Cover story Writer's Digest: Future of Ebooks, Amazon, etc.

Falbe Publishing · 10-05-2008, 03:03 PM

The cover story of the December 2008 Writer's Digest magazine explores the growing impact of digital books on the publishing business.

I'm not finding this article online, so I'll paraphrase or quote some interesting points.

The article notes the resurgence of ebooks since the fizzled push for digital book publishing in 2000/2001.

With ebooks actually taking off, Bob Sacks, president and publisher of Precision Media Group declared that ebooks were the future and added, "There was a point eight years ago in which they started and crashed. That's not going to happen this time. We've passed the point of no return."

The article then cites some interesting figures from the Association of American Publishers.

2002 - Estimated $7.3 million in net ebook sales.
2007 - Estimated $67.2 million in net ebook sales.

Then, WD reported that at the 2008 BookExpo America, Amazon CEO Jeff Bezos said that since the Kindle launch, sales of content for the device accounted for 6 percent of Amazon sales revenue.
----
Not bad in less than a year, I say.
----
The last half of the WD article addresses how the digital content platform might help or hurt the income of writers. Points were made about how e-publishing would help more people be exposed to an audience, but Paul Aiken, executive director of the Authors Guild warned that:

"When it comes to digital media...often a single player gets early control and winds up taking home the majority of the profits, as with digital music and Apple's iTunes. He says Amazon is building up its ebook library, and once it's in place, such dominant systems are hard to dislodge."

Aiken went on to say, "If this goes wrong, it could drain a lot of money from authors and publishers. Whatever promise the new media has could all be taken by one company, leaving authors and publishers to scrap over the money that remains."
----
Well, I certainly imagine that this is Amazon's goal. It makes business sense.

Overall, it's an interesting article that avoids the usual print media approach to reporting this subject as a books vs. ebooks thing.

wallcraft · 10-05-2008, 03:45 PM

Quote:

Originally Posted by Falbe Publishing

Then, WD reported that at the 2008 BookExpo America, Amazon CEO Jeff Bezos said that since the Kindle launch, sales of content for the device accounted for 6 percent of Amazon sales revenue.

What Jeff Bezos reportedly said (The Amazon e-book sales guessing game continues) is:

Quote:

the company is seeing 6% of book sales in electronic form for the 125,000 titles sold in both print and digital formats

This is significant, but still a drop in the bucket for a company the size of Amazon.

kovidgoyal · 10-05-2008, 03:53 PM

It's ironic that digital distribution, which is so low cost that it should really be removing the middleman from the picture is instead serving to make that middleman even richer.

Richard Herley · 10-05-2008, 04:07 PM

Thanks for the digest, FP -- it certainly feels like we're on the cusp of an ebook revolution.

Actually I think the outlook for authors is rosier than it might appear. Remember the old adage? "Content is king". Without authors, there is no content, and no publishing industry at all.

Authors need publishers for distribution and promotion. With ebooks, the net takes care of distribution; and most publishers' promotional campaigns are, frankly, dismal. I believe we will see the emergence of a new wave of indie authors. The process is analogous to the transformation of the music industry. For mp3 player, read ebook display.

Amazon's strategy, both in trying to corner the market and in offering a means for individual authors to offer their wares to Kindle owners, suggests to me that they know they are on shaky ground when it comes to ebooks. If electronic distribution of books takes some of the clout from publishers, it will impact even more heavily on booksellers.

Readers may not be aware that the bookseller's markup on pbooks can be 50% or more, with perhaps a similar or even greater figure for ebooks. The pleasure and convenience of having somewhere to browse the latest books comes at a high price.

Ebooks should be very much cheaper than pbooks, since the main cost is the author's time and expertise, which at the moment accounts for only 10-15% of the price. Beyond the author's efforts, we have the cost of editing and formatting to take into account, which might represent 2% of the price. Thus an ebook costing $10 from a publisher might be a commercial proposition at $1.70 ... provided the author can sell the work directly to the reader. And as our old friend Mr Shakespeare remarked, "there's the rub!"

pilotbob · 10-05-2008, 11:18 PM

Quote:

Originally Posted by Falbe Publishing

"When it comes to digital media...often a single player gets early control and winds up taking home the majority of the profits, as with digital music and Apple's iTunes. He says Amazon is building up its ebook library, and once it's in place, such dominant systems are hard to dislodge."

Aiken went on to say, "If this goes wrong, it could drain a lot of money from authors and publishers. Whatever promise the new media has could all be taken by one company, leaving authors and publishers to scrap over the money that remains."

I don't understand the above at all. Amazon is selling ebooks from many different publishers and authors. How does them becoming the dominate player affect authors/publishers? Does he know what he is talking about?

BOb

starrigger · 10-06-2008, 01:51 AM

Quote:

Originally Posted by pilotbob

I don't understand the above at all. Amazon is selling ebooks from many different publishers and authors. How does them becoming the dominate player affect authors/publishers? Does he know what he is talking about?

BOb

Dominant players can have a tendency to call the shots. Look at textbook publishers and the way they're cowed by school districts in just a few states. I suspect the concern is that any single entity that dominates the ebook marketplace could start exerting too much influence on price, format, means of delivery, content, just a whole lot of areas.

I think the concern is overstated (the Authors Guild tends to be on the conservative side of things concerning authors' rights), but I don't think we should dismiss it, either. Especially in light of Amazon's business model of doing their best to keep the Kindle users tied to the Amazon store.

rhadin · 10-06-2008, 09:22 AM

Quote:

Originally Posted by pilotbob

I don't understand the above at all. Amazon is selling ebooks from many different publishers and authors. How does them becoming the dominate player affect authors/publishers?

What the WG and I am concerned about, Bob, is that if Amazon comes to dominate the ebook industry like Apple dominated the initial music market, then Amazon will be able to dictate the sale terms -- both wholesale and retail.

It is not so farfetched should Amazon dominate for Amazon to tell publishers that (a) it wants an 80% discount and (b) it wants exclusivity for x months/years. If Amazon so wraps up the market for ebooks that it accounts for 40% to 60% of ebook sales, authors and publishers will have little choice but to agree.

Also, consider this: Buying an ebook reading device is currently an expensive proposition so most people buy 1 device. If that 1 device is the Kindle, they are locked into the Amazon store, especially now that Amazon owns Mobi. Yes, I know that the Kindle can handle other formats and that there are conversion tools, but most people will only think Amazon and will not go to the trouble of converting other formats.

I think the WG has a legitimate fear.

bill_mchale · 10-06-2008, 09:50 AM

I agree that there is a danger of one player dominating the market. That being said, I am not sure that it is Amazon with the Kindle. Yep, its been the big seller for this past year, but I am not convinced it has been quite as dominating as the IPod was on the music industry. At least not yet.

I think the biggest difference between the Kindle and the iPod is this; the iPod entered a world where young people (by and large the driving force of the modern music industry) were already conditioned to listen to their music using ear phones on small devices (i.e., the various walkman and like products that proceded mp3 players). When a digital music player finally got elements right (easy to use device, store, fashion statement...) it took off. In much less than a year, all other digital music players were also rans to the iPod.

In contrast, the Kindle certainly has been a significant player, but e-Book readers still very much remain a niche product. In general, I would say the bulk of current e-Book reader buyers are both serious readers and also early adopters. They make up a significant, but by no means a dominating position in the market place for books. The book market is, I believe, more fragmented in demographics.

I don't know what the current numbers are, but I suspect that a large percentage of book sales are to people who buy only a few books a year. At current prices, dedicated readers do not make sense to this demographic. If you spend $100 a year on books, its hard to justify spending $350 just so you can buy more books.

I think there is a reason why Stanza and fictionwise have both seen quite a few of their readers downloaded for the iPod Touch. They are cheap (i.e. free) applications that can be downloaded easily to a device people already have. In addition, they offer a reasonably pleasing reader experience. In just 2 months they have accounted for enough book downloads that Forbes and other media outlets have taken notice. Sure they may not match the experience of e-Ink, but for the casual reader, they are fine.

So ironically, I think the device that could end up dominating the e-Book market is actually the same device that dominated the digital music market.

--
Bill

Slite · 10-06-2008, 10:00 AM

@ Bill: I think you are wrong in one of your assumptions, that people will be content to read books on their iphone/ipod touch. For starters, yes, it will be sufficent at first, but if you are "serious" about your reading, you will soon tire of concentrating on the small screen and look around for alternatives. And thats where the e-Ink devices comes in. But I do agree that the e-reading market is just in it's infancy and it needs to "mature" before it will be adopted by the large masses.

And before that happens we need a bit more development for the devices.

As in faster devices, even better screens (not necesarily bigger), and ease of use improved.

JSWolf · 10-06-2008, 10:07 AM

Sony says they are vamping up their eBookstore so we'll see what Sony can manage to do.

pilotbob · 10-06-2008, 10:25 AM

Quote:

Originally Posted by rhadin

It is not so farfetched should Amazon dominate for Amazon to tell publishers that (a) it wants an 80% discount and (b) it wants exclusivity for x months/years. If Amazon so wraps up the market for ebooks that it accounts for 40% to 60% of ebook sales, authors and publishers will have little choice but to agree.

Don't they already dominate the pbook market? I thought there market share for pbooks was pretty high. Anyone know what it is? I've never heard anyone complain about that. They publishers have just been cashing Amazons checks.

BOb

bill_mchale · 10-06-2008, 11:37 AM

Quote:

Originally Posted by Slite

@ Bill: I think you are wrong in one of your assumptions, that people will be content to read books on their iphone/ipod touch. For starters, yes, it will be sufficent at first, but if you are "serious" about your reading, you will soon tire of concentrating on the small screen and look around for alternatives. And thats where the e-Ink devices comes in. But I do agree that the e-reading market is just in it's infancy and it needs to "mature" before it will be adopted by the large masses.

And before that happens we need a bit more development for the devices.

As in faster devices, even better screens (not necesarily bigger), and ease of use improved.

Slite, I think you are correct that "serious" readers will not be content with iPod/iPhone reading. That being said, the crux of my argument is that I expect that the casual reader, not the serious reader to be the real force behind how the ebook market develops over the next few years.

The basic danger to the dedicated devices is that I expect that the vast majority of ebook purchasers will, in a few years want to do their reading on converged devices. the 3.5" iPhone or PDA screen might be too small for most of their reading, but a 5" or a 7" media/internet tablet might be just right. As it is, for someone who only occasionally reads a book, or who reads mostly when waiting for the bus, or other periods where they have a few minutes of downtime, might in fact be quite content with the smaller screen.

I like e-Ink, but frankly, for the cost, a converged device (i.e., a UMPC with a finger based interface and or some keys that could be configured to turn pages, search the book etc,) would be a better choice for me.

--
Bill

daffy4u · 10-06-2008, 11:48 AM

Quote:

Originally Posted by rhadin

Also, consider this: Buying an ebook reading device is currently an expensive proposition so most people buy 1 device. If that 1 device is the Kindle, they are locked into the Amazon store, especially now that Amazon owns Mobi. Yes, I know that the Kindle can handle other formats and that there are conversion tools, but most people will only think Amazon and will not go to the trouble of converting other formats.

I see what you're saying but if Amazon truly wanted to lock people into only buying from Amazon, the Kindle would only read AZW and Topaz files.

I believe you are correct about most folks who own the Kindle thinking that they can only buy ebooks from Amazon but I think that is true of Sony Reader owners as well. It is only the more tech savvy owners who venture out to look elsewhere for content. I'm sure there are thousands of people happily purchasing their ebooks from the Sony store (or from Amazon) who have no problems with things as they are.

kovidgoyal · 10-06-2008, 12:18 PM

Quote:

Originally Posted by daffy4u

I see what you're saying but if Amazon truly wanted to lock people into only buying from Amazon, the Kindle would only read AZW and Topaz files.

I believe you are correct about most folks who own the Kindle thinking that they can only buy ebooks from Amazon but I think that is true of Sony Reader owners as well. It is only the more tech savvy owners who venture out to look elsewhere for content. I'm sure there are thousands of people happily purchasing their ebooks from the Sony store (or from Amazon) who have no problems with things as they are.

The difference is you can only but DRM books for the Kindle from Amazon, whereas for the SONY Readers, you can buy them from retailers other than SONY.

ficbot · 10-06-2008, 12:18 PM

I agree with Bill. The main reason for my purchase of the iPod touch was that I got tired of carrying around so many different devices. The iTouch has transformed everything for me! I love it. I am reading so much more because my books are so accessibleand it is so easy to get new ones---don't even need to get on the computer for it!

I got used to the small screen. But I would not mind a bigger one. I think my ideal ebook device would be a slightly bigger iPod Touch---the iTablet? Some sort of marriage between the OLPC and the iPod, maybe---energy-efficient mini-pc with a tablet mode and with eReader running on the iTouch platform?

I think most people won't want to buy a separate device, especially if they continue to cost so much. And most people don't want so much stuff to carry around.

And don't forget, the Kindle right now is US-only, which already inhibits it from being really a major player...

10-05-2008, 03:03 PM	#1
Falbe Publishing Gadget Slave Posts: 264 Karma: 600001 Join Date: Jun 2008 Location: Battle Creek, Michigan Device: Sony PRS505SC	Cover story Writer's Digest: Future of Ebooks, Amazon, etc. The cover story of the December 2008 Writer's Digest magazine explores the growing impact of digital books on the publishing business. I'm not finding this article online, so I'll paraphrase or quote some interesting points. The article notes the resurgence of ebooks since the fizzled push for digital book publishing in 2000/2001. With ebooks actually taking off, Bob Sacks, president and publisher of Precision Media Group declared that ebooks were the future and added, "There was a point eight years ago in which they started and crashed. That's not going to happen this time. We've passed the point of no return." The article then cites some interesting figures from the Association of American Publishers. 2002 - Estimated $7.3 million in net ebook sales. 2007 - Estimated $67.2 million in net ebook sales. Then, WD reported that at the 2008 BookExpo America, Amazon CEO Jeff Bezos said that since the Kindle launch, sales of content for the device accounted for 6 percent of Amazon sales revenue. ---- Not bad in less than a year, I say. ---- The last half of the WD article addresses how the digital content platform might help or hurt the income of writers. Points were made about how e-publishing would help more people be exposed to an audience, but Paul Aiken, executive director of the Authors Guild warned that: "When it comes to digital media...often a single player gets early control and winds up taking home the majority of the profits, as with digital music and Apple's iTunes. He says Amazon is building up its ebook library, and once it's in place, such dominant systems are hard to dislodge." Aiken went on to say, "If this goes wrong, it could drain a lot of money from authors and publishers. Whatever promise the new media has could all be taken by one company, leaving authors and publishers to scrap over the money that remains." ---- Well, I certainly imagine that this is Amazon's goal. It makes business sense. Overall, it's an interesting article that avoids the usual print media approach to reporting this subject as a books vs. ebooks thing.

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10-05-2008, 03:53 PM	#3
kovidgoyal creator of calibre Posts: 43,870 Karma: 22666666 Join Date: Oct 2006 Location: Mumbai, India Device: Various	It's ironic that digital distribution, which is so low cost that it should really be removing the middleman from the picture is instead serving to make that middleman even richer.

10-05-2008, 04:07 PM	#4
Richard Herley Author Posts: 203 Karma: 1164907 Join Date: Feb 2008 Location: Norfolk, England Device: Kindle Oasis	Thanks for the digest, FP -- it certainly feels like we're on the cusp of an ebook revolution. Actually I think the outlook for authors is rosier than it might appear. Remember the old adage? "Content is king". Without authors, there is no content, and no publishing industry at all. Authors need publishers for distribution and promotion. With ebooks, the net takes care of distribution; and most publishers' promotional campaigns are, frankly, dismal. I believe we will see the emergence of a new wave of indie authors. The process is analogous to the transformation of the music industry. For mp3 player, read ebook display. Amazon's strategy, both in trying to corner the market and in offering a means for individual authors to offer their wares to Kindle owners, suggests to me that they know they are on shaky ground when it comes to ebooks. If electronic distribution of books takes some of the clout from publishers, it will impact even more heavily on booksellers. Readers may not be aware that the bookseller's markup on pbooks can be 50% or more, with perhaps a similar or even greater figure for ebooks. The pleasure and convenience of having somewhere to browse the latest books comes at a high price. Ebooks should be very much cheaper than pbooks, since the main cost is the author's time and expertise, which at the moment accounts for only 10-15% of the price. Beyond the author's efforts, we have the cost of editing and formatting to take into account, which might represent 2% of the price. Thus an ebook costing $10 from a publisher might be a commercial proposition at $1.70 ... provided the author can sell the work directly to the reader. And as our old friend Mr Shakespeare remarked, "there's the rub!"

10-06-2008, 09:50 AM	#8
bill_mchale Wizard Posts: 1,451 Karma: 1550000 Join Date: Sep 2008 Location: Maryland, USA Device: Nook Simple Touch, HPC Evo 4G LTE	I agree that there is a danger of one player dominating the market. That being said, I am not sure that it is Amazon with the Kindle. Yep, its been the big seller for this past year, but I am not convinced it has been quite as dominating as the IPod was on the music industry. At least not yet. I think the biggest difference between the Kindle and the iPod is this; the iPod entered a world where young people (by and large the driving force of the modern music industry) were already conditioned to listen to their music using ear phones on small devices (i.e., the various walkman and like products that proceded mp3 players). When a digital music player finally got elements right (easy to use device, store, fashion statement...) it took off. In much less than a year, all other digital music players were also rans to the iPod. In contrast, the Kindle certainly has been a significant player, but e-Book readers still very much remain a niche product. In general, I would say the bulk of current e-Book reader buyers are both serious readers and also early adopters. They make up a significant, but by no means a dominating position in the market place for books. The book market is, I believe, more fragmented in demographics. I don't know what the current numbers are, but I suspect that a large percentage of book sales are to people who buy only a few books a year. At current prices, dedicated readers do not make sense to this demographic. If you spend $100 a year on books, its hard to justify spending $350 just so you can buy more books. I think there is a reason why Stanza and fictionwise have both seen quite a few of their readers downloaded for the iPod Touch. They are cheap (i.e. free) applications that can be downloaded easily to a device people already have. In addition, they offer a reasonably pleasing reader experience. In just 2 months they have accounted for enough book downloads that Forbes and other media outlets have taken notice. Sure they may not match the experience of e-Ink, but for the casual reader, they are fine. So ironically, I think the device that could end up dominating the e-Book market is actually the same device that dominated the digital music market. -- Bill

10-06-2008, 10:00 AM	#9
Slite Icanhasdonuts? Posts: 2,837 Karma: 532407 Join Date: Aug 2008 Location: Mölnbo, Sweden Device: Kobo Aura 2nd edition, Kobo Clara HD	@ Bill: I think you are wrong in one of your assumptions, that people will be content to read books on their iphone/ipod touch. For starters, yes, it will be sufficent at first, but if you are "serious" about your reading, you will soon tire of concentrating on the small screen and look around for alternatives. And thats where the e-Ink devices comes in. But I do agree that the e-reading market is just in it's infancy and it needs to "mature" before it will be adopted by the large masses. And before that happens we need a bit more development for the devices. As in faster devices, even better screens (not necesarily bigger), and ease of use improved.

10-06-2008, 10:07 AM	#10
JSWolf Resident Curmudgeon Posts: 74,037 Karma: 129333114 Join Date: Nov 2006 Location: Roslindale, Massachusetts Device: Kobo Libra 2, Kobo Aura H2O, PRS-650, PRS-T1, nook STR, PW3	Sony says they are vamping up their eBookstore so we'll see what Sony can manage to do.

10-06-2008, 12:18 PM	#15
ficbot Wizard Posts: 2,409 Karma: 4132096 Join Date: Sep 2008 Device: Kindle Paperwhite/iOS Kindle App	I agree with Bill. The main reason for my purchase of the iPod touch was that I got tired of carrying around so many different devices. The iTouch has transformed everything for me! I love it. I am reading so much more because my books are so accessibleand it is so easy to get new ones---don't even need to get on the computer for it! I got used to the small screen. But I would not mind a bigger one. I think my ideal ebook device would be a slightly bigger iPod Touch---the iTablet? Some sort of marriage between the OLPC and the iPod, maybe---energy-efficient mini-pc with a tablet mode and with eReader running on the iTouch platform? I think most people won't want to buy a separate device, especially if they continue to cost so much. And most people don't want so much stuff to carry around. And don't forget, the Kindle right now is US-only, which already inhibits it from being really a major player...

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