Tired of writing about the Kindle 3. Went through a list of interesting articles from July.
There’s an overwhelming sense of destruction. If you step away from 70% royalties and readers reading in large fonts and the good Kindle and Nook are doing there’s a train wreck - players in the current publishing world are becoming casualties.
- Bookstores are closing down.
- Libraries are struggling. Perhaps the most worrying.
- Used book stores are in trouble.
- Publishers are panicking.
- Authors are worried about the future.
- Distributors suddenly see their entire raison d’être vaporizing.
- Agents don’t know where to turn.
It makes you wonder – Which of these players are going to survive if we transition over to a world where 75% of book sales are ebooks?
Participants likely to survive the Kindle + Nook ebook revolution
You have to look at the Kindle 3 and where the ebook market is and feel there’s a pretty reasonable chance ebooks do make it all the way to 75%. If they do – What roles could the current players aspire to? Who could take up positions of power?
The Platforms like iBookstore and Kindle
There’s a very strong chance that everyone other than the author and reader gets replaced by the Platform, which gets 30%, and a few small service providers, Agents and Editors perhaps, who might get just 15%.
Amazon and Apple are very well placed to be the Platform. Google will try but it doesn’t have a device. B&N might be able to figure out a way to do this.
The reality of ebooks is that we do need a platform – It connects readers to authors, provides the infrastructure that links ebooks with readers, adds value to eReaders, and makes storage and distribution possible.
The Platforms are going to be the big winners.
The eReaders like Kindle 3 and Nook
While ebooks are going to be a tens of billions of dollars a year business eReaders are going to be nearly as profitable.
There will perhaps be over ten million people buying eReaders in 2011 and the number might grow to hundreds of millions of people once eReaders replace paper more broadly.
The Kindle 3, or to be more precise the Kindle WiFi, represents a move in this direction. To replace paper and eventually sell hundreds of millions of eReaders a year.
There are two schools of thought – One feels that multipurpose devices will kill off eReaders. Another feels that eReaders will be fine and their focus on reading provides enough value to ensure they survive and thrive. If the latter school of thought is proven to be right then eReaders are going to be big winners.
Literary Agents like Andrew Rylie
There is still a very lucrative 15% cut available for anyone who can provide authors with the services they still need.
In particular, there will always be a 15% cut for any company that will let authors focus on writing and will help improve authors’ chances of success. Literary Agents are well placed for this role as they are the closest to authors.
The literary agents will be fighting with new Publishers for this role.
New Publishers like Open Media
New Publishers will try to fulfil a hybrid role of Publisher plus Agent and will aim to become the sole support authors need.
We are seeing this with RosettaBooks and Open Media. If you look at what Andrew Wylie is doing and what Open Media is doing the role and the cut are probably quite similar.
That 15% cut will remain lucrative and there will be a pitched war between New Publishers, Literary Agents, and any Publishers that realize they can no longer expect 75% of ebook royalties.
Top 3% of Authors
The Authors at the very top and those who’ve already made it are going to make a lot of money. They’ll be getting 50% to 60% and will no longer be subsidizing failed books.
It’s going to become a winner takes all market and the Authors that win will make more money than authors ever have.
Participants unlikely to Survive the Kindle 3, Nook, and eBooks revolution
This is a difficult section to write because who wants Libraries or Bookstores to disappear. However, if we really do get a world where 75% of the market is ebooks and most readers have Kindles and Nooks then a lot of the current players will die out.
Distributors are done
The Platforms take over. Distributors don’t really have a role to play.
Used Bookstores don’t have a part to play
You can’t really sell used ebooks and that’s unlikely to change. If only 25% of the market is physical books there might not be enough used book sales left to sustain actual stores. Used book sales are likely to move to the Internet.
Physical Bookstores will be in a ton of trouble
There’s only a certain point up to which you can push eReader owners to come into a bricks and mortar store. B&N has already offered free books and free coffee and free browsing of ebooks. It’s going to run out of ideas eventually.
There are some bookstores that will survive. However, we’ll probably see fewer bookstores and hardly any independent bookstores.
Read a few of the articles about what’s going on and what bookstores’ strategies are and it’s obvious they are struggling mightily to compete with Internet stores. A market with 8.49% ebooks is threatening to destroy them. Once ebooks gain larger market share few bookstores will survive.
Publishers
Publishers have access to the one remaining irreplaceable resource – writers. Yet, they are trying to force writers into ridiculous terms and are only managing to scare authors away.
As Publishers’ leverage becomes less and less their demands become more and more. It’s like an ultimatum in a relationship – It’s usually a last, desperate move.
It might not be in the DNA of current Publishers to accept a 15% cut and work as helpers and enablers instead of gatekeepers.
The lower 97% of Authors
As we become more efficient and network effects become more powerful it’ll become a winner takes all market. Look at the Internet or the iPhone App Store or the Facebook App Store.
The authors that don’t make it to the top few percentage points will have a terribly difficult time.
The 5-6 failures that were being subsidized by the 1 big winner will now have to survive on their own.
In a way, 70% of royalties is an illusion. If you win then it really kicks in. However, only 1% to 3% of authors will win. Everyone else misses out and now they don’t have Publishers’ advances or backing to see them through hard times.
As the Kindle 3 and the Nook 2 and new Sony Readers transform Publishing and help the spread of ebooks it’s worth taking a look at the lessons the previous world of Publishing has to offer. Perhaps one day a new type of platform will emerge that will make the 30% cut Amazon and Apple take seem archaic.
Filed under: publishing Tagged: | future of books, future of publishing
Libraries will survive as well. They will be in a form far different than today, but they provide information services that will remain important and relevant as we move further into the information age.
Totally agree with FSkornia. I can see Libraries investing in intuitive tech for information access, ie big touchscreen tablets, maybe two or three to a station, faster internet, can anyone say ereader palooza? They could buy them and share purchased books per six devices (or more if they can strike a deal of some sort) and people could then come in and read for free or even check them out (tho your lost fee’ may be significantly higher). Ebooks might be cheaper, but new releases and obscure old titles are still a lot of fun when free.
Bookstores tho, yeah, not sure on that one.
Agree, except that brick and morter stores, both new and used have been disappearing far longer than ebooks have been viable. I agree that ebooks are accelerating the demise of the brick and morter bookstores (or, to be perhaps overly optomistic, maybe they will evolve) but they have been struggling for at least the past 20 years.
Long time lurker here, first time commenter. As usual, excellent post. I do think the physical bookstore will survive, although in a different form than what we see today. Recall during the dotcom boom in the early 90s when ecommerce was coming onto the scene, many predicted the complete demise of any brick and mortar shopping. But, humans are social creatures. We need to be around other people. Although I do think e-readers will completely cannibalize trade and mass-market paperbacks, I don’t think the physical book will completely disappear. The act of interacting with a book is part of very early childhood development. Books are physical objects. We have evolved to interact with physical objects. A book will always be more natural to use compared to any ebook because of the nature of it being a physical object. Again, I do think the book experience is and will change. Moreover, economics will drive us to us to our future, whether it’s one we want or not. But, I just don’t think physical bookstores and all books are going to disappear. At least in the near term, I see an evolution where ebooks replace a large portion of the publishing space, but a sizable percentage will be maintained in both forms (i.e., print on demand, physical, ebook).
There’s an elite of everything, and location makes a difference. Here in San Francisco Landmark Theaters seem to be doing well showing foreign and indie movies. And I understand they’re doing well in other big cities. Neither television, animation, film production mergers or big money production of schlock has wiped them out. They have a niche market. Landmark is a cultural elite in the TV, film wasteland. Now, translate that to books. TV didn’t wipe out movies. Movies, big and little have found many sources of income, including globalization. My point is that agents of quality, books of quality (including used ones), publishers of quality, and bookstores of quality will find ways of surviving. Maybe not making gazillions of dollars, but when have they made that? As for e-readers? Think of them as TV. Nook’s strategy is, if you want to do library loans, if you want to read old texts on Google, if you want to get books on epub from all kinds of sources, do it. Amazon doesn’t agree with that model. I hope they will, soon. I’m waiting for a better quality Nook so I can read the Old Icelandic texts (just kidding) and 19th century texts as comfortably as I can read the big money best sellers on Kindle. I won’t have to wait long, I’m sure.
First, I agree with most of the original post.
However, I disagree on only 3% of the authors doing well. I enjoy ‘esoteric’ fiction. The ‘long tail’ theory of retail suggests that a lot of previous demand wasn’t being met by the ‘tyranny of shelf space.’
So in effect, I expect the mid-list authors to do better!
But there will be casualties. To think this is all accelerated because authors were underpaid. It is under the previous system that only the top authors had enough negotiating power to make a living. 8% to 15% cut of the revenue for the authors was far too little.
I personally think 70% is such a huge shift it was bound to be destabilizing to the industry. Reading KA’s blog, its obvious that the revenue for e-books for the top 15% of authors is now greater with a 70% cut on e-books than 8% from the big 6.
Most of the subsidy was for costs that have nothing to do with the consumer experience. With e-books those mid-list authors will see more take home. I’ve certainly thrown enough of my money there way.
I agree with Harlan, some bookstores will survive. But they will be the ‘flagship stores’ that are the face of internet sales (e.g., Powell’s in Portland Ore) or excellent local stores. There will be far fewer. If nothing else, physical bookstores will survive at the airport. Albeit, they might be POD stations.
“Brick and Mortal’ stores have been struggling for at least 20 years (as Ganne noted). But this is new. But then again, ‘big box stores’ make 45% of today’s book revenue. I think one change might be the shrinkage of the ‘book isle’ from those stores.
Neil
Neil, there’s another factor to consider here. The tragedy of the commons and authors doing absolutely anything to reach the top. If the mid-list authors are happy being mid-list authors then it would be fine. However, you have to suspect there will be brutal competition to hit the top spots.
Of course, if authors are sensible about it they would do better collectively.
We’re going to find out in a few years. Certainly interesting times.
I do see some ‘tragedy of the commons.’ But by having Amazon set the floor at $2.99 and having them automatically match the price (if lower) anywhere… a floor has been set. It is also good that Amazon split the top-’selling’ lists into free and priced books.
I do not think any mid-list author is happy being mid-list. But if they have a ‘franchise’ that sells… there is no reason to end the series. (Hey, some of those old books were fun!)
Now do I see some ‘selling’ books for ridiculously low prices to build a name? (Heck, usually free.) Yea… But as long as they are wise enough to make book #2 $2.99, they’ll be ok.
For example, I enjoy alternate history texts. It is unlikely more than one (at a time) will be a best seller, but now there is a much better selection and I can read a few per month.
There will be winners and losers. But 3% is too low of a fraction. It might only be up at 10% of the serious authors (I’m not going to count un-proofread books. If those are counted, then 3% might be right.)
But among books worth reading, I see hundreds selling 200 to 500 per day.
Not to mention the genre growing quickest on e-books is romance. That isn’t a category where a few books dominate the category. (I’m sort of shocked at the variety of sub-genres in that topic. Not shocked as in offended, but shocked I didn’t realize the variety women want back when I was single.)
So while I think the top 3% of authors will bring in most of the money, I see no reason the top 10% to 15% wouldn’t be able to make a decent living. Since their cut goes from 8% to 70%… I see far more authors living off their book revenue and thus a sustainable variety in the market.
Neil
good post. authors have a big opportunity here but they must change their way of thinking.
they must start writing to the ebook platform rather than relying on a copy of their printed book being converted to an ebook.
i will be posting thoughts on the eBook Author on my blog in the next few weeks.
http://www.hbspublications.blogspot.com/
this is an industry in transition. readers will still read. the sources of their material will just be different.
libraries, bookstores, agents and publishers must adapt to the new environment or go away.
jrm
Some libraries may be struggling, but as someone who works at a library I’m not seeing any particularly strong negatives at the moment. I’m a little nervous about exactly how everything will shake out, but e-readers may just trigger a shift in what we do rather than the annihilation of our raison-d’être.
A/V material is some of our most popular material and I don’t see that changing any time soon. Books are still very popular, and I work at a library in a wealthy suburb where people have traditionally had enough money to buy their own books as well as things like Kindles which act as replacements. I think many people don’t want to buy a book (even at $10) if they don’t think they want to hold onto it. As a Kindle user I’ve been buying more books for Kindle than I used to buy in paper since I don’t have to find a place to store them (and I own a lot of paper books). Some publishers still don’t want to publish to Kindle, and I borrowed a book from a library recently that I’m currently reading that fits that model.
I think that libraries may start circulating a lot of devices that are preloaded with materials as well. We’ve been circulating Kindles so people can try out reading on a Kindle without having to buy one. We have limited space and I could see a point where we have a huge digital library of materials supplementing our paper books allowing us to have more titles than we could otherwise own, and then just checking out devices, which by the time they hit $50-$75 will make them no more expensive than many books that we regularly buy anyway.
Libraries also offer a lot of services such as classes and one-on-one education on how to use technology and digital resources and I think that will become a more important part of what we do. As long as paper books keep being published we’ll still buy them and we’ll have people who want them for any number of reasons. It’s just that that will become a slightly smaller part of what we do.