4 reasons why e-book growth will be slower than expected

[charleski]

Originally Posted by fjtorres

And ebooks are in fact a full replacement for print books; unlike compressed music downloads that offer slightly lower quality that their CD incarnations, ebooks are lossless conversions of the original material.

If only that were true...
As CazMar noted:

Originally Posted by CazMar

He probably left out one big reason why sales may not reach intended figures - the appallingly bad formatting of some DRM'd books on sale (particularly in EPUB). The books on this site, Gutenberg and other free sites are just so much better. As EPUB requires some expertise with HTML (hardly a new technology) this seems to have left publishers floundering around and trying to pass off shoddy product as a digital book.

The general state of ebooks has a long way to go before it reaches the standard of quality people have come to expect even from MMPBs. I have to say, I've seen some atrocious ePubs on Gutenberg, though.

Originally Posted by Elfwreck

7% by dollar value; Amazon sells more ebook units than paper, but a lot of those ebooks are .99 each.

I don't have access to the BISG report, but Publishers Weekly says, "The BISG study found that e-books accounted for 8% of unit fiction sales in the fourth quarter of 2010" (emphasis added), which looks like they were counting individual units rather than a dollar value.

It's certainly interesting that the BISG report differs so markedly from Amazon's. BISG certainly has no animus against ebooks (they sell a hefty bundle of survey reports about ebook use), though of course Amazon has a big stake in them. The only way I can think of to reconcile the two sets of numbers is to suggest that Amazon has lost market-share in physical book sales. But frankly it's impossible to say without having a closer look at the data used to come up with these numbers.

But back to the original article: I think it's a realistic perspective - ebooks will end up dominant, it's just not going to happen overnight (it's taken over a decade to get this far). I still think the device problem is a major issue at present, though - only 15% of the market has a smartphone, and ereader prices need to come down more.

[Elfwreck]

Originally Posted by charleski

I don't have access to the BISG report, but Publishers Weekly says, "The BISG study found that e-books accounted for 8% of unit fiction sales in the fourth quarter of 2010" (emphasis added), which looks like they were counting individual units rather than a dollar value.

Does BISG count all ebook sales, or only those through the Big 6 publishers, or only those through publishers? I doubt they have access to Smashwords' and Lulu's sales numbers, and if they're getting statistics from publishers, rather than bookstores, they're not getting self-published ebook data.

[fjtorres]

A (quick-n-dirty) do-it-yourself method to calculate ebook penetration is to take the 8% *dollar* ratio so broadly reported last fall as if it were gospel and apply a pricing mutiplier of your choice.
eBooks are *on average* cheaper than print books, right? Half the average pbook price? A third? A quarter? Your choice.

Yes, you too can be an ebook industry analyst, just like the good folks at Forester or wherever!

Either way you slice it you'll get an industry-wide unit penetration of 15 to 30%. This, barely three years after Kindle's Oprah moment. 50% unit ratio is within easy reach any way you slice it. It might be a year, it might be four. 2014 is probably conservative, though.

[K-Thom]

Maybe in the US. Amazon created an impressive eBook economy and buildt the foundations for an overall eBooks acceptance.

In Germany I think we could call ourselves lucky if eBooks reach a 10-20% share by 2020, and I consider this true for most European countries.

I think we will see a decline of the mass market trade paperback in the years to come, leaving two very different market shares: the high-value hardcover print and the affordable eBook version. Both appealing to different customer groups. And in-between POD paperbacks created on-the-fly in book stores or libraries.

[charleski]

Originally Posted by Elfwreck

Does BISG count all ebook sales, or only those through the Big 6 publishers, or only those through publishers? I doubt they have access to Smashwords' and Lulu's sales numbers, and if they're getting statistics from publishers, rather than bookstores, they're not getting self-published ebook data.

Lulu is a member of BISG, though Smashwords isn't. Amazon is a member as well. They should have access to a reasonable sample of self-published ebooks, though it's unclear whether those were included.

[Andrew H.]

Originally Posted by fjtorres

By the way, Amazon's recently reported unit sales ratios--1.15 ebooks per paperback, 3 ebooks per hardcover--works out to a 45/40/15 sales rate of ebooks/paperbacks/hardcovers.

It's pretty clear that Amazon is already where the music industry is in digital sales and *still* growing ebook share, so setting the bar at 50% unit share is pretty low, even granted that as the industry leader, Amazon is several years ahead of their competition. Because Amazon is clearly pointing out that, given abundant, reasonably-priced ebooks, readers are *not* so wedded to print that the 50% mark is out of reach. More, with the dual examples of Amazon's ebook success and Borders' deathspiral, most retailers will *have* to look to growing their ebook markets to survive. Essentially retailers have to follow Amazon, as B&N is doing, or risk following Borders.

All in all, given the current growth rate, I would expect to see the ratios stabilize at something like 60/30/10 unit sales in the near future. And that is with the price-fix scheme in place. If Agency pricing should vanish, publishers are going to be facing a *lot* of downwards pressure on pbook pricing. Which might explain why they're actively looking for signs of hope even from industries that don't map particularly well to theirs.

I think those are crazy numbers.

Amazon has 15% of the US book market and the e-reader with the largest market share; their numbers are *not* generalizable to the entire market.

Although not a perfect match, I think that that the recent history of digital music is instructive, and it suggests that we should be cautions in extrapolating. After 10 years of impressive growth, mp3s still haven't passed CDs in popularity. And digital music has (at least) three important structural advantages over e-books.

1. For all recorded music, you need some sort of player, of the CD, turntable, or walkman variety. Thus buying an mp3 player instead of a portable CD player is not that different from buying a portable CD player to replace a cassette walkman, or buying a walkman to replace a transistor radio.

Books, on the other hand, have not historically required a reader - if you bought the book, that was all you needed. Convincing people that they should pay $100+ just to be able to read books that can be read without a reader is a hard sell for many people.

This would probably change if prices dropped dramatically. But I think that we are several years away from the throwaway e-reader...not the least of which is because the technology isn't mature yet. The best screen so far is the pearl screen...but it's still a few generations away from providing the best reading experience (and I'm just talking about B&W readers). I think we'll need to go through an emerald screen and a ruby screen and maybe even a diamond screen before e-ink screens reach a point where innovations lead to dramatic improvements. And I think that the newer generations will be at the $100+ point until they reach the last phase. And then prices will start dropping.

By contrast, mp3 player tech was basically mature 10 years ago - you could tweak the codec here and there to squeeze out maybe a couple of percentage points better fidelity - but most people couldn't tell the difference. (And by far the best thing that could be done wrt fidelity was to play less compressed music, which was made easier by cheaper hard/flash drives). But it was only after this point was reached that players started to drop dramatically in price.


2. One of the great advantage that mp3 players have is that there is an extremely simple and quick method of putting your existing CDs on your player. Buying an mp3 player doesn't mean that you have to spend thousands of dollars rebuying hundreds of CDs - in a weekend, you can convert your existing music library to mp3 format. There's nothing equivalent for e-books.

3. There is, for most people, a lot more utility in having 3,000 songs with you wherever you are than in having 3,000 books with you at all times. I'm more likely to want to spend 3 minutes listening to "Lucy in the Sky With Diamonds" *right now* than I am to be hit with an urge to spend 8 hours rereading "Strong Poison." For *some* people, of course, it might be important to have all of their books available...but for most people, I suspect that the convenience is in having 5-6 books available. This is true in my case, in any event. And while I really like the convenience of having these 5-6 books available, it has always been possible, if slightly less convenient, to carry these books with me. It has never been convenient to carry all of my music with me, even though it has been desirable.

E-books have other issues to, such as incompatible DRM and, to a lesser extent, incompatible formats. And while these factors may be more important at some point in the future, right now people seem content to stay within the warm bosom of B&N or Amazon.

So my prediction would be that e-book growth will plateau at 20-30%, and grow much more slowly after that.

[Daithi]

I don't think it will be too long before half the books sold on Amazon are ebooks. Yet, Amazon is only around 15%-20% of the U.S. book market. There are still a lot of Brick and Mortar stores, discount stores (Sam's Club, Walmart, Target, etc.), grocery stores, airport shops, etc. all selling paper based books. I don't see them switching over to an ebook model anytime soon, but I do see Amazon's percentage of the market growing (I haven't bought an airport book in years).

[GA Russell]

I can see the 50% number being reached soon for fiction, but I've got real doubts about non-fiction. I think a high percentage of non-fiction books have photos and illustrations, and we're not there yet with eBook readers.

[Paul Levine]

I'm not surprised that there's a disagreement over rate of growth.

Important point: E-book sales seem to double each year. Kindle hardware will nearly double this year, again.

As they say....do the math.


Paul Levine

[Andrew H.]

Originally Posted by Paul Levine

I'm not surprised that there's a disagreement over rate of growth.

Important point: E-book sales seem to double each year. Kindle hardware will nearly double this year, again.

As they say....do the math.


Paul Levine

In 4 years e-books are going to be 150% of the market?

[CJ Archer]

Originally Posted by Daithi

I don't think it will be too long before half the books sold on Amazon are ebooks. Yet, Amazon is only around 15%-20% of the U.S. book market. There are still a lot of Brick and Mortar stores, discount stores (Sam's Club, Walmart, Target, etc.), grocery stores, airport shops, etc. all selling paper based books. I don't see them switching over to an ebook model anytime soon, but I do see Amazon's percentage of the market growing (I haven't bought an airport book in years).

Amazon's market share is something a lot of people forget when they quote the retailer's figures on ebook sales. Having said that, I have no doubt the sales of ebooks will grow as ereaders become more popular, particularly outside the US.

It's an interesting discussion and one I'll watch closely in the future. As both a reader and a writer I have a deep interest in the way books will be delivered to the public. It's certainly an exciting time for all of us in the biz.

[Scott Nicholson]

"Ebook sales will be slower than expected BECAUSE I WANT THEM TO BE!!" --
Big fat publisher

[J. Strnad]

I think that his estimate is more reasonable, but that's still a lot of books and a very strong market in itself, easily enough to upset the existing print paradigm. But as I've said before, it isn't an either/or situation between ebooks and print books. They can co-exist for a long time yet.

[GreenMonkey]

Originally Posted by Andrew H.

I think those are crazy numbers.

Amazon has 15% of the US book market and the e-reader with the largest market share; their numbers are *not* generalizable to the entire market.

Although not a perfect match, I think that that the recent history of digital music is instructive, and it suggests that we should be cautions in extrapolating. After 10 years of impressive growth, mp3s still haven't passed CDs in popularity. And digital music has (at least) three important structural advantages over e-books.

1. For all recorded music, you need some sort of player, of the CD, turntable, or walkman variety...

Books, on the other hand, have not historically required a reader - if you bought the book, that was all you needed. Convincing people that they should pay $100+ just to be able to read books that can be read without a reader is a hard sell for many people.
...

2. One of the great advantage that mp3 players have is that there is an extremely simple and quick method of putting your existing CDs on your player. Buying an mp3 player doesn't mean that you have to spend thousands of dollars rebuying hundreds of CDs - in a weekend, you can convert your existing music library to mp3 format. There's nothing equivalent for e-books...

3. There is, for most people, a lot more utility in having 3,000 songs with you wherever you are than in having 3,000 books with you at all times....

So my prediction would be that e-book growth will plateau at 20-30%, and grow much more slowly after that.

(Trimmed for space)
Agreed on all points. Good post. Most people that I know that aren't READERS, per se, read more like a book every month or two, or just Stephen King books, or whatever.

And keep in mind the demographics of those people that DO read:

http://www.msnbc.msn.com/id/20381678/ns/us_news-life/

One in four adults read no books at all in the past year, according to an Associated Press-Ipsos poll released Tuesday. Of those who did read, women and older people were most avid, and religious works and popular fiction were the top choices...

The survey reveals a nation whose book readers, on the whole, can hardly be called ravenous. The typical person claimed to have read four books in the last year — half read more and half read fewer. Excluding those who hadn’t read any, the usual number read was seven....

Among those who said they had read books, the median figure — with half reading more, half fewer — was nine books for women and five for men. The figures also indicated that those with college degrees read the most, and people aged 50 and up read more than those who are younger.

Here's a breakdown of the raw numbers from the 2008 poll.

http://www.businesswire.com/news/hom...s-Typical-Year

If you add that up, who is likely to buy e-readers? Probably the 37% of people that read more than 10 books a year. Do you REALLY think people are going to spend $100+ on an e-reader to read 4-6 books a year? Some, sure. But how many of those people read from the library or buy used? Ditto even for the people reading 10+ books a year.

I think that steep sales curve for e-readers will flatten out quite a bit before too long. They're being pushed by the price drops of this year & by the more avid readers right now.

I severely doubt we'll see growth anywhere near the music industry. Music is a lot more commonly consumed than books.

[GA Russell]

Thanks for that AP-Ipsos poll, Green Monkey.

The focus of the industry's comments is always on books, but I imagine there are many people who read article-driven magazines and weekly newspapers instead of books. I am referring to publications whose photos are not particularly important.

I can imagine that online delivery of those publications would be valued by readers currently dependent upon the mail system.