E-Book Sales May Rule by 2018

PriceWaterhouseCoopers (PwC), the multinational professional services network, predicted e-book sales will top both print-book and audiobook sales by 2018, according to a report in The New York Times. The projection is based on inroads PwC sees being made in the e-book market in the United States and Great Britain, which represent a quarter to a third of e-book sales.

The problem is PwC has made this prediction before. In fact, the company has made the same prediction for the last four years, according to Nate Hoffelder in his Digital Reader blog post.

According to Hoffelder, the size of the e-book market can’t be accurately measured, so there is no way to prove whether PwC is right or not.

“In any case, I am looking forward to making this post an annual tradition,” he wrote. “PwC will post their prediction, and I will point out that they missed in their previous predictions. We’ll all laugh, drink hot cider, and what fun we’ll have.”

Should Printed Textbooks Be Obsolete? Maybe Not.

Education Secretary Arne Duncan recently told the National Press Club that “textbooks should be obsolete” and replaced with e-readers and multimedia web sites. While an appealing idea, digital materials are still unproven as an effective learning platform, according a New York Times opinion piece by Justin Hollander, assistant professor of urban and environmental policy and planning at Tufts University.

Hollander wonders if examples such as American cities bringing back streetcar lines after years of dismantling to make room for highways or the way consumers have started buying vinyl records again suggests that “We shouldn’t jump at a new technology simply because it has advantages.”

Hollander points to a study by Tufts colleague Maryanne Wolfe, an expert on the origins of reading and language learning, that looks at the effects of digital reading on learning. The results so far have been mixed. Her concern is that Internet reading could be the kind of distraction that cancels out other benefits from web-based e-learning.

Some of the other benefits of digital learning material can also be called into question. Hollander write that roller backpacks are a solution to the problem of students toting around heavy books. He adds that with all the talk of the cost savings of e-textbooks, very little is said about the price of the device, technical support, or software updates.

It took just two days for Dan Eldridge of TeleRead to respond to Hollander.

“It’s a bit of a stretch to suggest that digital books are ‘still unproven,’” Eldridge says. “But Hollander’s essay makes a good (if clichéd and overused) point: When advancements in new technologies lead us to discard the old ways of doing things, we often come to regret it. And while Hollander probably is guilty of making way too much out of a couple of sentences uttered at a press club, the point he makes may eventually lead to a conversation that’s very much worth having.”

Encyclopedia Britannica stops its press after 244 years

The digital revolution takes another bite out of popular print medium.  Encyclopedia Britannica announced that after 244 years, it will put an end to the print edition and be available only in digital form, according to this CNN story.

Encyclopedia Britannica has been in print since it was first published in Edinburgh, Scotland, in 1768.  It will no longer be available when the current copies run out. The Chicago-based company will continue to offer digital versions for subscribers, as well as educational products (online learning tools, curriculum products, etc.) which comprise the majority of the company's business today.

"This has nothing to do with Wikipedia or Google," Encyclopedia Britannica Inc. President Jorge Cauz said. "This has to do with the fact that now Britannica sells its digital products to a large number of people.  The sales of printed encyclopedias have been negligible for several years," Cauz said. "We knew this was going to come." 

The final hardcover encyclopedia set is available for sale at Britannica's website for $1,395.  The company plans to mark the end of the print version by making the contents of its website available free for one week, starting Tuesday, according to the article.

The End of Books...

A totally engrossing article appeared last week in New York Magazine. The article was entitled simply, "The End," and discussed changes underway in the book publishing business. The opening of the article was fascinating, though. It began with a recent visit to a new startup within HarperCollins. Here is a short excerpt:

But first, a horror story. Debbie Stier, Miller’s No. 2 at HarperStudio (as this little imprint is called), has been collecting videos for their blog. “You want to see what happens to books after they go to book heaven?” she asks. On the screen of her MacBook, a giant steel shredder disgorges a ragged mess of paper and cardboard onto a conveyor belt. This is the fate of up to 25 percent of the product churned out by New York’s publishing machine. Everyone’s eyes widen, as though watching some viral YouTube gross-out. “It’s like Wall-E,” says marketing director Sarah Burningham. “It’s depressing,” Miller adds. They had sent in a flip camera with a warehouse worker. “You can see our books go through there,” says Stier. "The Crichton, the Ann Patchett.”

I would love to see that video. I tried to find a link to their blog, but was not successful in the few minutes I had this morning. The greatest or perhaps saddest quote comes from Stier's 12-year old son, when asked for birght ideas to save publishing he comments: “So maybe you have to turn all the books into movies so nobody has to waste their time.”

The article is quite long, but has some fascinating history, alongside some contemporary challenges and discussions. Midpoint in the article is an interesting discussion of how "traditional marketing is useless" that has some good lessons, or at least items to ponder. There is also some interesting analysis and insight into how Amazon works with the publishers, and what that might mean for both publishers and bookstores. Some quotes near the end could easily be modified to fit the bookstore industry. It allowed the article to end with a start as engrossing as the beginning:

But going back in time isn’t an option. A hundred Bennett Cerfs wouldn’t save the current publishing model—not without a hundred Bob Millers puzzling out the way forward, unhampered by fear or complacency. The kind of targeted, curated lists editors would love to publish will work even better in an electronic, niche-driven world, if only the innovators can get them there. Those owners who are genuinely interested in the industry’s long-term survival would do well to hire scrappy entrepreneurs at every level, people who think like underdogs.

It’ll be rough going in the meantime; some publishers will transform, some will muddle through, some will die. And there will, no doubt, be a lot of editors for whom even this diminished era will look like the last great golden age, when some writers were paid in the millions, some of their books produced in the millions, and more than half of those books actually sold. Book publishing is still a big-league business, and that’s a hard thing to let go of. “There’s something terrible,” says an editor at a prestigious imprint, “about admitting that you’re not a mass medium.”

Wow. It is like looking in a mirror and not liking what one sees, but being too engrossed to turn away. I thought the article provided a good read and some things to think about -- which is what all good reading should do.

Why stores should not wait to experiment with digital...

I received the following e-mail inquiry in the past week, and thought it would be worth sharing. I changed the content a little to make the identity of the writer more anonymous, but in essance, this is what the person wrote:

Dear Mark-

I seem to remember a discussion from last year where we
came out feeling like things (digital) might be 5 years off. I thought I
heard at CAMEX that we are now looking at 18 months. What is your latest
& greatest crystal ball look like? Any of your current thoughts always
appreciated?

From Crystal Ball Reader

The following was my response -- updated to include a new development from the last few days.

Hi Crystal Ball Reader,

5 years seems realistic for perhaps the bigger shift, but 18 months is more realistic for the point by which more stores will start feeling a bigger impact of digital. If they wait more than 18 months to do anything it could be too late. Why? A couple recent events have spurred this.

• First, Amazon's recent flirtations with entering the market. They have approached several institutions - large, small, public, private and for-profit. From what we have been able to learn from a couple of those institutions, it appears that they are proposing a model where the campus deliver the Kindle via a laptop-program-type initiative (which can be done several ways). Students could then download the textbooks to the Kindle at a reduced cost and some money would go back to the institution. So far it is IT that is being approached, not us. I have not been successful yet at getting a contact at Amazon to talk with us. If they tackle this market full-force, they could change things for us quite radically, quite quickly. And you know they will be advertising their sales not ours. I just received a draft article from a CIO proposing a program like this where 80% of the student textbooks would be delivered over the Kindle on ampus and what that would mean for campus stakeholders - although he forgot to mention the stores. I am supposed to review and provide feedback as an anonymous reviewer. So, Amazon could speed things up.


• Apple is rumored to be working on a reader. We also know that they have signed agreements with publishers to offer a large number of textbooks via iTunesU within the next 2-4 years. I hope to have another update on this before long, but if Apple enters the market in force, it again could mean trouble for us.


• About 10 days before CAMEX I was at a publisher meeting. One interesting point made there was a statistic given by one of the academic publishers who noted that the conversion rate from print to digital this year hit the 2-3 percent mark. Seems low, yes? That happens to be the same conversion rate from traditional media to digital that iTunes had in its first year. Four years later 85 percent of college Freshmen were carrying around iPods and buying music digitally.


• Another item out of that publisher meeting, that I have now heard repeated in other venues, is that the publishers plan to approach institutions and push licensing of digital textbooks. They described this as "the solution" - reducing textbook costs and eliminating the used textbook market. It was how they saw getting the textbook to quote "appear to be as lose to free as possible" for students. I find this approach troubling, as licensing is not as innocent or inexpensive solution as it might appear on the surface. I expect to see a big push on this going into the fall. If an institution decides to digitally license the content and provide textbooks electronically via this method (and you know some will) the impact on the ampus store could be significant. This item seems to be the most logical or realistic threat to our timeline at the moment.


• Open source content could be a threat. It probably will eat only a small chunk, and it is something that we may be able to work with, so that is a minor concern at this time, but much of that content is likely to be digital - increasing available inventory and alternative solutions.


• There is CourseSmart, which will have the largest collection of digital textbook assets. They are popping up all over and will be working with many more institutions over the next year. There may be other companies they are in conversation with as well (I would assume). At least one institution has seen adoption figures of the CourseSmart option at 10 percent of enrollment across the courses tested, with one class reaching 20 percent of enrollment.


• McGraw-Hill made some interesting remarks regarding digital this week in a call for the financial media. Of particular note, I thought, was their plan to have all of their front list available for sampling by August. This signals, yet again, that the barrier of insufficient digital inventory is dropping.


• Finally, the recent tests in Ohio under the OhioLINK program are going to make things much more difficult for us. In their pilot tests, they got over 90 percent of the students in the trial courses to adopt the digital option. That is not a typo - 54 out of 55 students in one class, 54 out of 56 in another, adopted the digital. When compared against a class using just print, those students using the digital performed equivalently. I spoke to one professor involved in a pilot on another campus this semester and he has over 100 students in his large intro-psych course using the digital/e-book option this semester. Their prototype will be expanding to other institutions and large-adoption courses over the next few semesters - but we are already hearing about some of their results in other states.

So - while it may be five years before we see high levels of adoption across the board, I think we will not have that long before we have a larger critical mass of these anecdotal instances of higher adoption. Some of these models could change things overnight. I would rather plan on 18 months and find out we have five years to work with than the opposite.

All that being said, at NACS we are working hard at helping address these challenges for stores, while at the same time trying to provide lower cost solutions for students. For stores this can be doubly difficult because of the complex nature of store economics. Most college stores give revenue back to the institution, which is perhaps most often used to support student activities and student resources on campus. So stores are under pressure to increase revenue. At the same time stores recognize that students have options, and that price is a great concern. In some cases the institutional sources telling stores to generate more revenue are also the same sources telling stores to reduce prices. That is a difficult set of demands to balance - particularly when revenue for most stores comes primarily from textbooks. As digital course materials become more prevalent on campus, these pressures will get tighter for those stores who have not begun to work on campus relationships and rethinking their store capabilities, products and services in advance. Thus, it is better for stores to work for a future that may be just 18 months away than believe in the hope that we may have five more years before the digital impact is felt.



Thoughts or opinions?

The end of reading -- according to Mr. Jobs

Steve Jobs recently commented that people do not read anymore, so any e-reader product is doomed to fail -- since none of us read. That's bad news for the textbook business, where most of what we sell is reading material.

There is an interesting editorial/response to Mr. Job's recent statements in Ad Age this week. As a rebuttal, it is worth a quick read. I think the rebuttal makes some worthwhile points to consider -- how the Kindle has sparked peoples' interest (at least at a novelty level), and even more so in the points related to "what is reading?", and that the point is about getting text -- whether from magazines, newspapers, books, or blogs anywhere and on demand. Anywhere and on demand -- relevant words for our industry in the year(s) ahead. What do those terms mean to your store?

Something to think about as you read the Ad Age article at:
http://adage.com/mediaworks/article?article_id=123332