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.
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