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The eBook Wars – First Salvo Fired

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I have been following the trends in book publishing, specifically the arrival of ebooks (electronic books), ever since I got my Amazon Kindle last April. Since then, this infant market has grown to toddler stage and, with the recent Macmillan versus Amazon battle, we're seeing, in some cases, the tantrums of a two year old.

It's All About Money

There are three fundamental sides currently involved; publishers, retailers and customers. Each side wants to protect their turf, and the turf, in all cases, is money.

The book publishers want to defend the way they have always done business and, as of the last two years, for which we have some statistics (we'll call this pre-ebook), the number of books published in the U.S. has flattened (2006 to 2007 = 4% and 2007 to 2008 = -3%)[1].

If you take into account the economic recession and rising costs of raw materials, the publishers have been squeezed. Suddenly, with the release of the electronic readers, Kindle, Sony and the nook, the publishers perceive them as a threat to the status quo. Electronics books sell for less than hardcovers and, in some cases also less than paperback books. Book publishing saw what happened to the music industry; the mass marketing of artists tracks through Apple's iTunes and other online merchants, which brought about lower prices and less margin.

Digital Photography Set The Stage

There is some precedent with what's been happening with ebooks. The photographic market went from all film to mostly digital in the last two decades. That industry saw an almost complete demise of film production and processing which reverberated through drug stores, department stores, camera retailers, film laboratories and camera manufacturers.

The music industry also saw a transformation from analog (records and tapes) to digital (CD-ROMS and MP3 files) and now, there are rumblings that even CD-ROMs will disappear.

The book and music publishers have been trying to hold their ground by declaring "ownership" of the media. This protectionism is their legacy. Writers and music artists create the media and contract with the publishers for production, distribution and promotion. Now, some writers are declaring independence, setting up shop with their own web sites or aligning themselves in non-exclusive arrangements with online book sellers, such as Smashwords.

Writing Is An Art, Publishing Is The Business

With mainstream publishers, writers and music artists get 10% to 15% with an advance against sales on the front-end. Naturally, they want higher prices at retail as it returns more money to their pocket[2]; but, most of all, they want to get their creative works in as many hands as possible.

In the ebook business, as it is in the music industry, the retailers are in the middle. They want a salable product with enough margin to make a profit. The retailers are now large organizations; Barnes and Noble and Amazon are two of the largest.

Without a doubt, these institutions have an interest in selling their products at attractive prices. Also, both these major retailers sell their own branded ebook readers; Amazon's Kindle and Barnes and Noble's nook. These e-readers, as well as other readers by electronics manufacturers, are the razors to the ebooks razor blades.

Enter The Kindle

Over two years ago, Amazon released the Kindle 1 (November 19, 2007), which ignited the ebook market. Prior to the Kindle, you could buy ebooks for PDAs (Personal Digital Assistant: Palm, Sony, Comppaq and so forth) and there were a few online retailers, such as Fictionwise (now owned by Barnes and Noble), but, until the Kindle, this was a niche industry.

While new hardcover books sell for $25.00 and up, Amazon sells the same book, in a Kindle ebook format, for $9.99. When Apple showed off their planned iPad device, Macmillan, a large book publisher, forced a play with Amazon to raise the ebook pricing. Their strategy was to stop selling through Amazon, unless both parties could agree on pricing. Amazon was forced to capitulate (the full details are still unknown) to not lose a major publisher in their book list.

The Bottom Line

What does this all mean to people like you and me, the consumer? At this time we're but pawns in this game. Until all of the publishers decide their marketing strategies, it's business as usual at the bookstores, both physical and online.

As the distribution and pricing shakes out and as the industry transforms, we can choose to buy or not buy, depending on our interest and the price. Should we not want to pay Macmillan's proposed $14.99 ebook price, we don't have to. The price will eventually come down, once the title has been on the market for a while.

In the meantime, if you don't want to buy a book or ebook, there are plenty of online web sites where you can download free ebooks. Whether you have a Kindle, a nook, Sony's Reader or any other brand, thousands of titles are available (Amazon lists 420,000 on their web site alone), including over 500,000 in the public domain.

This is just the beginning. The electronic readers change almost daily and new manufacturers and new models are in constant development. The technology is also in its infancy, developing new screens and better battery life, as well as new features.

Watching the changes in this industry is almost as exciting as reading a good book. The staid book market is morphing into a dynamic industry, and the fun has just begun.

1. New Book Titles and Editions; Bowker – http://www.bowker.com/index.php/book-industry-statistics

2. Book writers and music artists sometimes have expenses and other costs applied against their percentages. Deduct 10% to 15% of their total for an agents fee and their total drops considerably.

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About Dennis Hays

  • Lynn Voedisch

    As both an author and reader, I’m thrilled with the arrival of the Kindle and its competitors. Easy to read, pack and carry for the reader–and the Kindle transfers the information to your iPhone or iPod Touch. I’m less enthused with the Sony Reader because it doesn’t support the Mac. However, they will all agree on a single design one day.
    As an author, I watched a once moribund book (when print sales dropped to zero) start to rebound. I got a nice little royalty check at the end of this year, which means people out there are choosing the ease and the relative cheapness of the Kindle.
    Books aren’t going away, but the E-books are a great addtion. I can’t wait to see what the iMacs bring to the table.