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E-Books Have The Fame, But No Fortune Yet

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product-descr-book_v15485687_With Oprah pushing an e-reader to her audience, Google placing whole books online, and the popularity of programs such as Stanza, which turns the iPhone into a mobile library, the mass market has latched onto e-books in a meaningful way. Witness’s Kindle e-Reader, which has already sold out for the holiday season (the e-tailer doesn’t disclose sales figures for the device). But while e-books have caught on in the public consciousnesses, they have yet to tap deeply into the public’s pocketbook. Widespread popularity is still a few years — and cheaper devices — away.

Ana Maria Allessi, publisher for Harper Media at HarperCollins, says e-books accounted for less than 1 percent of total revenue at the publishing house in its fiscal year ended July 31st, and believes it could edge up to 2 percent in the next fiscal year. So while relatively speaking, their e-book revenue is doubling, its contribution is minimal — and is forecast to stay that way in the short term, rising to just 5-6 percent of sales by 2013. In comparison, audio books made up 9 percent of total sales for the same full-year period, but that number seems to be shrinking.

A survey from PricewaterhouseCoopers estimates that sales of e-books will be $9.6 billion annually by 2012,  but won’t pass sales of paper books until 2018. Ten years out is long time for a prediction to hold, but there is no doubt that consumer acceptance of e-readers and reading documents online appears to be nearing a tipping point after what Allessi calls “several notorious false starts.”

It’s clear that consumers want e-books, she notes, and book publishers would be silly not to reinvent themselves in a world where the value is moving from the paper to the prose itself. “We have to stop talking about books, and start talking about our authors,” she explains. “We will continue to be their ally in reaching consumers, but will it be through hardcovers? Probably not. If consumers want a variety of formats we will follow where they lead.”

One of the key breakthroughs in the digital format will be a drop in the cost of dedicated electronic readers from $400 to less than $100, and good software that can turn laptop or a mobile phone into a credible reader. Russell P. Reeder, CEO of LibreDigital, an Austin, Texas-based company that digitizes published content, envisions the price point of readers dropping — possibly even to free, if users buys a subscription contract — within the next five years.

Reeder, whose company takes everything, from hard copies of manuscripts to electronic newspaper files, and formats them for readers like the Stanza and the Kindle, says the desire for digitized books didn’t ignite until Google started to put books online. Soon after that, LibreDigital found itself selling its content formatting, delivery and digital rights management services to not only its existing newspaper clients (like the New York Times), but to book publishers as well. Now the company counts among its customers seven of the top 10 book publishers in the country.

“Google is a disruptor for this industry, and tried to disintermediate the publishers,” Reeder says. But publishers are jumping in quickly to give consumers the content how and when they want it. It’s still going to cost readers, though.

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19 Responses to “E-Books Have The Fame, But No Fortune Yet”

  1. Great article! Your are right, I agree the demand for ebooks will be growing in the next years. But it will not replace books. There is nothing greater to have a book that you can read anywhere without using a piece of technology. I love my laptop but need to get away from it sometimes.

  2. @Kevin: I’ve heard of Zinio before, just never took the plunge.

    @Stacey: Sadly, B&W is the current limitation of the eInk technology. Samsung had an interesting ad in Fortune a few issues ago, showing a rollable color screen. No timetable on that though. [sigh]

  3. There’s another technology called isoaps. Its audio books that are more like the old radio play. It uses a group of voice actors. is one of the websites in this new field that may replace ebooks.

  4. Stacey – you subscribe to periodicals. You buy books. It depends on the time value of the information. Both mdels are needed. The DRM issue is real for books. What happens when the DRM vendor goes out of business or stops supporting the algorithm? Like Kevin, I’ve been reading ebooks since 2000. I’ve been burned.

  5. Kevin C. Tofel

    Steve G.: I highly recommend you look at Zinio ( while you’re waiting for a specific device. I’ve used them to subscribe to digital magazines for a few years and they provide a great solution. You can demo / view some magazines before signing up.

  6. The subscription model would be a bad idea. If I buy a book, I can sell it, give it away, etc. Plus, it often takes me months (if not longer) before I get around to reading a book I buy. As you might guess, I buy a lot of books (still haven’t figured out why).

    I’m tantalized by the Plastic Logic reader. Thinner and sexier than the Kindle. (I have no connection with them.)

    Personally, I’m going to hold out for a device with a color screen where I can subscribe to and download magazines. Which seems like a viable way to continue some magazines, since you can eliminate the printing and mailing costs while maintaining subscribers. While I understand you can access some of the content online, I wouldn’t want to open a laptop while I ride the bus or subway to work.

  7. Kevin C. Tofel

    As a reader of eBooks since 2001 on many platforms and devices, one of the biggest challenges continues to be DRM. Each eBook format, application and device offers its own form of DRM and is very rarely compatible with any other. I’ve often ended up purchasing titles for the second (or even third) time simply to read the content on a new device. And while the DRM issue sounds similar to that of music, it’s even more limiting. Here’s why: if you purchase a CD, you can easily create your own digital copy at home plus it can be in any number of formats. Since the music is already in a digital form on physical media, you can easily work around the DRM issue. Same can’t be said for books: a physical book is simply that; it’s not in a digital format and it’s not easy (short of manually scanning each page) to get it into a digital format. If you buy it in a digital format, it’s coming with vendor-specific DRM. There’s no in between and it’s been a huge barrier for this market. Not saying there aren’t other issues, but DRM is one of the tops since there’s little to no data portability of the product.

    • Stacey Higginbotham

      Kevin, great point. As a heavy reader I like the subscription model for e-books, so I could access them on different devices for a monthly fee.

      pwb, I’m torn on DRM. It’s so easy to copy books and I don’t think people will pay for them if they don’t have to. That being said, the inability to move content around on devices does punish the consumer who buys the current e-books. And in the real world, there’s piracy and plagiarism for paper formats.

  8. I think it will take some time for ebooks to really take off and will only begin to do so if educational institutions will start embracing such format instead of books. That will take a long time.

    I also tried reading an ebook once while on flight and it is a hassle to do when you have a laptop that has limited battery power. The portable devices (pda) often gets confused as a mobile phone and that usually catches the attention of a stewardess or a fellow passenger asking you to turn it off.