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By David Rothman

idpfStatsNov3007

E-books are a small part of the market but are growing rapidly—that’s the standard line. Long term, yes, I can see the market ramping up well into the billions.

So why are some truly abysmal sales figures coming out of the IDPF‘s limited survey of trade publishers, at least within the first three quarters of 2007? Can we trust the numbers? And how about the E Ink factor? The Sony Reader PRS-500 E Ink gizmo reached Sony’s online store in September 2006 and should have been gathering momentum in 2007, so what gives? Click on the chart for a more detailed view, but that still won’t provide you with the full picture.

Ready for some detective work? Let’s begin with the IDPF’s wholesale numbers for the U.S. e-book biz, collected with help from the Association of American Publishers. The chart shows the following for 2007:

  • Q1: $7,500,000
  • Q2: $8,100,000
  • Q3: $8,000,000

Just a $500,000 increase from the first to the third quarter (and even a $100,000 drop from Q2)? A mere 6.67 percent?

Again, there are wholesale numbers, not retailer numbers, and come from “approx. 12 to 15 trade publishers” and without “library, educational or professional electronic sales” included. But forget about size per se. Shouldn’t we have seen more growth here, even though the quarters are pre-Kindle?

Greater expectations for Kindle

My own hunch is that the Kindle, with its wireless and its Amazon ties, will be far more successful than the Sony Reader has been up to now.

But then we’re expecting more out of the Kindle. Will we suffer a similar letdown? I hope not.

If both Sony and Amazon released hardware sales figures—dream on, huh?—that would provide a little more context.

Holiday bump but not healthy momentum

Meanwhile, for comparison, just consider that for 2006 the IDPF reported $4,100,000 in Q1, $4,000,000 in Q2, $4,900,000 in Q3 and $7,000,000 in Q4. That suggests that the market perhaps got a nice big bump from the Reader in late 2006, as well as end-of the year holiday business, but that it didn’t continue last year to the extent optimists expected—not if Q3 of 2007 ended with only $1M more in sales than Q4 of the previous year, just a 14.2 percent increase.

I expect a much-bigger boost from the Kindle for Q4 of 2007, but I still wonder what will happen once the K machine moves past the early adopter market. Could go either way. One research firm is forecasting Kindle sales of perhaps 50,000 in the first year. Now let’s think first-year book buys, not just one quarter, and say each owner shells out $200 in for books, or half as much as he or she paid for the machine. That would be $10 million at the retail level—huge growth but still less at the wholesale level and a speck in the book galaxy of tens of billions.

Adding to the fun for now, keep in mind that most of the houses reporting to the IDPF probably were bigger than average and reliant on DRMed books. If you go outside the IDPF’s realm and include smaller publishers less inclined to hobble their titles with DRM, the industry stats might be looking much, much healthier. That’s why the headline says the numbers are iffy. Sales stats from retailers would probably be more meaningful, but the IDPF isn’t as strong as it could be in the retail area.

Hey, sorry the news in the IDPF’s own numbers isn’t better, but it would be worse. Consider 2005. Again going by the IDPF stats, Q1 of 2005 was $3,161,049, while Q4 was $2,175,131—no, I didn’t get those numbers reversed. Why did sales drop? Maybe a decline in newly released e-titles when the industry had less faith in E than it does today?

Much brighter picture long term if you go by pure growth

As for the first three quarters of 2007, I’d urge people not to panic. The $8M from Q3 2007—and the $5M from just a partly finished Q4 2007—still dwarf the $1,649,144 of Q4 2002.

So patience, please, e-book fans. Popularization of e-books on cellphones could help. So could sexy new reading devices such as the forthcoming Readius. And what about e-book standards? Or a more sensible attitude toward DRM? The solution isn’t just incremental thinking, but experimentation with major changes, such as the abolition of DRM or the substitution of it with social DRM. Let’s work toward a tipping point. Oh, how much upside there if the right thinking prevails!

Wisdom from Ficbot

Without guts to change e-bookdom, beginning with their own practices, statistical analysis can get publishers only so far. If you really want to understand why E isn’t growing as quickly as it should—but why it still has upside potential—-read Fictbot’s account of her DRM hassles and powerful urge to stick to nonDRMed books, the very kind that large publishers refuse to do.

I feel the same, Ficbot. I want to own books for real and be able to enjoy them on a variety of machines, the reason why I’m so gung ho on e-book standards, not just an end to DRM inanity.

If the publishers make people like Ficbot and me happy, then E will take off, or at least do much better than it has up to now.

Detail: Many traditional book people are uncomfortable with tech and the mechanics of transferring books from machine to machine and among different brands. Perhaps they think all consumers are the same. Not so. Young people, especially, plan to trade up to new machines and move books around on their existing ones–overwhelmingly without piracy in mind. A Kindle- or Sony-centric approach, would be downright dangerous, especially if the real e-book winner ends up being Apple, which could partner with content-related companies.

Good ideas: Talk of perhaps making it easier to go between audio and e-books, or to buy both E and P in one package if you want (scroll to near the end of Evan Schnittman’s post). But people will want to shift within E, too, not just among media.

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