A giant stalks the high street

A few years back, Internet soothsayers predicted that the end of the book was nigh. In the digital age, it was said, we won't need anything as primitive as a paperback. So it is not without a wry smile that those at the helm of the online bookselling industry now point out that book buying has never been so buoyant - thanks to the Internet.

"Buoyant" may not be quite the right word. Some would say that the bookselling landscape, both online and off, is now more like a battlefield. Behind the calm facade of bookshops, with their Seattle-style sofas and coffee bars, or the welcoming interface of the new online bookshops, a ferocious battle is being waged.

High-street booksellers, only recently recovered from the loss of the Net Book Agreement, now face the arrival of America's book giants with their discount megastores. Borders has already bought up Books etc and Barnes & Noble, the biggest book company in the world, is also said to be waiting to pounce. The high-street chains aren't yet feeling the squeeze from the Internet bookshops, but they soon will. It is predicted that online bookselling will be worth at least $2.2bn a year by 2002.

The online booksellers are also busy slugging it out between themselves. The latest American buccaneer to arrive in the British marketplace is Amazon.com, the Goliath of online bookshops, which has just bought up one of the Internet's many bookselling Davids - Bookpages, the UK's second- largest online bookshop. Amazon.com, which calls itself the "Earth's biggest bookstore", a claim Barnes & Noble threatened to contest in the courts, has a catalogue of 2.5 million titles and more than 2 million customers in 160 countries. Its founder, Jeff Bezos, a 34-year-old former Wall Street whiz-kid, is the darling of e-commerce. Although still not in profit, Amazon.com is valued at $2bn and has just reported sales of $87m for the first quarter of this year.

Buying up a British company was a shrewd move, as is their other acquisition of Telebook, Germany's biggest online bookshop. Nearly a quarter of Amazon.com's sales are to people outside the US, but until now buying from Europe has meant expensive postage and long waits for packages to arrive. With their new European operations, books will now arrive in days, not weeks. The European market is well worth chasing. We spend more on books per capita than Americans do, and although many fewer of us are online, we are catching up fast.

In America, where "deep discounting" is the norm, Amazon.com offers discounts of up to 40 per cent on thousands of books. Its arrival here could kick- start a British price war, in the high street and online. "We will be very aggressive about pricing in the future because we think that's the way to encourage people to try out the Internet for buying books," says Simon Murdoch, who founded Bookpages and will remain as managing director under Amazon.com.

At the moment, British Internet bookshops are still only selling modest amounts. "They're doing as much business as a small- to medium-sized bookstore," says Phil Dwyer of analysts Jupiter Communications. "That means they're selling around 7,000 a month, although the oldest and biggest, the Internet Bookshop, is now up to around 30,000."

"Amazon's arrival will change the landscape," says Ross Beadle, marketing manager of the Internet Bookshop in Oxford. "But we're not worried. The market is growing at 100 per cent per annum, so there's plenty of room for other booksellers in the high street and online."

In America, high-street chains were slow to get online. Their UK counterparts have been quicker off the mark - Blackwells, Waterstones and Dillons all have sites where customers can buy online. WH Smith has yet to make an appearance. However, discounting is going to be a big problem for them.

"It's very difficult for Waterstones or WH Smith to compete on the Web because they risk cannibalising their high street business if they sell cheaper on the Net," says Ross Beadle. "Our great advantage is a low-cost base with no shops to maintain." Discounting, he predicts, may be a universal problem for all high-street retailers online. "It's no coincidence that it is not HMV or Virgin selling CDs on the Web - it's Internet-only specialists like CD Zone and CD Now."

HMV Media, which now owns Waterstones and Dillons, agrees. "We do have to be careful what we do across our different channels," says Sally Taplin, HMV's new media manager. "But we're not a discounting chain - that's not what we do. Our brand values are elsewhere: in recommendations, authority and knowledge."

So while the high-street chains have the brand advantage - which, given people's anxiety about online shopping, is not to be underestimated - the Internet bookshops have their bargain bucket books. "The other huge advantage of buying online is the range," says Simon Murdoch. "You can find whatever you need, however wacky, with our databases. Even the biggest Dillons, like on Gower Street, has only got about 200,000 titles. We've got access to 1.2 million, even without Amazon.com".

Such a colossal catalogue, you might think, would have small independent booksellers panicking. But not so. "People love to handle books," says Stephen Ellcock, manager of Wordsworth Books, which has three shops in south London. "It's a physical pleasure. I can see how Internet book buying works for specialist books, but not on impulse buys. Here in London there are so many bookshops, you'd have to be extremely idle to order a bestseller like The God of Small Things on the Internet."

Internet bookshops say this is their greatest challenge: to make online book buying as "rich" an experience as wandering into your local shop and spending half an hour thumbing through whatever catches your eye. Amazon.com goes out of its way to lure customers in with special offers, interviews with authors and book suggestions. You can read summaries of every book, or find out what The New York Review of Books had to say about it.

Readers are also invited to send in their own reviews. Some are mind- blowingly boring theses sent in by Eng Lit students. Some are just pretentious. A review of Moby Dick starts: "The whale. Herman Melville's whale. The whale of Ahab's tortured monomania." Others echo Adrian Mole's classic verdict on Tolstoy: "Just read War and Peace. Quite good." An AOL user from Montana who has just finished Great Expectations: "This book was AWESOME!!!"

In Britain, there is one big problem that all online booksellers still face - UK copyright law. Last year, the Publishers Association issued a stern warning to British-based online shops about selling the US edition of books whose rights have been bought by different publishers in the UK. This means that, because books are not always released simultaneously on both sides of the Atlantic, anyone wanting to buy the latest John Grisham from a UK bookshop has to wait until the UK version comes out. This is, in many ways, ridiculous. There is nothing to stop people buying US editions from US-based shops such as Amazon.com. In theory, HM Customs could stop books coming through, but it would be quite a chore. Some British booksellers have suggested setting up US offices as a loophole.

"Publishers aren't automatically against Internet bookselling," says the PA's Ian Taylor. "But we do value our exclusive territorial rights very highly. In most cases, they are purchased at considerable cost. The advent of Internet bookselling will not prevent publishers defending them."

This is anathema to most Internet users. "Poor little darling UK book publishers - throwing tantrums just because they don't like a little online competition," said one of many angry letter-writers in .net magazine. "Wise up - bookselling is now an international market."

Booksellers are equally indignant, although none are willing to break the law. "We want to be able to sell any book to any customer," says HMV's Sally Taplin. "What's most frustrating is that the Publishers Association aren't doing much to stop Amazon from taking away our book market."

But it may, in fact, be Amazon.com's arrival here that brings the issue to a head. The copyright problem needs to be sorted out once and for all, says David Risher, Amazon's senior vice-president of marketing. "Look at the world in which those laws and rules were created, and look at the world in which we live today," he argues. "I think you inevitably come to the conclusion that something has to change. Publishers around the world are going to have to start thinking differently about how those rights are assigned."

"Publishers love us, really," says Simon Murdoch of Bookpages. "We're selling to people who weren't buying before. Sixty per cent of our sales are overseas - almost all sales publishers wouldn't have otherwise had." The merging of Amazon.com and Bookpages, he says, will also mean many more British books get exported to the US. "We are very good in Britain at writing and publishing books - we have 100,000 new publications every year, which is more prolific than any other country in the world. A key thing we can do is build on relationships with publishers here so we can promote British books in the States."

So while authors and publishers may do well out of the Internet, what about the high-street chains? Or "physical" bookshops, as they are now called. To predict their demise, say all the online sellers, would be as foolish as predicting the end of books. But they may be shaken up by the coming price wars. David Risher says the percentage of books sold online in 5-10 years is likely to be somewhere between 10 and 15 per cent. "I'm sure bookshops will exist," he says. "Absolutely sure. There will always be something very powerful and passion-invoking about going into a bookstore, flipping through a book and drinking a cup of coffee. I don't expect that's going to go anywhere soon."

Amazon.com

http://www.amazon.com

Bookpages

http://bookpages.co.uk

Blackwell's

http://www.blackwells.co.uk

Internet Book Shop

http://www.bookshop.co.uk

Waterstones

http://www.waterstones.co.uk

Dillons 9sells through The Bookpla@ce)

http://www.webworks.co.uk/

bookplace.htm

Barnes & Noble

http://www.barnesandnoble.com