Editor's Note: Fear vs. Opportunity
People fear the unknown. It’s a simple premise that creeps into our lives more than we realize. Change brings a great amount of uncertainty … and therefore, fear. The changes happening in the book publishing industry right now are enough to prompt even the bravest publishing souls to cover their eyes, cautiously peeking through the space between their fingers to see if it’s OK to look.
It has been a challenge for Book Business to provide you with enough information on digital content without scaring off or angering the print lovers among us. But the simple fact is that whether you love printed books or not, or whether you see them existing forever or not, there is a growing market for e-books and other digital content formats that cannot be ignored. It is going to impact the future of the entire industry.
A panel at the recent Tools of Change for Publishing Conference confirmed that. The session, called “The Rise of E-books,” shared interesting statistics and trends, and explored why e-books previously failed to gain momentum after their initial launch. David Rothman, founder and editor-publisher at news and commentary Web site TeleRead.org, said he believes the reasons for the initial failure were: the price point was about the same as for printed books; there were not many e-books available to consumers; digital rights management issues; and lack of viewability of e-reader screens.
Addressing advances in e-readers today, Russell Wilcox, president and CEO of E Ink (the company behind the e-ink technology used in the Sony Reader and Amazon Kindle, among others), said, “Every 18 months, the speed of the ink is doubling.” Today, it takes just a quarter of a second for the ink to change (e.g., when you “turn” a page). This year, he said, will also see the launch of new sizes in e-ink screens, both larger and smaller; e-readers will launch in new countries; and we will begin to see touch and pen interfaces, enabling users to input as well as output content.
“In 2010,” said Wilcox, “flexible displays will expand … and toward the end of the year, we will see the first full-color e-paper devices. In 8 to 10 years, color will get better and better,” he added, ultimately achieving a level suitable for viewing quality, full-color magazines.
Digital rights management (DRM) continues to present an obstacle, agreed the panelists. “DRM has to go away,” said Joe Wikert, general manager of the O’Reilly Technology Exchange division of O’Reilly Media Inc. He added that the industry needs to stop thinking of digital content as print books in digital form. “As long as we’re focused on bringing print to a digital format,” he says, “[that will be] an artificial ceiling we’re always going to be dealing with.” Instead, publishers should focus on the “great opportunities in video, linkage, etc.”
To better adapt to digital technology, publishers need to use the technology, said Wikert—get the Kindle, an iPhone, and get to know these devices and the opportunities they present. “Publishers have to find different ways to provide value to their customers,” he said.
The latest estimates, according to the panelists, suggest that: Amazon has sold about a half-million Kindles; there have been more than 1 million downloads of the Stanza application for the iPhone; and Sony has reported that it has sold more than 300,000 of its Readers.
“It’s moving very rapidly,” said Wilcox. “Within the next 12 to 18 months, 2 [percent] to 3 percent of American households will own a dedicated e-reader.” He projected that in 4 to 5 years, the market will “see … certainly double-digit market penetration.”
Wilcox anticipates that in the next 18 months or so, e-book sales will comprise 6 percent to 8 percent of book sales.
Also, e-readers will quickly begin to drop in price, he suggested: “In China, you will see e-book devices for $199 or less within the next 12 months.”
With print production and distribution costs continually escalating and major flaws in some of publishing’s core business processes, publishers have to continue to seek better ways of doing things—whether by reducing or eliminating returns (check out “The Point of No Returns” feature on page 24); developing better inventory management processes; streamlining trading-partner communication (see Michael Healy’s special “Guest Columnist” column on page 28); or tapping the growing market for digital content.
“At the end of the day, there’s tens of millions of dollars wasted [by] moving paper around,” said Wilcox.
Whether you agree or not, covering your eyes at this point would be a mistake. The e-book market is growing, and it’s worth taking a good, hard look at it to see the opportunity it presents.