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I think that Harry Potter has definitely had a positive impact on children's reading habits, and on the quality of children's books as well.
Don't think that children who read HP, just sit around playing their Game Boys until the next one comes along. They read other books.
Bookshops and publishers take children's books incredibly serious; something like 25% of sales in my shops comes from children's books. And although there is a lot of crud out there, there is also a lot of quality.
And I'm one of the lucky ones, neither of my parents read books, but I loved them as a child, and still do. Hopefully my love of books will rub off on my children.
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