E-Book Economic Take-Over: Alice in Kindleland

 

NEW YORK (MainStreet) – What would American literary colossus Ernest Hemingway have made of the friend-obsessed times we live in today where the need to like and be liked has taken on a literal meaning? "There is no friend as loyal as a book", Hemingway is reputed to have said. Does the Facebook generation identify with that sentiment; can budding bibliophiles express their love beyond 140 characters?

The Renaissance of the E-Book

Gutenberg's invention of the printing press in the middle of the fifteenth century and its contribution to the Renaissance is the stuff of lore. In fifty years we might be hailing Sony—a serial offender when it comes to disrupting the status quo— and its introduction in 2004 of the LIBRIe e-book reader as similarly momentous.

At first glance, the e-book revolution seems, overhyped, with three-fourths of the American population yet to read a single e-book. Responding to a survey by website Grammarly, reader John Landis captured the sentiments of many: "An e-book is not a book." Another reader, Wynter Woodbury, chimes in, "I can see the point of e-readers but the feel of books in my hands, the texture of paper as I turn the pages, pick them up and read the covers to make a decision, makes me never want to give up paper books."

Yet, data from the American Association of Publishers has shown that e-book sales grew 49.4% in January 2012 in the adult category year-over-year, 475.1% in the children and young adult category, and 150.7% in the religious publications category, without any divine intervention.

The Pew Research Center's Internet and American Life Project reported that readership of e-books increased from 16% to 23% between 2011 and 2012, while readership of printed books fell from 72% to 67%. The USA Today best seller list of 50 books had 42 books where the e-books were outselling the paper versions.

The industry has reflected the fundamental nature of change. While Sony may have lost out to Apple and Samsung in the device wars, Amazon has been able to combine its marketplace strength with a solid e-reader thanks to the Kindle. In contrast, Borders has gone under, and Barnes & Noble, which valiantly attempted to fight back with the Nook, has lost $500 million on its e-reader division.

The Library Lives!

Regardless of the format, there is another reason why the reading habit is still going strong—America still loves its libraries. There is a strong printed book bias despite e-books being available. "Library! I love the feel and smell of books, there is nothing like it", says Erika Richards in the Grammarly survey. Others, like Lisa Sprinsgteel Markhoff have arrived at a compromise that works well for everyone.

"I do not live in a home large enough to accommodate an expansive library," she said. "I did have a large collection that was taking up so much room that I was beginning to look like a hoarder. I donated all of my books to the local library and got my first e-reader."

Younger Americans, those between the ages 16 to 29, polled by the Pew Center showed a strong preference for libraries, with 60% having used one in the last 12 months. The e-book consumption in libraries is still on the lower side, around 10%, mainly due to a lack of awareness about being able to borrow e-books from a library.

Unsurprisingly, e-book advocate Amazon runs the Kindle Owners' Lending Library which at last count had more than 350,000 titles available. It is also partnering with libraries, offering them 10% commission from sales, though such efforts have had limited success.

The Battle of the Business Models

Apart from American readers, it is the investment community which is watching the changing reading habits of Americans with great interest. Venture capitalists who missed out on backing Amazon have the opportunity to invest in a range of exciting start-ups, some of whom are trying to disrupt Amazon's model. New York-based start-up Oyster wants to become the Netflix of the e-book world offering unlimited access to its 100,000+ titles for $9.95 a month. The catch, like Netflix, is that you are only renting the book, not owning it.

In contrast, start-up eReatah allows you to subscribe for a higher amount, ranging from $14.99 to $29.99, based on the number of books you can download per month. Plus they are yours to keep after reading. The company is also consciously targeting higher priced books from premium publishers to differentiate itself from the competition.

The innovations in business models are not limited to the retail end of things. Publishing is also undergoing a transformation. Start-up NetMinds has used technology to create a collaborative publishing platform where authors can access the services of publishing industry professionals, often in return for a revenue sharing arrangement, instead of large upfront costs. New Word City specializes only in short-form e-books filling a strong niche in digital publishing. Magzter is another "category killer" specializing in digital magazines.

Self-publishing is almost synonymous with e-books now. It has allowed a generation of authors to realize dreams which would never have been possible in the printed world. The self-publisher Smashwords has amassed 190,000 e-book titles by 58,000 authors, and made $15 million in revenues in 2012.

The New Dichotomy

Printed books continue to form the foundation for Americans developing a reading habit— the Pew Center research talks about 94% of parents favoring printed books for their children. This is natural since these parents grew up in an environment where the printed word was the norm.

As e-reader proliferation increases and libraries expand their e-book catalogs, there will be a natural transition to the e-book as the preferred format. When a Jeff Bezos acquired the Washington Post, the big picture signs are there for all to see, but equally it is a recognition that the printed word, like an old friend, will always be around.

--Written by Preetam Kaushik for MainStreet

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