If you’re an independent bookseller in Australia at the moment, you probably feel better than anyone else in the industry does. Business is up, as a result of less competition following the collapse of Borders and Angus & Robertson. Book prices are down, as a result of the high Australian dollar and publishers capitulating to offshore competition and the weak economy, so your customers are getting much better value for money. There are even some signs that customers are rediscovering the special pleasures and benefits that only a physical bookshop can provide.

On the other hand, you’re probably worried that ebook sales are rising rapidly, and that you’re going to miss out on most of this market. You’re still hurting from offshore online booksellers who don’t have to pay GST or customs duties, or whose subsidised postal costs are unavailable to you. You also have to work harder than ever before, because lower average book prices mean you have to sell more books just to stand still. And you might also be worried about the growing rumours that Amazon is planning to set up in this country; if that comes to pass any time soon, it will represent an existential threat to your business.

If you’re a book buyer working for one of the big chains or department stores, you’re probably dreaming of a promotion to the meat products section. Or else you’ve got plans to treat books like salami.

If you’re a literary agent, you’re probably worried about where your next dollar is going to come from. Advances from publishers are coming down across the board (especially from the big houses, which is where most of your income comes from), so there’s less money for your authors and your business to survive on until each book is published. You’re anxious about ebook royalty rates, because you have to license them without knowing if they’re reasonable or not. And, given the overseas trend for the acquisition of world rights, you’re finding it harder to justify your existence as a local agent. It’s almost back-to-the-future time, when it makes more sense for a commercial Australian author to be published in London or New York than Melbourne or Sydney.

If you’re an author, your prospects depend on the areas you work in. Paradoxically, if your work is marketable, you have a good chance of getting a local publishing deal — because, in publishers’ eyes, there’s now a premium on local books that don’t or won’t suffer from offshore competition. But, for authors of mid-list books (that is, books with fair-to-middling commercial prospects), advances will be lower than they’ve been, and will trend lower. And authors with a poor or faltering track record of sales as reported by Bookscan will find it harder to find publishers prepared to back them.

If you’re a book printer, you’re struggling with unprecedented simultaneous problems. Print runs are down, reprints are down (and smaller), and value-adding cover embellishments are down. You can’t raise your prices, and publishers are demanding impossible levels of service. You’ve cut shifts, and you’ve retrenched staff. The one area that’s booming is digital — print-on-demand titles and short-run digital reprints — but it’s cannibalising your conventional business. In essence, you’re an Australian manufacturer facing global headwinds. How do you make a profit in this environment?

If you’re a book publisher, you’ve got the blues real bad. Turnover is down dramatically; in fact, it’s fallen over a cliff. The value of bookshop sales, as measured by Bookscan, dropped by 17.5% in December last year, compared with the same period in 2010. This already-alarming trend was being maintained earlier this year, but it has just started to accelerate: in the second week of February 2012, the value of book-trade sales was 22% lower than for the same week a year before; in the third week, the value was down 29%. The first three weeks combined were down by 21.5%. Publishers are hoping that this is the tail-end effect of the Borders and Angus & Robertson collapse. But what if it’s not?

Ebooks sales have risen significantly throughout this recent period, but they’re not even close in value to the loss of turnover from what will soon be called pbook sales. Throughout this period, most publishers’ costs have been either roughly the same as a year before, or slightly higher. You don’t need to be Einstein to work out the effect this has on profitability and cash flow.

If you’re a big publisher — a subsidiary of the multinational Big Six — you’re probably in a world of acute pain. You’re haemorrhaging money and missing budgets, morale is shot, and you’re under excruciating pressure from head office to fix the problem. But how do you cut costs in a major way without abandoning core functions? The only solution is commercial success: you have to have a runaway bestseller now, and the next month, and the month after that. But you can only achieve that, usually, if you pay a lot of money for it. And yet costs have to come down. The only way you can square this circle is to have immaculate judgment: you have to be right every time you place a big bet.

If you’re a small or medium-sized publisher, you face a smaller version of the same set of problems. At least you manage your own business, you have less at risk, and you’re more flexible. But it takes steady nerves, a disciplined approach, excellent staff, and — again — inspired judgment to cope. And look on the bright side: you won’t have to pay company tax for the foreseeable future.

Many Australian industries and businesses are facing the same sort of severe challenges — although the arts, in general, seem to be regarded as economically irrelevant and not worth the government’s time or trouble. Ultimately, these problems are due to the high dollar, the power of the mining lobby, the stupidity of the Reserve Bank, and the complete subservience of Canberra and the financial commentariat to the rule of the marketplace (except when industries are politically influential). What will it take to change this hands-off approach? Nothing short of mass unemployment seems likely to shake the faith.

*This story was originally published on Henry Rosenbloom’s blog.