In a recent article in the Financial Times, HarperCollins Publishers announced that it had sold more ebook copies than hardcover copies of Laura Lippman’s latest thriller “I’d Know You Anywhere.”
According to vice president and publisher Ana Maria Allessi, this was encouraging news. While I’d agree it is great news for the adoption of ereaders, her exuberance made me wonder. Was this really cause for excitement? At the time of the article, HarperCollins had sold 11,250 electronic and approximately 9,300 hardcovers copies. From a pure numbers game, there was no doubt, as was previously reported by Amazon, electronic books are outselling their hardcover counterparts.
When we check the retail price of these different versions, another perspective comes into focus. Right now, the Amazon Kindle edition of the book costs $9.99 and the hardcover $14.99. So total sales for the Kindle edition are $112,388 and total hardcover sales are $139,407. At this early stage of the transition from hardcover to ebooks, it’s not simple to compare these numbers or draw any conclusions.
However, if we add in recent projections for the growth of ereaders, I think it is safe to assume that the disparity between ebook and hardcover sales will only increase. Which means that, over time, best-seller income for publishers will drop. This, of course, assumes an apples-to-apples comparison of relatively the same number of total units sold. Many publishers are hoping that this assumption is wrong and lower ebook sales will be made up with increased total units sold. If we try to compare a scenario where just the hardcover of the Lippman novel is available to one that includes an electronic version, to break-even, the Lippman ebook thriller would have to outsell the hardcover-only scenario by more than 50 percent.
It will take time to achieve this transition. As I was reading Chris Anderson’s “Free,” I was reminded of “The Law of Conservation of Attractive Profits.” It immediately struck me that publishing was suffering the commoditization of their main product: books. Essentially, as the value of books drops, the law suggests that the value has to emerge in an adjacent stage in the publishing process.
Right now, the stage that is absorbing the lost revenue from falling ebook prices is in the development of ereaders. As this new market expands, the value being lost in books is being captured in sale of ebook readers. But this will only be a temporary stop as the value continues to migrate away from books. After ereaders become a commodity, their collective prices will start dropping. The next logical adjacent layer to capture the migrating value is in proprietary, independent, and open ebook marketplaces. So once the market is flooded with ereading devices, then the value will move into the distribution channel of ebooks.
This framework explains the breakneck speed of device announcements, and the bigger players like Kobo and Kindle with their multi-platform clients looking down the road. In this scenario, Apple’s closed platform may not work to their advantage. While Apple got such a big jump on other MP3-player manufacturers, it seems unlikely that the iPad will enjoy the same level of market domination as the iPod. While they’ve not hinted at expanding the reach of the iBookstore to other platforms, it will be fascinating to see if Apple will port the iBook ereader to other platforms.
I’ve got a feeling that the e-stores will not be the last stop in the book value migration. Once ebooks themselves become a commodity, then we’ll need effective systems to help us manage our libraries and keep a personalized pipeline of books in our ereading queues. In this area, it’s much too early to make any solid predictions, except that there is one large search company that’s well positioned to help Internet users find the books they’re looking for … but that’s a whole other story.
More diversification in ereader market
It’s clear that portable electronics competitors are not going to concede the ereader platform to Apple as they did for the portable MP3 market. So in just this last week, we saw announcements by Sharp and Research In Motion’s Blackberry division. Each of these announcements continues the trend toward multiple-use devices. In addition, it underlines my analysis that the next sector of competition in publishing will be at the cloud level.
Sharp Galapagos Devices and Service
Sharp announced plans to capture migrating revenues in both the ereader and ebookstore markets. Its Galapagos devices — named after the islands that partially inspired Charles Darwin’s evolution model — will come in two versions: A 5.5-inch LCD model aimed at the mobile market, and a 10.8-inch LCD version aimed at the home market. Initially posed for the Japanese market, the Android-based devices are expected to become available in December 2010. Featuring color displays, the devices will include a trackball to facilitate ebook navigation. Both devices will come with 802.11 b/g connectivity.
The devices were only half of the announcement. Sharp will also launch a cloud-based media service business, also nicknamed Galapagos. Starting with a 30,000-item store of newspapers, magazines, and books, the cloud service will provide periodic software updates. All of the content will use the XMDF ebook format to support Japanese expressions, such as vertical writing.
Research In Motion Blackberry Playbook
During their annual BlackBerry DEVCON conference, Research in Motion (RIM) unveiled the BlackBerry PlayBook. Featuring the Blackberry Tablet OS, the new Playbook will have a 7-inch capacitive touchscreen capable of displaying WSVGA. The Playbook will have high-definition audio and video playback, including an HDMI video output. With dual HD cameras, the Playbook also supports 1080p HD video recording as well as video teleconferencing.
As we identified in last week’s update, the Playbook is a multi-purpose and multi-tasking device aimed at the enterprise market. It’s powered by a 1Ghz dual-core processor, and it integrates with existing BlackBerry smartphones via a secure Bluetooth connection. It’s also compatible with the BlackBerry Enterprise Server. Initial versions will feature 802.11 a/b/g/n connectivity. 3G and 4G models are planned as well.
The BlackBerry Tablet OS is based on the QNX Nuetrino architecture, which means that it is fully POSIX complaint for porting existing C-based applications, including support for Open GL for 2D and 3D graphics.
RIM also announced a new applications development platform called WebWorks that will provide deployment possibilities for both the Playbook and BlackBerry smartphones.
The Playbook will come pre-loaded with the Kobo reader and access to the Kobo global ereading service. Unlike other Kobo readers, the Playbook version of the Kobo reader will use the Blackberry Messenger (BBM) service to access the new BBM social platform. Amazon has developed a version of its Kindle app for the the new Blackberry Tablet OS.
Kobo gets Wi-Fi
This week Kobo announced the newest addition to their ereader line-up, the Kobo Wireless eReader. Thanks to the addition of 802.11 b/g connectivity, the $139 device can directly access the 2.2 million books available in the Kobo store. Kobo’s new device also features a faster processor and a sharper E Ink screen. The ereader is available for pre-order through Kobo’s website
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