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Thursday, May 22, 2003

THE BOOK REPORT

Book Off chief rolls with the blows as status quo publishers complain


The Japanese may love a hardworking and unassuming company man who out of nowhere wins the Nobel Prize in Chemistry, but they are still wary of the true entrepreneur who is willing to take risks and shake up long-established ways of doing things.

Thus, Koichi Tanaka is idolized by the media while Book Off founder Takashi Sakamoto, far from being admired for discovering an untapped market for used copies of relatively new books and creating jobs for 10,000 people, is vilified for supposedly causing the six-year slump in sales of new books and magazines.

In long interviews with Kazuna Matsumoto and journalist Masayoshi Murano in "Book Off no Shinjitsu (The Truth about Book Off)," Nikkei BP, Sakamoto explains how he came to found Book Off and gives some of his thoughts on the state of the book business in Japan today.

In 1990 Sakamoto was at loose ends after spending several years opening a new shopping center anchored by Ito Yokodo. He was thinking of going abroad, or maybe on a zen retreat, when he happened to drive past a hole-in-the-wall shop near Yokohama that had customers streaming in and out. Curious, he stopped by and found it was a bookstore dealing in used books and comics. In a flash, he thought here was a business that he could do something with. Now Book Off has 701 branches (557 of which are franchises) and rings up annual sales of 21 billion yen.

Using the lessons learned from his earlier experiences running an audio shop and a piano refurbishing business, he settled on a simple formula: buy books for 10 percent of the original price and sell them for half-price. Books that linger on the shelves for three months, or for which there are more than five copies in storage, go to the 100 yen corner.

In the main, Sakamoto has viewed pre-existing used-book stores and regular bookstores as examples of how not to do things (like arranging bunko [small paperbacks] by publisher, apparently for convenience in returning unsold copies). Instead, he relies on the ideas of his student and part-time workers, and draws inspiration from retailers who are competitively responding to the actual needs of consumers, such as convenience stores, McDonald's, and the Matsumoto Kiyoshi drugstore chain (which is run by his interviewer here, Kazuna Matsumoto). His stores feel spacious and well-lit (he visited several Matsumoto Kiyoshi stores with a light-meter in hand) and generally open from 10 a.m. to midnight.

Sakamoto sees the cozy system of price maintenance (no discounting of new books) and easy returns as the main problem in the book business today. Bookstores simply put out new books on their shelves without gathering data on readers or setting prices based on demand -- or even trying to create demand. But with books' limited shelf time -- approximately 180 new titles are published each day -- and returns running at 40 to 50 percent, can publishers and bookstores really be said to be responding to the needs of their customers? Are they giving them the books they want to read at a price they want to pay?

Big publishers' efforts to increase the number of original titles in the lower-priced bunko and shinsho [large paperback] categories (as opposed to hardcover) is, Sakamoto points out, a way of circumventing price maintenance. But the profit margin is lower on such books, and 20,000 to 30,000 copies have to be sold to make any money. Since there aren't many titles that sell that well, publishers are, in effect, engaging in dumping on themselves.

Rather than blaming Book Off and similar chains -- or the latest scapegoat, public libraries -- Sakamoto believes publishers, bookstores and authors should be re-examining their 50-year-old ways and finding ways to adjust in a new age. In fact, he dreams of joining forces with a major bookstores like Kinokuniya to sell used and new books under the same roof, like Toyota's recent venture into selling used and new cars together. This would be a plus for consumers and a way to sell more books.

Meanwhile Nikkei Entertainment (May) reports that first printings of literary fiction have dropped to 1,000 or 2,000 copies. Aside from Harry Potter, fiction best sellers are limited to "brand" authors, such as Miyuki Miyabe and Haruki Murakami, winners of the Akutagawa or Naoki prizes, and mysteries from the two major "best 10" rankings compiled at yearend.

In a major blow to publishers dependent on manga sales, the loyalty of young readers to manga magazines is apparently waning, except for the megahits created when previously serialized manga are published in book form. Kodansha, for example, fell into the red last year for the first time since the war due to declining sales of comics for boys and other magazines. Nikkei Entertainment foresees consolidation in the book industry as smaller publishers find themselves unable to compete with the resources of larger publishing groups.

Recently, such groups have been attempting to counter the domestic slump by moving abroad. In January, Kodansha announced a joint venture with Random House, and late last year Shogakukan and Shueisha successfully launched an American edition of Shonen Jump.

So change seems certain in the troubled publishing world, but it remains to be seen how many individuals like Sakamoto will emerge who can see a new opportunity and dare to seize it.



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