Mergers and price wars squeeze Israel's book industry

Small publishers, bookshops seek niches in bid to survive.

By DANIEL KENNEMER
December 25, 2005 08:25
steimatzky 88 298

steimatzky 88 298. (photo credit: Ariel Jerozolimski)

 
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Mergers and price wars among Israeli book chain retailers and publishers will put the smaller of those businesses at greater risk of closure, Dun & Bradstreet Israel said last week. While currently only 14.5 percent of businesses in the literature sector are in danger of closure - against 19.2% in the Israeli economy as a whole - the number of publishers and bookshops at risk of extinction is set to rise 20% according to the Israeli branch of the business research company. The risk is primarily borne by small publishing houses not associated with industry leaders and independent bookshops that will have difficulty competing with the prices of the dominant book retailing chains, Steimatzky and Tzomet Sfarim. "The worthiness of publishing a book that will not succeed in penetrating one of the two will fall significantly," the study showed. The company conducted the study following the October purchase of Steimatzky by Markstone Capital Partners Fund. Steimatzky itself, in May, acquired a 49% interest in Keter Publishing. Tzomet Sfarim was founded by a group of publishing houses - Kinneret, Zmora Bitan, and Modan. There are currently roughly 550 bookstores in Israel, including 150 Steimatzky shops and 40 Tzomet Sfarim outlets. The volume of business in Israel's publishing sector - whether books, periodicals or audio-visual material - is about NIS 3.5 billion yearly, Dun & Bradstreet said. Publishers estimate that fully half of new Hebrew literature - an annual market totalling NIS 1b. - is sold in Steimatzky outlets. Tzomet Sfarim sells one out of every five such books, and the remaining 30% of the market is divided among smaller chains, such as Tamir and independents. "Independent bookshops that want to continue existing in a market in which book chains offer books at competitive prices will have to concentrate on specific niches - such as school books, professional literature, importing books from abroad - or expand their product range to include stationery, gifts, etc.," Dun & Bradstreet predicted. The Israeli book market also suffers from "import surplus," with an exceedingly varied offering of translated literature relative to the size of the Hebrew-reading population, the company said, though it believes the supply may be reduced down the road. Independent bookshops Independent booksellers are already concentrating on specific niches and more discerning book buyers in order to ensure their survival. "We choose our books 'with tweezers' in order to maintain a unique character," said the owner of one such shop on one of south Tel Aviv's up-and-coming main drags who asked not to be identified. Niches on which the shop concentrates range from poetry and political sciences, to women's literature, French philosophers in Hebrew translation, and books from Tel Aviv art galleries. "We also carry books that don't have much of a market these days, such as full libraries of the writings of Thomas Mann or Herman Hesse," she said. "We've found our particular audience with more personal service. ... They come to get additional information from us and find books that aren't always on the shelves or in other places." The bookshop's clientele, she noted, isn't limited to the neighborhood with customers coming from Jerusalem and Haifa and ordering by telephone from around the country in search of particular hard-to-find books. The owner added that publishers and distributors other than Steimatzky give discounts to her unintimidating bookshop on the sort of "unique books that we like but not the bestsellers because they know that these books won't sell in the big stores." She doesn't even carry many of the more popular titles. "If someone asks for the latest Harry Potter book, I tell them to go buy it at Steimatzky. I can't sell it for the same price that Steimatzky does because, as the book's distributor, Steimatzky gives itself a discount while selling it to independent bookstores at the regular catalogue price." There are no longer any independent bookshops that sell the same range of mainstream books as the big chains, she estimated. "All the independent stores have some sort of uniqueness or a particular niche." Dabbling in both At least two Jerusalem independent bookstores are trying to compete with the large chains by straddling the market, keeping one foot in the mainstream while plunging the other into the niche circuit. "We are not afraid of any competition," said Israel Daniel of Dani Books on the corner of Jaffa Street and Ezrat Yisrael, founded in 1956. The store has two parts: a more mainstream section selling new books and titles on the highly visible corner, and a section selling second-hand books and collectors' items further inside the pedestrianized sidestreet. "The good survive. We compete in terms of service, low prices and a high level of professionalism," he boasted. "I see being a big chain as a disadvantage. A big chain is heavy, with bulky mechanisms. We can put an emphasis on quality of service and the quality of our books. With every merger of chains, we don't feel any negative effect. In fact, we just keep succeeding more and more and our customers are happy, so we are doing something right." The manager of a new bookstore on the main street of one of Jerusalem's central neighborhoods - under new management for the past year and under its current owner for the past two - painted a less rosy picture. "There is hope, but the small shops are indeed in trouble, and that's nothing new." The shop sells mostly new titles, with bestsellers on display alongside more esoteric items and second-hand collectables. It tries to compete by offering 20% to 30% discounts on most new titles and what seems to be the bulk of its inventory. Nonetheless, clients will not feel like they've entered a discount Steimatzky. "We're trying to give the store a direction," the manager said. "For instance, we have six shelves of poetry, which you won't find even in the bigger Steimatzky stores, as well as belles lettres - not necessarily bestsellers." Nonetheless, he said it's the new books that sell. "We still consider ourselves a new business, and are giving it time. But if the present situation continues for much longer, we'll have to close within a year." Boutique publishers Specialization is also key in the publishing business, but even seemingly promising niches can be risky. Small publishers range from Mapa - specializing in domestic tourism - to Tel Aviv bookseller Tola'at Hasfarim's in-house operation, which publishes psychology literature. Resling, meanwhile, publishes Israeli cultural sciences and translations of foreign philosophers, primarily to a restricted list of subscribers. "We haven't seen any closures. The small publishers hook up with an exclusive distributor, who represents them for sales to the big chains," an industry source said, adding that smallness is an advantage in terms of manpower, costs and organizational flexibility. Some find sources of funding from beyond the marketplace, such as domestic academic institutions or European cultural foundations. One publisher with well-known problems - despite having hooked up with Lior Sharf, one of Israel's two dominant distributors - is Andalus Publishing, which specializes in Hebrew translations of Arabic-language authors. "Leftists may want these translations, but there's not enough of a reading culture [in Israel] to sustain them," the source said. Andalus's Yael Lerer was frank about the state of her enterprise. "We are not really surviving, but it has no relation to developments in the market. We're somewhat outside of the market. It's more a question of the general cultural mood." Nonetheless, Lerer sees signs of greater Israeli openness toward the cultures of less-than-friendly neighbors to the east, pointing to the mainstream success of Hebrew translations of Khaled Husseini's The Kite Runner and Reading Lolita in Tehran by Azar Nafisi. Those on the right wing, "particularly in the territories," also are interested in Andalus's books dealing with current affairs and the Israel-Arab conflict, she noted, although more culturally oriented titles fall by the wayside despite glowing critiques in the press. So, while Bab al-Shams - "a Nakba novel" by Elias Khoury - sold several thousand copies, the aesthetic prose of Hanan al-Sheikh sold only a few hundred. Emil Khoury's Yalo - a novel presenting the Lebanese civil war from the point of view of a militiaman who is also a member of an Aramaic-speaking Christian community in Beirut - has placed somewhere in the middle. Lerer said she cannot complain of any negative discrimination against the small publishers on the part of Steimatzky - where half of her sales are concentrated, following the general hierarchy of the Israeli book market - or by any other dominating chain. She is confident that if Andalus' titles were to be sold by a bigger publisher they would be even less successful. "We have access to the target audience, which is small, and we advertise on certain Websites and through mailing lists." Given the limited market, Andalus is planning to take a break from publishing "at least temporarily." Before that, however, it will release a batch of seven books in the near future, some of which only will be sold to those who sign up on Andalus' list of subscribers. Joining the ranks of boutique and niche publishers already selling through subscriptions is "an experiment," Lerer said, "something we want to try out. I don't know how it will go." Xargol Books, founded in 1998 as a small publisher of original Hebrew literature, provides a contrasting example of success, having quickly grown into a medium-sized publisher boasting 20 titles in 2005. "We are not in danger of closure - at least it doesn't seem to me that we are," said Xargol co-founder Yehonatan Nadav. "But it is true that there are problems in the market, like in the rest of the world. Perhaps a bit more here in Israel." One factor compounding Israeli book market's distress is the small size of the country's population, which makes readers of Hebrew-language literature scarce. There is a core population of around 100,000 people who regularly buy books in Hebrew, whether once a week or once every four months, Nadav said. "Proportionally, this is the same percentage as in other countries, but a country with a population of tens of millions will naturally have a much bigger and more varied market," he added. Relative to the population, Israel produces too many books as it is, he argued, leading to short shelf lives and tough, "unpleasant" competition. "But the crisis is worldwide," Nadav stressed. He estimated that sales of printed material - both books and periodicals - have been falling for more than a decade. "The ability of small publishers - perhaps of publishers generally - to make a living from the business continues to decline." And the big chains are not immune, Nadav said, calling the trend of mergers itself a "symptom of crisis." "If Steimatzky is so successful, why did they merge?" he asked.

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