Guest Column : Keeping Pace With Today’s Consumer

Smart publishers will heed the three key market dynamics shaping today’s book-buying behavior.

The Rise of E-Books
The rise of e-books is clearly the loudest and most prominent conversation underway in our industry today. Amazon.com's Kindle has blazed the trail for e-book reading devices and driven e-book sales higher (not without its share of controversy, of course), and the Jan. 27 announcement of Apple's iPad created a full-scale, national conversation about e-books' future.

A recently published study by the Book Industry Study Group using the PubTrack Consumer data confirms that consumer product selection is indeed changing substantially from the early e-books adopters. Although e-book sales still account for a tiny fraction of overall unit sales (approximately 3 percent to 4 percent of all trade book purchases in 2009, according to Bowker's PubTrack Consumer survey data), the trend line is startling. As the graphic above (based on BISG's survey of those who purchased e-books in the past year) indicates, while print unit sales declining, 50 percent of today's e-book consumers said their e-book purchases increased last year while they bought a third fewer hardcover and paperback books.

Additional PubTrack data indicates that some serious business issues are going to become more challenging for publishers to confront if this trend holds and e-books continue to gain market share.

For instance, the most recent purchase price differential between hardcovers and e-books was roughly $6.25 per unit (based on an average price of $14.55 for hardcovers versus $8.30 for e-books). This data illustrates that, as e-book sales gain and other formats decline, book publishers are going to be facing a fundamental "top-line" problem: how to determine the tipping point and what to do when the per-unit cost of printing a hardback will be cost-prohibitive due to fewer units being printed as e-books gain market share.

The shift to e-books also is likely to bring challenges in reaching certain customer segments. One startling reality indicates that the current e-book market skews to a wealthier audience than traditional print formats (which stands to reason due to the high cost of entry for e-book devices). Today, the percentages are flip-flopped between high-income earners versus lower-income earners when comparing e-book use to print. This is significant because census data shows that the vast majority of American adults earn less than $35,000 per year, indicating that unless something changes to lower the point of entry for e-books, publishers may be potentially removing a substantial consumer base from the e-market.

These are just a few of examples of how book publishers need to be in tune with their customers to adapt to the shifts in consumer book purchasing underway.

How Do We Survive This Digital Tipping Point?
Most of us can now envision a future in which the book publishing industry has migrated to a new business model built around the production, sale and distribution of books in digital formats. However, it's the challenge of managing this transition and surviving the upcoming "digital tipping point" that will likely determine the long-term winners and losers in our industry.

As we navigate these choppy waters in the marketplace, it's going to be crucial that we gather, assess and act upon the most accurate information intelligence available, so we know with some degree of certainty where book buyers are headed and what is driving their decisions.

We all have a front row seat to a historic shift in the way human beings read books. The smart publishers will make sure they're listening carefully to consumers so they can find ways to be on the right side of this extraordinary transition.

Kelly Gallagher is vice president of publishing services for Bowker (Bowker.com), a New Providence, N.J.-based company that is the global leader in bibliographic information and business intelligence solutions for the publishing industry. Contact him at kelly.gallagher@bowker.com.

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