eBooks Ready To Climb Past $1 Billion

Consider it an inauguration of sorts, a celebration of the eBook industry becoming a member of the major media club just as digital music and online video have before them. When you influence a billion dollars, people have to take you seriously. In the book business, it means that traditional publishers can no longer live in deny-and-delay mode; meanwhile, digital publishers get invited to better parties and people in other media businesses like TV and magazines look over and wonder if they could cut a slice of this new pie just for them.

To honor the occasion, we have just published our five-year forecast for eBooks in the US for Forrester clients. The punchline is this: 2010 will end with $966 million in eBooks sold to consumers. By 2015, the industry will have nearly tripled to almost $3 billion, a point at which the industry will be forever altered.

Right now, the number to track – and the one that determines how many eBooks will sell – is the percent of a consumer’s books that are bought and consumed digitally. To get at this number, we have to understand how people get books today. Did you know that the two most common ways people get books today is borrowing them from a friend or getting them from the library? Evidently content – at least in the book business – is already quite free, even without the help of digital.

eBook buying falls very low down on this  list of how people acquire books. Just 7% of online adults who read books read eBooks. But that 7% happens to be a very attractive bunch: they read the most books and spend the most money on books. And here’s the kicker – the average eBook reader already consumes 41% of books in digital form. Oh, and that includes the people who don’t have an eReader yet, which is nearly half of them. For those that have a Kindle or other eReader, they read 66% of their books digitally.

I’m sure you’re ahead of me on this one, but let’s just spell it out. We have plenty of room to grow beyond the 7% that read eBooks today and, once they get the hang of it, eBook readers quickly shift a majority of their book reading to a digital form. More eBook readers reading a greater percentage of their books in digital form means our nearly $3 billion figure in 2015 will be easy to hit, even if nothing else changes in the industry. Meaning even if we never get color e-Ink screens, if publishers never experiment with eBook subscriptions, and interactive eBook formats never succeed, we will still see digital get close to $3 billion in size by the middle of the decade.

At that size and higher, not only do publishers need to take digital seriously, they must make it the new default for publishing, preparing for a day in which physical book publishing is an adjunct activity that supports the digital publishing business. And this dramatic reversal will have happened faster in book publishing than in any other media business. Not just because publishers have had years to watch other media industries face the digital transition, but also because book publishing is a single-revenue business. Music used to generate revenue from the radio, from CD sales, and from concert tickets. Changing that business required upsetting several apple carts at once. TV is similarly complex, revenue is derived from advertising, cable carriage or retransmission fees, and direct sales of DVDs. You can’t go digital without first rethinking the entire business (and not every player in the ecosystem takes that lying down). But not publishing. Books are published and sold at retail. In the end, once the only channel from which revenue is derived starts to get remodeled, it’s not long before the whole structure gets torn down and rebuilt to accommodate the new dominant distribution model.

That’s why we pause to commemorate the crossing of the billion dollar threshold, because from here things will move so quickly that by the time the dust settles, the book business may actually be the most digital of all media industries, even if it got the latest start.

Comments

eBooks

Well the hot button topic on eBooks is in the realm of education..... eBook textbooks are a different breed. I would like to see the sales figures on eBook textbooks. This billion dollar figure accounts for mostly novels for the recreational reader. Reading a textbook is far different then reading a novel, and once the publishers figure our how to deliver a textbook digitally that is easily navigated, that's when we will see the sales start to increase even more.

Agree with you, Scott

In terms of moving massive dollars to eBooks, textbooks represent a significant opportunity. But they are also a problem. Right now the decision is gated by two different constituencies: 1) local school districts for K-12 who have no money and very little tech savvy and no mandate from parents to make this change, and 2) the universities and the professors who have to choose to go digital but have no incentive to do so. At the university level, textbooks have been broken for years (spoken by one who has 3 college degrees and taught at 2 universities, I can assure you it has ever been thus). But no one other than the students wants to change this. So that's how most textbooks will first go digital: via piracy. Get ready to see the death of textbook publishers as they spend all their time suing their way through the digital transition. It will be Napster all over again, sadly.

College Students & E-books

NACS wondered about the prevalence of e-books and e-readers on campus also, so we had our OnCampus Research division do a survey last month of college students. Use of both were very low.
Highlights are here: http://www.nacs.org/advocacynewsmedia/pressreleases/ebooksereadersslowto...

-- Charles Schmidt, Dir. of PR
National Association of College Stores

Thanks for sharing, Charles

That's very interesting and not altogether unexpected (in the general population of people who read books of any kind, only 4% had an eReader as of last June). I think eReaders may never catch on in colleges -- but tablet PCs will, and those tablets will allow for a lot more interesting textbooks but also much easier to accomplish piracy.

I'm an author who has been

I'm an author who has been published by numerous large New York houses (Penguin, Warner, Berkley Putnam, St. Martin's, HarperCollins) -- my field is science fiction -- and I'm eager for the rest of the world to discover what I discovered years ago: the absolute joy of reading text electronically.

I've got a good survey of ebook reading devices over the years on YouTube -- http://www.youtube.com/watch?v=OWvbhE7tbOY -- and think the current crop are really excellent devices. The big tipping point, I think, will be when people stop thinking of reading off a screen as something for the young, and instead have the old -- who buy the most books, after all -- recognizing that suddenly they can get any book they want in a type size that's comfortable to read with older eyes. I need my bifocals for a paperback; I don't for an ebook.

This Christmas will be the tipping point, I predict, with ebook reading hardware being the most-sought-after gift: the Kindle 3 graphite will be the Tickle-Me-Elmo for adults this year. ;)

-- Robert J. Sawyer, author of FLASHFORWARD, basis for the ABC TV series

Great contribution, Robert

It's great to have your perspective as a successful author. We generally attract tech types here so your addition is meaningful. I like your comparison between the Kindle and Tickle-Me-Elmo. I'm certainly seeing it anecdotally as well as in the data. Amazon will probably end the year with 6+ million people owning Kindles. From an author's perspective, imagine how tempting a base of potential readers that is! It's also why some authors are going directly digital and cutting out the publisher -- imagine getting 70% of the eBook retail price rather than 15% or even 25% net of publisher receipts! If you dare, I'd love to know if that's something you'd ever consider as an author who already has those publisher relationships established?

Going direct

Many thanks! I had dinner a few weeks ago with two editors from a major New York publishing house, and they had no idea at all that Amazon.com was offering 70% royalties to authors who publish directly on the Kindle platform. These editors thought the 25% of net proceeds their company was offering was fair and competitive.

Back when I was president of the Science Fiction and Fantasy Writers of America in 1998, I was arguing for disintermediation of authors and readers, and speaking about the "post-publisher economy." I do love my editors, and I love the hefty advances traditional publishers pay me, and I love that they send me on book tours, and, of course, I love that they get my books into thousands of bookstore and other venues -- but no author loves traditional book royalty rates (normally 10% on hardcovers and 8% on paperbacks), and we're all struggling with just how much the services of a traditional publisher are worth.

The trick for authors is establishing themselves as brand names -- but those of us who are, to one degree or another, are certainly looking at all possibilities for the future. :)

Thanks for being open with us

First of all, Robert, I'm terrified for your editor friends who were unaware of the 70% Amazon deal. They need to know that as soon as possible because it indeed changes everything, especially for a name author like yourself.

But it even changes things for an up and coming author. Imagine an author who has some credibility from blogging or some other digital venue and manages to surprise the market with a strong debut novel, promoting herself on twitter, Facebook, etc. -- perhaps she can sell as many as 10k eBooks and people start to talk about her and suddenly a publisher arrives offering a traditional publishing deal. If the book is starting to garner genuine attention among readers, it would hard to woo that author with a modest advance (say $50K) because she will already have earned $70K from eBooks with the expectation that it could grow with the added buzz she's achieved. And if the publisher argues that with their clout/marketing/distribution, the author can sell 10x as many copies, the author would genuinely have to think twice again given that they'd have to give up the lucrative eBook revenues in order to gain the publishing deal. I fully expect to see a case like this emerge in the next year or two. I wouldn't be surprised if such an author chose to stay outside the publisher system.

Of course the amount of money

Of course the amount of money earned from E-Books will climb beyond 1 billion dollars given some of their absurd pricing points:

9.97
99.97
997.00
9,997.00

Surprised actually that it hasn't surpassed 1 billion long before now.

Textbooks and ebook formats

@James Structural issues in the market aside, textbook publishing as ebooks founders on a simple issue: format.

Textbooks by nature do not lend themselves to ebook usage. They tend to feature multi-column pages, complex design, illustrations, and (particularly) math in the form of equations. The existing ereaders for the most part simply can't deal with this, as the ePub (B&N nook, Sony Reader) format, and the MobiPocket format (Amazon Kindle) don't support many of the required elements, starting with multi-column display. The only format that *does* work for textbooks is PDF, and there you have the problem that the display on most dedicated devices simply isn't large enough to accommodate a page readably without side scrolling.

The Amazon KindleDX incorporates Adobe's Mobile SDK to be able to display PDFs, and has a larger screen than the standard reader. They've had pilot projects at several universities where student could get Kindles and texts in PDF format. Initial reports aren't encouraging. The students have been less than thrilled with the experience.

Another potential issue is that most dedicated readers (save the new B&N color nook) use eInk displays, and eInk does not support color. If your volume needs it, you're out of luck. Chinese manufacturer Hanvon just announced an eInk reader that *does* support color, but it's problematic. eInk, Inc announced a color eInk prototype in 2006 slated for volume production in 2007. Hanvon seems to be the first to actually use it in a device. Problem one is "washed out" colors. Problem two is that the technology only supports 12 bit color, for 4086 possible colors on a page. If your ebook is on art or photography, this is simply not adequate.

There's plenty of growth available for ebooks, and my personal suspicion is that they'll cannibalize the mass market paperback. But before that can happen, ebook production has to be part of the standard workflow of a trade publisher, instead of an extra step in the process, and publishers and readers have to drop the wishful thinking about how much (publishers) and how little (readers) can be charged for them.
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Dennis

Great walk-through, Dennis

I agree completely with your thorough rundown of the format problem. The only place it doesn't apply is in English Lit! That's why I keep my eyes on tablets. Format would be elegantly addressed on an iPad or Android tablet -- and with another 1-2 years of price competition these devices could be genuinely cheap enough to gain traction among this population. B&N's Nook Color is clearly positioned here already at a very cheap price point yet with enough control over the apps (it's not an open Android market device, all apps have to be approved by B&N, which makes it harder for pirated content to get in there), textbook publishers are probably very intrigued by it, even though it's not likely to become dominant on campuses any time soon.

The format problem is pesky,

The format problem is pesky, and won't go away soon. ePub, MobiPocket, and PDF are only the tip of that particular iceberg. We have the IMP format used by the old Rocket eBook and current eBookwise 1150 product, the FB2 format that appears to be the default standard for Russian texts, the legacy eReader format, originally devised by Peanut Press for Palm OS devices and supported on the nook through their purchase of Fictionwise, and some others peculiar to Asian devices and intended for support of things like Chinese texts.

The bigger problem from my viewpoint is that ebooks are currently an additional step in the chain. Right now, the publishing workflow is that a manuscript is delivered in Word format, worked in to reach final approved copy status, then handed over to DTP who import it to Adobe InDesign for typesetting and markup. The output from InDesign is a PDF that goe to the printer to be fed to an imagesetter to generate plates for printing. Making ebooks is a whole separate step outside of that process.

Current versions of ePub can also generate ePub output, but do so badly. Ideally, the final workflow stage should be "import to InDesign for typesetting/markeup, Save As PDF for printer, Save As ePub for ebook. Once it's in ePub format, conversions to other formats like MobiPocket can be automated through scripts, as the ePub file contains all the necessary content and metadata.
But InDesign isn't there yet. This is ironic, given that Adobe is the biggest industry player pushing ePub.

Ultimately, content should be stored as well formed XML, using XSLT transformations to do the bulk of the work of getting into the output format desired. But while the tools exist to do this, they are not widespread in publishing, and would require significant changes to existing processes and significant investment to implement. I'm not holding my breath waiting.

And while textbook publishers, might be intrigued by the nook, the format problem still bites. There are interesting possibilities for textbooks for a device like the nook, but they require a completely different design than the print edition. Doing that adds significantly to costs, and textbooks are already expensive. Again, starting with well-formed XML and using XSLT transformations would go a long way toward overcoming this, but first you have well formed XML. Catch-22, anyone?

The Color nook is interesting, and I wonder how long it will be before someone "jailbreaks" it? I don't see a color ereader when I look at it: I see a cheap Android tablet with significant possibilities if users aren't limited by what B&N approves. But I fail to see why the lockdown should be thought of as a piracy suppressant. The stuff that gets pirated isn't apps, it's *books*, and locking down the Color nook to unauthorized apps won't have any effect at all on that. B&N's motivations are far more likely to be reducing the support nightmare that would ensue if any old Android app could be installed, and when things broke, the users would say "Hey! B&N! Fix it!" By vetting what can be installed, they reduce headaches.

And I'm a contrarian on piracy in any case. DRM is useless. I don't know a DRM scheme that hasn't been cracked the day after release, and once a copy is cracked, the horse is out of the barn. You don't present piracy by DRM. You prevent it by providing value, pricing appropriately, and making it as easy as possible to give you money. I know people well acquainted with the "darknet" who could find any ebook they wanted free, but choose to go online and buy the books, because convenience rules. They can see a new book they want, pay for and download it, and be reading within a minute or so. Instant gratification is worth money to them.
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Dennis

Your details (and your concepts) are right on

Now you're moving beyond me in terms of the technical details (for which I'm grateful, thank you for filling us in) but I understand the concept quite well from the work I do with magazine publishers who are stuck in the same mess. That's one of the reasons they don't like having to craft totally new apps for the iPad, they'd rather just export from InDesign (and Adobe would like them to, as well!). You're right about the workflow issue, and I think eventually the whole thing will get reversed. The whole workflow will be flipped around so that it is primarily focused on digital (for linear trade books, that could be as soon as five years, for textbooks, for all the reasons you've mentioned, it is much longer hence). Paper output will be a secondary (and optional) process that has specific costs associated with it.

True about jailbreaking Nook Color. I hadn't stopped to consider that option, but give me a jailbroken Nook Color over an iPad any day. Half the price, better form factor, with more flexibility for the user.

As for piracy, you're speaking our language. Our mantra here since 2003 when we first tried to work with the music industry on this topic is simple: make legal consumption easier than piracy and you will win. Books will be the same, completely agree. The only reason I bring the issue up specifically with textbooks is that because of the issues you bring up, it's unlikely that textbook publishers will do this anytime soon. Yet their end customer is the savviest technology user in the market. That makes the pain of piracy a minor thing compared the pain of paying $150 per book.

Thanks for the great dialogue.

It surprises me not at all

It surprises me not at all that those NY editors didn't know Amazon's royalty rate. In my two decades of experience as a published writer (20 suspense/horror novels), I've found the big publishers to be maddeningly slow to adapt new technology.

I had email before my publisher did. I was producing books on floppy discs long before my publisher would accept an electronic file. For years I had to print out manuscripts, send them to the publisher via UPS, and wait for the publisher's typesetters to laboriously retype them from scratch (introducing a whole new set of typos, which required a whole new round of proof-reading). Why? Because "that's how we've always done it."

I've also found that the big publishers will go to almost any lengths to screw their writers. When ebooks were introduced, publishers actually tried to *lower* the royalty rate from a measly 8% to an even measlier 7.5%! We were told that this rate would be the "new industry standard." So a book with almost no physical production/distribution costs would actually pay the author less than a traditional book! If not for upstarts like Amazon, you can bet the NY houses would still be insisting on 7.5% - unless of course they decided, in their wisdom, that 6% or 3% made more sense.

As far as I'm concerned, the ebook revolution is overdue. The book industry has stagnated in monopolistic complacency long enough.

Wow!

I spend time with publishers, but almost always with the digital side, so I am very saddened to hear of your experience. It's an eye-opener for me and one I'll probably refer to a lot, thanks for sharing. I will do my best to light a fire underneath them but if I fail, it sounds like successful authors like yourself are poised to go on without them.

The dust has yet to settle in several areas

Yeah, one area where the dust hasn't settled for Apple devices is whether app or ebook is the preferred delivery method for electronic literature. Apps are popular because they can be sold through the Apple store like any other application, but with the existence of things like Stanza, the Kindle app for iOS, and the B&N nook viewer app, I suspect eventually ebooks as ebooks will win.

I'd *like* to see the workflow flipped for trade publishers. Print is an additional cost, but printing, binding, warehousing and distribution are perhaps 20% of the total cost for the average title. Most of the costs of acquiring and preparing a book for publication occur before it ever reaches the state of being published in *any* format. I look forward to the day when "Save as PDF for printer, Save As ePub for ebook" is all that's required to do both. Again, I'm not holding my breath waiting...

As for a jailbroken Nook Color, I expect it sooner rather than later, but it largely won't matter. I have the Android SDK here. Android is modular, and you include the pieces that support what you want your hardware to do. I wondered when we'd see devices based on Android that *weren't* smartphones. The Nook Color is the sort of thing I was thinking of, but it's the edge of the storm. There are a number of Android powered tablets in the pipeline, and if you add the respective Amazon and B&N apps for Android, you largely have a Nook Color that isn't locked to B&N ebooks, with a wider range of other functionality. The question will be cost, but if B&N can make and sell a Color Nook for $249 and make money, so can others.

There are intriguing possibilities for textbooks and other ebooks in a tablet like the Nook. For instance, ePub is a container, and what it contains doesn't have to be text and static graphics. It can included video and audio, and links to other content. An interactive textbook with full multimedia might be nice indeed. The barriers aren't technical - it could be done now. The problem is the development cost and the issues of maintaining two separate source trees for print and electronic editions.

And thanks for the agreement on piracy. I see DRM as changing focus, with Amazon as the example. Amazon uses the MobiPocket DRM scheme, but customized for their purpose. The intent isn't to prevent piracy of ebooks - it's to lock you into Amazon as the vendor. Amazon wants to sell ebooks, so I saw the Kindle device as priming the pump, and was unsurprised when Kindle apps for popular platforms followed. Sure, they'd like to sell you a Kindle device, but if you read with a Kindle app on whatever platform, fine by them: if you *purchase* ebooks, it has to be from Amazon. They have selection and pricing such that Kindle users largely don't care about vendor lock-in, so they get away with it.

Thanks for the dialogue from here, too.
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Dennis

I'm sorry, but you're wrong

Let me start with a bit of background - I was one of the e-book authors with Pocket Books back in 2000 during the first "e-book revolution," and I own and operate a small publishing company today. As a result, I am very familiar with e-books, and I have been tracking their performance for some time.

But, you make a statement here that is completely separated from reality:

"At that size and higher, not only do publishers need to take digital seriously, they must make it the new default for publishing, preparing for a day in which physical book publishing is an adjunct activity that supports the digital publishing business. And this dramatic reversal will have happened faster in book publishing than in any other media business."

Okay, first of all, digital as the new default for publishing. Most of the internal workings of the book publishing industry were digital by the time my first print book was published in 2003 - for that matter, I'm fairly sure paper was mostly removed from the process by 2000. In fact, print on demand technology, which is primarily digital, not only made publishing companies such as mine possible, but has also led to a new technology that is essentially an ATM for books, which will give bookstores a selection not in the thousands, but the millions. The ONLY difference at this point between an e-book and a printed book is that at the end of of the process the e-book doesn't go to a printer - and that's pretty much where it STARTED from. I know - I was there.

Second, speed of reversals. The first DVD player hit the shelves in 1997. By 2000 it was clear that the DVD was the format of the future. By 2002 the VHS is an endangered species. The first "e-book revolution" was around 2000. Now, in 2010, the e-book has yet to secure a steady 5% per month of the book market. The e-book may be experiencing growth, but as far as adoption is concerned, the DVD alone has it beat by at least 7 years now.

(DVD figures from The Digital Bits.)

Furthermore, the sales figures do not act in a way that suggests that they're part of the book market to begin with. The book market has very large peaks and valleys (the difference between them can be over a billion dollars per month). However, the e-book sales are a steady horizontal line, with an occasional step up to a higher level, where it goes back to being a steady horizontal line. The peaks and valleys just are not reflected. If the e-book market was part of the rest of the book market, at least some of the variation should be reflected, and it is not.

(Figures from the Association of American Publishers)

Now, you're talking about one replacing the other. Well, sorry, but no, the printed book is not going to be replaced by the e-book. The e-book is a niche product - a growing niche, but a niche all the same. The reason I say this is because if you look at other markets where one format has replaced another, quality and level of technology are not the determining factors (the quality of an MP3 is considerably lower than that of a CD, and while the DVD got all the press, the Laserdisk worked for 15-20 years to gain a market share against the VHS, and failed). The determining factor appears to be simplicity - does the new format make it EASIER on the consumer? And, the simple fact is that you can't get easier to use than a printed book - the minute you have to press an "on" button, there are extra steps.

Now, I have been hearing the rhetoric about how the e-book is the future, how print books are obsolete, etc., since 2000. There are very interesting things going on in that market, but it is not a Mad Max scenario along the lines of "two formats enter - one format leaves!" It never has been. And, speaking as both an author and a publisher, I am getting very tired of enthusiastic rhetoric that has little relation to reality.

I welcome your viewpoint, but I will disagree

Robert,

First let me say I really encourage this type of dialogue and I'm grateful that you bring your experience to the table because I'm sure you've learned a lot from it and I'm glad you would share it with us. I wish I could sit over a cup of cocoa and hear more of your stories.

That said, I am going to disagree with you on three fundamental points that I think are very critical: 1) there was no ebook revolution in the year 2000, 2) the publishing business will be forever changed once it changes its economic orientation, not its production process, and 3) ebooks are 10x more convenient than paper books.

First, let me dispatch with the first question rather easily. You say there has been rhetoric about ebooks since 2000. That may be, but it wasn't from me. As the guy who has covered publishing and other media since 1996, I can truthfully say I have never claimed that ebooks were in a position to change the publishing market until late last year. You describe a failed revolution in 2000 as if it were the same as what's happening today. It's not. In 2000 we didn't have the devices that could make it possible for people to read to easily, plus we didn't have publishers as willing to release top content like they are today. In fact, your own comparison to laserdisc is apt, because laserdisc was not a video revolution (I know, I had a classic RCA laserdisc in the early 80s). In the same way, all ebook efforts prior to the Kindle were similarly failed misstarts. The eBook revolution didn't start until the Kindle, and it didn't get serious until eReader prices fell below $150, which they did this year.

Second, I am not talking about one replacing the other (your words, "two formats enter, one format leaves," are words I have never uttered). I am talking about one becoming dominant over the other. And by that, I do not mean that one even has to be a small fraction of the other. In the music business, for example, digital sales still only accounts for a third of all (dollar) sales, but it is very clearly the dominant driver of the business: the music labels design for digital release and use all other aspects of talent management (appearances, endorsements, concerts) to help sell CDs and concert DVDs as follow-on revenue boosters. CDs, though still the biggest chunk, are less than half what they were at their peak. So while the industry used to base all of its economic planning on the release of the CD as a tentpole in terms of promotion and revenue, now the CD is just another trinket to sell behind the digital release. It's a glorified tour t-shirt.

The same thing is going to happen in print publishing. Publishers will eventually think of their eBook strategy first. Paper decisions will be made as an adjunct to digital decisions. Many, many books will be published without paper versions at all, at least until they get enough critical mass to justify going to paper. Bestsellers from proven authors will always get both, launched simultaneously, and certain niches (travel, cookbooks, etc.) will always have heirloom paper editions. This isn't because they want to make this change, it will be because they can no longer sustain the economics of being print focused. They already have the worst margins in the media world, and getting a digital squeeze will force them to cut back on paper capacity, which will then force a change in the way they handle manuscripts from approval to release. At the same time, just as what happened in music, when the dominant retailers suddenly find their economic model drying up, they'll cut shelf space (music did it in 2007 and again in 2008, resulting in 40% less shelf space at major retailers like Best Buy and Walmart not to mention the complete end of Tower Records before that). This will mean an automatic retraction in how many books are printed because publishers won't get the massive bulk purchases they used to get for as many titles. This means they won't be able to give as large of advances. Meanwhile, authors won't like that advances are going down and marketing spend is going down at the same time their royalties shrinking, all while Amazon is offering them 70% of the retail price of their ebooks -- paid monthly, not twice annually.

In other words, what's happening here is not about technology, and it's certainly not about about formats. It's purely economic: This industry is plagued with analog inefficiencies which cannot persist in the face of efficiencies that digital will bring, nay force.

And why is this economic tsunami going to hit? Precisely because of my third point, and probably our sharpest area of disagreement: eBook reading is 10x more convenient than paper reading. You say an on button is a step that inhibits reading. And if the device has to boot up, and you have to fire up the application and locate the file, you would be right. But you don't. Today's Kindles never turn off. Yes, you have to wake it up with a slight button push, but it automatically displays the last page you were on and you can read immediately under all the same lighting conditions that you can with paper. The experiences are roughly substitutable.

But that's not the only issue where convenience plays a role: You can acquire books much more easily with digital than you can in paper. That's the single most significant advance of the current digital model. And once acquired, a book is always with you. For anyone who reads more than 2 books a month (about a fifth of the population), this is a tremendous benefit. And in the future, you'll be able to share books (or quotes, insights, notes) more easily in digital than you can in paper. The new Nook Color, for example, already allows you to post straight to Facebook from a line that you find insightful and want to share.

I'm not expecting you'll agree with me, obviously your experience here counts for a lot and I don't want to disregard it. However, as the guy who has been consulting industry after industry through digital transitions, there's a lot more to consider than just format battles. The entire economic structure of the industry is at risk and history shows that there is no way to avoid or even delay that change.

I wish it were that simple

"The ONLY difference at this point between an e-book and a printed book is that at the end of of the process the e-book doesn't go to a printer - and that's pretty much where it STARTED from."

The current workflow in every trade publisher I'm aware of is to get a manuscript as a Microsoft Word file, work on the Word file to produce the final form to be turned into a book, then import the Word document into Adobe InDesign for typesetting and markup. The output from InDesign will be a PDF file, which the printer will feed to an imagesetter to make the plates from which the book will be printed. As you state, that part is all digital.

The problem is what happens when ebooks are the intended end product. PDFs are not a "one size fits all" solution. Many currently popular reader devices can't *display* PDFs. The Amazon Kindle models, except for the DX, display ebooks in the MobiPocket format. The Barnes and Noble nook and the Sony Reader display ePub files. There are other less common ebook formats in use as well.

And even if the device can display the PDF, many PDFs are not created with the tagging that allows the PDF view to reflow the PDF to fit the screen size of the device. (The PDF viewer in the KindleDX doesn't support reflow even if the PDF *is* tagged for it.) Reading the PDF on a small screen requires sideways scrolling, which is actively painful. For most people reading ebooks, a PDF is the *last* format they want.

Before you can issue the book as an ebook for current platforms, you have to have the book in the format the end user can read, and that's unlikely to be PDF. Conversion of the PDF to a different format is problematic. How well it works depends on the PDF. What you want to do is generate the the ebook formats to begin with, and that currently involves a separate set of steps in the process, with attendant added costs.

The industry is not there yet.
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Dennis

Ah, okay, you may have me on

Ah, okay, you may have me on that one, Dennis. I stand corrected.

Mea culpa.

This sounds like a software

This sounds like a software issue that could be solved with reasonable ease. If the industry could agree that everyone could make serious money focusing on getting ebooks into the hands of readers, that the money to be made from selling devices is relatively modest.

The problem is getting the ebook readership up from that 7% one post mentioned. Reading devices already are affordable (the $140 Kindle and similar devices). And readers need to be able to rent books rather than having to buy them at the current fairly modest discount off the print book price.

Why not an industry standard for publishing and for licensing ebooks?

I just wanted to point out

I just wanted to point out there appears to be a typo in this sentence. The million should read billion. "The punchline is this: 2010 will end with $966 million in eBooks sold to consumers."

sorry if it's confusing to follow...

...all the talk of billions, but the number is correct as million -- we are about to cross the $1 billion threshhold, this year we will come within $34 million of it at $966 million.

Yes, well said...all the talk

Yes, well said...all the talk of billions. Thank you for clarifying. Great article!

Rental service

I had assumed I would not be a person who would want to read electronically. And here I find myself jumping in with both an iPad and a Kindle. And unhappily realizing that the ebooks are still in their infancy.

Like most movie junkies, most readers do not want to own every book they read. We go to the library and the used book market for most of our books. We literally cannot afford our reading habit at $10-15 per book. And even if a device will store hundreds of books who wants all that digital clutter to sort through?

A Netflix style rental service will open up the ebook market to the reading masses. In this business model, each use of the material generates income for the publisher and the author. Only a single shot of income is generated from the print sale of a book that will be resold and passed around among friends multiple times.

The reading consumer of a print book can recoup half or more of the cost of the book by reselling it while the ebook reader has to absorb the entire cost of their digital edition with no simple way to pass the file along to be read a second and third time.

Once we, the reading public, have affordable rental subscription services available the ebook market will explode. And publishers and authors will have a perpetual income stream from backlists that cannot be profitably kept in print.

I'm with you on the topic of rentals

It's worthy of a separate blog post, but rentals are an ideal solution for digital. Both individual rentals and subscription rentals. Think about it this way for individual rentals: the cost of delivering the content is almost zero, the additional reader only wants the book for a short period (that's why libraries and loaners from friends are the top 2 ways people get books today), so the incremental revenue is practically free money. And there's always the chance that the person will like it enough to either buy it to keep in their digital collection or gift a rental to another person.
Subscription rentals are harder for the industry to swallow because it's hard to figure out what an unlimited subscription service looks like that doesn't cannibalize these new eBook revenues that offer some hope for the future. So it may take a while, and in a later post, I'll explain how it could happen.