Why E-Books are Hot and Getting Hotter

2009 will go down in history as the year e-books went mainstream.

According to the Association of American Publishers (AAP), between 2002 and 2008, e-books grew at a compound annual rate of 58%, compared to 1.6% for the overall book industry.

In the last two years, e-book growth has accelerated. In July 2009, the most recent reported by the AAP, sales increased 214%. Yet despite this growth, e-books accounted for only 1% of book sales. One percent? Do e-books even matter?

The answer is yes, because AAP statistics dramatically understate the overall market share for e-books. AAP collects its data from about a dozen large publishers. Thousands of smaller independent publishers, as well as self-published authors, don't report data to AAP.

Consumer purchase surveys provide more perspective. Bowker's PubTrack consumer survey reported e-books accounted for 2.4 % of book sales in the first quarter of 2009, up from .6% for all of 2008. On July 21, 2009, Motoko Rich, a reporter from the New York Times, referenced a Codex Group survey that stated e-books reached 4.9% of book sales for the month of May 2009.

Amazon's e-book results point to an even larger market opportunity than indicated by the consumer surveys, especially for retailers with a strong e-book strategy. Last week, Amazon announced that for books it sells in both print and Kindle editions, Kindle versions now account for 48% of unit sales. In February, the number was around 12%.

What's driving the rise of e-books? A confluence of multiple, self-reinforcing factors, including:

1. Screen reading now rivals paper - Thanks to advances in screen-reading technology, today's crop of e-reading devices offer a reading experience as good as, and sometimes better than paper. Screens on cell phones, personal computers and dedicated e-reading devices are much-improved over just a few years ago. It's not just the screens -- the underlying software allows consumers to customize their reading experience by increasing the font size. For those of us in the over-40 age group (and we buy more books than anyone), larger type and customizable text layout make for a more pleasurable reading experience.

2. Proliferation of multiple high-quality e-reading devices - Multiple e-reading devices satisfy different consumer preferences. The iPhone has introduced millions of readers to the joy of e-books, thanks to a beautiful screen and free e-reading apps such as Lexcyle's Stanza (acquired by Amazon earlier this year) and Barnes & Noble's eReader. E-books are also coming to Android smart phones thanks to apps such as Aldiko and Word Player. In the next two years, entry-level mobile phones will feature e-book-ready screens and apps, which will dramatically expand the worldwide market for e-books. Last but not least, dedicated e-reading devices based on E-Ink technology such as Amazon's Kindle and Sony Electronics' Sony Reader have introduced millions of additional readers to e-books. Barnes & Noble is rumored to announce their own LCD-based device next week.

3. Oprah Winfrey - Few consumer taste makers can match the influence of Oprah Winfrey, especially when it comes to books. In October 2008, Oprah dedicated an entire show to celebrating her favorite gadget, the Amazon Kindle. For millions of book lovers, this was their first introduction to e-books. Immediately following the segment, the rate of growth for ebooks accelerated.

4. Early adopters become new evangelists - Books have always been a word of mouth business, and ebooks are no different. Most people today have a "wow" experience when they try ebooks for the first time. These early adopters then evangelize ebooks to their friends. My personal wow moment occurred when I sampled, purchased and downloaded my first Kindle book while sitting on a beach in Hawaii.

5. Greater content selection - Hundreds of thousands of ebooks are now available for instant sampling, download and purchase. Within the next few years, the vast majority of books ever printed (and still preserved) will probably be available in ebook form, and many of these books will be free.

6. Free books are gateway drug - Many consumers discover ebooks for the first time by downloading free books. Most free e-books are classics derived from the digitization effort of Project Gutenberg, the brainchild of Michael Hart. Hart founded the non-profit, all-volunteer organization in 1971 to distribute out-of-copyright works as electronic books. While it's difficult to name any single person as the father of e-books, it's fair to say Michael Hart was in the delivery room.

7. Portable library in the cloud - Imagine holding a portable, limitless catalog of books in the palm of your hand, accessible any time, anywhere. This is possible today with a wireless or Internet-enabled e-reading device. Books are moving from physical repositories (personal libraries, public libraries, book stores) to virtual repositories (personal online libraries, online public libraries, free online repositories, and online bookstores).

8. The slush pile, digitally liberated - Independent authors are adopting e-books as a format for rapid publishing. Whereas traditionally published print books require months or years to sell to a publisher (if ever), and then 12-18 months more before the books appear in bookstores, e-books offer instant publishing. The tools to publish and distribute e-books are available to any writer at little to no cost. Free ebook self-publishing platforms, such as Amazon Digital Text Platform, Smashwords (my company), Scribd, Lulu, and Sony's recently announced Publisher Portal, allow writers to upload their manuscript as a Microsoft Word document, and start selling it online to a worldwide audience within minutes or days. Major e-book retailers such as Barnes & Noble, Sony, Amazon, and ShortCovers have opened up their stores to independently published e-books, allowing authors to bypass publishers altogether. The rise of independent publishing has opened the floodgates to thousands of new books that might otherwise have never seen the light of day. The e-book publishing platforms mentioned above perform little quality control, delegating the vetting to consumers instead. Like a giant slush pile of digitally liberated books, these titles comprise gems of undiscovered brilliance alongside works that might make your eyes bleed.

9. Prices dropping - Amazon made waves by pricing first run e-books at $9.99. As prices drop further (see my column from last week, Why We Need $4.00 Books), it will serve to accelerate e-reading adoption. One factor driving price drops is the proliferation of free e-books, including out-of-copyright classics. Many talented indie authors also offer some of their e-books for free to build readership and fans.

10. Impulse buying - E-books are the ultimate impulse purchase. With a few clicks of a button, you can download dozens of free book samples in seconds. A few more clicks and you can load your e-reading device with multiple e-books. No more driving to the bookstore to wait in line, and no more waiting days for your Amazon shipment to arrive. Today, ebooks offer instant sampling, immediate gratification and affordable reading pleasure.

What do you think is next for e-books? Share your thoughts below.

Mark Coker is founder of Smashwords, a publisher and distributor of ebooks. Follow him on Twitter at http://twitter.com/markcoker. He is also the co-author, along with his wife, Lesleyann, of Boob Tube, a satire about the daytime television industry.

 

 

 

Follow Mark Coker on Twitter: www.twitter.com/markcoker

Comments

[eBookNoir]

11:31 AM on 02/18/2010

I see a future where it won't be about what content is available as an eBook, but more of what you can do with it. The interaction and ability to manipulate the text, multimedia, images, links, etc will be what is next for eBooks. We also have to look at this in a couple of different lights though, what will work and is wanted in say Higher Ed is much different in some regards then in the consumer market for fiction and leisure reading. eContent is going to be what it is referred to more and more, because in essence it is an eBook, but the more interaction you can have and the more you can draw readers in, it becomes content or enhanced eBooks, I'm sure a new name will arise for this type of digital mash-up of features.

I also see it becoming more about the software then the hardware, the software is what will allow you to work with the content in a way that hardware doesn't allow. Think about the new iPad, the interaction level on a touchscreen is greater then on a physical keyboard type of reader, it's more static that way then if you can touch the screen, make a dog bark in a kids book, watch augmented reality & interact with it. Laugh all you want, but Minority Report type of interaction with digital content is not that far off.

Erik

[Ellen Violette]

11:49 PM on 10/19/2009

I think the next big thing will be multi-media ebooks. There is so much more you can do beyond just text. When you add audio and video it becomes a much richer experience.. People can create them right now using a program called eBook Generator and that puts them on a website but they are not downloadable to an ereader. The technology needs to improve for that to happen.
Right now a Kindle can only ead to you and support podcasts but I'm not seeing a video feature.

I've been teaching people how to wrie ebooks and market them for 5 years now and we will be
launching a site that will absolutely weed out junk ebooks and promote quality ones . To get updates and more information you can go to www.theebookcoach.com/blog

[SeaBlood]

05:04 PM on 10/16/2009

This is all good news. Soon, major newspapers will start publishing solely for these devices----selling subscriptions for actual money!! It will be the very salvation of journalism . And, if you're like me, old fashioned paper books and magazines will still be available to properly equip our bathrooms :0) !! Meanwhile the price of E-readers will come way down so that anybody can afford them. Just think how the environment will benefit----The Sunday NY Times destroys how many acres of forest per year?

[JoeCottonwood]

03:45 PM on 10/16/2009

Mark, as an author I love the Smashwords concept and have posted 3 of my own books there. But... The sheer volume of dreck on an unfiltered site is daunting. We need gatekeepers. As a consumer, I want an ebook publisher with demonstrated taste - an Alfred Knopf of ebooks, say, or a Random House. I want a brand name I trust so I don't have to wade through all the dreck. I don't have time.

[Mark Coker]

10:17 PM on 10/16/2009

Hi Joe, I appreciate your comment. Good publishers can certainly add a lot of value through their editorial filter. The challenge, however, is that the economic model for publishing no longer allows publishers to play that role for all the great books that deserve to be published. This is where a lower cost publishing and distribution model can play a useful role. The most powerful filter ever created is the consumer. If consumers love a book, they drive the marketing via word of mouth. In the digital world, word of mouth is driven by shared hyperlinks on social networks. If a book doesn't inspire the reader to recommend it, that book, whether self-published or commercially published, will quickly fade into oblivion. At Smashwords, as well as at any other online retailer of anything, it's common practice to leverage the community as the filter. The most viewed items, most purchased items, and best reviewed items bubble to the top, and become easily discoverable at the click of the button. The dreck becomes invisible. Neither approach to filtering is perfect, so I believe both publisher-filtered, community-filtered and combinations of the two are all valid approaches.

[JoeCottonwood]

12:55 PM on 10/17/2009

I just checked the Smashwords rankings, and all 3 of my books are on the bestseller list for their respective categories. So I guess I shouldn't complain! :-) But maybe I have a relative advantage in that all my books were previously published, so I'm a known (though obscure) name. For the newbie authors, I wish there were a web site, or better several web sites with different points of view, reviewing and hopefully "discovering" new ebook talent. We need an e-infrastructure similar to (and hopefully better than) the tired old NY Times Book Review/tweed-and-elbow-patch model. Most consumers, including me, don't have the patience to sift through hundreds of mediocre ebook titles hoping for that little gem - but I'd read a blog that did the job for me.

[TrueSmallCaps]

09:45 AM on 10/27/2009

Joe: I think with so many new titles being published, publishers had effectively appointed the consumer as gatekeeper anyway, long before the rise of ebooks.

I agree with you it would be helpful to have someone else do the sifting. But, like many other people, I would expect this to be a free service!

[yuzutea]

02:12 PM on 10/15/2009

One thing though is, if many books become all digital, what about the "digital divide"? With the high cost of ebook readers, how will people who don't have a lot of money, such as lower-income people or students, manage to get them?

[Mark Coker]

02:50 PM on 10/15/2009

Hi Yuzutea, great question. The beauty of ebooks is that you don't need a dedicated ebook device to read them. Many entry level cell phones now support ebooks, and anyone with a computer or access to a computer can enjoy them as well. From an international perspective, ebooks are easier and cheaper to distribute (since they're digital) than paper. It's also worth noting paper books won't go away. Ebooks represent an additional consumption method.

For people who want a dedicated device, the prices are coming down quickly. I also wouldn't be surprised at all if companies started offering subscription-based services (like your cell phone service) where you get the e-reading device for free in exchange for agreeing to purchase X books a month, kind of like a digital book club.

[hedgehog4987]

11:59 AM on 10/15/2009

is this a typo? are teh 2.4% and 6% reversed?

Bowker's PubTrack consumer survey reported e-books accounted for 2.4 % of book sales in the first quarter of 2009, up from 6% for all of 2008.

[Mark Coker]

12:20 PM on 10/15/2009

Great catch, hedgehog. Now corrected. Thanks.

[Michael Pastore]

10:49 AM on 10/15/2009

Well expressed, Mark. But Michael Hart is more than an obstetrician's assistant: he is the venerable grandfather of the ebook movement. He has been promoting ebooks -- and the value of reading the classics -- for almost 40 years!

Ebooks are now flourishing. Here's what the epublishing industry needs to leap to the next level of growth and profitability:

1. A Standard Format for Ebooks. EPUB is emerging as that standard, and it may well win the format wars during 2010.

2. An Ebook Search Engine. It's easy to find paper books. We need a comprehensive search engine for ebooks.

3. An Ebook Price Comparison Site. ... Is it better to buy the novel ==At A Picnic in Italy, I Found Rome-Ants== on Amazon, B&N, or directly from the publisher? ... What is the price of this ebook on various sites? ... What formats are offered? ... What rights am I getting when I buy? Currently, there's no convenient method for doing this convenient comparison shopping.

4. A Solution to the Ludicrous Read-Aloud Problem. Ebooks that can't be read aloud are crippled ebooks. Let's set ebooks free and allow them to be computer-voice read and enjoyed.

5. A Tablet Computer with a Hi-resolution Screen. When someone manufactures a multi-purpose ebook reader -- a tablet computer that accesses the entire Internet, not merely one online bookstore -- then ebook reading will become as natural as reading any other on-screen document.

(Huffpo-comment-limit-to-250words-Boo!)

Michael Pastore
50 Benefits of Ebooks

[Mark Coker]

12:44 PM on 10/15/2009

Hi Michael, right on. Agree with all your points. For points 2 and 3, take a look at http://www.inkmesh.com - they're building an interesting ebook search and price comparison engine.

[Michael Pastore]

01:40 PM on 10/15/2009

Thanks again, Mark.
Inkmesh is off to a good start: I'll keep tabs on it.
I wanted to say more in my first comment, but HuffPo is limiting me to 250 words.
In a nutshell: thanks for your continual, charismatic and knowledgeable advocacy of ebooks and electronic publishing.

[SAGMUN]

08:46 PM on 10/14/2009

Wouldn't it be great if you could highlight your favorite passages along with your comment s and they would be automatically collated and referenced? So you can print them out via thumb drive.

[Amy Hertz]

03:14 PM on 10/15/2009

Arianna was asking for the same thing in her opening Books blog: http://www.huffingtonpost.com/arianna-huffington/attention-fellow-book-lov_b_309740.html

[nibblestix]

12:59 PM on 12/12/2009

I believe you can do this with Sony's new ereader. Not sure if they can be automatically referenced but I think you can highlight and comment.