With eBook Sales Flat, Is it Time to Experiment with New Models?

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38ensoThe Book Industry Study Group recently released Report Two of Consumer Attitudes Towards eBook Reading, Volume 4. It is filled with a lot of excellent data regarding eBook sales. One of the main take-aways is that over the past year, eBook sales have flattened out at 30% of units and 15% of dollars.

Although there have been many predictions of 40-50% eBook market-share, this news is not surprising. Amazon Kindle ushered in the ‘modern’ eBook market almost six years ago. As with most industries, there is an initial period of hyper-growth and then it slows down to a natural pattern. The majority of eBook sales are still via traditional sites Amazon, B&N Nook and Apple. As these markets flatten out, is it time to look at other models for further growth?

Some platforms to watch:

Subscription (“un-limited reading”) – This is the hot button for many. “Netflix for eBooks” and “Spotify for eBooks” are two of the more over-used phrases in the industry. The recent Scribd and Oyster launches into subscription have many watching and discussing. How much will readers gravitate towards these models? One of the major issues with the music industry subscription models is that the talent and music companies make pennies. But, according to HarperCollins president Brian Murray, the Scribd deal is “the exact opposite of the music industry’s subscription models.”  Maybe they have figured out a system that will work. By being first in, Harper probably got the best deal.

Subscription (“eBook-of-the-month”) – This is similar to the earlier subscriptions model in that the consumer signs up for a monthly set fee. But different in that it isn’t an “all you can read model.” This platform is a guarantee sale of 2-4 books a month. This model protects the price and continues to directly attach the royalties to the specific title. One of the start-ups leading in this area is eReatah. They have signed up Simon & Schuster, HarperCollins and a dozen other publishers and are set to launch this Fall.

Libraries – eBooks into libraries has been another dynamic discussion these days. Over the past year all of the Big5 have committed to selling eBooks to this channel. But there are still a lot of restrictions and hurdles. Limits on checkouts, high prices and long-waiting times on the best sellers all put a strain on budgets and the ability of libraries to buy deep into the lists. But a couple of models have emerged that allow all books to be available but only pay when checked out.

There are experiments from Total BooX and Freading. In both platforms, the library shows the entire catalog of the participating publishers to the reader. The library pays for the books when the patron checks out the book. Many of these titles are deep backlist that might not have been purchased by the library, but these systems allow for the opportunity for them to be selected before purchase. The Westchester Library System is experimenting with both systems. If you are a library cardholder, you can access both systems and check it out.

Direct-To-Consumer (D2C) – DBW parent, F+W Media has 13 verticals that sell direct. They have done this focusing on communities such as Craft and selling through sites like Interweave.com. Super-brand Harry Potter established Pottermore and sells only HP titles (in 11 different languages). Scholastic, playing on their traditional strength of direct to teachers and schools, sells their own titles and other publishers direct via Storia. Baen Books has been selling SF-Fantasy titles direct for years and recently started selling on Kindle, iBooks and Nook. Most publishers are experimenting with direct-to-consumer sale of eBooks.

Amazon – The market leader remains on top by continuing to experiment with many models. They have their Kindle Owners Lending Library (KOLL) that lets Prime members get one book a month free to borrow. They also have a subscription service called the Kindle Free Time Unlimited. It has 1,000 children’s books from top brands, over 300 videos and 200 Android Apps. Amazon will always be around the innovation.

This is a sampling of some of the new platforms. As eBook sales move into the next phase, there will be more experimentation and opportunities to sell eBooks.

There are other companies starting up and selling eBooks in creative ways. If you know of any, please comment.

(Note: I currently work with eReatah and have consulted Total BooX in the past.)

Jack W Perry

About Jack W Perry

Jack W Perry is VP-Sales, Print & Ebook for Highlights for Children. Prior to that, Perry ran his own consulting firm, 38enso, for five years. He consulted for a variety of publishers, tech start-ups, Fortune 500 companies and independent authors. Previously he was an executive at Random House, Scholastic and Sourcebooks. All opinions in this column are his own. Twitter - @38enso

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20 thoughts on “With eBook Sales Flat, Is it Time to Experiment with New Models?

  1. Pingback: Publishing Opinions | With eBook Sales Flat, Is it Time to Experiment with New Models?

  2. Pingback: With eBook Sales Flat, Is it Time to Experiment with New Models? – Digital Book World » red book

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  4. Evolution of the model is one thing and evolution of the content is another: Look at how games have evolved for the touch-screen based smart-phones – would anyone have thought about an angry birds or temple run or subway surfers even before a decade?

    But what have ebooks done? Evolved from the paper books to ebooks, but the way the content is experienced remains the same, whether in eBook readers or in tablets.

    • Many eBooks are just following the physical editions re: content, I agree. The innovation of the content seems to be more in the apps — especially children’s interactive ones. The models are blurring with audio, video, games etc. all being rolled into one “eBook.”

      I agree with you in that no one could have predicted the Angry Birds innovation. So much happening!

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  7. Pingback: Growth ideas for a maturing eBook marketplace « eBook Rumors

  8. The % of ebook to print really depends on genre. In mine (fantasy) It runs about 60% ebooks to 40% print books. And that’s just not my numbers, I’ve talked to many peers and they are reporting similar, some as high as 66% / 34% and others as low as 50%/50% but much higher than the industry norms.

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  10. In August, I moved 2900 miles cross-country pulling a large trailer behind a tiny Toyota. I also decided to make it an adventure. I used no GPS/map gadget. I had no paper road map newer than 12 years old. My route planning consisted of a 3×4-inch scrap of paper with five lines saying things like, \I25 to Denver & I70E.\

    I also decided to do a lot of seat-of-the-pants driving. I hit Denver at afternoon rush hour not knowing where or how I-25 connected with I-70. I just assumed a south-bound Interstate had to cross an east-bound one somewhere. And when I intercepted a three-digit Interstate in Denver going left, I assumed that’d be a beltway around most of that rush-hour traffic and took it. It was and I saved a lot of time.

    In short, I rebelled against most modern travel techniques, with all its gadgetry and access to up-to-the-instant data. I decide not to play it safe, and I had quite a bit of fun doing so.

    Traditional print publishers aren’t having much fun the last few years because they’ve been playing it too safe. Until very recently, they’ve done nothing they couldn’t be sure would have a profitable outcome, moving with excruciating care and deliberation. In the slowly changing 1950s, that made sense. Today it doesn’t.

    The result is predictable–Amazon is beating the socks off them. Amazon, for all their unpleasantness, bullying and control freakery, is taking chances. Yes, that first Kindle was awful. I owned one. But they’ve gotten vastly better. And if a scheme doesn’t work, Amazon simply drops it and moves on. Either its executives aren’t punished when a risk becomes a failure or the culture is risk-friendly enough that executives simply have to take risks. That’s apparently not so in the sober world of Manhattan publishers.

    Ebook sales are flattening because ebooks remain a niche product, although the niche is quite large. A lot is asked of those who buy them. They’re expected to ‘buy’ an ebook that they don’t really own in the same sense that a printed one is owned. They can’t be sure it’ll be readable in the device they’ll own in just a few years. They can’t sell it. They can’t loan it. They can’t even will it to family members. What they’re really getting is a rather vague lease. And in the muddled world of multiple reader platforms and apps, soon they often can’t remember where a particular ebook is.

    That’s a major niche for ebooks that are typically read once and forgotten–romance novels for women and thrillers for men. But it’s not a niche that can handle more serious topics. I’ve got over a dozen print titles for which I’d love to create a digital version but can’t because the formatting isn’t up to even their modest formatting complexity. And while pundits gush that digital means the advent of a golden age when every book with come with a 3-D, technicolor, full-motion, Dolby-sound imagery, the reality is that ebook readers can’t handle a simple b&w picture without creating ugly page breaks.

    Worst of all, those designing ePub seem to think webpages are the proper model for ebooks. They aren’t. The proper model for an ebook is a printed book. The to-do list for ebook standards should start with what Gutenberg could do with print 500 years ago. Only when ebooks can do–and do well–all that print books can do, does it make sense to add flashy new abilities. Think of the first cars. Yes, there were a few silly things about them because they followed the horse and buggy model too literally. But at least they understood that cars shouldn’t take boats as their primary model.

    And yes, the current administration isn’t helping matters, suing almost everybody that’s big in the industry but the 800-pound gorilla that has everyone worried. But there are ways to trump even out-of-control feds. Charges of conspiracy by a few publishing giants can be countered by open conferences that include everyone from those giants to an independent mom-at-her-kitchen-table children’s author. All have a common cause in ensuring that what is potentially one of the freest markets in human history really does stay an open and free market with no retail dictator determining the terms of sale.

    The only way to give heat to the ‘world’s largest bookstore’ is to create one just as large and just as diverse. Amazon isn’t going to be put in its place by free-standing, one-publisher-only retail outlets. That may work for popular niches such as C.S. Lewis and Narnia. It’s not going to work for readers who read a variety of books from multiple authors and who could care less who a book’s publisher is. They’re going to take the easy path and right now that path is Amazon.

    Having established such a retail superstore, publishers need to offer more than Amazon does. Promise them that the ebook they buy will always be there whatever happens, whether formatting changes or a computer that dies suddenly. After a suitable delay, let people sell their ebooks, although perhaps with a share of that resale going to the publisher and author for setting up and agreeing to a resale mechanism. Remember, there are people (I’m one) who usually don’t buy until they can get a deal. For books, that’s buying used.

    Also quit being so hidebound by tradition. New technologies mean new business practices. When I worked at a supermarket in high school, we spent quite a bit of time stamping every can of beans with its price. With today’s barcoding, that’s no longer necessary. As the article above notes, digital for libraries doesn’t need to be bound by print’s model of ‘you must buy it to rent it.’ With digital, copies in infinite numbers are virtually free. Make money on library checkouts not library ownership. Give every public and school library in the country a loanable copy of your entire backlist. That’ll create almost 300 million customers. And make those rental prices low enough, libraries will have an incentive to encourage digital checkouts not throttle them.

    In short, run publishing like I made that cross-country move. Don’t fret the details that’ll pop up along the way. Simply assume you’re capable enough to handle problems as they develop and correct missteps before they become disasters. It’ll be a lot more fun and, in a fast-changing market, more likely to be met with success.

    –Michael W. Perry, Inkling Books

    • Michael — thanks for your spirited and detailed response. There are so many ways to look at this and appreciate your take. Amazon has done more to create and innovate in this market. They continue to keep up the pressure. It will be fascinating to see what happens over the next year, two years, five years.
      — Jack

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  13. Hi Jack, I know this post is a bit old, but I’m interested to hear what you think about eBook bundling? I work for BitLit – an app that allows publishers to bundle their eBooks after point of purchase. The eBooks are usually 75-90% off the purchase price and the reader uses the app to take a picture of the print book to prove ownership. This is a complementary system to Amazon’s matchbook, that hit the scene last August. Seems to me that this is another way that publishers can start to experiment with eBook sales, now that the traditional markets are flattening out. What do you think?

    • Mary Alice – I like the idea of bundling the ebook with the physical. The initial efforts seem to indicate that the consumer was not interested in bundling. But then the way things change, it is probably different now. I do feel that with Amazon offering it, there is a need (and room) for competition.

      I checked out BitLit and love the way it is set up. It makes it easy to “prove” you have the physical book and to get a digital copy. I see you have a start with some innovative publishers and the challenge is to add more and get some of the conglomerates to test the market. It is generally a challenge starting out to get content.

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