Waterstone's and publishers thrown a lifeline by Mamut takeover

"A bookstore is one of the only pieces of evidence we have that people are still thinking."

Comedian Jerry Seinfield has a point, although the importance of physical book stores to the publishing industry goes a lot deeper than this smart quip.

Executives at independent book publisher Faber & Faber are cheering the news this weekend that the bookseller, Waterstone's, has escaped potential closure following the £53m acquisition by the Russian billionaire, Alexander Mamut.

Faber & Faber's chief executive, Stephen Page, said the purchase has secured a "crucial platform" for its writers

May has proved a crucial month for booksellers, and with the Hay Literary Festival, sponsored by The Telegraph, starting this week there is a positive mood building. In the US last week, John Malone's Liberty Media offered to buy Barnes & Noble, the struggling US book chain, for $1bn (£616m) in an unexpected deal.

"Waterstone's is our core market and it is the only specialist book seller with a presence in most UK cities," says Page. "We are celebrating."

If Waterstone's had been forced to shut down, Page says, writers of history and novels by little-known authors would get limited exposure in physical stores, if any at all.

"Physical stores allow you to browse, meander and discover new writers," says Page, in contrast to Amazon which focuses on promoting its best sellers. "People are more impulsive online, in the way iTunes is more impulsive than a record store."

"Bricks and mortar retailers are clearly the shop window," said Tom Weldon, Penguin's UK chief executive. "All publishers have an interest in the financial security of Waterstone's. And publishers need to help Waterstone's in any way they can. This may be through author events, while booksellers need to focus on better embracing their local communities."

Events, author signings and a selection of titles specific to the location are all ways of becoming more local.

It was the appeal of selling to local communities which prompted Mamut - who owns 6pc of HMV Group and whose friends include Chelsea football club owner, Roman Abramovich, to install Daunt Books founder, James Daunt, as managing director and refocus Waterstone's as a local community bookshop.

Page says Daunt is well-known for his "good customer service" and a "skilful selection and presentation of books". He is also recognised for successfully selling to local communities. Page adds that Waterstone's still faces the numerous challenges of competing in an online environment dominated by Amazon.

"Waterstone's has struggled to compete online, but it has a loyal client base. Going forward, it needs to play more to its strengths," he says, citing its strength as a specialist player.

A greater digital presence for Waterstone's is necessary and some argue that it needs to work more closely with Amazon – although it has tried this before.

Amazon has clearly made impressive – and rapid - progress. Last week it announced that it is now selling more eBooks than it is selling print editions in the US, a mere four years after launching the Kindle in America.

In the UK, after just nine months since the Kindle's launch, it emerged that Amazon now sells 242 ebooks for every 100 hardbacks.

However, publishers' revenues are still principally from physical books.

At both Penguin and Faber & Faber, for example, ebook sales account for just 7pc of overall revenues. The growth, though, has been rapid, Faber & Faber saying that digital revenues were just 1pc of total sales before Christmas but had now escalated as Amazon's Kindle proved a popular festive gift.

Penguin expects ebooks to account for 20pc of its total revenues within the next three years. With one in 10 people now owning a tablet device, not to mention the numerous iPhone owners who download books, it is not simply the Kindle that is driving sales.

The rise of digital has also enabled publishers to market their titles in a more effective way.

Just five years ago, says Page, books were marketed purely to the trade. Faber & Faber has restructured its marketing department and is now 70pc focused on marketing straight to the consumer through social media.

"Our marketing team have niche conversations through Twitter and Facebook," says Page. The digital environment has also seen Faber & Faber create biographical films of authors.

"To publicise a book by Nicky Wire of Manic Street Preachers, we shot a film of him which we embedded into the retailers' websites," he said.

In an attempt not to become too reliant on the high street and devise new revenue streams, Faber & Faber is launching a number of initiatives. One is The Faber Academy, a school of creative writing based at its offices, offering three-month and six-month crash courses.

"We could use the internet to offer courses.There is the obvious potential with Skype," Page said.

Weldon's team at Penguin are experimenting with iPhone and iPad apps. He has hired a team of five interactive designers and is particularly focused on adapting children's characters for smartphones and tablets - such as Spot the Dog and Peppa Pig.

The latest is a paid-for app called Jamie's Great Britain, which will include restaurant and food shop recommendations from Jamie Oliver. "This is a growing area, although one has to be careful as the pricing model is pretty competitive," says Weldon.

Both Penguin and Faber & Faber acknowledge that these additional revenue streams are unlikely to become dominant and that there will be a market for all formats. Stephen Fry's Fry Chronicles becoming a number one best seller across five formats is just one example.

"Physical books are here to stay," says Weldon. "The appeal of the physical object is still incredibly alluring. However, we are having to constantly emphasise the physical quality of the book to make it appealing."

And some have other reasons why physical is here for good. "Kindle's are useless for bragging about your intellect while lounging by the pool on holiday," a well-known media executive admits.

The demand for ebooks will continue to grow at a phenomenal rate and this will bring its own challenges. Piracy is already emerging as one.

Research by media law firm Wiggin has found that one in eight women over the age of 35 who use a tablet or ebook reader admit that they have downloaded unauthorised copies of ebooks

Alexander Ross, a partner at Wiggin, said : "Internet piracy among women has always been a rarity but the popularity of ebooks looks to have changed that. And with iPads and other devices for reading ebooks becoming increasingly popular, it is impossible not to conclude that the publishing industry could soon be facing a problem on a scale approaching that which confronts the music and film industries."

But Penguin's Weldon is positive, citing digital opportunities rather than risk.

"As a publisher, I feel incredibly optimistic. In an age of so much change, book publishers have never been so important," he says.