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It is a scary time for the writing industry. With big publishing houses cutting back and bookstore giants going under left and right, the times they are a changing. There is an issue that many literary types are contemplating now. If bookstores are defunct how will readers learn about new books and new authors? Imagine it, you're perusing the book store for your favorite author and next to their book a cover catches your eye. Something about the title or the cover art and you can’t help but pick it up and read the back cover, and before you know it your arms are stacked with books you didn’t come for but left with anyway. Or sometimes you might head to specialty displays and best seller sections. Bookstores know what to sell and how to sell it, they will take your favorite author and group him with like authors all to sell more books to you.
If bookstores go away who will do this? So I am posing the question how do we the younger generation find new literature? What will new authors do to get their work noticed if there are no more readings and their work isn’t carefully marketed by these bookstores? What will we do when we can no longer walk down the aisles of our favorite Boarders and have our interest peeked?

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Well, I would be devastated if bookstores went by the wayside, but I do find a lot of my favorite reads online. Places like this, of course are an awesome way to find books. I've found a lot through blogs and the book people that I follow on Twitter. There, I get recommendations on an almost hourly basis. And Amazon gives you recommendations, and similar items, etc when you look at or buy a book--this is kind of similar to the bookshelf experience at the book store. Although I still spend many hours browsing in a bookstore, I already use all these different methods as well.
I am hoping that the library doesn't disappear, because that is my favorite way of finding new books. I just go there and grab as many as i can carry. What's the worst that can happen? I stop reading a book halfway through because it's so stupid. And that has only happened a few times. Sometimes I will come across a new author this way, and end up reading all of their books.
The internet also helps me. I went on the Chuck Palahniuk site a couple weeks ago, and they have a "chuck recommends" section, and then another section for his fans to recommend books. I like finding books this way because there is a good chance that the people who like the same author as me will like other authors that i will.
I also ask people all the time what they would recommend.
1 word... Amazon. Whenever you look at a book on Amazon, not only does it show you other books by that author, but it shows you what books people who liked that book liked and what people who looked at that book eventually bought. Plus, if you rate things on amazon it will create a recommendation list for you. And when new books come out it will email them to you. AND if you know you want to read a certain genre or about a certain topic, you can search by tags. If you couldn't tell, I really like Amazon. I just wish Kindle wasn't so extremely expensive.
Sometimes I'll go to the library or book store just to look for books that look interesting. Other times I'll ask friends, such as a friend who happens to be a librarian, for recommendations.
I usually find new books and authors through recommendations on forums, blogs, Amazon, friends and favourite authors. I find this is the best way for me. I love to browse through bookstores too or the library. But I hope bookstores don't fall away because I still prefer reading the hard copy and I like turning pages and feeling books in my hands.
To be honest, I get new book ideas from friends, amazon.com, and judging a book by its cover while perusing the bookstore. I love the "Customers Who Bought This Also Bought" line on the amazon.com website, it generally links up to similar genre books and I can get at least 4-5 more books to add to my must read list. After perusing the bookstore and amazon.com I always go to my local library to see if they have the book and I check it out. If for some odd reason they don't have it, I will usually wait as long as possible before I actually buy a new book (like when someone gives me a gift card for birthday or holidays) because I think that the prices for a smallish paperback book is a bit ridiculous, and I would rather support my local library. If I can no longer walk down a major book chain store I will turn to my local mom and pop book store (i like those, because they are so homey!), and will continue to browse the library.
I personally don't think that there will ever come a time (not in the near future anyway) where bookstores all over go under for good. With the recession companies have been making serious cutbacks & closing down branches that aren't doing so well- but I work in a branch of a big Canadian bookstore that is prospering even during the recession. It's weird, but looking through a bookstore happens to be an incredibly relaxing & popular thing to do if the bookstore is situated in the right area.

and I think that publication companies know that this is a big way they get customers. I know that in-store a huge part of sellling books is which books we put on display, which books people mention on TV (and that we later put out on display) etc... So I don't know if someone, somewhere will all of a sudden decide that doesn't need to be done anymore!
Honestly, the best place to find new (or new to you) authors/books is at your local independent bookstore. It may not have as big of selection as a Borders, but the staff will be infinitely more knowledgeable and much more able to assist you in finding your next favorite than any staff member of a large chain (plus, shopping at an independent bookstore puts money back into your community). Also, most independent bookstores are pretty good about ordering books for you if they don't currently have it in stock.

Also, if the bookstore is a member of the American Booksellers Association, then they will get a publication every month called Book Sense, which will feature new books that you will want to check out.
A lot of stuff I've read has been from word of mouth.

In college, my roommate was always letting me borrow her books (Harry Potter, Twilight... I let her borrow my old old Narnia books). At the theater I worked at, sometimes what my employees and co-managers were reading would interest me (again, Harry Potter, some Gregory MacGuire, etc). My mom suggests books to me as well. My husband, who mostly reads sci-fi, I noticed has some interesting fantasy-type books I'm planning on reading.

Sometimes if I learn a tv show or a movie is based on a book, I'll go check out the book if I really liked it (True Blood for example, as well as Neil Gaiman after I saw Stardust, and Wicked after I saw the musical).

My husband finds new authors in a way you described - cover art. He actually bought a book a few months back because he liked the cover art and the description on the jacket sounded interesting as well. Turns out, it was the 4th book in a series, so he had to go back and find the first 3 so the story made more sense to him.
I read a lot of author, publisher, and agent blogs for suggestions. I also occasionally come across a book club website, or bloggers that post reviews. Amazon and window shopping bookstores are also good places to get recommendations.

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