Guest Column: Keeping Pace With Today’s Consumer
The consumer market for U.S. book publishers has changed significantly in the past three years, driven largely by fundamental shifts in the way books are published, found and ultimately purchased by readers. These changes sometimes leave publishers with more questions than answers in determining what their next move ought to be to keep pace with today's consumer.
While there is no denying that e-book sales are growing at a rapid clip, we're still in the process of learning whether those unit purchases are adding to overall sales totals or merely cannibalizing sales of hardcover books and other formats. We've all seen how the Internet's substantial growth over the past several years has significantly diversified consumers' options in how and when they purchase books—and therefore cannibalized sales for traditional bricks-and-mortar stores.
Factors Influencing Book Buying
Now more than ever, it is crucial for the book publishing industry to keep a careful and ongoing watch on book consumers to help publishers make content, awareness and selling decisions. This idea is behind the genesis of Bowker's PubTrack Consumer service, which attempts to gather this kind of data with a nationally representative panel of U.S adult men, women and teens that complete weekly online surveys about their book purchase behaviors.
What the research has revealed about today's book consumer is that there are three key market dynamics shaping book behavior right now:
1. The economy and the resulting decline of book purchasing. Book buyers as a percentage of the U.S. population dropped below 50 percent for the first time ever in 2008.
2. Reading's competition for our leisure time with the ever-growing choices available. Last year, online activities even surpassed television viewing as the No. 1 leisure activity among American adults, who now spend on average more than 15 hours per week online. Reading books comes in at a paltry 5.5 hours per week.
3. The migration of product formats. According to Association of American Publishers' statistics, hardcover, paperback and mass market sales are all down, but e-book sales are sharply increasing, offsetting declines in other formats.
Of these three crucial factors facing publishers in the fast-changing consumer demand chain, the one that book publishers have the best ability to influence and adjust their business practices to accommodate is the seismic shift in consumer book buying away from traditional print formats and toward digital.
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 email@example.com.