The Kindle and Nook have weathered quite a few storms in 2010 – So have eBooks. Let’s take a look at some of the biggest eBook trends of 2010.
10 Big eBook Trends of 2010
You might feel that a few other eBook trends should be added to this list. Please do leave a comment.
Rise of the Agency Model
This is easily one of the top 3 ebook trends of 2010.
Publishers moved to an Agency Model where they set the prices and got 70% of the ebook revenue. Out of the Big 6 Publishers five embraced this model with Random House the only one sitting out.
Here are the things the Agency Model has done and the things it has failed to do -
- Established $12.99 as the new ‘release price’.
- Given Publishers more control than they had.
- Failed to set $14.99 as the new ‘release price’.
- Failed to kill or even slow eReaders and eBooks.
- Made readers dislike Publishers.
- Helped smaller Publishers and indie authors become more prominent.
- Taken Amazon from ‘losing money per ebook sold’ to ‘making money per ebook sold’.
If you look at that list it’s amusing how Publishers’ biggest trump card has hurt them more than it has helped. Yet, the Agency Model is well-established now and we have $12.99 as the price at which most new books are released. Publishers have more control over ebook pricing than they had – They just haven’t been able to dictate terms to readers.
Increasing Share for Authors
While Publishers have some amount of control thanks to the Agency Model they’ve also lost a lot of their advantages – With eBooks authors don’t need publishers to finance the risks and negotiate distribution and supply domain expertise.
With physical books you could argue that Publishers’ huge share of profits and revenue, as well as their total control, was somewhat justified. You can no longer argue that with eBooks.
First, we saw authors’ share increase from 8% royalties (this was probably 8% of total revenue after advances were paid off) to 25% of ebook profits. Then, Apple entered with their 70% model and Amazon matched it.
New Publishing upstarts and Amazon were offering a much larger share of ebook revenue than Publishers were and some authors began to defect. We saw Andrew Wylie try to sell his back list as Amazon exclusive ebooks – although after a month Publishers forced an end to that experiment. We heard a lot of reports of authors getting 45% to 55% of ebook sales revenue from new Publishers.
Authors began to ask the Big 6 Publishers for 50% of ebook sales and Indie Authors began to choose Amazon and get 70% of ebook sales.
It’s an amazing trend – To go from 8% royalties to platforms like Apple and Amazon that offer you 70%.
Increasing power of readers
Let’s be quite frank here – Apple helped bring the Agency Model into play and Amazon and B&N were powerless before it.
It’s the readers who have kept ebooks and eReaders alive. If we didn’t have a critical mass of ebook buyers and eReader owners, and if they weren’t smart enough to avoid Publishers’ tricks, we would have seen eBooks die out.
That’s just one way in which readers have shown their power.
We’ve also seen -
- Inordinately expensive books get a shellacking via user reviews.
- Indie authors, and also authors who were pricing their books reasonably, find huge success.
- A huge increase in attempts to court readers – free books, book deals, and more. It’s an acknowledgement of where all the power is migrating to.
- Readers keep Kindle and Nook alive despite the Press and Mass Media’s attempts to brainwash readers into buying a device that wasn’t meant for readers.
- eBooks capture 9% of the total book market. eBooks have tripled their market share in about a year.
There is also speculation by analysts that eReader sales have increased 80% since last year. It’s all because of people who value reading.
Rise of Free Books and Book Deals as Marketing
When you replace bookstores, which can showcase tens of thousands of books, with a website that tends to showcase just a few hundred, you are bound to run into trouble. Trouble is exactly what we ran into – The Bestseller lists and getting featured by Amazon became the only two options to create awareness for a book.
That meant books had to compete for attention by using offers and deals. Since everyone was offering deals it became necessary to offer free books – We had the rise of Free as marketing.
We’ve gone from 10 to 20 free books a month in mid 2009 to around 100 a month by end 2010. The number of offers keeps increasing and we might even see Free lose its marketing power.
Not everyone is let into the ‘free book lottery’. That means lots of Publishers and lots of indie authors rely on $1 and $2 book deals to create awareness.
Books are what all authors and Publishers have an abundance of and books are what they’re using to generate interest in books. It’s quite a tricky situation as we shall soon see.
The Race to Zero
On one level its pure genius – Let’s use this one free book to sell our other 5 books. Let’s use this $1 book deal to sell our $10 book.
On another level it’s amazingly short-sighted – If they keep devaluing books by offering $0 books and $1 books readers will eventually stop paying $10. If every single author has a $0 book on offer soon readers will be trained to just wait until that $10 book goes down to $1 or $2.
There’s a race to zero because authors are discounting books to sell books - Using free books to sell $10 books is the strangest thing imaginable.
Increasing number of ebook stores
Selling ebooks seems like the easiest thing in the world. You take this electronic file and load it on to a website and then people pay you $5 or $10 for it. For a lot of companies that have huge existing customer bases this seems too good to be true. There are no shipping costs, no storage costs, few advertising costs, and there’s little effort involved.
For other companies which have devices that could be used for reading this seems equally incredible - An additional revenue stream that takes close to zero effort.
The net result is that everyone is jumping into selling ebooks. It’s a trend that’s not going to stop.
Now Google and Amazon are letting every website in the world and every bookstore in the world sell ebooks. We might soon have more authors and more ebook stores than there are readers.
Increasing number of channels for ebook reading and distribution
Consider the ways in which you can read an ebook – Smartphone, Tablet, PC, laptop, netbook, eReader.
Consider the ways in which you can buy one – through all of the above, soon through indie bookstores, through Amazon.com and BN.com.
We’ve gone from having one physical carrier for books (physical books) and two physical channels (bookstores and online book stores) to having a multitude of channels and a multitude of ‘shells for books’. You can read on almost any device you have with you. You can buy via almost any device.
Continued Domination of Amazon
It’s impressive that even though the number of channels and ebook stores has increased exponentially, Amazon has managed to hold on to 70% to 80% of the eBook market. In the eReader market the Kindle has held on to an impressive share – perhaps 50% to 60%.
As eBooks and eReaders have exploded, Amazon has managed to maintain its dominance – It’s quite likely it’ll be able to hold on to the #1 spot in both markets for a long time.
Note: The Nook Color is the first device for which Amazon doesn’t have an answer – It can’t create a Kindle for Nook and channel away ebook sales and it doesn’t yet have a Kindle Tablet to fight the ‘reading tablet’ wars.
Resurgence of B&N
B&N made some very smart moves in 2010 and might have set itself up to be the #2 eBook seller for a long, long time.
- It kept improving the Nook until it finally managed to release Nook 1.5 and get within a respectable distance of Kindle 3.
- It released a Nook WiFi that was the best low-priced option until Kindle WiFi was released.
- It avoided Ronald Burkle’s takeover attempts.
- It kept up with the Kindle Store for the most part. It might not have as good a range or comparably low prices – However, it’s within striking distance.
- It got Nook into WalMart and a lot of other physical retail stores. It got Nook into Best Buy before Kindle got there.
- It leveraged its B&N stores very well – both to sell Nooks and to provide value-add features.
- It released the Nook Color – it marked the first time B&N had a device that one-upped iPad and Kindle as a ‘reading tablet’. You can obviously argue that Nook Color is not as good a Tablet as iPad and not as good an eReader as Kindle. However, it’s the only ‘reading tablet’ and a very good one – It will steal sales from the tablet and eReader markets.
B&N has firmly established itself as a top-3 eReader company and a top-2 eBook company. Not only does it look like Nook Color will beat off iPad and other pretend-eReaders – it might even steal a bit of the Kindle’s target market.
Fragmentation of the eBook market
We’ve gone from Kindle vs Nook vs Sony Reader to a fragmented, fragmented market. Kindle is still a clear #1 and Nook is still a clear #2 – However, their combined market share has gone down a bit and a terrifying number of competitors of all sorts have emerged.
- We have Google selling through indie bookstores.
- We have Apple selling to people who treasure animated page turns.
- We have Sony making a strong push outside the US and going Big in Japan.
- We have Kobo doing well on the software front and also line up a scary group of investors.
- We have tens of thousands of book apps on the iPhone.
Since it’s so easy and so profitable to sell eBooks everyone wants a share. A little bit of fragmentation is unavoidable as a market grows. However, with eBooks there are few barriers to entry and Publishers are trying to play off one retailer against another. It’s led to a situation where there are 4-5 dangerous competitors nipping at the heels of the two leaders.
The three most surprising developments in 2010 are -
- Amazon and B&N have kept, and in some ways cemented, their #1 and #2 positions.
- eBooks and eReaders have survived the Agency Model and all the other attempts to destroy them.
- B&N has created a reading tablet that will win back casual readers. Those casual readers will then read far more on their ‘reading tablet’ than they would have on a pretend-eReader.
In the long term the race to zero is a huge threat. That is, however, the only huge threat and eBooks and readers are in a much better situation than if eBooks had stalled at 4% market share or if pretend-eReaders had killed eReader sales. We have the right amount of competition and as long as Amazon and B&N stay in the top two spots good things will continue to happen.