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The Flat Future of Electronic Reading

Posted By Aggregated Content On December 20, 2012 @ 2:21 pm In ebook,Tablet | 5 Comments

 

[1]By Andy Richardson, CEO of Influential Software

The future wasn’t meant to look like this. According to e-book evangelists, freeing the book from its paper format was going to herald a new era of reading. Physical book sales would wither and e-book sales soar as a new generation of reader, converted by the convenience of digital reading, thumbed through Twilight on their phones.

I believe this was a fatally flawed reading of the future, for multiple reasons:

  1. It was based on the notion that e-book sales were automatically ‘additive’ to the overall book market, when publishers had no way of tracking whether e-book sales were or weren’t cannibalising print purchases.
  2. It assumed that e-books were a new category of product (true of enhanced e-books and book apps, but these still don’t represent the bulk of e-book sales), rather than books in a new format.
  3. Its projections were based on an assumption that digital reading would shake publishing out of the low-growth trajectory of a mature market.
  4. In a world where tablets make it possible to consume any kind of media on the move, what makes you think that books should be privileged?

[2]Writing now at the end of 2012, it does seem that digital reading is facing a flatter future than we were led to expect. While sales of tablets and e-readers have sky-rocketed until now, with the Pew Research Center estimating that 29 percent of American adults now own one of the devices [3], the future for pure-play e-readers is looking far more uncertain.

This week, technology market intelligence firm iSuppli warned that dedicated e-reader shipments are now well past their 2011 peak [4] of 23.2 million units, predicting that only 14.9 million will have shipped for the whole of 2012. The consumers who would have splashed out on e-readers two years ago are buying tablets instead. Indeed it’s very probable that many e-reader owners now have both.

It’s good news if you’re a platform owner—like Kindle or Apple—who doesn’t care whether consumers read books, watch videos or play Angry Birds, as long as you use their content ecosystem. It’s a far more mixed blessing for publishers, however, as now, their e-books don’t just have to compete with those of other publishers for the holiday shopping dollar, but are now pitted against every other digital medium represented in tablet app stores. [5]

Another sign that digital reading isn’t delivering high growth book sales comes from an analysis by Jeremy Greenfield at Digital Book World. He’s used Nook book chart rankings (which are assumed to be more reflective of actual book sales than Amazon’s) to track the effect that e-book discounting has had on actual sales [6]. The results make for discomfiting reading for any publisher who’s succumbed to stunt pricing offers in order to achieve a spike in book sales. None of the Harper Collins titles Greenfield examines seem to have made back the money ‘lost’ in discounting the books in the first place. It makes basic mathematical sense. If you discount a book by up to 93 percent (as Sony and Kindle did during the brief e-book price war earlier this year), sales of that same book must rise by 93 percent before you break-even.

So what can we take away from these apparent trends that will guide our thinking for publishing in 2013? Well, it’s safe to say that e-books will continue to grow their share of the book sales market, but the rate of growth will probably also slow too. This is because many heavy readers have already transitioned (at least in part), as well as the fact that a bigger share of the overall market leads to a natural deceleration in growth.

The end of the publisher price fixing case could also have surprising effects on e-book pricing, according to Greenfield. Faced with a competitive landscape where price promotions don’t work, and are also limited by law, we could see fewer of them about. But seeing as full-price e-books drove the majority of bestseller sales anyway, it’s difficult to say what impact this would have on publishers’ bottom lines.

I do believe, however, that all e-reading platforms should be far more open about the data they provide to publishers. The app stores and mobile content ecosystems that control millions of consumers’ media diets represent vast stores of insight into what people want, when they want it, and how much they’re prepared to pay for it. Without access to at least some of that data, and the ability to interpret it, publishers will be at a natural disadvantage when it comes to creating the product the market wants. And if they don’t get access to it soon, it’s likely that publishing will fall behind in terms of innovation. This is something no one—e-reading platforms, publishers and consumers alike—wants. So make it happen soon, for everyone’s sake.

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About Andy Richardson and Influential Software [7]:

Andy Richardson, CEO of Influential Software [8]Influential Software is an IT consultancy set up by founder and CEO Andy Richardson in 1993. It has a turnover of £2m and 35 staff in the UK, with offices in London and the South East. The company has been working with businesses across all sectors for 20 years on scores of successful projects that range from enterprise-level business intelligence and data-warehousing to ERP solutions, vendor selection exercises, bespoke software development and the supply of skilled contract staff.


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5 Comments (Open | Close)

5 Comments To "The Flat Future of Electronic Reading"

#1 Comment By Paul StJohn Mackintosh On December 20, 2012 @ 3:22 pm

I want to see a survey that says how much ereading consists of free content. Project Gutenberg may be to blame for the flat trajectory in ebook takeup. Whether or not publishers were charging for part of our heritage that should have been available for free anyway back in the bad old days of paper only, they sure have no excuse now. And given the sheer quality of the free content now available, they have a far higher quality bar to pass to convince readers to shell out.

#2 Comment By Frank Lowney On December 20, 2012 @ 6:16 pm

It is entirely understandable that Influential Software would want better access to data about what readers want. Whatever did publishers do prior to analytics? I suppose that they listened to readers who opted to provide an opinion. Certainly a skewed sample but also a method respectful of privacy. Purchasing an eBook should not entail an obligation to involuntarily bare one’s soul.

#3 Comment By Marilynn Byerly On December 21, 2012 @ 12:35 pm

Paul, as a former literature teacher at both high school and college level, I’d say that Gutenberg has a minimal effect on ebook numbers. Books old enough to be out of copyright are much harder to read by today’s standards of narrative and story-telling so they are a hard slog for a vast majority of readers. All you have to do is listen to students whine about these books to know that.

I belong to several reading lists of fantasy readers and in a recent discussion of LORD OF THE RINGS many of them said they couldn’t push through the complex text even though they were fans of the movies. And LOTR isn’t remotely as difficult to read as a novel by one of the early masters of the novel.

#4 Comment By Adam On December 24, 2012 @ 7:12 pm

Why would I buy a black & white e-reader when my smartphone is colour and much more portable?
Also, discounting works fairly differently to as indicated – it is not designed to make money from a massive increase in sales of the discounted product, but to grab readers’ interests and encourage them to buy at full price other works from the same author.
I think e-book publishers as well as traditional publishers still have a lot to learn regarding the most profitable way to sell books in the digital age, but e-publishers are certainly learning quicker (as they don’t have their heads in the sand).

#5 Comment By Ethan Parsons On January 1, 2013 @ 4:52 am

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[3] the Pew Research Center estimating that 29 percent of American adults now own one of the devices: http://www.forbes.com/sites/parmyolson/2012/12/04/5-eye-opening-stats-that-show-the-world-is-going-mobile/?goback=.gde_61398_member_192784613

[4] iSuppli warned that dedicated e-reader shipments are now well past their 2011 peak: http://thenextweb.com/mobile/2012/12/10/after-rapid-growth-ebook-readers-set-for-collapse-with-shipments-plummeting-36-in-2012/?fromcat=all

[5] but are now pitted against every other digital medium represented in tablet app stores.: http://www.digitalbookworld.com/2012/consumers-increasingly-choose-tablets-over-e-readers-e-book-sales-to-suffer/

[6] the effect that e-book discounting has had on actual sales: http://www.digitalbookworld.com/2012/how-amazon-and-barnes-noble-price-changes-affected-sales-of-harpercollins-ebooks/

[7] Influential Software: http://www.influentialsoftware.com

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