E-Dreaming
by Sara Nelson -- Publishers Weekly,06/30/2008
“Global e-book sales at Amazon could reach $2.5 billion by the year 2012.”
No, this hyperbole doesn't come from Amazon founder Jeff Bezos, who has always been famously circumspect about discussing his business. Instead, it was the prediction of an independent analyst (for an outfit called Pacific Crest) named Steve Weinstein, as quoted last week by the Washington Post.
And here I thought I was bullish about e-reading. Yet while it's true that I regularly buy books for my Sony Reader (a gift after my tragic loss of one of the earliest Kindles), download manuscripts and galleys from publishers when I can get them and brag about both devices to whatever Luddites will listen (I love the Kindle's wireless download and ability to read newspapers; I prefer the reading experience of the Sony), I still had to laugh. Two-and-a-half billion dollars in just four years? The total trade book market, according to the AAP, is “only” about $9.6 billion. That seems mighty optimistic, indeed, especially if you consider that his $2.5 billion is the total sales of e-books that retail for around $10. That's a whole lotta units.
But what Weinstein didn't say—or wasn't quoted as saying—is what portion of the market the Kindle will constitute. Will the total book market be so much bigger overall that e-books will be only a slightly bigger slice than it is today (maybe 1%). I'd love to think so, but even I can't be that deluded and he that upbeat. More likely, I'm afraid, Weinstein is suggesting exactly what some book folks, secretly or not, are beginning to fear: that e-books will indeed take off—and end up cannibalizing the “regular” book market. As the “older” generation of “real” book readers dies off, the thinking goes, they'll be replaced by members of the upcoming generation, who, after all, are accustomed to (and in fact prefer) reading electronically. The total number of readers and book buyers, then, will remain about the same; it's the format that they utilize that will be different.
And what's wrong with that? Nothing, if all that you're concerned about is how far and how well content can be disseminated. But publishers (and agents and authors) have an additional concern, which is making money. And if e-book prices stay where they are, and royalty and other arrangements remain the same, authors (and agents) will be out a pretty penny if one-quarter of the market buys “content” for $10, say, instead of $20. (Even if publishers save on printing and shipping costs, the drastic reduction in unit price will negatively affect their bottom lines, too; and pity the poor bricks-and-mortar bookseller, outfitted to sell a very different product).
Lucky for us, then, that the e-worriers are, I predict, way wrong, just as those who worried that audiobooks would supplant “real” books, and DVDs would demolish cinemas were wrong. Sure, there is some cannibalizing and crossover, but just as there are certain books you would rather listen to than read (and vice versa) and some movies you'll rush to the theater to see, there is room in the world for another way to enjoy written narrative. Put it another way: there will always be books you can read in pixels, and others you'll still want to read in the bathtub.
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| Submitted by: | John Newton 7/3/2008 10:29:45 AM PT |
I'm not a publisher so perhaps you can explain why publishers care about the retail price? Shouldn't they only be concerned with the wholesale price?
Mark, I agree with most of what you said however point #5 is wrong. Amazon is not the sole provider of content for the Kindle. In fact anyone could sell content that works on the Kindle. In fact if Borders or Walmart or whoever offered ebooks that work on the Kindle as well as other devices (Amazon limits their books to the Kindle for some short sighted reason) at a price approaching Amazon's prices they could give Amazon a run for their money.
| Submitted by: | Mark Simon 7/2/2008 4:58:07 PM PT |
Sarah,
At the risk of opening the inevitable can of worms……
I read your column every week and enjoy your insights. I found your article in PW on June 30th most interesting if not disheartening. I, as a bookseller, am clearly not a proponent of e-books but I have come to see the writing on the screen (although those around me seem oblivious to the threat). They, like all good ostriches, hope that ignoring it will make it not so. I too, have resisted putting a pen to the subject in the hope that perhaps these insidious little inventions would fall under the radar of the marketplace. But I have to admit that they are efficient, and the content (if not the hardware) is inexpensive.
At present, it would appear that Amazon is employing the marketing technique known as “skimming” to sell the Kindle. (Skim the market of all those technofolks willing to pay $400 before dropping the price to the next lower level and skim the market again before dropping the price again thereby getting the R&D costs out faster.) In the end (unless some legal barrier is erected)…. Economics will rule and the most efficient will be successful. Improvements in the technology will expand acceptance.
For several years I have felt that the publishers were missing the boat (thankfully) by not pricing e-books appropriately. For the most part they were trying to get an equal price for both the hard and soft product (thereby inadvertently or intentionally protecting the bookseller), not recognizing the differential between the two. Also, the technology of downloading and reading a screen was really not up to the task and not as comfortable as reading the printed page. But the $10 price tag on the newest bestseller and it’s instantaneous availability is certain to drive the evolution of the e-book concept. Imagine being able to download the latest Oprah author before the show finishes airing. From both perspectives even the price clubs can’t compete. The publisher is obviously no longer interested in protecting the bookseller and has inadvertently (as has happened in the music business) signed their own death warrant. If Borders and Barnes and BJ’s and Costco and the ABA aren’t threatening the publishers yet, they took their eyes off the ball and the genie is now out of the bottle.
As you pointed out, there are books that you would read on the Kindle or Sony reader and others that you wouldn’t. At $300- $400 a crack you probably wouldn’t take it on the beach or to the bathtub. But as these things catch on (like the transistor radio of the 60’s or the flat panel TV in the current decade) the price will be driven down to a more affordable level. I can see a time in the not too distant future where there will be a Columbia House type offer of “buy 10 e-books and get the reader free” (perhaps there is a future for the book club). They will also become more robust (impervious to sand and water) over time.
While it may take a bit longer to penetrate the over 50 market (it didn’t take 40 years for Moses to cross a relatively small desert, it took 40 years for a generation of slaves to die off before entering the promised land without carrying the yoke of slavery), the younger generation is already used to the computer screen and will adapt quickly. The e-reader, as with any popular gadget, will also continue to evolve and perfect.
Here are just a few repercussions to think about.
1) Will school age children carry their textbooks in a reader or the current 50 lb backpack? It would appear that over a relatively short period, economically strapped school districts and universities around the world will avail themselves of huge savings by licensing content instead of replacing worn-out textbooks. Easier on young backs too. Clearly this would increase penetration rates as youngsters become acquainted with the technology at an earlier age and carry it foreword educating their parents along the way.
2) As you pointed out, it would seem that the e-book will not expand the total reading market by much. As more e-books are sold, will the shorter print runs further drive up the cost of the hard product causing a further erosion in an elastic marketplace? And how will the bookstore survive or evolve? The typical big box bookstore is already something of a 5 & 10 selling everything from stationery to candy bars to sweatshirts. Will books have a place in these stores?
3) Will market penetration of the e-book and its effects on the retail market parallel the demise of the record business. There are so many bright hackers out there that it would be impossible to stop wholesale piracy. So many musicians (even big names) today are offering their music directly over the internet (some for free) without the need of a record company, in order to promote their concerts (where they now make their money). Where does the author and publisher fit into all of this? Piracy in the music business has become so rampant that even lawsuits against citizen pirates have done little to stem the problem. Several years ago Stephen King tried to market a book over the internet on the honor system and proved beyond a shadow of a doubt that we are a little short on honor when it comes to purchasing a soft copyright.
4) As the e-reader garners a significant market share (I have no doubt that it will), you may not have the option of choosing which books you download and which you purchase as hardcopy as the economics of the marketplace will drive bricks-and-mortar as well as internet bookseller operations into extinction. There may be quite a few 30,000 – 60,000 square foot stores for rent. A logical extension would apply to publishers, printers, newspapers, paper manufactures, etc..
5) Since Amazon is the only provider of content for the Kindle, will the industry implode in a series of anti-trust suits? There are surely enough bright lawyers out there who will seize the opportunity if there is a glimmer of a chance.
6) In this new world of publishing, how will the marketing of new titles and new authors take place?
These are just a few of the issues that all of us will grapple with over the short run. It’s impossible to predict the last ripple caused by a stone in a lake but suffice it to say “change will come” and for most of us independent booksellers, it won’t be fun.
Significant market penetration, at the individual level, of the cell phone took about half as long as that of the personal computer which took about half as long as that of the television which took about half as long as that of the operator assisted telephone. Video has progressed from the big screen to the small screen to the VHS (remember them) to the DVD to the download in just a few short years. How long will it take the e-reader to gain broad market acceptance?
| Submitted by: | John T. Cullen (john@johntcullen.com) 6/30/2008 12:46:02 PM PT |
| Location: | San Diego |
| Occupation: | author |
I appreciate your thoughts, but I think the outcome will be different than anyone imagines. For one thing, most people have this thing about "I want a book I can curl up with in bed." Well, the real e-book has not yet arrived, although the Sony and Kindle are halting steps in the right direction. The real e-book, whatever it will be, will put to rest all those ergonomic concerns. You mention pixels vs. bathtub. That's the same type of non sequitur. The real e-book will be searchable, readable in the dark, in the bathtub and in bed, anywhere. I think it will be portable in your purse or wallet, like a cell phone. Most importantly, it will eliminate inventory, bookstores as we know them, ink, dead trees, warehouses--and yes, those high prices for an incredibly eco-unfriendly, uneconomical product, the dead tree book. When the tsunami finally comes, it will mean the end of paper. Remember that it took decades for Spain to exploit Columbus' discovery of the New World. Decades between the invention of the automobile and the innovations of Henry Ford.
| Submitted by: | Matthew Baldacci (matthew.baldacci@stmartins.com) 6/30/2008 9:28:57 AM PT |
| Location: | NY |
| Occupation: | Publishing |
Size of market is a crucial piece of this week's column. Our challenge is and has always been to expand the book-buying audience. All those people who bought the DaVinci code and a lot of those Harry Potter buyers have not gone on to buy more books. So can we use the eBook format to attract a new audience segment? We can, and it is one of the most exciting aspects of the eBook development.
We must, because much as the music industry was challenged by the mp3 format, our ability to sell first a hardcover format and then a paperback version of a book is going to be somewhat supplanted by the eBook format. As you point out, getting $10 retail for a book at retail is a lot less successful than getting $20 retail (or $32 retail - if a publisher sells the hardcover and a trade paperback).
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