are leading to a significant decrease in the range of academic titles stocked in campus academic bookshops.

For many years, United States publishers have sold textbooks at substantially lower prices in Europe. The internet is exposing global price differentials and to protect their domestic market US textbook publishers have to increase their prices in Europe to US levels as quickly as possible. For the past two years, prices of US texts have risen by approximately 10 per cent per year. Although these price rises have had no effect on student purchases, there are signs of price resistance by lecturers, perhaps because they remember the artificially low prices they paid for their texts as students. The £60 US textbook will allow UK and European publishers once again to enter the textbook market. A sign that this is happening is Oxford University Press's plans for investment in textbook publishing.

Academic libraries appear to be devoting an ever-increasing slice of their purchasing budget to multiple copies of student texts. One is tempted to question the rationale for this as ultimately it transfers the cost of student materials from the student to the institution and must also impinge on the funds available for research material. However, in this age of performance indicators, it presumably drives up loan rates and justifies the increasing proportion of library budgets devoted to staff salaries.

Prior to the fall of the Net Book Agreement and the fixed 10 per cent discount to libraries, most academic libraries spent a substantial proportion of their budget with their local academic bookshop. These purchases have disappeared as libraries have grouped into purchasing consortia and awarded single-supply contracts at much larger discounts to a small number of specialist academic library suppliers.

The composition of the student body has been changing significantly with the major growth in off-campus students. Maintaining the on-campus bookshop as the major source of the material they require is a challenge facing all academic booksellers.

In addition, the concentration of global academic publishing has been substantial over the past five years and there is no sign of this abating. The five major US academic publishers account for around 50 per cent of an academic bookshop's sales and just one of these, Pearson Education, is likely to account for 20 to 30 per cent. To put this in perspective, fewer than 30 publishers are likely to account for over 90 per cent of a campus bookseller's sales. How to deal profitably with the enormous tail of smaller academic publishers is another challenge facing all academic booksellers.

Internet booksellers have over the past two years had a large impact on the sale of specialised titles. One major academic publisher estimates that 20 per cent of its sales of academic monographs have transferred from terrestrial book stores over the past year. There are, however, signs that this trend is reversing as internet discounts fall and delivery charges increase. Campus booksellers have also been helped by the substantial improvement in delivery times that have resulted from an increased concentration of suppliers.

Until this academic year, students were unlikely to find textbooks discounted on the internet. Publishers have no reason to offer the margins that make discounting viable due to the inelasticity of the market. This year, however, saw the arrival of several specialist internet booksellers targeting the textbook market (Swotbooks and Headfiller to name two). The general consensus among campus booksellers and academic publishers is that they appear to have had little impact. However, were they to capture even 5 per cent of the textbook market, a large number of existing campus bookshops would no longer be viable. In the longer term, this could be enormously damaging to textbook publishers, as any failure to supply students with a text when they require it is likely to see a switch from using a textbook as the main teaching material for a course.

As yet, digital material has had little impact on the market for textbooks. The big US textbooks invariably have linked websites with supporting material but the actual book remains the core product the student buys. Pearson's substantial investment in online companies over the past two years suggests that they see an eventual move to distributing learning material digitally. Investment necessary to produce a major textbook is already very substantial. The cost of producing online teaching material is even higher. Only the very largest publishers, with a worldwide market, are likely to be able to follow this route.

All publishers are busy digitising their back list and now ensure they have digital rights for all material they publish. Libraries see substantial reductions in their costs if they are able to hold and loan material digitally; however, at present a mechanism for paying the copyright holder for use has not been found. This has traditionally been the booksellers' role. For many non-textbook-taught courses, the ability to give all students access to the same material when they need it is essential for the efficient running of the course. One answer could be e-books. It would be possible for a campus bookstore to download onto an e-book all the references required by a student studying a particular course. The e-book could be returned to the bookstore at the end of the course to have the references required for the student's next course downloaded. The issue of how to price this material has not been resolved and developing a sustainable model will be the challenge facing both publishers and booksellers over the coming years.

Chris Sugden is retail director, John Smith & Son, Booksellers, Glasgow.

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