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Thursday, January 09, 2003
 Book Biz mugged by burgeoning DVD sales
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Message Text: Publishers have a formidable new adversary in their competition for consumer dollars: it looks like a book, costs less than a trade paperback, and is piled to the rafters at many of the same retail outlets. It's the DVD, an enormous new revenue source for the movie biz in the midst of a rocky holiday shopping season for publishers. While DVD sales were booming, publishers were licking their wounds as the biggest brand name authors -- Tom Clancy, Stephen King and Michael Crichton -- performed below expectations.

The Assn. of American Publishers has yet to compile its report on book sales in December, a month when bookstore traffic picks up, generating increased sales velocity and volume for publishers. But a Publishers Weekly poll of booksellers found that holiday sales ranged from flat to down 11%, echoing complaints throughout the book biz that consumer spending was flagging in all sectors.

It's not clear that overall holiday retail trends were quite so dire, however. On Dec. 26, citing the International Council of Shopping Centers, reported that "more U.S. dollars were spent buying holiday gifts this year than in any previous year since the birth of Jesus Christ."

DVDs were sailing out of stores -- the "Spider-Man" DVD generated $144.4 million in its first weekend on sale in early November and box office was sharply up, driven by holiday tentpoles like "The Lord of the Rings: The Two Towers" and "Harry Potter and the Chamber of Secrets."

In other words, consumers were spending money; they just weren't buying quite so many books.

DVDs are just the latest threat to book publishers from a proliferating array of media choices -- including the 500-channel TV universe and the booming video game industry. None of these technologies has yet sounded the death knell for books. The publishing industry generated $25 billion in 2001, and that figure isn't likely to change much when 2002 book sales are finally tabulated.

But publishers are finding it increasingly hard to make their voices heard in a crowded media market.

In his annual Christmas memo to Random House staff, CEO Peter Olson announced that in the face of "ongoing weakness in the consumer marketplace," he had committed $100 million to marketing support for the publisher's 2003 list. "This is consistent with the dollar amount budgeted in healthier economic times," Olson said.

But $100 million, which is roughly what it would cost to market just four studio tentpoles, must be spread across Random's annual output of 3,500 frontlist titles, and an active backlist of 23,000 titles.

Books don't lend themselves quite so well to the rat-a-tat marketing campaigns used to promote Hollywood blockbusters.

There's a billboard advertising the new Michael Crichton novel on Sunset Boulevard. But try to read the logline ("You won't see them until they swarm and you become prey") and you risk driving off the road.

Publishers often rely on other media and external events to provide what their marketing dollars can't afford. One category of books that's flourishing is movie tie-ins. Broadway Books has shipped 400,000 copies of the "Catch Me If You Can" trade paperback tie-in.

And Bob Woodward's "Bush At War," has gotten a lift from the war posture of the Bush administration. Defying the marketplace logic of most books and movies, which gradually fade from view after their first week in the marketplace, Woodward's tome has seen its sales grow from week to week. Simon & Schuster has now shipped 750,000 copies to stores.

Should the country go to war, however, publishers will have a new set of concerns.

"We could have a tough winter ahead of us," Random House spokesman Stuart Applebaum said. "The last war in '91 was tough on the book economy if for no other reason than it knocked out our ability to promote our books on the broadcast media."

As one editor puts it, "What's better entertainment, watching a smart bomb go into a hospital and blowing it to pieces or reading a (New York Times columnist) Tom Friedman book on the Middle East?"
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