Sunday, February 20, 2011

My writing week 4 (8)

Hi all,

If you haven’t heard yet, Angus and Robertson and Borders were placed into voluntary administration last Thursday. There stores are expected to continue trading as normal. There are 103 stores Angus and Robertson stores. Sixty-one franchises should not be affected. Borders has 26 stores.

We don’t have an Angus and Robertson or Borders in Wangaratta so it won’t effect my book buying. I have never been into a Borders, but had thought of them as a big American company who probably would not promote Australian authors as much as an Australian owned bookstore would. A Reading’s customer, in one of the Age articles, described Borders as a two dollar shop, making it even less likely that I would venture into them.

But it is a shame to hear that Angus and Robertson is in trouble.

Online sales were not the cause.

Online sales might have had a slight influence on Borders and Angus and Roberston’s problems, but economic analysts are saying the major cause was their owner REDgroup’s debt.

According to Age analyst Michael Evans “the private equity owners of REDgroup Retail, Pacific Equity Partners, had a simple plan – bulk up its existing bookstore business by buying a fresh revenue stream in Borders, strip out costs from overlap, then flog the combined business to the public in a float”.

Other booksellers also blame poor management and business models. Chris Redfern, who owns a bookstore in Albert Park, is quoted saying Borders had “appalling management, hopeless customer service and a poor range of books”.

Author Richard Flanagan was scathing in his opinion piece on the retailer’s troubles. He said REDgroup was “overly indebted, seeking to make up the growing difference between its mounting debt burden and its more humble income by using its businesses to fleece customers and suppliers”. He gave as an example the attempt to charge publishers up to $20,000 for shelf space.

He said, “while REDgroup's chairman, Steven Cain is now telling the federal government the company's failure is in part because of the government's decision not to open up the book market to parallel importation and thus, supposedly, cheaper books, that didn't stop the company routinely charging above recommended retail prices for its books. If it was worried about retail pricing, it wasn't reflected in its own pricing structure”.

REDgroup’s troubles are bad news for authors.

Flanagan saw the demise of Borders and Angus and Robertson as bad news for the Australian Publishing industry, saying it will cause many large publishers to “continue the process already begun of sacking staff and slashing their Australian lists, telling authors that despite their promise or their record that the market has vanished. To survive they will concentrate ever more on the books stocked by the discount department stores - Kmart, Big W and the like: celebrity titles, overseas mass-market hits, cookbooks”.

Some good news in the book retail world.

John Manigan reported in an article in Sunday’s Age that Melbourne’s Little Bookroom opened a new branch on Friday. It specialises in children’s books. One advantage the owners of the Little Bookroom think they have over online booksellers is that a parent can come in to their store and ask well informed staff what book is suitable for a certain age group. Expert knowledge is seen as a major advantage for small independent stores.

I have begun to worry over the past few years that most bookstores in Australia will close because of online trading, but as REDgroup’s debt seems to be the cause of Borders and Angus and Roberston’s problems, I can still hope that not all Australian bookstore owners are in similar financial trouble. I can’t blame their closure on online sales or ebooks.

My writing efforts last week.

In between reading many articles about Borders and Angus and Robertson, I did manage to do some editing/rewriting of my novella. I actually progressed further into the novella too. But this week I will be spending some time gathering all the information together for my next Divine article on how ebooks might affect the publishing industry. If you’re a publisher, feel free to send your thoughts to

My article about authors with a disability, featuring interviews with multi-award winning science fiction author KA Bedford and very close to being published writer Karen Tyrrell, should be up on the Divine website this Thursday.



Anthony J Langford said...

Ah yes I know Karen too..very close..but not quite there ..yet..

I think childrens and YA books should continue to do well, mainly for the cost factor. A new YA novel is still under 20 dollars. That's affordable. I still think we pay too much for new novels and that people will continue to online shop. God forbid we only end up with K-mart style choice.. They are terrible.
We need a new player who can manufacture books more cheaply and offer them at reasonable prices. It can be done elsewhere, so why not here?

Good luck with your writing and your article.

Graham Clements said...

Hi Anthony,

I think in five years, apart from a few independent bookstores with loyal customers, all we will be left with is the heavily discounted k-marts etc. And they will eventually quit selling books because of cheaper ebooks.

Richard Flanagan's article mentioned that author's whose books are heavily discounted by Amazon etc, only get 3-4% royalties from their publisher for those sales, instead of the 10% they get when sold in an Aussie bookstore.

Amazon does not pay US state sales taxes and Australian GST. They also do not have to pay for brick and mortar storefronts and sales staff.

If the exchange rate drops, which will probably happen when the Republicans get the presidency and control of both houses in two years time, then Amazon's book prices could rise a lot. But until then, it remains a very unfair market.

If we want Australian publishers to survive, we have to pay more.

If Angus and Roberston does go broke, it takes about 20 - 25% of the Australian book market, probably much of it will go overseas. Less bookstores means less opportunity to buy books, so their will be less books bought by Australians.

Australian publishers will obviously make less money, and therefore print less books.

So in the quest for cheaper books, Australians are contributing to the decline of their publishing industry. And ultimately their culture as overseas bookstores are not going to push Australian authored books as much as Australian bookstores do.