23 January 2011

The Future of Books

If this story is any indication, that future is going to be digital:

Sometime in the not-so-distant future, when we are looking for the moment when the book publishing business was finally and fully transformed, we’ll surely point to this month in 2011. Of course, given what’s happened since Amazon launched the Kindle and Apple made the iPad an overwhelming success, it’s no surprise that Barnes and Noble would make some changes in the organization.
The fact that the bookseller reorganized its buying operations to eliminate 45-50 positions while trying to keep every detail quiet suggests there’s a real shift going on in buying habits. The lost positions at B&N primarily deal with the persons who choose which books go into the stores. The company says they’re being replaced with people on the digital side.

Borders is dead, and Barnes & Noble is next.  If they survive, they will likely end up looking like Amazon, and may only have stores that exist as boutiques.  Physical books will still exist, IP will see to that, but their future will look different.  I would imagine that the most successful booksellers will be ones that specialize in used books, particularly those that are out-of-print.  Of course, there will always be those who want physical books, so they will go out of their way to buy new releases in hardcover.  Most booksellers should be able to offer new releases.  To that end, Half Price Books seems poised to take the lead in that area.

As such, I would short Borders and Barnes & Noble, go long on Amazon, and wait for Half Price Books’ IPO.  I’d also buy an eReader and wait for the pirates to get ahold of books.

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