On May 19, Amazon announced an important milestone that many of us have been expecting: Sales of Kindle eBooks have surpassed both paperback and hardback books combined.
After spending the last few years attending cocktail parties where the only point of view on the traditional publishing industry was that it is dying, I was captivated by the content and discussion last week at the Media Technology Summit, hosted by Landmark Ventures.
I heard the most refreshing statement of the last decade: “We have all been given a gift, and this is the global age of publishing.” What a truly inspirational statement made by one of the top C level executives in the publishing sector! And with Amazon’s news, we can safely say that the publishing industry has gone “digital”…so now what?
Community libraries are closing, virtual ones are opening and PC sales have decreased (according to IDC & Gartner), while eReader sales are on the rise. E-Books are the top-selling book format, Borders filed for Chapter 11 and industry leaders are stating that “bookstores are going away.” E-Books are here to stay, and the market is only headed in one direction–up.
During the past three years, I have personally observed the next generation of readers, Generation Z (born between 1995 and 2020). This generation has been labelled as “technology natives” because they are the generation who–as many other people and I believe–will ultimately close the chapter on paperback books in lieu of eBooks.
This new generation of readers compares eReaders (Kindle vs. iPad vs. Nook), they have no emotive connection to the “classics” in paperback, their elementary lessons are on smartphones and their college experience won’t include college book stores. Instead, they will flip on their eReader, open an app and download their syllabus linked to a digital copy of their text books.
The statistics are irrefutable:
- E-Books now make up 9 to 10 per cent of trade book sales, a rate that grew hugely this year, after accounting for less than half that percentage by the end of last year.
- Publishers are predicting that digital sales will be 50 per cent higher or even double in 2011 what they were in 2010.
- U.S Sales of eBooks reportedly surpassed that of paperbacks in February 2011 for the first time.
- The $90 million in e-book sales was three times the amount from the previous year, according to the Association of American Publishers.
As devices become more affordable and durable, and print publications become obsolete, new monetization models will successfully emerge. The next generation of readers will pay for convenience and they will pay because they will value frictionless access to premium, enhanced versions of eBooks.
So what will the future business model for eBooks look like? Will they be distributed through platforms or individual distributors? Will they be bought, rented or lent?
Last month, GigaOM published a piece on the eBook monetization models which spoke to the digital content monetization landscape. It’s apparent that when evaluating those monetization models, eBook is the least mature, but arguably the most profitable.
E-Book sales have dominated the sector, while rental, subscription and ad-supported models are somewhat nascent. However, no doubt publishers are watching the evolution of the digital music sector closely, where direct file sales are being challenged by subscription services (see a previous post I wrote on the PayPal blog). One has to believe that a subscription service strategy across multiple publishers will be a new business model for eBooks–at least I hope so, as I spend more on eBooks for my 9-year-old than I do on toys!
During the next 3 to 5 years, the monetization models for eBooks will evolve, and the real opportunity will lie in capturing the attention of Generation Z. Within this community of technology natives, eBooks will see the heaviest growth as the high school and college experience will be radically different from when Generations X and Y were in school.
Colleges have already started to offer class books in digital formats, high schools are issuing iPads and elementary students are embracing integrated learning methods on smartphones.
Mike Shatzkin, CEO of Idea Logical Co., a New York consulting firm, was quoted as saying, “There will be a 50 per cent reduction in bricks-and-mortar shelf space for books within five years, and 90 per cent within 10 years.” As I walk the aisles of the airports week after week, I find myself wondering if there will be a time, in the not so distant future, where the “bookstore” of today will become a digital browsing store front of the future; not reliant on traditional inventory management models of yesterday or digital content distribution platforms of today.
I look forward to the day when I can grab a coffee, step inside a virtual bookstore, flip through pages of a recent best seller, pay with PayPal and place my new book onto my eReader before running to my flight departure gate.
We know what Amazon probably thinks….but what do you think your future reading experience will look like?