Recently, I blogged about the inevitable dominance of all-electric vehicles over their gas-guzzling siblings. The conclusion was that saving the earth, sci-fi-level tech, and even Porsche-like performance will have little or nothing to do with the intrusion of electric powered vehicles into American garages. Instead, the primary motivator for middle class consumers will be lower cost and greater convenience.
An almost identical dynamic is occurring in the world of books. Amazon, the world’s largest book seller, announced way back in May 2011 that its sales of ebooks had exceeded those of traditional physical books (paperback and hardcover combined). Then, in January 2013, Amazon CEO Jeff Bezos reported that his company’s ebook sales had jumped 70% from 2011 to 2012, while also pointing out how this compared to paper books:
“Our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just 5%.”
In 2008, ebooks were so new that they were outsold by audio books and dismissed by many industry veterans—authors and publishing houses alike—as not even ranking within the relatively elitist world of publishing. Amanda Barbara, writing for Forbes in April 2014, said “Buying trends indicate the e-book industry is immature. After all, statistics show that more than 60 percent of readers still prefer print.” According to Aaron Pressman, writing for The Exchange, “Dig a little deeper and you’ll see that…ebook sales rose from $68 million to $3 billion [between 2008 and 2012], what’s technically known as a gazillion percent increase,” adding, “Absent ebooks, total print book sales did shrink about 8%.”
According to the latest stats, industry-wide ebooks sales topped $3 billion again in 2013—with a considerable percentage of legitimate sales not being reported (due to the archaic data gathering of the publishing industry). BookStats, a joint project between the Association of American Publishers and the Book Industry Study Group, reported that the number of ebooks sold between 2012 and 2013 rose by more than 10%, to 513 million.
The installed base of e-readers and tablets, like the iPad (Apple has sold more than 225 million as of October 2014), has finally grown large enough to allow ebooks to sell not only more units than their paper siblings, but is the logical precursor of greater industry revenue in the not-so-distant future. Although, granted, this increase might not be concentrated among a few behemoth old school publishers; it’s called the democratization of publishing for a reason. And the French weren’t able to invent democracy without axing a few heads (already, the legacy publishing business is consolidating).
Yes, per-unit profits will be down, driven primarily by very low prices for titles downloaded to consumer mobile gadgets. But given how Americans enjoy low-cost impulse purchases—like fast food and crap not on their shopping list at Target or Walmart—the number of ebooks available for under $5 will motivate those twitchy fingers hovering over Buy buttons, resulting in record-setting numbers of books sold. It will just so happen that the vast majority of them will be inexpensive (i.e. $1-3) ebooks.
In 2010, when the Apple iPad was introduced, only 5% of Americans owned an e-reader and 4% possessed a tablet. Today, 32% own an e-reader and 42% tout a tablet. According to a Pew Research Center poll, the percentage of people reading books in digital form jumped from 16% to 28% from 2011 to 2014.
It’s not surprising that ebook sales are increasing due to the rapidly growing installed base of e-readers and tablets. It would be easy to assume that this is coming mostly at the expense of pricier hardback books. However, according to a May 2013 New York Times article, “Mass-market paperbacks, the smaller format of paperback popular in airports and grocery stores, also decreased in sales.” Also, one must remember that all of these statistics exclude sales of ebooks not featuring an ISBN, like many from unknown independent authors and even some from prominent scribes, like JA Konrath.
When the digital version of a book is $3-5 and the hardback is $15-30, consumers will allow their wallets to make the decision for them. What? I can get three, five, or even ten ebooks for the price of a single hardback? Granted, paperbacks are more affordable and the biggest sellers among physical books, but they still suffer from material costs, warehousing, shipping, and the dreaded returns system that the publishing industry continues to so primitively embrace.
Moving atoms is a bitch; shifting electronics is cheaper and easier (and more convenient for customers). Average ebook prices will only continue to decrease, with even legacy publishers beginning to see the light of a 21st century economy driven so strongly by digital media, mobile e-commerce, and lower prices for digital commodities, like songs and ebooks. (Yes, shocked ebook authors, you’re creating what is rapidly becoming a commodity, whether you like it or not.)
American middle class consumers want value. Whether we spend a little or a lot, it’s what we get in return that matters. We’re a society of convenience. But what if the most convenient route is also the least expensive, as is the case with ebooks? Anyone betting against ebooks—and any publisher not taking the digital domain seriously—is beginning to look increasingly bound for the dinosaur boneyard. You can almost instantly download and begin reading an ebook, which is likely markedly less expensive than its paper sibling. The convenience of having dozens and possibly hundreds of books on a single mobile device like an iPad, Kindle Paperwhite, or even a smartphone is certainly enticing—and objectively superior to physical books, especially for students and those with mobile lifestyles.
Like with electric cars, it’s simply price + convenience that will drive ebooks to dominance over ink on dead trees. This will be true even among readers who prefer paper to digital (I have only respect; there’s tons of them). Most of us are on a budget. Getting three or four ebooks for the price of a single paperback will motivate even digital naysayers and Luddites to embrace this new format, pushing it to clear market dominance.
Just as there are still candles (even though most of us use light bulbs powered by electricity), there will always be paper books. But they will get relatively expensive. As the installed base of mobile devices grows, the public sightings of physical books will eventually become rare. In the publishing industry, it will be lower per-unit cost—not gee-whiz technology—that will drive this migration from analog to digital.
In other words, don’t tell yourself that you prefer old school paper books, because you won’t decide to adopt ebooks: Your wallet will.
Curt Robbins is author of the following books from Amazon Kindle:
- Home Theater for the Internet Age ($9.95)
- Understanding Personal Data Security ($4.99)
- Understanding Home Theater ($4.99)
- Understanding Cutting the Cord ($4.99)
- Understanding Digital Music ($4.99)