On disappearing bookstores

One of my favorite telling details, in the ongoing story of the vanishing of New York’s bookstores, is from a 1926 review by Edmund Wilson of the then-new uptown location of the bookstore Brentano’s:

One finds in the new Brentano’s the same admirable features as in the old: the varied and enormous stock, the easily accessible galleries, the comprehensive foreign departments, with clerks who are at home in the languages of the literatures to which they are accredited, and the fascinating display, in the basement, of the tables of periodicals from all over the Western world.

Working in a bookstore will always be cool, but in Wilson’s day, it was apparently reasonable to expect the staff of a top-of-the-line bookstore to be conversant in multiple languages. No doubt there are a few such staff still in New York today—McNally Jackson has very smart-looking foreign-language sections—but I’m pretty sure that such standards long ago ceased to be de rigueur. An article in The Guardian today by Oliver Conroy charts the decline, more plainly, in numbers:

In 1950, Manhattan had 386 bookstores, according to Gothamist; by 2015, the number was down to 106. Now, according to a count by the city’s best-known bookstore, the Strand, there are fewer than 80.

“Why are New York’s bookstores disappearing?” Conroy wonders. As possible explanations he cites competition from Amazon, a secular decline in the habit of reading (which I’ve written about before), and spikes in retailers’ rents, which are sometimes caused by real estate speculators. All of these are likely contributing—indeed, McNally Jackson’s Soho store is seeing its rent hiked from $350,000 a year to $650,000—but there’s another cause that I suspect is more powerful.

The economist Steven E. Landsburg spells it out in Can You Outsmart an Economist, a new book that hides key economic ideas inside the Trojan horse of dad-friendly mind-benders. After challenging readers to explain such mysteries as why people stand still on escalators, Landsburg offers a puzzle relevant to bookstores: “Why doesn’t Sony wants its TVs sold at a discount?”

Sony is far from the only company that insists on what’s known as “resale price maintenance” or, less charitably, “vertical price-fixing.” Most big-ticket consumer electronics items in America can’t be bought cheaper from one retailer versus another. Want an Apple I-phone? Want a Fujifilm digital rangefinder? Try to shop around, and you’ll quickly discover that the prices offered by all retailers uncannily coincide. The practice is completely legal. Antitrust law won’t allow a manufacturer like Canon to coordinate its pricing decisions with a rival like Fujifilm, but Canon is free to dictate independently the prices of all its brand-new Canon goods. All it has to do is require retailers to sign pricing agreements and refuse to supply stock to any who fail to follow instructions.

As Landsburg points out, it isn’t obvious why a company like Sony should “care about the retail price of its TVs.” Sony, as a manufacturer, only gets paid the wholesale price of its TVs, after all. If a retailer is willing to lower the retail price, cutting into its own profit share, why should the manufacturer mind? In general, a manufacturer expects to sell more units when the retail price is lower, or so the simple math of the supply-and-demand curve predicts. Why then do so many of the most successful companies selling in America think different on this question?

Landsburg explains:

If retailers are free to set their own prices, you’ll walk into Best Buy, latch onto a salesperson, ask questions for an hour, spend another hour playing your favorite You Tube videos on all the different display models, ask a bunch more questions, and then go home and order from Amazon, where the price is lower. Best Buy will soon enough get tired of this and either stop carrying Sonys altogether or stop displaying them.

Or go out of business, one might add, though Landsburg doesn’t mention that alternative. If price is invariable, on the other hand, retailers, instead of competing on price, have to compete by offering better service. If, as a manufacturer, you take pride in the quality of what you make, you want customers to have a chance to become more knowledgeable. In the corporate world, in other words, it’s widely understood—it’s a commonplace—that the only way to create a network of pleasant, thriving retailers is to control pricing.

So if the economic principle is so obvious, you’re no doubt asking, then why haven’t the publishers of America instituted vertical price-fixing?

Maybe books are different? They don’t seem to be. For a quick proof, consider that “Germany, France, the Netherlands, Italy, and Spain allow the vertical price-fixing of books,” as I wrote in this 2012 blog post, reporting on a conference about the future of books and copyright, and bookstores in those countries are prospering. If you’re a reader and you’ve visited one of those countries recently, you’ve probably seen them and wept. Maybe, as I constantly worry, reading itself is in decline, but it seems that bookstores needn’t be in a decline quite as steep as that in America and the United Kingdom.

Note an important difference in the kind of argument used to justify the laws that allow (and in France, require) publishers to set retail prices. Laws are passed for the common good, not to ensure that the customers of a manufacturer have a pleasant retail experience. The rationale for laws allowing publishers to control their books’ prices, therefore, is public-spirited rather than hard-headed. As I wrote in 2012,

The nations that allow for “resale price maintenance” . . . in publishing justify the legal exception for three reasons. They believe that it brings a bookstore to every village, that it makes possible a wide selection of books in those bookstores, and that it enables less-popular books to be subsidized by more-popular ones. In other words, the argument for resale price maintenance rests largely on the contribution that local, independent bookstores make to cultural life.

Online bookstores like Amazon might seem to undermine these rationales, because an online bookstore can bring a wider variety of books to a broader geographic range of citizens than any network of brick-and-mortar bookstores can. There’s an objection to this objection, however—an asymmetry. If a combination of uncontrolled pricing and online bookselling drives a brick-and-mortar bookstore out of existence, the special benefit to consumer-citizens that was provided by that well-managed brick-and-mortar bookstore is destroyed. The reverse, however, is not true. That is, if publishers were to control control prices, thereby supporting brick-and-mortar stores, the market share of online booksellers might well shrink, but it’s improbable that all online booksellers would for that reason go out of business, and as long as even one reputable online bookseller remained, the boons of wide variety and wide geographic distribution would remain available. If you believe that these boons are worth preserving, you needn’t necessarily oppose allowing publishers to set the retail prices of their books. Amazon remains in business in France even though it’s against the law there for online booksellers to undersell their brick-and-mortar rivals.

It isn’t exactly a surprise that a number of social democratic European nations have held onto the belief that bookstores contribute to cultural life and deserve protection, while in America and the United Kingdom, where the legal and political elites tend to be more market-fundamentalist, the consensus seems to be that cheaper book prices are worth more than the affordances of a nice bookstore. None of these ideological preferences alters the underlying economics of price-setting, however. Publishers needn’t wait wait for politicians, or for abstract moral argumentation, if they believe that well-run brick-and-mortar stores are the most congenial environments for introducing their books to readers. And in my experience, especially if one is looking to discover new books of high literary quality, nothing surpasses handling, sniffing, and leafing through ink-on-paper volumes in a well-curated brick-and-mortar store.

If Penguin Random House (to name the mega-conglomerate that happens to be publishing me this August) wanted to adopt Sony’s corporate strategy on the pricing of its TVs, it could do so tomorrow. Alas, there would be enormous risks. Federal antitrust regulators would be watching skeptically, because American publishers did adopt that strategy with e-books, as a roundabout way of supporting the price of ink-on-paper books, and got caught colluding with one another, in violation of antitrust law, when they did so. In the end, the publishers did get their way in the pricing of e-books, as Mike Shatzkin and Robert Paris Riger explain in The Book Business, a new primer on the behind-the-scenes economics of publishing. The results were mixed. Amazon decided to “let the big publishers be hoisted with their own petard,” Shatzkin and Riger write. While publishers kept the retail price of their e-books high, Amazon cultivated an alternative supply of e-books that were in the public domain or by authors who were self-published or who had taken their copyrights back from their original publishers. “The big publisher share of the e-book market appears to have steadily diminished since agency pricing began,” Shatzkin and Riger report, but “publishers take some comfort in the fact that print book sales have stabilized.”

I’m skating perilously close to turning this into an endless blog post about economics and the future of literature, so I’ll cut it short: Brick-and-mortar bookstores remain invaluable for publishers hoping to reach consumers who discriminate for literary quality and are interested in new titles, and as best I can figure it, vertical price-fixing is the only way to support an ecosystem of brick-and-mortar bookstores in the long term. The first publisher to attempt vertical price-fixing, however, will risk being undersold by rivals who delay adopting the strategy and being attacked in some way by Amazon, who will see it as a threat to market share. There will also be a more general risk, if prices are set too high, of spurring consumers to defect to cheaper alternatives.

Further into the twilight

In June, in posts at the New Yorker website and here on this blog, I reported new statistics about the amount of time that the average American spends reading, as a way of updating my 2007 New Yorker article “Twilight of the Books,” which discussed America’s shift from a literate culture to one of secondary orality. A couple of days ago, to prepare for a radio interview on the topic, I decided to poke around online to see if I could update other statistics in my 2007 piece as well. Here are a few that were easy for me to find . . .

In 2007, I wrote that

According to the Department of Labor, American households spent an average of a hundred and sixty-three dollars on reading in 1995 and a hundred and twenty-six dollars in 2005.

That spending dipped to one hundred two dollars in 2013, though it recovered somewhat in 2016, when it reached one hundred eighteen dollars. These amounts are not adjusted for inflation; if they were, the decline would look even steeper. Here’s a graph from the Bureau of Labor Statistics of household spending on reading between 1984 and 2017, also not adjusted for inflation:

US household spending on reading between 1984 and 2017

One of the pegs for my 2007 article was the release that year of a somewhat dire report from the National Endowment for the Arts (NEA), titled To Read or Not to Read. The NEA has published several follow-up reports since then, including the more optimistic Reading on the Rise in 2008 and the more mundanely-titled U.S. Trends in Arts Attendance and Literary Reading: 2002-2017 in September 2018. The NEA defines “creative literature” as novels, short stories, plays, and poems, and it counts in that category electronic texts as well as those printed in ink on paper. In 2007, I reported that

In 1982, 56.9 per cent of Americans had read a work of creative literature in the previous twelve months. The proportion fell to fifty-four percent in 1992, and to 46.7 per cent in 2002.

The NEA subsequently reported that in 2008, the share of Americans saying they had read a work of creative literature in the preceding twelve months recovered slightly, to 50 percent, but the share fell again in 2012 to 47 percent, and then in 2015 to 43 percent. In 2017, the number was hovering at 44 percent.

What about non-fiction books, such as history, political punditry, and memoir? Over the past quarter century, the NEA has also regularly asked Americans whether they’ve read any book at all in the preceding year that wasn’t required for work or school, and it turns out that the decline here, too, has continued to be steady.

Pleasure reading in America, 1992-2017

It’s conceivable that the dip in household spending could be explained away by the price-cutting enforced by Amazon and by the internet’s decimation of the subscriber base of newspapers and magazines, but the recent declines in self-reported rates of reading look dismayingly consistent with the recent declines in average time spent reading. I’m afraid this is (still) a thing.

Re-reading reading: bonus round

Actually, bonus round and afterthought.

First, the afterthought. In a recent post for The New Yorker taking a second look at data about American reading habits, I wrote that “there’s a little bit of good news: the average American reader spent 1.39 hours reading in 2003, rising to 1.48 hours in 2016.” But I’m not so sure now that that’s good news. I imagined a bulwark of readers who were redoubling their devotion to literature in a time of crisis, but another explanation of the surge occurs to me. Maybe we’ve lost the fair-weather, lightweight readers, and all that’s left is a core who have always spent serious time on reading.

Now the bonus round. One of the graphs of reading habits that I made got left on the cutting-room floor, because it seemed to require more explanation than it offered enlightenment. But here on my personal blog, I’m free to bore you a little if I want to. So here we go . . .

In my post, I parsed the reading habits of Americans by age. But because the American Time Use Survey, the source for my data, has now lasted more than a decade, it’s also possible to follow the progress of age cohorts—that is, to compare the reading habits of people who were 25 to 34 years old between 2003 and 2006 with those of people who were 35 to 44 years old between 2013 and 2016, and so on. I did so with five cohorts, using averages of the data from 2003 to 2006 and from 2013 to 2016, with the following dispiriting results:

The youngest Americans in this graph, born in the 1980s, managed to increase their reading time a little over the course of the decade, but not by very much; it’s probably another case of what I refer to in my post as a dead-cat bounce. Every other age cohort read less at the end of the decade, except for the oldest, representing people born in the 1940s. That result may be untrustworthy, however, because my averages compare the 55-64-year-olds of 2003 to 2006 with those who were over 65 between 2013 and 2016, so there are late-septuagenarians, octogenarians, and nonagenarians in the mix, avidly reading and skewing the turquoise line higher than it deservedly should go.

Keep in mind that this graph is a little kludgier than the ones presented in and linked to in the original post (that’s why it got left on the cutting-room floor; sharp eyes will have noticed, for example, that the age cohorts that I’m comparing here overlap in birth years at the edges), but I think the overall pattern is suggestive enough for a blog on teh internet’s peripheries.