Despite the recent spate of high-profile e-publishing bankruptcies and failures, a number of e-book publishers and distributors contacted by PW were mostly optimistic and, with one exception, quick to report rising sales and even profits. E-book publishers Palm Digital Media, Gemstar eBooks and not only report growing customer bases, but told PW that they are scrambling to offer a wider variety of electronic reading material.

Michael Fragnito, v-p at Barnes & Noble Digital, who directs B&N's e-bookstore and digital publishing, declined to give exact figures, but told PW e-book sales at were "steady. Sales are growing a little bit. We intend to continue to support e-books in a responsible manner." Fragnito indicated that retailers "need more e-books available at better prices."

Palm Digital Media (formerly Peanut Press) offers frontlist e-book titles in a format that can be read on handheld devices that use the popular Palm OS. Mike Segroves, director of business development at Palm Digital, told PW, "We doubled our revenues in 2001." Segroves reported that PDM sold more than 180,000 e-book downloads, representing "a 40% increase in unit volume. We're selling more frontlist titles than ever. We originally sold a lot of genre fiction, but six of the 10 top-selling titles are now nonfiction."

Segroves said there's a "bias against e-books in the consumer press, but it's our own fault. A lot of people—and I was one of those people—made a lot of predictions that were baloney." But Palm is now making "realistic" gains, he said. The company is running promotions and advertising, and drawing hundreds of new customers each week. Sales, down 25% after September 11, "picked up tremendously," in December and have been "even better in January," he said. Holiday shoppers favored handheld devices and Segroves noted that Palm Digital's e-book reader "was bundled in each of those boxes."

Bestselling titles for Palm Digital Media include Stephen King's Dreamcatcher and Michael Crichton's Timeline in fiction; and, in nonfiction, The Procrastinator's Handbook by Rita Emmett and Jack: Straight from the Gut by Jack Welch. "We've seen a real acceleration in interest over the last 120 days," noted Segroves. "People are saying: 'I can read with this.' "

Although its e-book format was dropped by's e-book store, Gemstar eBook, which offers e-books in a proprietary format for two reading devices, is optimistic, and reports a number of changes in its program. Lauren Snyder, a Gemstar spokesperson, credited a 50% reduction in price for its black-and-white REB 1100 device (now $149.99) and color REB 1200 device (now $399) for generating more "appeal to consumers." She downplayed the loss of as a Gemstar sales outlet, blaming technical support problems at the retailer. She noted that Gemstar has launched its own retail Web site ( and is also selling its devices through Gemstar e-books are also sold through

The exception to all the good news is Dave Arlen, a spokesperson for Thomson Multimedia, manufacturer of Gemstar's devices. Arlen said that despite price reductions, the Gemstar reading devices, which are available at about 600 electronic appliance outlets nationally, "have not done well." Echoing Fragnito, Arlen told PW that the key to selling more devices is "more content, and not just bestsellers but backlist."

However, Snyder, who declined to give exact sales figures, claims Gemstar e-book sales "far exceeded expectations" and that consumers were purchasing "a wide range of titles." Gemstar offers more than 6,000 titles from major publishers. Snyder said Gemstar bestsellers include recent books by novelists Peter Abraham and James Patterson. She also pointed to content deals with the Wall Street Journal and Time and with Push, Scholastic's new teen imprint.

Stephen and Scott Pendergrast, cofounders of e-book publisher and distributor, claim that a consumer-friendly Web site, aggressive promotions, books in virtually every e-book format and sensible pricing have generated a "a 400% increase in revenue in 2001. December was a super record." The site was launched in 2000 and has been shifting from offering short fiction to novels and expanding its content from mostly science fiction to more general fiction and nonfiction.

The site sold more than 100,000 e-book downloads last year, including monthly subscriptions to about 11 periodicals. "December was our breakeven month; we're cash-positive and now we're growing," said Stephen Pendergrast, noting that the first quarter of 2002 should be profitable. He said the average transaction size grew from $10 to $16 over the course of 2001 and added that "99% of our books sold at least one copy. We try to sell every single book." Fictionwise membership tripled, to 33,000 members. The site offers 1,300 titles and expects to have 3,000 by the end of year. Half are licensed to Fictionwise; the rest come from other e-publishers and are distributed through the Fictionwise site.

The two brothers, who have extensive technology backgrounds, also credit their success to Prometheus, a software program they developed that oversees the member database and highlights groups of buyers for special promotions on a regular basis. "On a weekly basis, the program lets us know who should be targeted for special offers," said Scott. "We've got about a dozen promotions coming this year. We're going to widen our promotional bag of tricks."

The site announced its awards for e-book of the year (Isaac Asimov's Robot Dreams) and e-book author of the year (Mike Resnick). Visit the site to see its list of bestselling e-books of 2001.