Will Ebooks Rule?
It is all the rage now to say that ebooks are the future of publishing. There is no better way to make yourself a predictable sage then to proclaim that ebooks herald the demise of paper books, and in a decade we’ll see scarcely a printed book around. Or something like that. While I have gone on the record to say that we are in the middle of a publishing revolution(1), I believe these popular predictions about ebooks are wrong. Ebooks will have a part of the publishing future, but they will not cause paper books to become nearly extinct. Ebooks will surely remain a minority player in the book publishing field.
I’m not the first to speak against the hype of ebooks. The typical arguments for ebooks are the litany of cheap, easy, convenient. The usual arguments against ebooks from doomsayers are the chants of difficult, inconvenient, and aesthetically displeasing. Depending on who is making the argument, different people lay stress on different points. Jason Epstein in his 2009 O’Reilly Tools of Change for Publishing speech laid a special emphasis on the aesthetic aspect of physical books.(2) Other people will complain about the lack of readability of digital screens, or the frustrations of handling ebooks. While there is merit to each of these complaints, none of them get to the heart of why ebooks will not take over the publishing industry.
The real reason ebooks will not conquer the publishing world is simple: The cost of reading ebooks is too high. This cost comes in two parts: The cost of ebooks, and the cost of ebook readers.
The Cost of Ebooks
Theoretically, an ebook could cost nothing. The cost of transmitting the digital bits of ebooks is nil. This is why you can find ebooks for works in the public domain available for free all over the Internet. But if sending an ebook across the world to a thousand people costs nothing, writing an ebook takes time, and most authors want some monetary compensation for their time. And if authors are getting something, publishers want a peice of it too. The problem is that publishing companies are damaging the prospects of ebooks by their standard practice of inflating the price for ebooks.
As of this writing, (June 2010,) if you go online to Amazon or Barnes and Noble you will see most popular and recently released ebooks priced in the range of $10. For example, today at Amazon the ebook of The Shack by William P. Young is priced at $9.99. There are several problems with this pricing picture. The most obvious is the paperback offering of the book for $8.47 with free Super Saver Shipping. You can purchase a paperback copy for less than the ebook copy. “Now wait a minute,” you think. “An ebook which costs nothing to print is being sold for more than a book which costs something to print?” This type of situation will not encourage the success of ebooks.
In its own offerings Amazon prices the paperback copy higher than the ebook copy of the same title–but only by a little bit (in this case 20 cents, for a price of $10.19). However, the fact that third party sellers can offer the new paperback for significantly less indicates that Amazon’s pricing is an artifical peg, neatly kept just above the desired price peg for the ebooks.
The more we look at this pricing structure, the worse it appears. It actually costs something to print and ship a paperback book, but how much? To continue with our example of The Shack, there are third party bookseller selling a new paperbook copies for as low as $5.45 (with an addtional cost of $3.99 for shipping). This price tells us retailers can pick up this book for under $5.45. Since the cost of distributing ebooks is effectively nonexistent, if a paperback copy of a book can be sold for $5.45, then the ebook should be sold for at least that low a price. But let’s not stop there. Ebooks don’t require paper and ink to create. That should be an additional savings. Using POD I could print a book like The Shack for about $4.00. But it costs less to print a book in large off-set print runs, so let’s say it only costs the publisher $2.00 to print The Shack. Since there is no similar printing cost for the ebook, the ebook copy ought to cost no more than $3.45. Instead, we have the ebook priced at $9.99.
Why is there this huge price markup in ebooks? There are two basic reasons: Greed, and fear. Publishers are afraid they might ruin the market for paperback books if ebooks were made much cheaper, so the price of ebooks is inflated to just below the cost of paperbacks to make ebooks less attractive. This appeals to both the publishers and retailers of ebooks because it means they can make huge profits from ebooks. There is no cost to print or stock ebooks–all of the printing and distributing costs are turned into pure profit gravy.
This pricing structure is neither fair to the consumer, nor truly wise on the part of the publishers and retailers. If you want your product to be successful, make it as affordable as possible, and treat your customers right. Instead, what we currently have in the ebook market is a form of price fixing. Publishers and retailers can reap large profits from ebooks, but the over-pricing depresses the market for ebooks. Until publishers and retailers adjust their prices to a fair level, the market for ebooks will be severely stunted. People know a bad deal when they see it.
The Cost of Ebook Readers
Even if publishers and retailers reform their practices and begin selling ebooks at a fair price, ebooks still will not take over the entire publishing market. The issue of cost remains–the cost of ebook readers. To conviently read ebooks you need an ebook reader, and this will remain a prohibative cost for most people.
At any given time in the United States, between 13% and 17% of the population is below the poverty line, and within a ten year period 40% of the population will fall below the poverty line. Over half of Americans will at some point live in poverty.(3) I have lived in poverty, and from my own experience I can tell you that if someone is living in poverty they simply cannot afford a $200 ebook reader, not even a $150, or $100 ebook reader (much less the current price of $250+). Even those not in poverty, but with limited disposable income, will be reluctant or unwilling to invest in such a device.
For a large segment of the population, the cost of entry into ebook reading will remain unfeasible and this has a profound impact on the viability of ebooks.
If this were not enough, a bit of math quickly makes it apparent that for most people it makes no economic sense to use an ebook reader. Currently a Kindle costs $259, a Nook $259, and the Ipad $499. According to a poll taken by Associated Press-Ipsos in 2007, of those who read books the median number of books read was nine books per year for women, and five for men.(4) At $10 for a paperback book (mass market paperbacks are typically a few dollars less, a trade paperback possibly a little more) it would take the median woman reader in this survey nearly three years of reading on her ebook reader before she would have spent as much on physical books as it cost her to purchase on her ebook reader–and that without counting the cost of any ebook purchases! At these prices you are spending more money to use ebooks, not less.
For your average reader it makes no economic sense to use ebooks. More than that, it is not practical. What are you going to do–bring a $6.00 mass market paperback to the beach, or your expensive ebook reader? Most people will take a cheap paperback. What are you going to do–use one ebook reader for everyone in the family so only one person can read one book at a time, buy an ebook reader for everyone in the family, or buy one paper copy of each book so everyone can read whichever book they want? The affluent in society can afford to buy an ebook reader for every member of the family, and chance losing or destroying their ebook reader at the beach, but most people are not affluent. Most people are going to continue buying cheap paperback books for their recreational reading.
Do ebooks have a place in the future of publishing? Yes, ebooks have a place in the future of publishing, especially to niche markets. If publishers bring the cost of ebooks down to a fair and appropriate level the market for ebooks will expand, and if the cost of ebook readers declines the market segment will thrive. But will ebooks rule the future of publishing? No, because it will always cost more to produce a sophisticated electronic ebook reader than it costs to produce the bundle of paper we call books. For this reason ebooks will always have a minority share in the publishing world. How successful that share becomes depends on how intelligently publishers, and authors, develop the market.
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(1)Rundy’s introduction to the publishing revolution: http://creative-vapors.com/essays/publishing-revolution/
(2) Speech given by Jason Epstein at the 2009 O’Reilly Tools Of Change for Publishing Conference: http://www.ondemandbooks.com/docs/TOC%202009%20Speech.pdf
(3) Wikipedia article on povertyhttp://en.wikipedia.org/wiki/Poverty_in_the_United_States (The figures I quote appear on the page 6-23-10. Future changes to the page may alter the data presented.)
(4) MSNBC article on Associated Press-Ipsos poll: http://www.msnbc.msn.com/id/20381678/
{ 6 comments… read them below or add one }
While I agree that the prices of ebooks holds it back from becoming more popular, I could easily see some incarnation of ebooks becoming something more then a gimmick.
You feel my article implied that ebooks are a gimmick? That was not my intention.
I intentionally avoided giving a precise prediction about the ebooks potential market share because that kind of speculation was not the point of the essay. For the article I simply said “minority share.” The point was demonstrating why I don’t think ebooks will destroy print books. I could see ebooks coming to rule in certain segments of the market (for example, perhaps college textbooks) but if I had to hazard a wild speculation, I would say the total ebook segment of the entire book market (once pricing was reduced to a fair level) would be at best 25% to maybe 45%.
One interesting possibility is that if ebook prices are reduced across the board to a $1 – $3 range people might start impulse buying a lot of ebooks they never actually read. This could inflate the number of titles sold on ebooks.
As an aside, the morning after I published this article I got an advert from Amazon, dropping the Kindle price to $189.
If ebook prices came down significantly, and ebook reader prices dropped a bit more, I would find it strongly appealing as a very cheap way to check out more writing. But in my mind the pricing is still too high for what, in my mind, is only a competitor for the mass-market paperback section of the market.
It wasn’t so much that I thought you implied that ebook readers are gimmicks so much as that they would never be a major competitor to regular books and that on demand books would become mainstream.
Granted, I don’t think the current ebook readers will be popular. I don’t even think dedicated ebook readers will be popular. It is my understanding that the only point of having a dedicated ebook reader is the screen. As the screens on laptops/computers/tablets continue to get better; at some point I expect they will get to a point where they are comparable to paper.
Let’s say the screens have improved to that point and the price of ebooks came down to a reasonable amount, and most people would already have a laptop/computer for other reasons.Why would you want to travel 40 minutes to the next big store so you could pick up a book that you may only read once or twice when you could start reading it instantly?
Or wait in a long line in the rain for the latest super popular book when you could have it the instant it came out?
Ebooks could have also huge advantages when it comes to textbooks, the ability to have multiple parts of the books open at the same time, copy & paste, search, interactive sections, lack of weight, etc.
In my opinion the technical advantages of ebooks outweigh the aesthetic advantages of physical books. As for the price, you already stated that the primary factor for the high price of ebooks is the publishers. Who is to say that the publishers/stores wouldn’t inflate the price of POD books? And if the publisher is out of the picture they could be sold as ebooks even easier.
Regardless, I don’t feel that strongly one way or the other about ebooks, I just felt like you dismissed them because of their current limitations instead of their potential. After all, books started out expensive, had to be written & bound by hand, were easily damaged, etc.
Bah, when I copied my comment from Word it didn’t keep the line-breaks it seems.. Oh well.
I said “Ebooks will have a part of the publishing future, but they will not cause paper books to become nearly extinct. Ebooks will surely remain a minority player in the book publishing field.” If (for example) Verizon has 55% of the cell phone market, AT&T has 30% and T-Moble has 10% and Tracfone 5% then Verizon holds a majority. AT&T is a minority player, but is Verizon’s main competitor. The statement that AT&T is a minority player does not contradict the statement that AT&T is Verizon’s major competitor.
By your reaction to my article, you seem to have read it as a dismissal of ebooks, which was not my intention. My position is that ebooks will not cause physical books to become “nearly extinct” and further that ebooks will hold less than 50% of market share. I did not state exactly how large a minority share ebooks will have because I am not certain.
If you are saying that ebooks will nearly wipe out paper books, and that POD printing is only a passing fad that will not go mainstream, then we do have differing opinions.
Now in regards to some points you raised:
You said, “It is my understanding that the only point of having a dedicated ebook reader is the screen.” That is not my understanding. Beyond the issue of the screen there is also the issues of ergonomics, portability, and price. Ergonomics is a primary focus of ebook readers. The way we sit in front of computers is not the way we sit to comfortably read a book. Current computer usage cannot mimic the comfort of the normal reading position, regardless of screen material. This becomes obvious if you tape a book to your computer screen and start reading it.
Now someone might (and many people have!) suggested that devices like ebook readers will replace computers. That may be the direction computers are going, but I still maintain that the majority of the population will not be affluent enough for everyone to have their own computer and a household is not going to want to share one book/computer for reading.
You said, “Why would you want to travel 40 minutes to the next big store so you could pick up a book that you may only read once or twice when you could start reading it instantly? Or wait in a long line in the rain for the latest super popular book when you could have it the instant it came out?” I do not deny that their are advantages to ebooks, but you are constructing something of a straw man argument here. When the final Harry Potter books were coming out, smart people pre-ordered the books from Amazon, etc. and it arrived the day of release. Traveling 40 minutes to the next big store, and standing in long lines was only for fools and fanatics.
It is true that ebooks have instant gratification, but this is not limited to ebooks. When the Espresso Book Machine advances to the place of being no more expensive than an office copier machine you will see it appearing in all retail stores–the Walmarts, Targets, etc. Much like magazine racks function now, the EBM will entice shoppers for instant gratification–and without the waste of the current magazine racks, because books will be produce only when someone makes a purchase. Ebooks and EBM books each have a particular instant gratification appeal, so I don’t see that as definitive.
I have not denied that ebooks may be a great advantage for textbooks.
I did not advance an argument based on the aesthetic of physical books.
You concluded by saying, “I just felt like you dismissed them because of their current limitations instead of their potential” My argument is primarily economic. I raised the issue of the price of ebooks themselves first, because that is the huge obstacle keeping ebooks from having any kind of significant success. But it is the cost of being able to read ebooks that I see as definitive in keeping it from becoming a majority market share. I do not see the majority of people having a personal computer/ebook reader which they can take with them wherever they wish to read.
In my opinion, ebooks will largely cannibalize the mass market paperback, leave the hardcover market mostly untouched and (depending on how things turn out) either slightly cannibalize or slightly improve the trade paperback market. The textbook market will be an exception. I think of authors and publishers act rightly, ebooks could be used as a great sales device for physical books so I do not see the two at odds.
“If (for example) Verizon has 55% of the cell phone market, AT&T has 30% and T-Moble has 10% and Tracfone 5% then Verizon holds a majority. AT&T is a minority player, but is Verizon’s main competitor. The statement that AT&T is a minority player does not contradict the statement that AT&T is Verizon’s major competitor.”
The way I see it books didn’t have a competitor before, and that even if ebooks only had a 20% “share” they would have a huge impact on the amount and how books are read. Being a minor player doesn’t stop you from having large effects on the market.
“By your reaction to my article, you seem to have read it as a dismissal of ebooks, which was not my intention..”
The first time I commented that was pretty much the tone I picked up on. The second time I was just disagreeing with some of your points and assumptions.
“My argument is primarily economic. I raised the issue of the price of ebooks themselves first, because that is the huge obstacle keeping ebooks from having any kind of significant success. But it is the cost of being able to read ebooks that I see as definitive in keeping it from becoming a majority market share. I do not see the majority of people having a personal computer/ebook reader which they can take with them wherever they wish to read.”
You seem confident that Espresso Book Machines could come down to price of a copy machine, but the price of an ebooks & readers won’t come down? You don’t explain why you think so. And if people are so poor they can’t afford any sort of computing device that could read ebooks do you really think they would be buying any books at all?
You say people won’t want to share their readers, but if your claim that women read 9 books per year and men 5, how often will they really need to?
“Beyond the issue of the screen there is also the issues of ergonomics, portability, and price. Ergonomics is a primary focus of ebook readers. The way we sit in front of computers is not the way we sit to comfortably read a book. Current computer usage cannot mimic the comfort of the normal reading position, regardless of screen material. This becomes obvious if you tape a book to your computer screen and start reading it.”
Computers, yes. Laptops and tablets not so much. To be honest always forget it is that way for most people, I find it more comfortable for me to work on the computer than read a book.
“It is true that ebooks have instant gratification, but this is not limited to ebooks. When the Espresso Book Machine advances to the place of being no more expensive than an office copier machine you will see it appearing in all retail stores–the Walmarts, Targets, etc. Much like magazine racks function now, the EBM will entice shoppers for instant gratification–and without the waste of the current magazine racks, because books will be produce only when someone makes a purchase. Ebooks and EBM books each have a particular instant gratification appeal, so I don’t see that as definitive.”
With an EBM you have to already know what you want, I don’t even see the point of having them in a store except to save shipping I guess. Not even comparable to browsing the first chapter or so of a book from the comfort of your home before buying it instantly.
“In my opinion, ebooks will largely cannibalize the mass market paperback, leave the hardcover market mostly untouched and (depending on how things turn out) either slightly cannibalize or slightly improve the trade paperback market. The textbook market will be an exception. I think of authors and publishers act rightly, ebooks could be used as a great sales device for physical books so I do not see the two at odds.”
Exactly! Yet you don’t mention that at all in your article.
“. . .you are constructing something of a straw man argument here.”
Yes, that was a poor example of some of the benefits of an ebook reader over a physical book. The benefits of ebooks over normal books might not be as large as that of snail mail and email, but I think after ebooks mature they will have significant advantages that will not be limited to textbooks.