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Summary:

As the ebook transition moves forward, Amazon should worry that Kindle is not going to be the device leading the revolution.

Nobody can predict the future, but Amazon thinks that when it comes to ebooks the writing is on the wall.

“We’re now seeing the transition we’ve been expecting,” CEO Jeff Bezos said in the company’s fourth-quarter earnings report, released Tuesday. “After five years, ebooks is a multi-billion dollar category for us and growing fast – up approximately 70 percent last year. In contrast, our physical book sales experienced the lowest December growth rate in our 17 years as a book seller, up just five percent.”

That’s impressive growth, but as the ebook transition moves forward, Amazon should worry that Kindle is not going to be the device leading the revolution. Apple and iPad will cut into its growth.

Amazon has mastered the art of the press release that doesn’t say much. Several data points are missing from Bezos’s statement — here are some questions I have:

  • What’s Amazon’s actual ebook revenue? The company’s worldwide media sales were $19.9 billion in 2012; what percentage of that came from ebooks, and what percentage came from print books?
  • What was print book growth for the entire year — and for past years? Bezos refers to annual ebook sales, but print book sales for just one month. Print books are also starting from a much larger base; they make up over 70 percent of trade book sales in the U.S.
  • Which ebook categories are growing the fastest?
  • Where’s the ebook growth coming from? 70 percent growth is a lot. Is most of it coming from within the U.S. or internationally? And is it coming from owners of Amazon devices — Kindle e-readers and Kindle Fire tablets — or is it coming from iPad and other tablet owners reading ebooks with Kindle apps?

Amazon’s not going to answer those questions (though I did ask them), but they’re important in part because U.S. book publishers are reporting slowing sales of adult ebooks: What was once triple-digit growth has fallen to the double digits. The revolution has also been largely limited to text-based titles — adult fiction and nonfiction — and categories like cookbooks and travel haven’t seen nearly as much growth from ebooks.

If the digital market for certain kinds of books is settling, as it appears to be, Amazon will have to find growth in other areas (though it doesn’t have to, and likely can’t, sustain 70 percent ebook growth for long). The company can expand Kindle internationally, as it’s been doing already, and it can still grab a certain number of ebook newbies.

Eventually, though, Amazon will have to tackle the genres that have remained rooted in print — children’s books and heavily illustrated books like cookbooks, coffee-table books and the huge textbook market. The company clearly sees potential on the children’s front: It’s launched new children’s book imprints and offerings like Kindle Free Time Unlimited. And Kindle Format 8 supports HTML5 and illustrated content.

But the biggest company it has to compete with in this area is Apple. Publishers of heavily illustrated content — both traditional publishers and digital-focused startups — are likely to focus on developing for iPad first, since it’s by far the most popular tablet. The next five years of the ebook revolution are not going to look like the first five.

Photo courtesy of Shutterstock / Stacie Stauff Smith Photography 

  1. You do a good job of writing around the question of whether it’s a good idea to let either Amazon or Google monopolize the ebook industry.

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  2. Talk about a click bait title. Apple is Amazon’s only serious competition because of ” heavily illustrated content”. That’s all you got?

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  3. So….what questions would you ask Apple about their revenue from ebooks and sales? I never saw anything on that line…..and I have seen nothing to indicate the iPad is a device that is used much fro reading books.

    I realize Paidcontent tends to fan the flames of Apple fandom (let’s look back at the coverage of the US lawsuit against the major publishers for guidance on that one), but I see nothing in this article other that assumptions which don’t appear to be grounded in fact that Apple will be a major stumbling block to Amazon;s success in ebooks.

    “What’s Amazon’s actual ebook revenue?” Well, from the information Amazon put out yesterday, the ebook annual revenue stream is measured in billions. That indicates to me at least that Amazon is chugging along, firing on all cylinders (as it were) in selling eBooks.

    I see nothing from Apple that shows me how much they are making in ebook sales.

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    1. The real question is what is Amazon’s profit in ebooks, looking at their earnings report there is no profit, Apple makes more profit on the AppleTV than Amazon makes for the entire year.

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    2. I believe Ms. Owen pointed out that publisher’s e-book sales increase rates are dropping, which conflicts mightily with Amazon’s huge increase of 70% (revenue). The question is where is all that growth coming from?

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    3. Like

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  4. Watch as Apple separates iTunes Rev for all analysts to see. How many Millions of iPads buy and read Books from iTunes….all of them. No real need for Amazon.

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  5. Interesting to see an article that is not just about praising Amazon on ebooks, and also less US-centric than most we can find on the web.

    Something that never comes up on US blogs is an analysis of the international situation. Apart from a couple of markets, today the Kindle is not the market leader. They are by far in US & UK, then there is Canada where the difference is a bit smaller, then Germany where they have around 40% of market share.

    In almost every other market (all in South America & Europe including France, Italy, Spain…) they are behind Apple, and sometimes quite far behind. Knowing that Amazon is pretty poor in all emerging markets (Asia, Middle East, Russia…) while Apple is very strong there thanks to iTunes and the App Store, I fully agree that it’s going to be a very different story in the coming years.

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  6. Christopher Pelham Wednesday, January 30, 2013

    Anyway, I can read Amazon eBooks on my iPad and iPhone via the Kindle app. Amazon doesn’t need me to buy Kindle hardware (on which they make no profit). Amazon needs me to buy eBooks and movies (or rent movies), which I do. Sometimes I buy eBooks from BN and sometimes from the Apple store since eBooks titles are not available universally for some reason. But I believe I can only purchase eBooks via the Apple store when I am actually on an IOS device, whereas I can shop Amazon and BN from my computer at work (despite the fact that it is a Mac). So I buy more books from Amazon so far (and if they don’t have an eBook version yet, I am likely to order the print version from Amazon since I have a Prime account.

    I realize the market is competitive but we can enjoy multiple vendors, especially when they each offer something a little different.

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    1. “But I believe I can only purchase eBooks via the Apple store when I am actually on an IOS device, whereas I can shop Amazon and BN from my computer at work (despite the fact that it is a Mac).”
      You can most certainly buy eBooks using iTunes on your Mac or PC. They will then automagically appear on your iPad — you just need to be logged into the same account on iTunes.

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  7. Look, I’m be big Amazon user and I like their consumer-focus business model, that said, Amazon can self proclaim all they want about ebook profit growth, until they release actual numbers nothing is real.

    Apple’s report on the other hands, actually documents how many units of ipad, iAnything is sold. IF I’m going to place a bet, it’s with Apple not Amazon’s magic bean growth on ebooks. Apple’s units sold tells me how many “potential” distributions I can attempt to reach.

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  8. Apple iBooks going thermonuclear against the Kindle ecosystem – How well is that working?

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  9. Scott Nicholson Thursday, January 31, 2013

    Two huge bait-and-switch assumptions here, founded on the very “logic” that is killing publishers.

    Apple is NOT ruling the ebook market. They are temporarily dominating the tablet market (a domination that is rapidly eroding) but this has always been a content war and not a device war (just ask the stock market, where Apple is shriveling on the branch and Amazon is surging.)

    The reason major publishers are seeing ebooks slow is because THEY are losing market share–the market is growing and they are getting an ever-smaller piece of it. Yet that is the only data that gets tracked because Amazon doesn’t report data. Normally, I ignore this kind of stuff, but it also leads to terrible decision-making when we need honest accounting for a strong future.

    Where is the growth going? To hundreds of Amazon’s own imprint books and to indie authors (there are an average of 1,911 new kindle books per day published over the last 90 days–how many of those were Big Six books actually tracked and reported?)

    But go ahead and keep repeating the same flawed data with the same foolish conclusion (remember when Steve Jobs claimed Apple had 27 percent of the ebook market–ha, ha, I do too!), because people believe what they want to believe.

    Apple may very well have already peaked. Amazon has only just begun (video and audio in addition to ebooks).

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    1. To be clear, I don’t deny in this piece that Amazon is dominating the ebook market right now. That is totally true. The question I am asking here is what this market looks like *going forward*. Clearly Amazon is making a major push to promote how well its indie authors are doing, and some of them are doing well, but as that market grows it is going to be harder and harder to stand out and success may not look the same as it once did.

      It’s not about “believing what you want to believe” — that’s not my job. It is my job to talk about what Amazon isn’t saying, and to explore how this market could look different as the ebook transition continues and spreads to non-text-based books.

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    2. Apple sold more iPads in three days at the launch of the iPad mini than Amazon sold Kindle fires in the three entire months after launch.

      Sounds to me like Apple is definitely eating Amazon’s eBook reader hardware market.

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  10. 23 Million iPADs last quarter say’s it all. Like over 150 Million sold to date?
    Amazon’s going to have to share ebooks with Apple, like it or not.

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