DBW Weekly Roundup, 5/4/11

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DBW Weekly RoundupDigital Book World presents a weekly roundup of some of the most interesting news, commentary and tweets related to publishing that you may have missed, from all over the digital book world.

What Do the Numbers Say About Ebooks?

Two of the Big Six–Simon & Schuster and Hachette Book Group–have released their 2nd Quarter earnings reports, indicating strong growth in digital sales.

On Simon & Schuster, from Publishers Weekly:

With digital content generating 18% of total revenue in the first quarter of 2011, Simon & Schuster reported that profits more than doubled and sales rose 2% to $155 million. Adjusted operating income rose to $5 million from $2 million, while adjusted operating income before depreciation and amortization increased to $7 million from $3 million.

“We got out of the gate faster than usual,” said S&S CEO Carolyn Reidy led by sales of e-books that doubled in the quarter and accounted for 17% of revenue with digital audio adding the other one percent (about $28 million). The steep increase in profits was attributed to lower shipping, production and returns costs as well as the “painful” belt-tightening that S&S has implemented over the last 18 months plus the higher sales, Reidy said.

On Hachette, from the press release:

E-book sales momentum was considerable (up 88% compared to Q1 2010), accounting for approximately 22% of revenue in the United States and 5% in the United Kingdom. This development is the result of very brisk sales of e-book readers at the end of the year.

As more and more publishers release their Q2 reports, the numbers will likely validate some of the industry reports that have come out in the past month. The numbers have been impressive, with a 202.3% spike in ebook sales in February 2011 (vs. February 2010), as reported a few weeks ago in the Association of American Publishers’ February 2011 Sales Report.

Similarly, last week, the Book Industry Study Group (BISG) published new findings from its Consumer Attitudes Toward E-Book Reading survey, which showed that:

… the percentage of print book consumers who say they download e-books jumped from 5% in October 2010 to nearly 13% in January 2011. In addition, fully two-thirds of survey respondents said they have moved exclusively, or mostly, to e-books over print. Finally, despite declining sales of pricier hardbacks, overall spending on books shows an uptick over the past six months, with 44% of respondents reporting higher unit purchases and 34% reporting higher overall spending on a combination of print books and e-books.

A more tempered set of findings about book buyers and digital readers comes from the Codex Group’s “Book Publishing Digital Transition Report: 1st Quarter 2011,” which recently surveyed over 9,000 book buyers.

From a summary of findings by Publishers Weekly’s Jim Malliot:

Despite the jump in both the number of digital readers and book buyers with devices, the percentage of book readers who said they only read digital books remained below 1% in February, while the percentage of readers who said they will only read print books stayed at 40%. Peter Hildick-Smith, president of Codex, said he expected to see an upward shift in the number of people only reading digital books and a decline in book buyers who said they intend to stick solely to print.

Thirty-three percent of book buyers said they read both print and digital books, and 26% said that while they only read print books now, they are thinking about reading a book on a digital device. The high percentage of readers who want to read only print books combined with the majority of digital device owners who read both e-books and print books makes it all the more important for publishers to preserve as much retail space as possible or risk losing print readers altogether, Hildick-Smith advised.

Finally, outside of the North American market, The Publishers Association released its 2010 annual report of sales figures across the UK publishing industry and reported that total consumer digital sales grew by 318% from £4m to £16m.

Are Ereaders Wrecking the Publishing Industry?

But, the impressive numbers in digital book sales and earnings has been somewhat tempered this week by discussion over competing ereader devices and forecasts. This week, Eweek.com summarizes a report from the market intelligence firm IHS iSuppli under the provocative title, “Are Ereaders Wrecking the Publishing Industry?

From iSuppli’s press release:

Book revenue for U.S. publishers, including both e-books and paper books, will decrease at a compound annual growth rate (CAGR) of 3 percent from 2010 to 2014. This marks a shift from the previous period of 2005 to 2010, when revenue grew slightly.

The overall weakening will be spurred by a 5 percent decrease in the CAGR of physical book sales from 2010 to 2014. While e-book sales will soar by 40 percent during the same period, such an increase won’t be sufficient to compensate for the contraction of the larger physical book market.

Total book revenue will fall to $22.7 billion in 2014, down from $25.0 billion in 2010.

Turning to devices, iSuppli forecasts that “Dedicated e-reader shipments will fall short of some expectations partly because of encroachment from media tablets, which many consumers will use to view e-books.”

However, other reports indicate that, at least presently, tablet users aren’t reading ebooks. Charlotte Williams over at The Bookseller summarizes a report from Simba Information, a media forecasting firm:

… the firm’s “Trade E-Book Publishing 2011″ showed that 40% of iPad owners have not read a book on the device, with 45% of survey respondents saying they instead read e-books on the PC or Mac.

Senior analyst and author of the report Michael Norris said: “A lot of people equate the sale of a new sale gadget with the creation of a new reader, and it just doesn’t happen. In both the offline and online world, there are a lot of independent factors and distractions that will keep a person from discovering and enjoying a book.”

As ereader devices become more like tablets (see, for example, updates to the Nook Color and rumors about Amazon joining the tablet fray), will these sobering numbers about iPad readership transfer over to the new tablet-style ereaders?

Can Readers With Devices Keep Up With Reading on Devices?

Leaving aside the conflicting data and forecasting about ereaders versus tablets, there is no doubt that ebooks are changing the way we read and, by extension, affecting how we fulfill whatever goals we pursue in reading. So, drilling down to more specificity, how are ereaders doing with specific kinds of readers?

For this, institutions, especially in higher education, rely on test groups and pilot programs, institutions like the University of Washington, which tested out the Kindle DX on a few dozen first-year computer science graduate students. Summarizing the University of Washington’s results, Ariel Schwartz at Fast Company suggests that technology is simply “getting ahead of what our brains actually need.” Using the device for schoolwork was not widely adopted among the group (only 40%), but it wasn’t just because the Kindle has poor annotation and note-sharing functions.

From the University of Washington, quoted by Fast Company:

The digital text also disrupted a technique called cognitive mapping, in which readers used physical cues such as the location on the page and the position in the book to go back and find a section of text or even to help retain and recall the information they had read.

Schwartz goes on to comment:

Are we getting excited about a future that our brains aren’t ready for? Could books have developed not simply because they were the available technology, but because they actually convey information to our brains in a more efficient way?

Aside from sentimental reasons, is this disruption of our cognitive processes another reason why we hold on to certain print-only features, like flipping pages, and recast those physical movements into a digital interface? Author and book UX expert Peter Meyers recognizes the value of skimming and the kind of page flipping that we like to do with the glossies. But, still, he warns against rendering the print page too faithfully:

Print-based page flipping is how we readers solve what is, at heart, an information architecture problem: most magazines order their contents in a way that doesn’t match our preferred reading path. So we flip to find the juiciest, most satisfying bits. In an app, then, swiping through page icons isn’t the best way to aid that quest.

Tweet of the Week

That’s just a taste of what you may have missed this week. To stay on top of the most interesting news, commentary and tweets related to publishing, keep in touch via our RSS feed, follow us on Twitter, join your publishing colleagues in our LinkedIn group, and connect with the broader DBW Network.

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