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Somewhere, Johannes Gutenberg is crying. The inventor of movable type and the man who introduced printing to Europe would undoubtedly be sad today to learn that the product of his beloved revolutionary press is on its last legs.
Certainly the slow death of books has been written about before, but with Barnes & Noble (NYSE: BKS ) set to close up to a third of its bookstores over the next decade, it seems we're much closer to their demise than before.
A world without borders
Undoubtedly the success Amazon.com (NASDAQ: AMZN ) has achieved in fulfilling the role of bookseller plays a role in the decision, but B&N identified the growth of electronic books as the key reason behind its decision to accelerate store closings. The downfall of Borders Group was just the herald of what was to come.
We've seen this play out many times in a number of industries over the years, as e-commerce has invaded the purview of the bricks-and-mortar business model. Investors (myself included) thought Best Buy (NYSE: BBY ) would excel after the downfall of archrival Circuit City, but the gains quickly evaporated as it became apparent it was the growth of Internet sales, particularly at Amazon, that hastened the chain's death and not some more rudimentary issue with the chain's business. Best Buy itself now struggles to reshape itself to coexist with the online world.
Similarly, the record industry has become a quaint memory as music turned digital. While there's romance still attached to putting vinyl onto a record player and hearing all the pops and cracks, Apple's iTunes store and the myriad other digital download sites put that sort of audiophile into a nostalgic category all its own. One day we'll likely find that people like myself who find holding an actual book in their hands a wondrous and exciting feeling will be looked upon with the same pitying, knowing glances that accompany those we see flipping through vinyl records at some hippie's corner shop.
Rise of the machines
According to a Wall Street Journal article discussing Barnes & Noble's decision to cut its physical footprint, the largest publisher of consumer books, Bertelsmann's Random House division, says e-books account for 22% of its sales versus virtually zero just five years ago. And one rival says by next year e-books will make up half its sales, let alone what the industry will look like five years from now. Although B&N says it will have 450 to 500 stores in a decade, down from the 689 it currently operates, the actual number is likely to be a lot lower than that.
The bookseller opened no new stores in 2012 and just one in 2011. Though we may see one or two opened here and there in the future, gone are the days of its heady expansion along the way toward hitting a peak of 726 stores in 2008 as it opened 30 or more stores a year. Instead it will close 20 stores or so annually from now on to achieve a stable, more profitable size.
Even though Barnes & Noble had to confront the popularity of Amazon's Kindle e-book reader by introducing its own Nook, it served to hasten the position it finds itself in today. But that effort is faltering, too. Sales of the e-reader fell over the holiday shopping season while Amazon's Kindle Fire HD tablet was the single "best-selling, most gifted, and most wished for product" on the entire site, the e-commerce leader recently trumpeted. Cyber Monday was the biggest day ever for Kindle sales.
While I'd like to see some hard and fast numbers accompany such glowing accolades (Amazon is notably stingy with real sales data), it's clear that not only is Barnes & Noble threatened by its advance, but so is Apple, which saw demand for iPads stall in the latest quarter. Some of that was no doubt due to demand for the iPad Mini, but that device in itself was a response to the popularity of the Kindle (maybe we should mourn the death of the e-reader, too).
Fit to print
It would be a greatly diminished world if there were no books in it that we could actually hold in our hand, smell the pages after cracking open its binding for the first time, and run our fingers across the words before us. But it's also possible that rather than lamenting a future without printed books as Barnes & Noble move suggests is before us, Johannes Gutenberg would really say Jeff Bezos is actually heir to his noble legacy and is bringing the gift of reading to a much broader audience than ever before.
That is the real lesson of the printing press, even if today it's a virtual one.