YouTube Video Summary: The Decline of Bookstores and the Future of Publishing
This video transcript features a discussion with Lee Dong-yeol, CEO of PitchDeck, about the severe decline of the bookstore industry in South Korea. The conversation delves into the historical context, current statistics, and underlying reasons for this downturn, ultimately focusing on the precarious financial situation of a specific bookstore chain.
Main Points
- Widespread Bookstore Closures: The segment begins by highlighting the recent wave of bookstore bankruptcies, including "Bookstrip," which faced closure this month [2:07]. It's noted that not just small neighborhood stores, but even historically significant regional bookstores like "Daemian Bookstore" in Gangwon Province and "Yeonsinnae Mungo" have closed after decades of operation [2:37]. Wholesalers like "Songin Seojuk" and "Bookplus" have also gone bankrupt [3:08].
- Historical Context of Bookstores: The golden age of bookstores in Korea is described, starting with the establishment of "Jongno Seojuk" in 1907 and the rise of large-scale bookstores like Kyobo and Yeongpoong in the early 2000s [3:08]. This era marked the peak for large chain bookstores, while smaller regional stores began to decline [3:39].
- Declining Book Consumption: Data shows a stark contrast between the increase in the number of publishers (200% growth) and the decrease in the number of bookstores. More importantly, the number of books published annually has significantly decreased, indicating a shrinking market and increased competition among publishers [4:10].
- Shift to Online and E-books: The rise of online bookstores like Yes24 and Aladin in the mid-2000s marked the second phase, followed by the current era where e-commerce giants like Coupang are entering the market [6:12, 6:42]. Survey data shows Coupang surprisingly ranks higher than Yeongpoong Bookstore in paper book purchases [7:13]. E-book purchases also show a competitive landscape with platforms like Millie's Library, RidiBooks, and even Google Play Store [7:45].
- Competition from Other Media: The primary reason for declining readership is the overwhelming competition from other forms of entertainment. Reading has fallen significantly in popularity as a hobby, replaced by gaming, exercise, and video streaming (OTT) [15:34]. The average work hours have decreased, but the leisure time has been redirected towards activities like eating out, watching OTT content, and exercising, rather than reading [17:38].
- Coupang's Dominance: Coupang has become a formidable force in online retail, holding a significant share of the online shopping market and experiencing rapid growth in its logistics services [26:23]. Its entry into book distribution is impacting traditional online bookstores like Yes24 and Aladin, as Coupang appeals to the younger demographic with its fast delivery and broad product selection [28:00].
- Bookstore Business Model Challenges: The financial structure of bookstores is examined, revealing low profit margins, particularly for retailers (around 25-32% gross profit margin) compared to publishers (around 52%) [29:31]. This thin margin makes them vulnerable to increased costs like rent and labor.
- Yeongpoong Bookstore's Financial Peril: A significant portion of the discussion is dedicated to Yeongpoong Bookstore's dire financial state. It faces a severe liquidity crisis due to its extended payment terms to publishers (6 months), insufficient cash reserves, and high operating costs [33:06, 37:14]. The speaker argues that if publishers shorten payment terms, Yeongpoong could face bankruptcy [37:44]. The company's reliance on supplier credit (holding payments for books for extended periods) is highlighted as a precarious funding mechanism [42:24].
- Owner's Will and the Future: The survival of companies like Yeongpoong is ultimately linked to the owner's willingness to inject capital. Without this, and given the declining book market, the future looks bleak. The comparison to declining industries like film cameras and hanbok is made, suggesting that bookstores might be facing a similar obsolescence unless a fundamental shift occurs [55:14].
Key Takeaways
- The bookstore industry is in a severe crisis due to declining readership, increased competition from digital media, and the rise of e-commerce giants.
- Reader habits have shifted dramatically, with younger generations prioritizing other forms of entertainment and information consumption over traditional reading.
- Financial models of bookstores are fragile, with low profit margins making them susceptible to cost increases and payment term changes.
- Yeongpoong Bookstore is facing an immediate liquidity crisis and is at high risk of bankruptcy if payment terms are shortened or sales decline further.
- The owner's commitment and willingness to invest are crucial for the survival of businesses like Yeongpoong, but the overall market trend is not favorable.
- The discussion questions the societal pressure to read books when other engaging and accessible forms of information and entertainment exist.
Actionable Insights
- For consumers: Consider supporting local or independent bookstores if you value them, but be aware of the broader industry challenges.
- For publishers and distributors: Re-evaluate payment terms and credit extended to struggling retailers. Diversify distribution channels and explore new business models.
- For investors/observers: Yeongpoong Bookstore presents a high-risk investment opportunity due to its precarious financial situation.