Thursday, August 27, 2009

People Get Ready, There's a Train a'Comin'


The ebook train hasn't pulled all the way into the station yet, but it is coming and not far away. Five years ago, the ebook share was less than 1% of the market. Now, it's at 6-8%. In five more years, I expect it will be considerably more; I've heard estimates from 30-60%.

The express carrying iPods rolled in and out in a hurry, and while I don't think book readers are going to take over the market as fast or as much as MP3 players did -- music draws more listeners than books do readers -- ebooks are going to change things.

Already traditional book stores are having troubles. A lot of the big chains have cut inventory, both in terms of titles and copies carried. Returns are up. Little stores are selling used books if they want to stay alive.

Traditional publishers are now competing with anybody who has a computer and a desire to see a book in print or online. True, the New York houses are the acme of the market now, in terms of production, advances, and distribution. But just as YouTube and MySpace have created musical stars and new video directors, it won't be long before somebody creates an ebook that hits it big, bypassing the traditional publishers.

Mostly, they still serve as filters -- at least there is a basic level of professional stuff. Anybody who can upload his or her own stuff without the chops probably won't do very well at it.

I like treeware and expect I will always prefer reading paper books to electronic ones, and I'm not alone. But there is a generation that doesn't care, or would rather read on their laptops or iPhones. They are jacked in. They are younger, and eventually, the market will cater to them. Paper books aren't going away, but the business won't be the same ten years from now.

When the etrain leaves the station, I don't want to be standing on the platform waving bye-bye. I'm getting my ticket now.

Some numbers:

Traditional publishers will give an advance against royalties, and then a rate -- at my level -- of 8-10% for a paperback book. The math is easy: Eight buck book, I might get eighty cents a copy sold, against my royalty. For the sake of argument and to keep the arithmetic simple, say I get a thousand-dollar advance. The paperback title has to sell 1250 copies for me to earn that advance, after which I start making eighty cents each. Twice a year thereafter, long as it is in print, I should get a royalty statement and a check.

Kindle's royalty rate is 35%. For a five dollar book, I therefore get $1.75. Twice as much plus as paper, on a title that costs 62% as much. 571 copies to get the $1000. They start paying after three months.

On my blog, a PDF for $5, the royalty rate is 100%. To get the thousand, only 200 copies. Payment comes before I email the book.

POD -- print on demand -- my costs for a book are about twice what I'm charging, a few cents less, and then the book has to be printed and shipped. An ebook gets there faster, no postage, and once done, almost no cost to me.

Granted, if I am suddenly overwhelmed with orders on my blog, I'll probably have to hire somebody to fill them. Not that I am ever likely to get that many orders this route. At the moment, however, it takes me about a minute. I click on the customer's email address, and send him an email with the PDF attached. I have enough bandwidth from my server to do that all day every day.

Neither Kindle nor my blog offer me a royalty up front. And the numbers of sales via them aren't anywhere near what I get on my paper books, even as a midlister. However, those numbers are probably going to get bigger as we roll along. Just as the music industry had to come to terms with the net, so are the book companies.

Ebook readers are still expensive and clunky. But there have been a couple million downloads of the Apple iPhone reader app, and readers will get cheaper. When you can get one for $99, which is less than the cost of four hardback books, watch. They won't be able to make them fast enough.

Barnes & Noble is about to jump into the fray with their own reader. Apple continues to lie about theirs, but don't believe them, one is in the works. Kindle has a million units out; Sony claims twice that. There are ten million iPhones out there. The Chinese are cranking up their factories.

Beat a better path and the world will build a door to your mousetrap ...

I'm not great at predicting the future, but you don't need to be a weatherman to know which way the wind blows ...


13 comments:

William Adams said...

I've been using a Sony PRS-505 since shortly after it came out (chose it over a first generation Kindle since it fits in my (old-style Travelsmith) shirt pocket).

The new Sony PRS-300 lists at $199 and w/ a new Sony credit card and the purchase of $100 worth of peripherals one could probably get $100 off --- which is almost close to your $99 price point.

I hope that the stylus enabled readers get more capable soon though --- was only barely able to resist getting a Sony PRS-600 as a replacement for my Newton MessagePad.

William

Stan said...

I've been using my Palm TX as an electronic reader for a couple of years. Two advantages: I almost always have it with me; and, it isn't an extra item to carry in my hands (fits in a shirt pocket or my briefcases).
Primary disadvantage is that I'm not able to get certain books that I want, in the e-format. (Case in point, Mr. Perry, No "Matadors!")The second disadvantage is that the screen is not really large enough for comfortable reading...always have to keep "tabbing down." Final disadvantage is the "mis-interpretations" the software makes when it translates the book into the "mobi-pocket" format. (I suppose if I was more of a geek, I'd be able to fix that...Oh well, 'tis a rare occasion when I'm not "geek enough!"

I have had to purchase several copies of certain paperback books (case in point, again, Mr. Perry!) that I enjoy because the bindings and pages tend to wear. It's an even bigger pain (..and it's you, again, Steve!) when the book I want is "no longer in print" and I have to purchase it from some collector's shop!

EvMick said...

Over the last decade or so I've been gradually transitioning from dead tree to electrons. Currently the vast majority of my reading is either on my laptop or my smartphone.

Many, many, Baen titles.

According to an article I read just this morning the current generation reads and writes (texts) much, MUCH more than previous generations.

I'm comfortable with e-books. I hope and expect the trend to continue. As usual the full extent of the medium is rarely being approached. (think embeded hyperlinks, sound, video's and "other")

Disruptive tech isn't it?

Scott said...

I don't need an ebook reader; I have an Aeron chair and a 30" monitor... BETTER than a book.

Sure, books are portable and unpowered, but that's not why I love them, you know?

Dan Gambiera said...

Absolutely true.

I decided that the eBook was the wave of the future a year or so ago. My in-laws swung by on their yearly cross-country migration. Now, they're book lovers. When I say "book lovers" I mean they have fifty years' accumulation that fills two houses. It's not hoarding. They just love having books around and reading them.

When the readers first came out they dismissed them. There was something special about the physical sensation of holding a book and having it on the shelf where you could see it and pull it out. Electronic ink just wasn't the same.

Now Jim is on his second Kindle and has a huge library of out-of-copyright books stored on memory cards, not to mention everything he gets from publishers' sites and Amazon.

My money is on Amazon in the short to medium term. Amazon has the advantage of mondo vertical integration and an enormous share of the book-buying world. They've become a price-setter on some aspects of the business, and their statistical "buy more stuff that you'll like" capabilities are frighteningly good. The move into the textbook world will cost them money now, but if they establish themselves - and nobody else seems to be doing anything serious - they will make a ton of money.

Are there superior devices? Certainly. Odds are some of the companies will end up making devices for Amazon or will be bought by them. It won't be an all-Amazon world, but it's their race to lose.

Scott said...

Great point.

I love books. The one time I ever got really angry with my ex - hands shaking, traps clenching, profane vitriolic stuttering mad - was when she complained about all the bookcases cluttering up the house.

But it's not the leather and ink and paper.

Steve Perry said...

Of course, there are the technical hiccups: I went to upload Pamor to Amazon.com and got a note:
"
Your book is currently under review by the Kindle Operations team as we are trying to improve the Kindle customer experience. Please check back in 5 business days to see if your book was published to the store. This will not affect any titles you are currently selling in the store, but uploading updates to existing titles will take longer to process."

I translate this as a screw-up in Amazon's process and they are running around like baboons on speed trying to fix it.

Just as well. Soon as I uploaded and checked the file, their conversion software stripped all the italics I'd carefully put in.

Amazon.com's translator doesn't much like PDFs. It will take Word, but not all the formatting. I'll have to see what else I can try to get the same effect as the PDF on my site.

Technology isn't quite there yet ...

Steve Perry said...

I'm a Mac guy and I looked at the Sony Reader when it came out. I liked it. But it didn't like Macs, and there are only so many hoops I am willing to jump through to make things work.

Sony missed the boat by not making the things Mac-friendly.

Brad said...

I love to read. Books that can be held and pages that can be turned, there's just something magical about it. But, I guess growing up without ebook technology, paper is nostalgia and youth gone by. It's where I'm comfortable and it's how I relax at the end of a long day (or on a long boring flight).

Sure, I need to hunt down and buy titles that are out of print or that I've read to pieces, but there's a bit of magic in that too. Finding a particular title after some many months, nay years, of searching makes that book more special. Downloading it from the 'net? Bah, anyone can do that. But hunting one down? Who has the patience or time for that anymore?

I do.

Dan Moran said...

I'm not a paper-and-ink wretch ... if they can produce a good form factor that works well enough, it's fine by me. So far hasn't happened, though I am considering buying an ereader to share for the house.

It really needs color to replace textbooks, though. There's a place I wouldn't mind spending money.

jks9199 said...

I like books. There's something about the feel of turning the page, of seeing the progress through the book. Same thing about newspapers. As awkward as they are, there's something special about reading the Sunday comics...

But the biggest magic of a book isn't the medium. It's the way that the words Steve (or someone else) wrote, weeks or months or years ago, come to life in my mind now. It's the way that we can share an author's image and ideas.

I think it won't be long before we have some sort reader-device (maybe some sort of thin-film LCD?) that more closely mimics the feel and experience of reading a bound book or newspaper.

And I'm certain that e-publishing will be the wave of the future.

William Adams said...

You'll do much better uploading a plain .html file to Amazon for your Kindle version.

William

Worg said...

I have bad news.

Ebook readers like this mean that the bottom is about to fall out of traditional publishing. Meaning, the "pay to read" model, where the writer gets money on something other than the honor system.

Mark my words, it's coming. There is going to be a vast tide of piracy which will make music piracy look like a flash in the pan, partly because books are much smaller than music files especially when encoded as text. You're going to start seeing huge packs of books out there to download, like "All sci fi released in 2009."

Piracy and iPods gutted the music industry. The profit margin is now gone for all but the biggest of bands.

The same thing is going to happen with books. And newspapers, but that's a whole nother kettle of worms.