E-Books Rock, But Will They Rule?

Mike Stackpole is a former author of mine and remains a good friend. If you want to stay on top of the future of publishing from the author’s standpoint (my perspective is the publisher’s, though I’ve sold enough anthologized fiction to marvel at royalty statements and grrr at their Hollywoodesque “reserve for returns”), you’d better be reading this smart guy’s ever-unfolding blog. (Here’s the entry in which he receives his iPad.) Mike pointed me to a statement from the e-reading guru at Sony, Steve Haber, who says e-books will overtake print books within five years. Read the piece and get back to me. I’ll wait.

Sony – a company which distributes music (Columbia Records) and movies (Columbia Pictures, no relation except the corporate one) – has a traumatic lineage which we probably should respect. After all, most of its businesses, which used to be huge cash cows before everything went digital, are getting pirated six ways from Sunday. Its Sony E-Reader deserves credit for actually being first out of the gate, and it’s been gamely duking it out with Amazon ever since the Kindle arrived. But Sony was soon eclipsed by Kindle’s immediate wireless access to mountains of software, i.e., books. Yet the stark utilitarian use, which certain industries quickly sussed, is that you can also download any document file you like into these things. My old stomping ground, HarperCollins, issued Sony E-Readers to its senior staff to help them quit schlepping bulky paper manuscripts home. Variety reports that no show-biz agent worth his Valium lugs screenplays home any more: they all have e-readers, mostly Kindles. We’ll have to check back in a year or so to see whether or not Bryan Lourd is by then using an iPad. I remain unconvinced on the whole tablet thing for e-reading — they’re larger and heavier, and you can do most if not all of the same tricks with a smartphone – but for now let’s welcome in a significantly wider potential audience for e-books.

Ah, yes. Note that we’re selling and using palletloads of e-readers – Apple did a mind-blowing two million iPads in a couple of months, and that’s just in America – but we haven’t gotten to books yet.

I had lunch with my friend Jenny Frost, a very sharp book-biz veteran. She said that on the morning train commute into the city, it was first a novelty to see a Kindle. Then she noticed two or three. Then eight or ten. (These days, just before landing, the flight attendant frequently tells us to turn off iPods and Kindles by name; e-reading, via a certain brand name, is descending into the mainstream culture.) But whenever Jenny was close enough to see the screen, it turned out that everybody on the train was doing just what Mike Stackpole does every morning with his new iPad: they were all reading the news. The Times, the Journal, USA Today, whatever. But not books.

We have to separate the e-reading of manuscripts, screenplays, business reports and newspapers from the e-reading of books, if we want an accurate picture of this new technology’s impact. Furthermore, we have to understand what people are buying for their e-readers, not just downloading. Steve York cited an Apple release boasting a million and a half downloads from its iBooks store in the first month of the iPad’s release. Read that really fast and you think, wow, the book biz is saved! But we’re talking downloads, not sales, and every e-bookstore features hundreds, thousands, of public domain titles that are free – plus, at least in the Kindle store, free promotional copies of, say, the first novel in a continuing series, and I can’t imagine iBooks is any different in that regard. Even if I weren’t an avid reader, one of the first things I’d do with my new iPad would be to see what all the e-fuss is about and download a couple of free titles. Apple’s million and a half number, in and of itself, doesn’t prove anything; significantly, they did not mention actual sales. (In fairness, Amazon declines to even break out its Kindle numbers, so we have to guess there too.)

So: will e-books overtake print books within five years? (Emphasis strictly on books, now.) I think that’s unlikely, because as I’ve tried to show, there’s no evidence at all of a groundswell among consumers, no tsunami of pent-up demand that can’t do without its e-readers, no killer app. Most frequent readers already own their e-devices, and if you have a smartphone, you do too. The best we can guess is that e-books are only about 3 to 5 percent of the total trade business right now (my metric isn’t downloads but money), and the sector may be growing fast, but not that fast. However, tumultuous things do happen really quickly these days. Remember when there was no Facebook? That was in January 2004. Not one single consumer owned an iPod on October 22, 2001. The Sony Corporation knows full well how powerful the whirlwind can become: it was one of the dominant distributors of music before June 1999 and the debut of Napster. Maybe knowing that an explosion rocked his company before anybody could even breathe prods Steve Haber into predicting five years for e-books’ market leadership: he used to say ten, which is more like something I could believe in. (First we need more bells and whistles, like cookbooks with video, so that one day even a reader of comics won’t be able to resist.)

And, of course, nobody owned a Kindle – and only a tiny few outside Sony, definitely excluding Apple’s Steve Jobs, even took e-books seriously – on November 18, 2007. Maybe I’ll have to eat my words five years from now, because when you look back, that span seems like an eternity. All I’ll offer is that digital music piracy took off when the public decided it was being overcharged in general, and forced to buy ten songs when all it wanted was one. Anything that makes it harder or more expensive for customers to buy your product disinclines the purchase, and is simply bad business. Marketing 101, dude. We’ll see whether that lesson has been learned as we watch the big trade publishers fight to retain their dominance, while guys like Steve Haber hear the wind picking up.

7/20: An interesting development was reported today. Now what we need to know is, how many of these e-book sales — Amazon stipulates that these figures exclude free books — come from Random House, which allows the retailer to set the price rather than the publisher (that is, sell ’em cheaper)? In other words, is there a price differential already between e-books and hardcovers? I was talking to a woman last weekend who said she didn’t mind higher prices for e-books, because the convenience, at least in Kindle’s case, was worth it. It may be that the only people who complain will be early adopters who can remember when the price for most new books was $9.99.

8/17: Now I have direct experience with both Kindle and iPad. This is my take.

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15 Responses to E-Books Rock, But Will They Rule?

  1. Ken Houghton says:

    One of the things I’ve noticed (being rude) is that people who are using the Kindle to read books on the subway (and, to a lesser extent, NJ transit–as you noted, most of the e-reader readers are news catchups) are often Romance Novel readers.

    Having checked books out of the NYPL (Adobe eBook Reader, which works fine on my netbook), I don’t get the same feeling reading books electronically that I do with a text. Part of that is just that being told you’re on page XXX of YYY isn’t the same as glancing at a book and seeing that the piece of paper/bookmark is about 1/2 or 2/3rds or 1/4 through.

    Text searching is nice, but not a killer app for fiction. (Copyeditors mileage will vary.) And losing track of where you are in the book is not an advantage. Its going from a 3D to a 2D visual medium; fiction specifically gives a sense of journey and having a tangible representation of where you as the reader are in that journey is a benefit that e-readers cannot, at this point, give.

    • Tom Dupree says:

      I have no experience with anything other than a Kindle. My reaction is described here:

      https://tomdup.wordpress.com/2009/07/27/me-and-my-kindle/

      (Since I wrote that, I’ve moved to a Kindle 2.) I couldn’t bear to read a book for pleasure sitting at my computer, or even with a netbook on my lap. The Kindle feels like a paperback. It solves the too-many-books-for-the-suitcase problem handily. And the print-to-reader relationship has always been 2-D.

      It’s actually easier to see where you are in the book with Kindle 2: the progress bar at the bottom means you don’t even have to lift from the page. Text search is barely useful for fiction, as you state, but what about for a cookbook? And you can’t forget to stick the bookmark back in: close the book and your place is automatically saved. What’s wrong with that?

      But such comps are history. E-readers are here, their influence is growing. Just like texting, which I can’t get into. The question remains: what will they do to book publishing and reading? The only thing I’m sure of is that “nothing” is an incorrect answer.

      P.S.: I’m not surprised you see mostly romance novels:
      https://tomdup.wordpress.com/2010/05/09/chix-n-boox/

  2. Elizabeth says:

    Interesting post — thanks.

  3. Scott Raun says:

    I still think e-book readers in general need to take a significant price dive before they’ll be competitive.

    Digital music players quickly picked up a number of advantages – hold more music, less likely to skip, longer battery life – that somewhat off-set the higher unit cost of the device. Also, there were things you could do to keep the chances of environmental damage down.

    It certainly helped that the CD had become the media of choice for buying music – it was trivial to get a big piece of your music library from physical media to files on the computer. There’s no good analog for that in the book world – we’re going to have to buy new copies of practically all our books if we want to have e-books.

    I don’t see any of these advantages applying to e-books yet. For $150, you can buy what, 20 paperback books? For many people, that’s YEARS worth of reading. And that’s based on the books being free – right now, the savings on e-books (if you don’t pirate them) is pretty small – I’d bet that the typical payoff is closer to a decade or two for most people.

    And if you drop one paperback in the bathtub, you’ve significantly damaged, but probably not destroyed, one book. What happens if you drop your e-book reader in the tub? Ditto for walking down the street, sitting at the bus stop, etc.

    I admit, reading e-books could take off if the convergence devices improve. I’ve been reading on my PDA since the days of the Palm III. From what I’ve seen, the current crop of cell phones is better for reading, but not orders of magnitude better. If you’ve got aging eyes, a cell phone or PDA is not a great thing to read off of. The dedicated readers are better just because of the extra screen real estate.

    • Tom Dupree says:

      You’re right about the CD physically inviting piracy. Also, the software unit is much more compact: a song or album versus a movie or book. Third, kids drive pop music, and kids are wired.

      Like I said, heavy readers/early adopters already have their e-reading devices, and for them the math is far more favorable. For e-books to overtake print, you’ll have to bring in the mass market — the rest of the world –somehow.

      Jon Stewart posed that same problem to Jeff Bezos when he came on THE DAILY SHOW to promote the Kindle 2. Bezos said, “I read in the bathtub all the time.” Stewart: “How?” Bezos: “A Baggie!” Huge hand.

      I’ve read that the new iPhone model has a much, much clearer screen. It’s not ideal as an e-reader, but quite utilitarian.

  4. Jason Block says:

    “All I’ll offer is that digital music piracy took off when the public decided it was being overcharged in general, and forced to buy ten songs when all it wanted was one.”

    Just a minor point, but anything not free would have been too much. Everybody liked CD’s and bought them like hotcakes, but ‘free’ was more appealing. You cannot compete with free based on price.

    • Tom Dupree says:

      Steve Jobs did. I’m sure there are still more pirates than iTunes customers, but (1) you can’t deny that he’s made a significant business out of it, and (2) if iTunes, or another fairly priced payment channel, had been there all along, you wouldn’t have so many people shrugging off the moral implications of piracy. Anybody who works in a copyright business should be ashamed to download illegally, but I know some authors and other bookies who did/do it, because “everybody else does.”

      And price point was a factor, not to mention the folly of having to tear through the better part of a twenty to buy an entire album for one or two hit songs. I’m starting to hear similar grumbling about the ever-rising list price for hardcovers. Now there is a payment channel for e-books already in place…but is it fairly priced?

      • Jason Block says:

        If by ‘significant’ you mean mostly unprofitable, then I agree with you:

        http://digitalmusicnews.com/stories/012510apple

        The iStore service competes on convenience, not on price. As does the Kindle store – a painless, instant and safe transaction. The more inconvenient the other options are, the more appealing the iStore option becomes – to users who value what the iStore represents.

        If iTunes had been selling albums for 5.99 when Napster hit, I don’t think most people would have cared so much for convenience and safety that it outweighed the appeal of free. Downloading was something that was ‘dangerous’, ‘rebellious’ and you had to learn some small thing to be able to do it – all things that appealed to the primary music buying demographic of young people over ‘convenient’ and ‘safe’, which is the iTunes model.

        It’s not about pricing other than ‘free’ and ‘not free’. There was always a little grumbling about prices on CD’s, but on balance people often decided to buy one instead of a pizza, which cost the same. The free music option afforded people the ability to have both for the same price, where dinner costs what it costs, and the soundtrack is free. Regardless, they’ve been heavily discounted for decades and now with the global used market all but the most in demand cd’s can be had for little more than the cost of shipping.

        There’s a reason LP’s took over the market, because people bought them instead of singles. The LP’s with their ‘unfair pricing’ allowed an industry to support riskier artists, and for those artists to support themselves and make more out of popular music than ‘doo wop ditty’. In the end we get what we pay for, though. There is a similair dynamic in popular literature and it would be a shame to see that change.

        As for the price of books, I’d be very suprised if the average selling price, not the list, for a hardcover was higher than it was ten years ago, especially adjusted for inflation. In that context, still, ‘not free’ will always be unfair to people who have already accepted the free option as a possibility.

  5. Tom Dupree says:

    People first adopted Lps because they were fairly priced collections of singles. Remember, we call them “albums” because they used to look like photo albums, with 78rpm “singles” stuffed inside. Same with the first wave of pop Lps (I assume you’re talking about pop music, not classical or Broadway cast albums): Dylan aside, most were still collections of singles until the idea of the Lp-as-concept emerged in the mid-Sixties. The public doesn’t care about riskier artists — only the fans of those artists do.

    • Jason Block says:

      Sort of. There were always flipsides of 45’s that rarely resonated with the public, but went on to become classics in their own right, and from the outset LP’s had plenty of ‘filler’. Even Buddy Holly and Beatles records had stuff that nobody had heard before or had much longevity. But yes, people saw the value and that’s why they liked them. The same way a seven dollar album on iTunes is a better value than a single.

      The public very much cares about riskier artists. They adore them. The Beatles were a risk which many were unwilling to take. Dylan, the same, Springsteen, Zeppelin, Fleetwood Mac, the list goes on and on, even Madonna and Prince, though in retrospect a safe bet, were a great risk to pour that much money and promotion into – a risk that eventually payed off, but not right away. A creative industry – any industry – that can’t afford to take real risks, for instance, on a young film maker with genuinely weird ideas like ‘American Grafitti’ – will only make safe bets, will make dreck produced by a few insiders, as opposed to diverse art made by a thriving class of professionals, and that is how popular art forms die.

  6. Tom Dupree says:

    I fail to see how “risky artists” produced what we now know as, say, Fleetwood Mac.

    • Jason Block says:

      Maybe not in the sense of Dylan but in the same sense as the Beatles, who did both pop and rock. They did not sound the same as everything else, and no one sounded like them, which is a risk.

  7. Shawn says:

    I think that price is the answer. I might by an e-reader if I thought that I could get the books cheaper. I buy a lot of paperbacks and the cost savings just isn’t there…and it should be. What’s the overhead for electronic versions? There’s the initial cost of getting it ready to publish, but there’s no unit production cost or shipping or storage (well not much anyway). The books are simply priced wrong to encourage sales. Publishers could, I think, make more by charging less.

  8. I did some math using the AAP monthly numbers.

    Ebooks’ percentage of total sales (in $), starting with April and then going backward:

    April: 4.4%
    March: 6.2%
    February: 5.9%
    January: 3.9%
    December: 1.3% (19.1 million out of 1.5 billion)
    November: 2.3%
    October: 2.5%
    September: 1.3%
    August: 0.9%

    We should’ve gotten iPad sales coming in in April, so I think it may be telling in a negative way for Apple that ebook sales did not really improve in April.

    Note however, that these stats don’t include figures from independent authors. The above percentages are those given by *publishers,* and more and more authors are publishing new and backlist books as ebooks.

    And a year ago, Amazon said that 35% of the sales on any given book were on the Kindle edition of the book, whenever a book was available in both Kindle and paper formats.

    And that 4-6% figure is out of a base of categories that includes University Press, higher ed, K-12, and scholarly.

    So really, the current 4-6% figure of publisher’s sales is more impressive than it looks, certainly of fiction. Ebooks may be 4-6% of publishers’ overall income, but a higher percentage of books being read are ebooks.

    OTOH, is the agency model pricing really depressing ebook sales? Hard to say, because ebook sales are still very much increasing overall for publishing houses (though not in April), but what would ebook sales be if ebooks were priced lower? Maybe even better (I have to think so, since a recent study done by Critters.org showed that 93% thought that an ebook was too high at a price of around $11.20). And there wasn’t much improvement in April (maybe because more people are buying cheaper indie ebooks?).

    This is a big year for ereading devices, and it looks like so many will be bought at the end of the year for holiday gifts. So I think we will see these numbers increase a lot, and very quickly.

    • Tom Dupree says:

      Interesting assessment, Moses: thanks. I would love to know the results of Amazon’s dynamic pricing experiments — that is, on some just-published books they’ve introduced Kindle editions at $11 or $12, then reduced them to $9.99, sometimes only temporarily. I know this because I tag certain books I’m interested in for Kindle and keep watching. On at least three occasions, I’ve pounced at $9.99. What has AMZN learned, I wonder?

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