Recently, I was struck by a statistic that was highlighted in a July New York Times article. The article pointed out the fact that Amazon.com, one of the nation’s largest booksellers, is now selling more e-books than hard covers for the first time in history as of the second quarter of 2010. In fact, it was selling almost 1 1/2 times the number of e-books to hard covers. This trend doesn’t show any sign of slowing down either. In the 4 weeks prior to the article, that ratio was approaching 2 e-books to every hard cover.
Many credit the proliferation of e-book readers such as Amazon’s Kindle, Barnes & Noble’s Nook, Sony’s Reader, or Apple’s iPad for driving the consumption of e-books. Though Sony’s Reader has been out for several years, it was the introduction of Amazon’s Kindle in time for the Christmas shopping season in 2007 that launched this rapidly growing trend. The combination of hardware, content, and wireless access was the missing spark that lit the e-book powder keg. It is no coincidence that what started it all was a product called the “Kindle”.
As the proud owner of a Nook, I am amazed at how easy it is to buy, read, and share e-books. I have always been an avid reader (in my adult life anyway), however, I read significantly more with the device than I did before. There are always free e-books that are on promotion and many authors are even giving away the first book in a series in order to get you hooked (I can attest to the fact that it works). I have an e-wishlist with 30 books on it and add one every time I hear about a new book that interest me. Sometimes when I am just sitting around (which isn’t often) or waiting for a plane and get the hankering to read, I just surf the Barnes & Noble eStore to see what’s available.
However, there is an even bigger reason for the growth in e-book sales. In fact, it reminds me of a client I had in another industry. Roaring Springs Water Park is the largest water park in the Northwest. Their season pass program gave the deepest discount to its customers and they considered getting rid of the program. What we did was help them understand that those people who buy season passes were the influencers. They were people who were so passionate about Roaring Springs, they knew they would come to the park enough to warrant a season pass.
Instead of doing away with the season pass program, we helped them add significantly more value through added perks and offerings. One of those was Buddy Tuesdays, where season pass holders could bring a friend for $10. They also stayed open an extra hour on Mondays, just for season pass holders as well as offered a 4th of July BBQ for $1 – again, just for those who were members of “the club”. The result – increased season pass sales and a 30% jump in profit the first year from people who would not only come to the park, but stay longer and spend more money.
How does this relate to e-books? Those who purchase e-book readers are like season pass holders at Roaring Springs. These are the influencers and evangelists. These are those who read so often that they know an e-book reader will be worth the investment. As such, they are shifting their reading habits from regular books to e-books and the book sellers as seeing the shift.
How are Amazon and Barnes & Noble appealing to this crowd? By offering a package of value that goes beyond just buying books cheaper. Those who own e-book readers are part of a club. They get special deals, can lend books to friends, and (in the case of Barnes & Noble) even have dedicated content when you bring your Nook into a store.
What does this mean for the future of the industry? Books will never go away, however, as your influencers and evangelists shift their reading habits you will continue to see a shift in the balance of power. Before, the publishing and distribution process was controlled by a select few. Now e-book readers are making it much more simple to publish and distribute your intellectual property. Barnes & Noble even has a new program called Pubit! that allows to publish your e-book directly to their library. Amazon has its Digital Text Platform which accomplishes the same thing. ePublishing sites like YUDU and Scribd make self-publishing simple and social. The iPad even allows you to have all these ePublishing libraries on one device.
When your influencers are on the move, so goes your industry. The publishing industry is seeing a seismic shift similar to digital music, television programming, and movies on demand. Some might say these earlier movements paved the way. However, one thing is for sure – the book industry is changing forever. Who will lead and who will follow? Who will be caught saying, “it’s just a passing fad”? How will the democratization of publishing affect the quality of the content? All these questions and more have yet to be answered.
Where do you think the growing demand for e-books will take the industry?
Maybe you should have a long talk with the Top 5 book publishers who signed Amazon/B&N etc to an Agency deal wherein the publishers control all the eBook pricing and the bookstores are just their delivery boys.
Since the Agency deal went into effect, readers have been complaining about the publishers pricing some of the eBooks higher or the same as the hard cover. Example, Ken Follett’s Fall of Giants (The Century Trilogy) is $19.39 hardcover, and $19.99 Kindle, which had the Kindle readers practically raging and calling for a boycott.
Thanks for the info. There are definitely powers struggling for control in the new reality. However, again, it follows the same pattern as the music industry. The industry tried to control the distribution and is slowly losing control. (See Radiohead’s efforts in bypassing the major labels).
The point of the post, however, is to understand that tastes are shifting because influencers are moving to digital formats. The industry needs to understand the shift and build value for their influencers. Will there be situations like you mentioned above with The Century Trilogy? Absolutely. However, influencers vote with their wallets and publishers will learn what flies and what doesn’t in the new reality. The Google Books project, self-publishing, and competitive pressures will all work together to keep publishers honest.
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