The flat future of electronic reading

The future wasn’t meant to look like this. According to e-book evangelists, freeing the book from its paper format was going to herald a new era of reading. Physical book sales would wither and e-book sales soar as a new generation of reader, converted by the convenience of digital reading, thumbed through Twilight on their phones.

As we’ve explored before on this blog, we believed this was a fatally flawed reading of the future, for multiple reasons:-

  1. It was based on the notion that e-book sales were automatically ‘additive’ to the overall book market, when publishers had no way of tracking whether e-book sales were or weren’t cannibalising print purchases
  2. It assumed that e-books were a new category of product (true of enhanced e-books and book apps, but these still don’t represent the bulk of e-book sales) rather than books in a new format
  3. Its projections were based on an assumption that digital reading would shake publishing out of the low-growth trajectory of a mature market
  4. In a world where tablets make it possible to consume any kind of media on the move, what makes you think that books should be privileged?

Writing now at the end of 2012 it does seem that digital reading is facing a flatter future than we were led to expect. While sales of tablets and e-readers have sky-rocketed until now, with Pew Internet estimating that 29% of American adults now own one of the devices, the future for pure-play e-readers is looking far more uncertain. This week technology market intelligence firm iSuppli warned that dedicated e-reader shipments are now well past their 2011 peak of 23.2 million units, predicting that only 14.9 million will have shipped for the whole of 2012. The consumers who would have splashed out on e-readers two years ago are buying tablets instead. Indeed it’s very probable that many e-reader owners now have both. It’s good news if you’re a platform owner like Kindle or Apple who doesn’t care whether consumers read books, watch videos or play Angry Birds, as long as you use their content ecosystem. It’s a far more mixed blessing for publishers, however, as now their e-books don’t just have to compete with those of other publishers for Boxing Day dollar, but are now pitted against every other digital medium represented in tablet app stores.

Another sign that digital reading isn’t delivering high growth book sales comes from an analysis by Jeremy Greenfield at Digital Book World. He’s used Nook book chart rankings (which are assumed to be more reflective of actual book sales than Amazon’s) to track the effect that e-book discounting has had on actual sales. The results make for discomfiting reading for any publisher who’s succumbed to stunt pricing offers in order to achieve a spike in book sales. None of the Harper Collins titles Greenfield examines seem to have made back the money ‘lost’ in discounting the books in the first place. It makes basic mathematical sense. If you discount a book by up to 93% (as Sony and Kindle did during the brief e-book price war earlier this year) sales of that same book must rise by 93% before you break-even.

So what can we take away from these apparent trends that will guide our thinking for publishing in 2013? Well it’s safe to say that e-books will continue to grow their share of the book sales market but the rate of growth will also probably slow too. This is because many heavy readers have already transitioned (at least in part) as well as the fact with a bigger share of the overall market leads to a natural deceleration in growth. The end of the publisher price fixing case could also have surprising effects on e-book pricing, according to Greenfield. Faced with a competitive landscape where price promotions don’t work, and are also limited by law, we could see fewer of them about. But seeing as full-price e-books drove the majority of bestseller sales anyway it’s difficult to say what impact this would have on publishers’ bottom lines.

We will, however, end the year as we started with a plea to all e-reading platforms to be far more open about the data they provide to publishers. The app stores and mobile content ecosystems that control millions of consumers’ media diets represent vast stores of insight into what people want, when and how much they’re prepared to pay for it. Without access to at least some of that data, and the ability to interpret it, publishers will be at a natural disadvantage when it comes to creating the product the market wants. And if they don’t get access to it soon, it’s likely that publishing will fall behind in terms of innovation. This is something no one – e-reading platforms, publishers and consumers alike – wants. So make it happen soon, for everyone’s sake.

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