The E-book market: like a Bull in the Publishing Industry's Porcelain Shop!

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What is the e-book market all about? Who are the people who read e-books? Nobody really knows for sure. Yet it would be nice to know a little more about this new digital bull threatening to break every glass and porcelain cup in the traditional publishing industry. And, to further mix metaphors, it's not just another butterfly about to die after summer is over (see pix!)

If you knew who buys e-books, you might be better able to aim titles (and "genre" - I'll get back to that in another post: please vote the poll on your right) and hit the jackpot. At this point in time, it's still very early in the e-game and one can only make conjectures.

A few facts are fairly certain. The buyers of e-readers are people with a certain amount of personal means - particularly buyers of the i-Pad which is still fairly expensive. I suspect that the i-Pad market is somewhat different from that of other e-readers. The i-Pad with its jazzy touch-screen technology and bright colours is bound to appeal to fashion-conscious and technology-savvy people while e-readers based on electronic ink in its various shades of grey can only attract "serious" readers, the kind of people that don't care about images or music and just read books, period.

The i-Pad opens the door to "extended" e-books, based on a multi-media approach, with colour illustrations,  music, video-clips and all sorts of extras. Not "real" books, at least not in the traditional sense. Extended e-books are still fairly experimental, and so far they don't really threaten the traditional publishing industry. They could, though, in the not too distant future once they get going in a big way, particularly in the children's book market. But we're not there yet.

Where we are now is with e-books in electronic ink. They are similar to paper books in every way, plus they are highly accessible and portable. On the minus side, you can't autograph them, lend them or resell them (although all these drawbacks are close to some sort of solution sooner or later - for example, it will soon be possible to autograph books on the i-Pad).

Another important fact so far: most buyers are Americans. The big e-market is in the US and that's where some interesting number-crunching can already be done. Mark Coker, the founder of Smashwords has made a laudable effort (see HERE) which suggests that e-books' primary market might be in places where people are far away from bookstores. While there is little doubt that accessibility is a major factor and one of the clear advantages of e-books over printed books, enabling distribution problems to be overcome with a single click on an e-reader,  it is probably only an indication of how e-books spread in the early stage of introduction.

This accessibility aspect is also likely to explain the early spread of e-books to the rest of the world - at least in the English language - while e-book in local languages still have to take off, as Meredith Green has shown in her interesting article (see below).

But what about the next stage of the e-book market? No doubt this is a bullish market, growing at exponential rates. E-book sales have already topped paperback sales, suggesting that e-books are likely to replace paperbacks in the not too distant future - particularly considering the exponential speed of growth of the e-book market (at 200% a year, and possibly much more, like tripling or quadrupling over the next couple of years). Actually growth in e-book sales surpasses print sales in all trade categories, fiction and non-fiction. If you consider that e-books on average are cheaper than any form of printed book, then it is probable that the number of book titles sold in digital form is higher than in printed form, although actual figures so far are not available (I haven't seen any - if you have, please let me know). Since printed book sales are headed down, it would appear that people are shifting from printed books to e-books.

Another important point: driving this e-book growth is the fact that people are re-discovering back titles, classics etc, all sold at generally low prices. Lots of people are stocking up like mad as soon as they acquire an e-reader. One of my friends confessed that she's bought some 250 titles since she got her Kindle last year! I haven't, but I suspect that I'm a particularly finicky reader and probably not "in the norm": I don't go for "genre" reading and tend to download samples before deciding to buy, and very often, after twenty pages, I just delete the sample.

The real question becomes: with e-books, is the reading market actually expanding or is it just undergoing a shift onto a new reading platform?

To begin to answer that question one would need to know WHO is buying all those titles. If one can assume that it is your basic group of "core readers" (that famous 20% of readers who buys 80% of titles), and that they just happen to joyfully stock up on classics and back titles after they've acquired their new e-reader, well then, it's just a bubble in sales that won't be maintained over time. A bubble will eventually burst and we need not worry. And it certainly is not indicative of an expansion in the overall market, particularly for new titles.

Let me don my economist's hat for a minute (ugh!) and consider the structure of the e-reading market. First, let's remember that e-readers are bought by people who can afford them, i.e. people with a "comfortable" income, presumably with a steady job and belonging to the cultured middle classes. Second, judging from the spike of e-reader sales at Christmas, a lot of e-readers - perhaps as many as half - are bought as gifts. Presumably (again, nothing is certain) these are gifts for the family, in particular teen-agers. Since teen-agers have generally limited pocket money, one may assume they are the ones buying e-books at the low end of the price range (from $0.99 to $3.99) and possibly downloading free titles.

And this is where (perhaps) the book-reading market might be expanding: for the first time, adolescents everywhere are in full charge of their book purchases. They don't have to go to the bookstore with Mum and Dad to buy books and have their choices dictated by adults. They learn for themselves the pleasure of reading, and hopefully that pleasure will remain with them for the rest of their lives. This might help explain the extraordinary success of Amanda Hocking's paranormal romance titles - clear emulations of Stephanie Meyer's "Twilight" which, as we all know, is currently all the rage with teen-agers. Amanda Hocking's e-books became blockbusters last year and turned her into a millionaire in less than 9 months because in the e-book market there is a vast, new Young Adult audience looking for just this kind of book.

The success of such self-published authors seems to have a lot to do with the price-range at which they reached success (always under $10, but mostly between $0.99 and $3.99). That particular price range seems to be decisive for other highly successful self-published authors, such as Locke and Konrath (whose popular thrillers are actually aimed at older audiences).

All this suggests there's a sea-change in the e-market's price structure. This is caused in turn by a sea-change in the kind of readers coming now to the e-market. And since all readers' markets are connected, the printed book producers - i.e. traditional publishers - would ignore such changes in the e-market at their own risk.

Yes, a SEA-CHANGE! Something like Japan's tsunami, without the terrible loss of human life, naturally...

And remember, readers vote with their dollars, whether they buy an e-book or a paperback!

You know, come to think of it, probably the most intelligent thing about e-books is that famous $0.99 selling price that scares so many people in the publishing industry! There's just been a fascinating tit for tat between two bloggers that specialize in commenting on the publishing industry: Nathan Bransford vs. the Passive Voice. You can get the whole thing by reading HERE, or I'll tell you in a couple of words. The Passive Voice calls that price the most "disruptive" price there is - and of course, Nathan Bransford agrees, indeed he goes one step further: $0.99 is going to kill the publishing industry business. At that price, says Nathan Bransford, you might as well give everything away for free, you can NEVER recover your costs!

Well, yes and no. As the Passive Voice points out, this is a reaction that belongs to the traditional book publishers's frame of mind. If you think in terms of $20.00 paper/hardcover books, $0.99 may well look like a big marketing mistake. But this overlooks a very simple fact: a printed book is ALWAYS read by more than one person - and if it happens to be in a library, that book could be lent out 100 times before it falls apart! That, as pointed out by the Passive Voice, works out to about $0.20 a reading!

Because after all, that's what e-books really are: ONE reading each! Even Amazon that allows Kindle readers to lend their books has put limits on it: not more than two weeks and only once! So you can easily imagine that lending e-books is not exactly in the cards...I don't know the numbers, but I'm willing to bet that only a tiny minority takes advantage of that e-lending service. I know that I certainly don't!

PLUS the fact that at $0.99, you are really into the realm of impulse purchases: a lot more people will buy books at that price than at $20.00...

So we are really into ANOTHER world, and something as big as this hadn't happened since Guttenberg's days, 600 years ago!


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