E-book market forecast to hit $5.2B as the book industry burns
Book on fire
Of all the markets I’ve followed in my decade-plus as a consumer analyst, I’ve never seen a market changing faster than the digital publishing market of today, where the sudden love of e-books has created a “digital backdraft” that has set the entire publishing industry value chain aflame.
In a report I just published for GigaOM Pro, (subscription required) I analyze this rapid disruption by outlining six areas in which market players are leveraging large-scale shifts to advance their competitive positioning, all of which will, over time, result in a U.S. e-book marketplace that exceeds $5 billion by 2016 (growing from just under $2 billion in 2011).
So what are these areas of disruption? Below, I outline three:
The Collapse of Distribution
In traditional book distribution, retailer/storefront are not one and the same as book distribution. In digital publishing, Byzantine distribution chains simply collapse. While publishers still exert enough market influence through control of the lion’s share of digital publishing rights (for now) of many popular authors to force Amazon and others to accept agency pricing, over time, this influence will wane, particularly as authors themselves increasingly choose to publish through those places that own the customer, which will be, in the end, the big storefronts.
Book Discovery Goes Social
Until about just over a decade ago, finding a good book for most meant either a word of mouth recommendation from a friend or librarian, or reading what preordained “tastemakers” from the New York Times or Oprah told you to read. But starting in the ’90s, both algorithmic and crowdsourced recommendations became the new bestseller list, and today, we’re back to word of mouth, only in the form of social recommendation. Whether readers are learning about new books from friends on general-purpose social networks like Facebook or through reading-centric networks like Goodreads, social recommendation is becoming increasingly important in the age of e-books, and this leaves the door open for companies that can leverage this disruption shift into a competitive opening to monetize e-book content.
Multi-platform/Multi-screen Access
While many in the book industry dismiss lessons learned from other types of entertainment by saying “books are books,” there’s no doubt all types of digital content are becoming increasingly multi-screen. In other words, with apps and browser-centric consumption, consumers expect on-demand access to their libraries of music, movies and, yes, books anywhere at anytime. Those players that make usage “friction” lowest will continue to have a competitive advantage as more consumers move from the paper to the digital book.
These shifts are resulting in the biggest change in publishing since the time of Gutenberg. Some publishers are adapting as fast as they can, while others sit idly by while the book industry burns. This is the face of true disruption: It can be ugly, but also create massive opportunity for those that move fast.
To read about the other areas of competitive disruption as well as see my e-book forecast for revenues, e-book consumers and e-book units, see my new report at GigaOM Pro.
Image courtesy of Flickr user J. Ronald Lee
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Great post Michael! I’d love to expand on this statement:
“social recommendation is becoming increasingly important in the age of e-books”
This is absolutely true – Goodreads was founded on the belief that recommendations from friends are the best way to find good books. And our upcoming launch on Facebook Timeline will only accelerate that.
But there is a massive hole in social recommendations – your friends aren’t always reading things you might be interested in! We have been working on filling that hole in two ways.
First by letting the Goodreads community help – letting you connect with other like minded readers who are reading the things you are interested in. For instance, if you like Science Fiction, we have tons of groups for you.
And secondly by crowdsourcing really good recommendations and book discovery using the interest graph of 240 million books that Goodreads members have added. Our recommendation engine is only a few months old, but has increased discovery by millions of books a month.
I
Thanks for the insight Otis. As a Goodreads user, I do see an opportunity here with e-books for you as well.
Fantastic post. Your point on The Collapse of Distribution is spot on. To take it one step further – In the coming disruption of the “Traditional Book Publishing Market” the middle functions between creators and consumers is where the greatest evaporation will take place. At the same time, there will be robust opportunities for providing simple to use tools and services that optimize the publishing pathway.
Thanks for a great article
Great Post! I really appreciate how you frame the issues so concisely. I wanted to follow up on the The Collapse of Distribution.
It’s the middle that will be the first fall out of the traditional publishing system. As the system reorganizes itself, there will be robust opportunties as new ‘Publishing Networks’ emerges and asserts themselves.
Look for bottlenecks in the production pipeline and provide simple to use solutions –
Look what Test Flight did for the problem of submitting an App to iTunes.
@Sean – I think the app model is a fair one to look at for where this is going. It’s easy to make a choice as an e-book publisher which storefronts to go to, but these publishers still have to navigate the various backends of the big three to five storefronts. Making that process easier is a ripe area for innovation.
I think some of this is the publishers forgot they wee selling stories, not piles of paper bound in card. However DRM is the biggest pain factor in modern ebooks.. I have many ePub books I have bought over the years, and I can still read them on all my devices. This can’t be said for kindle, which until amazon released the reader in chrome html5 couldn’t be read in any Linux OS. But if amazon ever stop supporting it, or I don’t approve their terms and conditions, all those books disappear.
did you really have to put that picture?
did you think maybe to show a little common sense?
In his 1821 play, Almansor, the German writer Heinrich Heine— referring to the burning of the Muslim holy book,
the Qur’an, during the Spanish Inquisition — wrote,
“Where they burn books, so too will they in the end
burn human beings.”
Over a century later, Heine’s own books were among the thousands of volumes that were torched by the Nazis
in Berlin’s Opernplatz
…so just a bit of common sense, not much