Books do furnish a room

I don't know exactly how many books I possess. It's not the sort of thing you keep an accurate count of, but I reckon that it must be in the order of a thousand or more, and that's just the ones I can claim to have bought. I've probably read 95% of them, which works out at about one a fortnight since I graduated from Biggles and Rosemary Sutcliffe. My wife must have a similar number, and the kids probably have about 120 each, so the house may contain 2,500 or so. That's not quite a bookshop but it is an extensive section of one.

I was prompted to this quick calculation by visiting a couple of bookshops in Central London yesterday, and by the coincidental revelation of Amazon's exploitation of the tax rules for selling books and e-books. While I think Amazon's business model has much to tell us about modern capitalism and future trends, I'm not about to embark upon a nostalgic lament for the charming world of bookshops that smelt of mouse droppings.

I am, as the police reports would say, a habitual frequenter of bookshops, but I am drawn there by the presence of books, not by the musty atmosphere. Yesterday I went in search of Karl Polanyi's The Great Transformation, a book I had long intended to read and had now been spurred to purchase by a reference in Patrick Keiller's exhibition, The Robinson Institute, at Tate Britain.

As the subject is economic and social history, I decided to pop into the Waterstone's branch at the LSE, just behind The Aldwych. Drawing a blank, the affable chaps behind the counter told me they regularly had problems sourcing the book as it was a small publisher with an infrequent print run. They then checked their system, a mainframe application that looked to be of late-80s vintage, which revealed there was a single copy at the Gower Street branch, "but they may not have it now as the data is always 24 hours out of date" (overnight batch processing lives on).

Having wandered up through Bloomsbury, I climbed to the 2nd floor of the shop where the economics and history sections are. I couldn't find the book there either. I then had to wait 15 minutes to speak to the lone assistant. This was because most enquiries seemed to result in her wandering off to trawl the entire building, which meant the throughput was about one customer every 7 minutes. While loitering, I overheard two women at the open door of one of the poky offices at the back talking about shoes. Their voices (posh loud) and dress (no regulation black polo-shirt) made it clear these were management and above getting their hands soiled serving customers.

When I eventually got to the assistant, she checked her antique terminal and told that me the book might be on the floor above. I went up. I couldn't find it (the book that is, not the floor). The assistant there said it should be downstairs. I explained my recent history from the LSE onwards. She disappeared for 10 minutes. On her return, she confessed she'd checked downstairs and couldn't find it and suggested I try the LSE branch. She hadn't taken in a single word I'd said to her, though she had gone to a lot of trouble on my behalf.

It occurred to me that what I had experienced was not everyday frustration but a carefully designed retail experience in which well-meaning ineptness is part of the charm. With the appointment of James Daunt to run Waterstone's, it looks like they see their future as purveyors of bibliophile heritage, preserving the funny old ways of traditional booksellers as a nationwide brand. They can't compete with Amazon on price, e-books are eating away at the p-book share, and the mass-market has long been lost to supermarkets and airport and station outlets. Their future looks like Hugh Grant in Notting Hill, but replicated to every town in the land (or the ones with a sufficiently middle-class high street).

Amazon, by contrast, is a much more straightforward type of enterprise. I've never seen it as particularly zeitgeisty (the technology has long been ropey), but as a very traditional business maximising profits through three key strategies, all of which are central to modern capitalism. First, it uses its market strength to push down on the wholesale price of publishers, much as supermarkets do with farmers. It applies exactly the same strategy to other products. Second, it minimises its tax, largely through offshoring (or "out-of-stateing" in the US). As Jeff Bezos has said "It sounds counterintuitive, but physical location is very important for the success of a virtual business". There is, of course, nothing counterintuitive about this. Third, it pushes down on labour costs, even to the point of recruiting robots for its fulfilment centres.

While it hasn't exhausted any of these strategies yet, the rate of profit growth attributable to them will start to decline soon, if it hasn't already. Future medium-term profit growth in the "stuff you can read" sector will presumably depend on e-books. This will allow further reductions in cost, and thus fatter margins, though I don't think we'll see the one-off fillip of readers re-buying their existing books as we did with CDs for music.

Amazon also employs a fourth strategy, which is specific to e-commerce, whereby the expertise once provided by knowledgeable staff is now crowdsourced, in that you rely on product evaluations provided by other consumers for free. Physical booksellers can provide a credible alternative to this, but it is a premium service that will only appeal to specialist buyers or those who see it as a positional good in itself.

I don't think physical booksellers are doomed, though there will be many fewer of them in the future. The physical book is returning to its earlier form as a luxury product rather than a mass-market commodity. More and more of the books to be found in bookshops are hardback, large, glossy and expensive. The fiction section, particularly genre fiction, which is the main fare of e-books, looks to be shrinking, its space taken over by the triumphalist lifestyle sections (travel, cookery, self-help etc), "serious" gift books (history, biography, photography etc), and the now acceptable graphic novel.

The e-book is not the first attempt to introduce disposability to the market for reading matter. From chapbooks to paperbacks, the low-cost book has always been with us, but even the most ephemeral has ended up as decoration for our walls. With the e-book we face the real prospect of there being no such trace, no second-hand. The passing on of a good read, that tangible recommendation, is not the same as an online "like" or tweet. The possession of books has always been an indicator of the social status of a home, which is partly why we display them so prominently. The message has been: "I like books because I'm sophisticated"; the future message may be subtly different: "I have books because they're expensive".