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Consider it an inauguration of sorts, a celebration of the e-book industry becoming a member of the major media club just as digital music and online video have before them. When you influence a billion dollars, people have to take you seriously. In the book business, it means that traditional publishers can no longer live in deny-and-delay mode; meanwhile, digital publishers get invited to better parties and people in other media businesses like TV and magazines look over and wonder if they could cut a slice of this new pie just for them.
To honor the occasion, we have just published our five-year forecast for eBooks in the U.S. The punchline is this: 2010 will end with $966 million in e-books sold to consumers. By 2015, the industry will have nearly tripled to almost $3 billion, a point at which the industry will be forever altered.
Right now, the number to track – and the one that determines how many e-books will sell – is the percent of a consumer’s books that are bought and consumed digitally. To get at this number, we have to understand how people get books today. Did you know that the two most common ways people get books today is borrowing them from a friend or getting them from the library? Evidently content – at least in the book business – is already quite free, even without the help of digital.
e-book buying falls very low down on this list of how people acquire books. Just 7% of online adults who read books read e-books. But that 7% happens to be a very attractive bunch: they read the most books and spend the most money on books. And here’s the kicker – the average e-book reader already consumes 41% of books in digital form. Oh, and that includes the people who don’t have an e-reader yet, which is nearly half of them. For those that have a Kindle or other e-reader, they read 66% of their books digitally.
I’m sure you’re ahead of me on this one, but let’s just spell it out. We have plenty of room to grow beyond the 7% that read e-books today and, once they get the hang of it, e-book readers quickly shift a majority of their book reading to a digital form. More e-book readers reading a greater percentage of their books in digital form means our nearly $3 billion figure in 2015 will be easy to hit, even if nothing else changes in the industry. Meaning even if we never get color e-Ink screens, if publishers never experiment with e-book subscriptions, and interactive e-book formats never succeed, we will still see digital get close to $3 billion in size by the middle of the decade.
At that size and higher, not only do publishers need to take digital seriously — they must make it the new default for publishing, preparing for a day in which physical book publishing is an adjunct activity that supports the digital publishing business. And this dramatic reversal will have happened faster in book publishing than in any other media business. Not just because publishers have had years to watch other media industries face the digital transition, but also because book publishing is a single-revenue business.
Music used to generate revenue from the radio, from CD sales, and from concert tickets. Changing that business required upsetting several apple carts at once. TV is similarly complex, revenue is derived from advertising, cable carriage or retransmission fees, and direct sales of DVDs. You can’t go digital without first rethinking the entire business (and not every player in the ecosystem takes that lying down). But not publishing. Books are published and sold at retail. In the end, once the only channel from which revenue is derived starts to get remodeled, it’s not long before the whole structure gets torn down and rebuilt to accommodate the new dominant distribution model.
That’s why we pause to commemorate the crossing of the billion-dollar threshold, because from here things will move so quickly that by the time the dust settles, the book business may actually be the most digital of all media industries, even if it got the latest start.
This article originally appeared in Forrester Research.