This fall and winter Shaman Drum Bookshop went into a steep financial decline. Text book sales declined 510K from last year. We managed to cut our payroll and other operating expenses by 80K, but that didn’t begin to cover our losses.
There was some good news. Our trade (general interest) book
sales on the first floor were actually up in December from last year by 10%,
which is extraordinary given what many other retailers were reporting. And trades
sales in January were up 15%. Still, this hardly compensates for our losses in
The evaporation of our position has been astonishingly
swift. We had been holding relatively
even financially until September. Suddenly we’ve moved into the red.
I sort of saw this coming.
In July, 2004, the National Endowment for the Arts published
Reading At Risk, a report detailing
the decline of literary reading in America.
This was followed by a second report in November, 2007, To Read or Not to Read: A Question of National Consequence,
chronicling “recent declines in voluntary reading and test scores alike,
exposing trends that have severe consequences for American society.”
Around the same time the NEA reports came out, I audited a
UM course on the History of the Book in which I learned that every 500 years a
major technological shift occurs. Five centuries ago Gutenberg invented (or
perfected) movable type. Now, with the digitization of print, we find
ourselves in the middle of another sea change. I recall wondering what the new
business model for bookstores would look like, and I worried that our industry
would suffer from the same chaos roiling the music world.
And a few years ago the University Library held a conference
on Digitization. I was invited to be a panelist and I defended the traditional
book as still the most efficient
technology for delivering information. I also said I was worried about
collateral damage during our forward march into the joyous digitized future.
I’m no Luddite, but everyone there seemed to me to be hypnotized by the new
technology. Of course, it is dazzling.
In my own retail neighborhood I’ve watched the collapse of
Schoolkids Records, an awesome independent record store, due largely to the
impact of digitization, and it looks like I’ve got a front row seat on another
sad decline. Borders Bookshop, which I think at one time was the best general
interest book chain in the English speaking world, is a shadow of its former
self and seems headed for oblivion.<
Early this fall I told a group of booksellers that our
industry (including the publishing sector) had a business model that didn’t
work very well for any of us. A few of the booksellers said they didn’t think
this was true, the others were silent.
Two weeks ago I met again with booksellers and publishers
from around the country at the American Bookseller Association’s Winter
Institute. Now everyone seems to agree that the book business is in trouble.
The disintermediation resulting from customers migrating to the Internet
coupled with the frightening economic crisis makes it terribly difficult for us
to see a way forward.
The crisis at Shaman Drum Bookshop is due to our loss of
textbook sales. This fall the university introduced a program which allows
professors to list their textbooks online, which effectively drives a
significant number of students to the Internet. It is impossible for local
textbook stores to compete under these circumstances. I don’t think there are
any villains here (well, maybe some greedy textbook publishers), but this is
one of the consequences of the university’s policy.
The efficiencies of Amazon — even given the clever algorithms
that bring us “if you like this, you’ll
like that” are no substitute for browsing in a bookshop.
In 1942 the economist Joseph A. Schumpeter said, “Creative
Destruction is the essential fact about capitalism. It is what capitalism
consists in and what every capitalist concern has got to live in….” This is our system and Schumpeter is
undoubtedly correct, but there is a countervailing fact that is equally true:
Stability is essential for a civilized society. The second truth is what I’ve
learned selling books in this community for forty years, being married for
thirty-seven years and raising two children.
It also seems to me that if we are witnessing the collapse
of Big Capitalism, the way to revitalize the economy is through supporting
locally owned businesses. If you agree, please lend your good energy to Think Local First, the movement supporting locally owned independent businesses in Ann
Arbor and Washtenaw
What’s To Be Done?
Shis haman Drum Bookshop is around 100 steps from the
central campus of the University of Michigan,
one of the top ten public universities in the world. I believe the university
community and Ann Arbor citizens
who love literature need a first rate browsing store for books in the
humanities in the university neighborhood. This is what we aspire to be.
However, as I mentioned earlier, it has been clear to me for
a while now that the current model doesn’t work. In March 2008 I announced my
wish to give the bookshop to the
community. I hired Bob Hart, a recently retired Episcopal priest, to research
the feasibility of forming a nonprofit bookshop. We wrote up a careful business
plan, met with a good lawyer, filled out the IRS
forms and submitted our papers in July. In November the IRS
notified us that our application was still under consideration. The review is
taking longer because a for-profit business is a component of the project.
The new entity is called the Great Lakes Literary Arts Center,
whose mission is “to
develop excellence in the literary arts by nurturing creative writing,
providing quality literature and fostering a literate public.” We’re already
hosting two classes in the store. If we do not survive this downturn, I hope
the Great Lakes Literary Art Center will continue under other auspices. It is a good idea.
Last week I consulted a lawyer and a financial advisor. They
both felt the store could manage the debt load with some temporary help from
our friends and a bit of luck. My landlord, who is a decent man, will allow us
to keep our first floor space, vacating only the second floor of the building.
The issue now is this: After we scale back the store, do we
still have a viable business? I asked my business manager to crunch the numbers
based on our projected sales for the next two years. He reported back that we
do not have a sustainable business model. Given our current sales projections,
we will continue to lose money.
This means very simply that we would need additional revenue
sources/streams to make the store viable.
For many booksellers — certainly including me — this is our
darkest hour. I know this sounds melodramatic, but that’s the way it feels to
me in the middle of the night when I’m trying to figure out how I can possibly
make this work.
If I can’t figure this out, the most realistic and
responsible thing I can do is shut the store down and move on.
The question then becomes: What is the next version of a
bookstore? This is something worth thinking about carefully. Like you, I want
to live in a community that has many good bookshops. But then I’ve been spoiled
living in Ann Arbor.
Whatever happens, I am filled with a sense of gratitude for
having been able to sell books in this town for the past 29 years. It’s been absolutely wonderful.
— Shaman Drum Owner, Karl Pohrt.
This letter first appeared in the Ann Arbor Chronicle on February
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