[fjtorres]

Negroponte is known for his tendency to overstate everything.
He's never met a technological concept he couldn't hype beyond all reason.
And yet...
...this time I wouldnt be as quick to dismiss him as I normally would...
For two reasons:

1- He explicitly states that ebooks won't obliterate print; just that they will become the *dominant* form of publishing. As in the form that sets the rules for the other forms, the terms for debate, defines the economics of the industry. And this *is* happening. *NOW*. Why else would we be debating orphan book copyrights? Why else would writers/agents be warring with publishers over backlist contract rights? Why else would authors be looking to take back their copyrights from publishers? eBooks are disrupting the existing business models and setting new guidelines. They are changing the production process right *now*. It is easy to see a whole new publishing paradigm where the new ebook-centric production processes change the economies of print books away from batch printing to print on demand. So ebooks don't *have* to obliterate print books to dominate the industry.

2- Having been around the block once or twice, I've seen these kinds of transitions before: from LP to CD, from Video Tape to DVD. In both cases, the transition starts slower than expected, then it hits a critical mass among early adopter consumers, and then retailers bail out *before* the majority of consumers is ready. Do a little digging and you'll find reports of LP buyers griping about being forced to buy CDs because the record stores switched out LPs overnight. And the complaints of VHS renters when DVDs took over were likewise loud and abundant.

What makes me think Negroponte may not be all that far off base this one time is the concept of tipping points. In both the LP-CD, and VHS-DVD transitions, the tipping point for *retailers* came before the tipping point for consumers. In both cases, early adopters triggered the tipping point by transferring the profitability of one format to the other so mass-market retailers *had* to switch their focus just to survive, even if it meant that the numerically superior but economically less powerful late adopters got left behind.

We need to remember that when it comes to retail, "some animals are more equal than others". Yes, there are 50 million americans that buy less than 10 books a year. There are also 30+ million that buy *more* than 24 a year. In market power, those 30 million outweigh the 50 million because not only do they buy more books, there are more likely to be buying the more expensive hardcovers. They control more of the market they control the *profits* of the industry.

As the 30 million move their purchases to ebooks, the center of gravity of book *retailing* moves away from print to ebooks. And the tipping point *is* going to come long before crossover. The pbook business is going to lose its profitability long before ebooks start outselling paperbacks. Count on it.

eBooks are coopting the "best" customers away from the print book business, cherry-picking the heavyiest buyers, the most afuent. This *is* happening. Now. And it is not going unnoticed.

Why is Barnes and Noble so aggressively looking to establish Nook as a big-time player, even at great financial stress to the company? Because they know they need the ebook customers to survive. Because they know they can't survive solely on their share of the 50-million casual readers; those customers don't geerate enough high-margin sales to pay the bills.

Why have the BPHs so aggressively tried to slow ebook adoption? Even though ebooks are more profitable than print books? Because they fear the tipping point; they fear that even ebook profits won't outweigh the p-book losses to come in that critical period between the defection of the heavy readers and the final marginalization of p-books. Having failed to adopt POD tech for pbooks, they are now too deeply vested in a pbook infrastructure that *needs* pbooks to be dominant to achieve enough economies of scale for their batchprint business model to produce profits.

To me, it is looking very likely that pbooks will cease to be profitable for retailers long before ebooks outsell them, industrywide. Whether the tipping point comes when ebooks make up 30% or 40% of the industry I don't know---I'm no insider---but from what I can see of the profit margins of pbooks, freely priced ebooks, and Price-fixed ebooks, I suspect the tipping point is going to be closer to 25% than to 50%.

ebooks are now running about 8% of the revenue of the BPHs and probably a bit more of the total industry. We've seen predictions of 25% in a few years. Shortly after that, things are going to get nasty. Because at some point after that, ebooks will be 30-40% of the revenue but well over 50% of the *profits* in the industry. They might even ake up *all* the net profits of the industry. At that point, retailers will start seeing pbooks as more of a cost center than a profit center and we'll see B&N and Borders closing/converting/whatever their storefronts at a furious pace because, unlike the LP-CD and video transitions, you can't just repurpose a bookstore into an ebookstore. Once the 30 million are gone, they're gone. They'll have little use for the storefront.

And at that point we'll see the griping and hand-wringing of the casual readers and the luddites reach fever pitch as print books become harder to find, more expensive, and possibly even vanish entirely from some locations; supermarkets, department stores, newstands... It won't matter if the 50 million are ready to move to ebooks or not; the economics of print simply won't work out.

That is how the earlier transitions played out and that is how his one is going to play out. One day we'll walk into a WalMart or a Target and see the usual rack of discounted bestsellers and a week later they'll be gone, replaced by a different traffic-generator product because pbooks will no longer generate enough trafic to justify the floor space. Overnight, print books will become a lot harder to find.

And this will happen long before ebooks outsell print books.
When?
Definitely before ten years.
Five years? Probably.
But it would not shock me if it began in three.