With the evolution of the e-book still clearly in its formative years, developments over the past year could perhaps be remembered as a real growth spurt thanks in part to Amazon’s launch of the Kindle. Reviews on the digital device were mixed, but it quickly sold out within hours of its debut on Amazon.com. Goldman Sachs has estimated that Amazon has sold as many as 50,000 of the devices in the first quarter of 2008. And Amazon has made more than 120,000 titles available for download on the device since its launch.
It’s too early to tell, however, whether the Kindle has directly spurred sales of e-books. Reliable numbers on e-book sales are difficult to come by, but the International Digital Publishing Forum (IDPF) estimates that the wholesale market for e-books in the United States approached $32 million in 2007, based on figures reported by 12-15 trade publishers—which Michael Smith, IDPF executive director, says comprise an estimated 75-percent to 80-percent of the trade publishing market. In 2002, when the IDPF began collecting statistics on e-book wholesale revenues, the figure was approximately $5.7 million. That’s a growth trajectory of more than 500 percent over five years.
The growth has continued in 2008. U.S. trade e-book sales were $4.4 million in March, according to sales statistics from IDPF and the Association of American Publishers (AAP), a notable, 58.9-percent increase over the same month last year. The first quarter of 2008 is the first-ever quarter to eclipse $10 million in trade e-book sales.
There is no doubt that e-books are growing, said Matt Shatz, vice president of digital, Random House, at IDPF’s Digital Book 2008 on May 14 in New York. According to Shatz, this growth is directly attributable to four factors: improved technology, consumer behavior, marketing and distribution muscle, and improved and more expansive title selection.
Yet, despite all the signs of a burgeoning e-book business, e-books are frequently measured against digital music downloads, as well as their revenue percentage compared to the overall book market—and many in the industry are still waiting for the e-book’s true “iPod moment.”
While that moment may not have occurred in the past year, some genuine and interesting progress has been made.
At Digital Book 2008, much of the focus of the day-long conference was on the industry’s adoption of the .epub (EPUB) digital format—a standardized way of creating e-books so that publishers don’t have to publish proprietary formats to suit each individual e-book retailer. EPUB, a result of work by the IDPF, is the file extension of an XML format designed specifically for reflowable digital books and publications.
Adoption of this standard removes significant barriers to entry into the book market. If the Kindle, Sony Reader, and Mobipocket-compatible and other e-book devices each require a separate document format, a publisher has to create at least three versions of each e-book it publishes. With the EPUB format, a publisher creates a single version, with the onus then on the retailer to ingest that format and create proprietary e-books if they so desire. It’s similar to the ONIX standard for metadata in that the essential information that a publisher transmits is fairly generic, and each retailer can display it in its own interface.
Shatz pointed out that a major e-book issue for publishers is pricing. “Pricing pressure is probably the biggest concern, especially if [e-books] are merely substitutional.” Consumers expect e-books to be priced lower than print books, because the cost of producing them is lower. With the necessity of having to create multiple formats, however, that cost goes back up again. “Multiple formats are not ideal for us [as publishers] or consumers,” he says. Adoption of the EPUB format should transmit directly to a publisher’s bottom line by making it cheaper to produce e-books, and to price them according to the desires of the market.
Adoption of the EPUB format is gaining momentum, as several major publishing houses have already begun transmitting their documents in this manner. Hachette Book Group released EPUB e-books for sale in January, and John Wiley & Sons’ in-house staff recently began producing the company’s branded titles (e.g., “Frommers” and “For Dummies”) in the EPUB format, while its non-branded titles are produced by a third-party conversion house.
Perhaps the real tipping point came on May 12 when the IDPF received a letter of support from the AAP’s EPUB subcommittee of its Digital Issues Working Group. The letter expressed “support for the use of EPUB as an e-book file type for reflowable texts from which any e-book delivery format can be rendered. Many publishers already want to begin a transition process toward this use of the EPUB file format and hope that such a transition can be completed by October 2008.”
The Digital Library Federation (DLF), a consortium of libraries and related agencies in support of the use of electronic-information technologies, has also gotten behind EPUB. Peter Brantley, DLF’s executive director, says, “It is my belief that a transition to more interactive, reflowable content formats, such as the IDPF’s EPUB format, is almost inevitable.” He adds that the adoption of such a format provides a number of advantages including a wider range of end-user control (from font size to spoken text services) and the ability for text formats to be tethered to devices such as the Kindle or iPhone, while being maintained on central servers.
E-books in Libraries
Libraries have been e-book innovators since the late 1990s, using services such as NetLibrary, ebrary and Overdrive to make e-books available to patrons on library Web sites. Because libraries have such limited shelf space for physical books, e-books are a good option for keeping collections vast and authoritative while not having to invest in acquiring more rooms or buildings.
Libraries are also accustomed to licensing models. Going forward, Brantley says, “I think libraries will increasingly be placed into a position of needing to secure licensed access to a new generation of digital book repositories and service providers that will take advantage of these opportunities; libraries will have to engage in a round of innovation that optimizes their local service provision through integration with institutional data sources such as library catalogs and e-scholarship repositories. I would also expect that libraries will increasingly support distributed print-on-demand solutions, such as the Espresso machine, in order to provide a range of content-delivery models to their constituents.”
However, this model could lead to some trouble. Georgia State University recently found itself the target of lawsuits from publishers, including Oxford University Press and SAGE Publications, after offering e-books and other digital content via an online reserve system. The system was offering copyrighted materials to students free of charge. Brantley notes, “This is why trade publishers don’t trust libraries with their digital content for acquisition to support digital lending, and frankly, I can’t say that I blame them. … Everybody is going to want to do the right thing for their own communities; it’s going to take a while for understandings to shift around to accommodate wholly new models for monetization and income.”
The Free Experiment
In January 2007, Google held a conference, called “Google Unbound,” at the New York Public Library’s main building. There, the Google Print folks managed to gather the trifecta of “give it away ’til they pay you for it” marketers: Cory Doctorow, Seth Godin and Chris Anderson.
All three are authors. All three have done various experiments in giving away digital copies of their work. And all three have found tremendous success in doing so. At the time, their experiences probably seemed a bit revolutionary to many of the publishers in the room. But more than a year and a half later, a number of those same publishers are conducting similar experiments, including HarperCollins and Random House.
Romance Readers Falling in Love With E-Books
Steve Potash, CEO of Overdrive and a board member of IDPF, has stated in the past that romance is one of the most popular e-book genres. At the Book Industry Study Group’s Making Information Pay event in May, Malle Vallik, director of digital content and interactivity for Harlequin, confirmed this, revealing that by 2007 the romance publisher had published its entire front list in e-book format. Vallik attributes much of the success of e-books in the romance market to the fact that it is easy for women to download such titles and, since they are at the computer, it’s easy for them to get some “me” time by appearing to their kids that “Mommy’s working.”
The key to the future of e-books, pointed out Vallik at Digital Book 2008, is connecting readers to the format for the first time.
“Introduce the consumer to digital formats,” Vallik suggests. Once they consume a book digitally, they’re often hooked. So her team has placed extra emphasis on luring first-time users to digital products with free content. For example, Harlequin released the “12 Downloads of Christmas,” making available 12 e-book titles over the course of 12 days—for free. The results, reported Vallik, included new membership to eHarlequin.com doubling, and January sales being “strong.”
Vallik also points to Harlequin’s popular “Spice Briefs” series, short-form erotic fiction of 5,000-15,000 words, released at the rate of two to three e-titles per month. The publisher is currently selling each “Brief” for $2.99, both on its own site and through intermediary retailer channels. Harlequin has found the series to be an enormous success, Vallik says, without cannibalizing its existing list.
In fact, “Spice Briefs” has been such a hit that Harlequin in May began publishing “Nocturne Bites”—an e-extension of its paranormal brand Silhouette/Nocturne. Both products are “short reads,” and Vallik says Harlequin was surprised to find that many readers were consuming the titles on their lunch hours.
Vallik says that these digital projects require a short development time, and offer both authors and publishers a whole new market opportunity. In addition, they’re attracting new writing talent to Harlequin. And in an ironic twist, the “Spice Briefs” have proven so popular that Harlequin is slated to release a print anthology in early 2009.
“Get out there and experiment,” advises Vallik. “You don’t know what’s going to work. Sometimes you’ll be totally surprised.”
Nick Bogaty, a longtime e-book advocate, past executive director of IDPF and currently senior business development manager at Adobe, offered perhaps the most telling comment at Digital Book 2008 when he said: “For the first time, we’re seeing real consumer demand for e-books, with the product’s development being supported by sales.” No doubt good news for a book format still only in its infancy.
Laura Dawson is a 20-year veteran of the book industry, specializing in technology issues.
Laura Dawson is CEO of Numerical Gurus, LLC, consulting company providing services to the information, librarym and book industries. Dawson has consulted to numerous organizations in these verticals, primarily focusing on solving problems related to metadata, identifiers, Linked Data, semantic web applications, and structured content.