Digital Directions: Want to Grow Your Ebook Revenue?
About 17 years ago or so, digital media folk were asking an important question: Would consumers buy online? Would consumers take the leap and actually enter their credit card information on a seller's website? More specific questions also arose about the growth rate of online commerce. In the course and fullness of time, we got our answers. ComScore and the Commerce Department now put annual online retail spending at somewhere around $165 billion.
Similar questions continue to surround digital publishing revenue, specifically about the role and significance of e–book revenue.
Beginning in the fourth quarter of 2011—driven in part by the launch of the Kindle Fire and Nook Color readers—the significance of e–book revenue became a bit clearer. Many publishers from a variety of industry segments have been caught by surprise by the strength of e–book sales.
Recent research data summarize publishers' results:
● A Pew study concludes that 1 in 5 adults in the United States have read an e–book in the last 12 months.
● In 2011, e–book revenue came in at $1.7 billion, a number that may jump considerably in 2012 with the new ereaders in the market.
● Forester predicts that 1 in 4 Americans will own an ereader in by 2016.
Yes, Virginia, people will pay for e–books—in large numbers to boot. As gratifying as these recent projections are, some significant financial and non-financial questions remain:
● Does direct cannibalization occur?
● Will e–book sales represent replacement revenue of lost print sales or will e–book sales become an opportunity to develop incremental revenue streams?
● Can e-books become a platform for attracting sales from additional customer segments, who may not already be immersive readers? The Pew study indicated that e–book buyers are overwhelmingly consumers of books in all forms. In other words, e–book consumers are immersive readers who are already a receptive market.
● Will the value delivered and quality of experience of an e–book be considered equivalent to the print experience, or viewed as a low-cost, ancillary experience?
The answers to these questions will not be determined solely by the disposition of the marketplace but to a large degree will be driven by the actions of publishers. Great product revenue is often driven by great product experiences. And it is up to publishers—both individually and in aggregate—to pave the way to compelling e–book product experiences, which in turn will lead to increased revenue opportunities.
As the recent survey data has attested, some customer segments perceive the value and quality of the e–book to be of a sufficient level to be nominally salable. However, one would be hard pressed to make the case that, apart from a factor of convenience, the e–book experience is on average of the same level as the print product. In most cases, it clearly is not. This supports the argument that the price point of e–books should be kept low, since it is clearly a secondary product.
Some of the challenges in quality of e–book experience derive from limitations in the ereaders themselves. Apart from being marvelous portable ecommerce devices, ereaders are often limited in terms of creating enjoyable and immersive media experiences. The release of the Kindle Fire and Nook Color, as well as the advent of HTML5 and EPUB3, will improve some of the device limitations.
Beyond issues related to devices, however, other issues remain that compromise the quality of the experience of the e–book. These are issues that are in the domain of the publishers. Performing even a cursory survey of e–books that are commercially available will indicate that the e–book marketplace is rife with quality issues and challenges that undermine the value proposition of the product.
Many problems exist in terms of fundamental editorial quality control. Whether a publisher adopts a print-first approach for e–book production (converting an e–book from a file meant for print composition) or an XML-first approach (using a device-neutral file for both print and e–book), the process of creating an e–book can introduce quality problems. Issues related to editorial quality can be largely addressed:
Publisher-articulated mandate that e–book editorial quality is as important as print editorial quality. This is often not the case or is not stated, but needs to be for a high-quality e–book experience. Publishers need to express intent for e–book quality.
Designing and implementing e–book quality assurance processes. Often, especially in a print-first workflow, e–books are given only cursory review.
Implementing automatable processes. Automation not only leads to greater efficiencies but greater consistency of output as compared to manual processes. Quality issues will still arise through automated processes, but they can be remediated much more efficiently than quality issues that are introduced through manual errors.
Refining the E–book Format
Beyond editorial quality, publishers need to continue to refine the structure of the e–book format. Reflowable e–books do not have fixed page numbers. Page numbers have been a fundamental organizing system of books for millennia, but in e–books have no relevance. Therefore, the industry needs to continue to evolve and refine the e–book format to be as useful and efficient as a print title without the benefit of page numbers. The implications are far-reaching, and impact indices, intra-text page references, and all other ways in which page references occur. Thinking through the implications of a book that lacks page numbers is a critical task in making e–books work.
The manner with which individual publishers and the industry at large address the issues relating to quality and format refinement will have no small impact on how significant e–book revenue will become. If e–books are presented—as they often are today—as a form that does not have the refinement and quality of the print product, then the market will logically assume that it will be available at a far lower price point than print. Worse still would be the assumption that the lower-quality e–book is a free ancillary, bundled with the print title. This is a distasteful scenario we know only too well from the higher-education marketplace.
On the other hand, if quality of e–book experience is made a priority, then the publisher will present a product that can support a higher sale price. In addition, e–book revenue may hold the promise of representing more than a replacement of lost print sales, but a source of truly new, incremental revenue—ideally including customers that are not regular print customers today.
Improving quality and refining the format will require additional effort and investment, made even more painful by a very tough economic climate. However, if this investment is not made—in the belief that e–book revenue will not be robust enough to provide a return on that investment—then a very weak value proposition will continue to be presented to the marketplace, resulting in lower price points and slower growth. The belief that e–books have a marginal role in driving revenue will become a self-fulfilling prophecy. BB
Andrew Brenneman is founder of Finitiv, which provides publishers with cloud-based services, mobile product development and digital strategy consulting.