Readers of PW, like everyone, everywhere, have followed the Covid-19 story for about a year now. Publishing moved quickly into crisis mode, facing bookstore closures and Amazon’s deprioritization of book shipments. PW had one of the first articles to tackle the pandemic, published online on Feb. 28, 2020: “What the New Coronavirus Means for Publishing.” The big issues at the time were book fair cancellations and supply chain interruptions. Industry coverage continued through the summer as numerous unexpected developments unfolded.
While still following the publishing trade press, a couple of issues that weren’t appearing front and center struck me. First was the rapid shift to working from home. Of course the reason for the shift, and the necessity, was obvious; what wasn’t obvious was the effect this would have on the nature of work over time.
Had the U.S. been able to wrestle the virus to the ground and send people back to their offices by late spring, it would probably have just been a blip. But when Penguin Random House announced that its offices would remain shut until “it’s safe and when it’s practical” to return, the blip became a trend—one that was mirrored across most white-collar industries. For many, central offices will not soon again be essential to the operation of their businesses. What could the impact be on publishing?
An obvious benefit is reducing the size of leased offices, which for the Big Five publishers, with their plush Manhattan headquarters, could bring significant savings. But over time, what will be more profound is the impact remote work will have on publishing workflows. Will books come to market more quickly or more slowly? Will the acquisitions process be smoother or more cumbersome? What can replace seasonal sales conferences? There are some exciting, if daunting, changes ahead.
We all followed Covid’s impact on booksellers as stores were forced to close to browsing and turned to curbside pickup and other alternatives, but again we hoped it was just a blip—that once the virus was at least partially under control stores could return to business as usual. But there were larger shifts taking place across retailing. Physical retail and online retail have taken dramatically different paths during the pandemic. Well-established chains like Brooks Brothers, GNC, J. Crew, and Neiman Marcus all made Chapter 11 filings, while Amazon, eBay, Target, and Walmart reported record sales.
E-commerce sales accounted for just over 11% of retail revenue in 2019, but they were 14.3% by last fall. The consultancy Accenture noted that online retail saw “10 years of growth in a matter of months.” The big question is whether the increased shift to e-commerce will hold once the pandemic subsides.
The mall sector has been under pressure for years because of the shift to online shopping and the demise of some large anchor tenants. One estimate suggests that more than half of all mall-based department stores will close by the end of 2021, stores that account for nearly one out of every three square feet in malls. As shopping malls lose their anchor stores, buyers have fewer reasons to visit.
Relatively few independent booksellers are located in malls, but Barnes & Noble is heavily dependent on healthy malls for many of its 600-plus locations. CEO James Daunt projected that B&N might see a 20% sales drop in 2020. What are the chain’s prospects for 2021?
What is the message here for the publishing industry, where roughly three-quarters of book sales have been stuck in bricks-and-mortar? How should this impact publisher marketing strategies moving forward?
Another perspective on book publishing can be found by looking out toward other entertainment-oriented industries. Gaming, streaming video, and streaming music companies all had significant subscriber, revenue, and engagement growth in 2020. What do these three segments have in common? They are for the most part companies with subscription-based business models. Homebound consumers have shifted to online discovery and consumption of this digital content, behavior that may continue beyond the pandemic.
In early December, WarnerMedia announced that it will release all of its 2021 films simultaneously in theaters and on its streaming service, HBO Max. I think of movie theaters the way I think of bookstores. If a studio wants a film release to be an event, it needs theaters. If a publisher is launching a blockbuster bestseller, it needs bookstores. Or it has up until now. How does Covid-19 change that equation?
And so what will 2021 have in store for book publishing? Though the sudden pandemic-driven shifts may slow or revert when we reach herd immunity, it appears likely that important underlying changes will persist and continue to evolve, driving significant adaptations across the industry.
Note: This column is drawn from “Covid-19 and Book Publishing: Impacts and Insights for 2021,” a report by McIlroy, Cliff Guren, and Steve Sieck. The report is available for free from thefutureofpublishing.com.
Thad McIlroy is an electronic publishing analyst and author, based on the West Coast and at his website, The Future of Publishing. He is a founding partner of Publishing Technology Partners.