It’s a sure sign that a new piece of technology is moving from the fringes to the mainstream when it’s possible to find more than a hundred sites that link to it or refer to it in some way. This one – Hack Your Kindle 100+ Tips, Resources and Tutorials to Get More Out of the Amazon Kindle – has more useful information than most, from the familiar (how to view PDF files on the Kindle) to the arcane (how to use your Kindle as a GPS device), to the worldly – a couple of these links require an understanding of Russian and German. Its posting on a college oriented website (CollegeDegrees.com) would seem to indicate that college students are beginning to look at the Kindle as an item to stick in their backpacks, along with the laptop and ipod, but one that actually may lighten their load. See this discussion for a well organized summary of the issues surrounding the potential of textbooks on the Kindle. Also, my June 25 post on the news that a few university presses are starting to publishe Kindle editions.
It was bound to happen sooner or later, but barely six months after it was introduced, the Kindle is starting to become the “textbook of the future”. As reported this week in The Christian Science Monitor and Inside HigherEd, a handful of university presses are starting to put some titles on the Kindle:
This fall, Princeton University Press will begin publishing Kindle-edition textbooks. It’s on a short list of printing houses that are testing the e-textbook waters. (Kindle has also snagged Yale, Oxford, and the University of California.) But Princeton is the only to attempt a Kindle-first launch, offering Robert Shiller’s new economics book “The Subprime Solution” on the Amazon electronic reader two weeks before students can buy a hard copy.
This development has met with enthusiasm from back-breaking-bag toting college students, if the following post is any indication:
Oh thank HEAVENS some of the University Presses are getting into the Kindle game! This device will radically transform the chiropractic needs of college students as soon as they can get textbooks on there … it’s coming!
A quick search of college textbook titles available in the Kindle store today turns up a mere three results, with prices ranging from $25 to $40 per title. The Inside HigherEd piece reports about a 10% savings for the Kindle versions of the books, not a substantial discount given the cost of the device. Again though, prices should come down as volume scales up, and if publishers ever venture out of their protection-of-margin comfort zone, and face the fact that the consumer will eventually run of of patience with an industry that continues to charge as much for digital bits as it does for the physical product (can you say “record labels?”) Of course, if they continue to manage their business with this 19th century foresight, there are a plethora of Web 2.0 upstarts ready to step in and serve the market. (See my post about Flatworld Knowledge on April 18)
Last month at Book Expo America, I heard Jeff Bezos say that Amazon had been selling e-books for nearly ten years and that they needed an electron microscope to find the sales figures. Well they may not need one much longer, if Pacific Crest analyst Steve Weinstein’s projections are valid. He estimates that global sales of e-book sales at Amazon could reach $2.5 billion by 2012, based on the following analysis:
To figure this, Weinstein starts with the handiest analogue: iPod and MP3 player sales. He notes that between 2003 and 2008, digital music sales grew from 2 percent of the US market to 33 percent, largely on the back of Apple’s (NSDQ: AAPL) twin offerings. He doesn’t expect the Kindle/e-books to track as fast, but he does think the market is off to a strong start already, and that the cycle will pick up steam as the Kindle comes down in price (that’s already started) and the ecosystem matures. He also suspects the consumers will be drawn to the instant gratification aspect of Kindle titles, as well as the lower price per book. Based on an operating margin of 4% to 5% for physical books (comparable to operating margins for brick-and-mortar stores) and 15% to 20% for e-books (comparable to other forms of digital media), we estimate that e-books could add as much as $330 million to operating income.
The key figure in this analysis is not the total sales projection, but the margin ratios. If the e-book business generates an operating margin that’s 4X that of the dead tree type, you need no further evidence that Amazon will over time make this the foundation of their business model. Any innovation that offers you the opportunity to carve out two of your largest cost components – warehousing and shipping – (not to mention improving on the customer’s instant gratification experience), is clearly going to be a key component of the company’s strategy. In fact, one wonders why they aren’t giving Kindles away, in order to “iPod-ize” the market, and begin to reap the benefits of the overall growth of the ecosystem. The most logical explanation is that the capital markets still regard Amazon’s investments in digital media with a high degree of skepticism, which tends to temper the rate of spending on this type of technology. This somewhat cautious approach could end up backfiring however. If Steve Jobs chooses to enter the e-book market (despite his dismissal of the book business last year), Apple could quickly come to dominate the market for e-books, since consumers are becoming more accustomed to using their iPhones for reading along with browsing the web. The infrastructure is already in place (iTunes store), and the platform has the dominant market share, and the lure of 20% margins on $10 price points (compared with the few pennies they currently earn per song download) may just be enough to entice Apple to change course and start selling e-books.
All these developments are good news, of course, for the reading public. The outcome of this creative destruction process will be lower costs for content, as well as for the devices to read it on. I might however, have some concern for my career path if I was an assistant editor in a large publishing company.
For the last month or so, David Pogue, the New York Times technology columnist, has been posting his views on the debate surrounding the effect of ebooks on sales of the dead-tree variety. He’s one the technology world’s most prolific authors, having created the “Missing Manual” series of user-friendly help books. Every time a new gadget or software program is released, you can count on a “Missing Manual” to be published at about the same time. But Pogue has resisted making his books available in electronic format, apparently after being burned a couple of times by the file sharing sites that illicitly obtained copies of his books and spread them all over cyberspace, ostensibly having a negative effect on his royalty income. He has received volumes of email from readers suggesting this is a shortsighted strategy. Well yesterday he announced that he is willing to take a dive into the digital pool, along with his publisher, O’Reilly Books:
Early next month, the company will also start selling electronic versions of certain books with no copy protection. For a single price (cheaper than the printed-book price), the package will include the book in three formats: PDF, Mobipub (compatible with the Amazon Kindle), and Epub (soon to be compatible with the Sony Reader). Anyway, I’ve agreed to try an experiment involving one of my books (“Windows Vista: The Missing Manual”): to offer it as part of that buy-the-electronic-versions program.
Pogue writes that he’s not sure how the experiment will turn out, and that he’ll report back in a few months, and concludes his column:
But at least I’m defusing the argument that says, “The only reason people are pirating your books is that you’re not offering e-versions for legitimate sale.”
I suggest that authors like David Pogue view their readers in much the same way that public radio regards its audience. Public radio, like all non-satellite programming, is free to anyone with a receiver, and anyone can listen to it. A typical ratio of listeners to paying public broadcasting subscribers is ten to one. So if a station averages 100,000 listeners, then it can expect to have about 10,000 paid members. So if through some well orchestrated viral marketing campaign, the number of listeners of a given station doubles to 200,000, the result of this increase in audience reach could be expected to yield a doubling of dues paying members during the next membership campaign. (It would also have ancillary benefits to the station, if it charges its underwriters fees based on audience size.) Most stations would regard this outcome as a good thing, and would expend considerable effort to double their audience size.
While few reliable studies have been conducted in the publishing world to determine the relationship between downloads and book sales, data collected by O’Reilly Media (publisher of Pogue’s Missing Manual series) reveals a similar result with another title:
As part of our continued effort to understand the impact on book sales of the availability of free downloads, I wanted to share some data on downloads versus sales of the book Asterisk: The Future of Telephony, by Leif Madsen, Jared Smith, and Jim Van Meggelen, which was released for free download under a Creative Commons license.The quick answer from this experiment is that we saw no definitive correlation, but there is little sign that the free downloads hurt sales. More than 180,000 copies were downloaded yet the book has still been quite successful, selling almost 19,000 copies in a year and a half. This is quite good for a technical book these days: the book is far and away the bestseller in the category, far outperforming books on the same subject from other publishers.
So here we see a similar, approximately ten to one ratio of free-riders to paying customers. If it costs the author nothing to implement a viral marketing campaign that leads to a tenfold increase in the number of downloads (via file sharing networks such as bitTorrent), it’s reasonable to expect a corresponding growth in the number of readers who are willing to buy the actual book.
This approach actually yields additional benefits to the author who is willing to emulate the public broadcasting underwriting model. If the “free” (pirated?) downloads included the name of the underwriter (“this free e-book is brought to you by Ford”), the sponsorship method could generate substantial income to the author based on the number of downloads – which can be accurately tracked via the file-sharing sites. This is the great thing about the web, even the illegal file sharing sites have more precise metrics than Arbitron and Nielsen.
So if sales of Mr. Pogue’s book, “Windows Vista, the Missing Manual” track much higher than his other titles, he can probably attribute at least some of the incremental volume to its availability in a digital format, even if some copies are pirated. Of course, if sales are much lower than all his other books, that can only be due to poor customer acceptance of Windows Vista!
It’s a strange and brave new world when you can read the noted economist and NY Times op-ed contributor Paul Krugman quoting tech guru Esther Dyson, who proclaims that the Grateful Dead are the creative harbingers of the age of digital media. In a recent column, he explains how she predicted, before the widespread adoption of the web, the end of the intellectual property model that the world had lived with for two centuries:
In 1994, one of those gurus, Esther Dyson, made a striking prediction: that the ease with which digital content can be copied and disseminated would eventually force businesses to sell the results of creative activity cheaply, or even give it away. Whatever the product — software, books, music, movies — the cost of creation would have to be recouped indirectly: businesses would have to “distribute intellectual property free in order to sell services and relationships.” For example, she described how some software companies gave their product away but earned fees for installation and servicing. But her most compelling illustration of how you can make money by giving stuff away was that of the Grateful Dead, who encouraged people to tape live performances because “enough of the people who copy and listen to Grateful Dead tapes end up paying for hats, T-shirts and performance tickets. In the new era, the ancillary market is the market.”
He goes on to describe his recent conversion to Amazon’s Kindle, which he believes has advanced e-book technology to the point where digital readers will become common, perhaps even the usual way we read books. And Krugman, like many others, predicts that this technology will alter the publishing industry forever:
Right now, publishers make as much from a Kindle download as they do from the sale of a physical book. But the experience of the music industry suggests that this won’t last: once digital downloads of books become standard, it will be hard for publishers to keep charging traditional prices. Indeed, if e-books become the norm, the publishing industry as we know it may wither away. Books may end up serving mainly as promotional material for authors’ other activities, such as live readings with paid admission. Well, if it was good enough for Charles Dickens, I guess it’s good enough for me.
He’s certainly not the first one to suggest that using books as promotional collateral for alternative revenue streams is the way of the future, but it seems to me that the only people suggesting this solution are writers who already earn a substantial portion of their income from non-authoring activities. (Krugman is best known as as Professor of Economics and International Affairs at Princeton University, as well as the author of over 20 books. One of these, International Economics: Theory and Policy , is a staple of many college level International Economics courses. The 7th edition lists on Amazon for $122.50, (including 1 semester access to the e-book version), so if Professor Krugman’s publishing prognosis comes to fruition he may find himself passing the hat during his lectures to maintain his lifestyle. For the rest of the piece, (“Bits, Bands and Books”) click here
For a well-reasoned rebuttal to Krugman’s hypothesis, it’s worth reading writer Steven Poole’s Blog posting, “Free Your Mind”, which neatly summarizes the challenge facing writers and artists who depend on their creative output for their living:
But if the day comes when most reading is done on electronic devices, the equation will alter drastically. Giving away your work in the same format in which you hope to sell it is a dangerous game, if that’s how you hope to make a living. And if books in the future are distributed mainly in DRM-free electronic editions, then writers won’t even have a choice. The version of digital rights management on Amazon’s Kindle, where your “books” are forever locked to that device and its successors, and you can’t even lend a book to a friend, is stupidly restrictive. But is a free-for-all the best alternative? A lot of people paid for the Radiohead and Nine Inch Nails albums even though it was also rapidly possible to download pirated versions for free. But perhaps that was because they were already Radiohead and NIN fans. Will as many people choose to pay for something they don’t have to pay for, when it’s a question of taking a punt on a new artist? A reasonable outcome, perhaps, would be something like an iTunes for books, where people choose to buy (DRM-free or at least DRM-lite) copies because it’s still easier for most folk than hunting down a torrent. That way writers would still see some kind of modest revenue from their efforts. Otherwise, if people can’t earn money from writing books, then books will only be written by the rich, and by people in their spare time.
As the creative universe grapples with the challenges posed by new technology, new concepts and ideas will need to be experimented with. One start-up which may be onto something, is wowio, a company that offers its registered users free e-book downloads that are ad-supported. (For an earlier post on this site, click here)
Can you really see the latest John Grisham or Stephen King thriller sporting an ad for Nike or Coke after the title page? Who knows? But I believe that a lot of Deadheads love Stephen King’s novels, so maybe it’s possible.
More commentary on Scholastic’s Family Reading Report, released earlier this week, this time from Tim Shanahan, a widely recognized and published academic in the field of youth literacy and learning. Among his observations on the report are the following:
The major reason that they say they don’t read for pleasure is because they have other things to do, like working on computers. Some of that time might be spent on just dumb video games, but at least some of it is spent on other reading and writing activities (two-thirds of the kids said they have looked up authors and other book-related information on line).
The bad news in the report (and this is not new—I’ve found surveys all the way back to World War I with the same pattern) is that older students read less than younger students do. Preschoolers like books more than elementary kids do, and elementary kids like them more than teens. Similarly, boys were somewhat less taken with reading than were girls.
For insightful and informed commentary on this and a variety of other topics related to literacy and learning, I strongly suggest following this blog.
An interesting item in May/June issue of Multimedia & Internet @ Schools on the future of the textbook, in a world of Web 2.0 education:
Now let’s get some perspective. Let’s say you were in college in 1978. When you received an assignment, you would use reference books and journals in the library to do your research. You would then handwrite your notes and use a typewriter for your final draft. You used a slide rule to work on your discrete math homework. Sometimes you called your parents from a telephone booth to beg them to mail you pizza (aka beer) money. Not to mention that your biology textbook was a 6-pound, 700-page tome that took 3 years to get published and was already out-of-date.
Now, 30 years later, your son is entering his second year in college. He takes class notes on a laptop and does his research with online databases and (of course) Google while using a free Wi-Fi hotspot at Starbucks. He gets help with his math homework by contacting classmates through Facebook, and he forgets to call you from his cell phone because he doesn’t need money for pizza—he just uses his credit card.
But you don’t worry about him too much. His phone is practically a part of his body, so you subscribe to an online service that uses the GPS locator to sync it up with Google Earth, so at least you can see exactly where he is at all times.
Only one thing hasn’t radically changed—his biology text, which has now grown into a 12-pound, 1,000-page mammoth of a book that still takes 2 years to get published and is already out-of-date. What’s wrong with this picture?
“Textbooks have yet to respond to changes in technology, teaching philosophy, and student life,” says Paul Bierman, a professor at the University of Vermont. He made this statement at a workshop he initiated of 54 leading scientists, educators, and technology experts at the National Academy of Sciences in Washington, D.C. They met under the theme “Reconsidering the Textbook.”
Here’s another thought-provoking excerpt:
Textbooks have been another casualty of budget cuts. Many schools are being told, “Don’t even consider ordering new textbooks for next year—the funds just aren’t there.” If only there was a cost-effective supplement. Hmm …
If a small fraction of the amount spent on producing, printing and distributing textbooks each year was invested in digital technology (such as Kindles or other e-reading devices), the long term savings would be sufficient to bring teachers’ salaries up to a level commensurate with their value to society.
Observation: A scan of the speaker roster at the “Reconsidering the Textbook” workshop reveals a collection of academics and technology leaders, but not a single representative of the publishing industry. I guess this would be a little like inviting the suits from the record companies to a confab hosted by Napster back in 1999 called the “Future of the CD”.
Filed under: books, digital books, ebooks, Education, ereader, kindle, literacy, schools, Tech Tools | Tagged: e-reader, Internet school, Napster, textbook, The future of the textbook, Web 2.0 | Leave a Comment »
This week marked the release of the bi-annual study of trends among kids and reading in the U.S. Some of the study’s findings are below:
- After age eight, more children go online daily than read books for fun daily.
- Two thirds of kids age 9-17 believe that within the next 10 years, most books which are read for
fun will be read digitally – either on a computer or on another kind of electronic device. Eighty-
seven percent of kids think people will be able to tag and share their favorite parts of books with others.
- 77% of kids age 9-17 believe that in the next ten years, people will have all their favorite books stored electronically on a computer or another electronic device just like a music playlist on an iPod. It will be like a personal electronic library.
- Two-thirds have read a book on a computer in the past year, and one-third had read one on a hand held device such as an e-book reader, iPhone, PSP, Blackberry, etc.
These findings merely underscore the conventional wisdom that kids born after 1990 expect to spend an increasing amount of time online, and take as a given that the web will be the source for nearly all of their information and entertainment as they enter adulthood. They started out with Gameboys and now they’re on iPhones. They like grazing, snacking and sharing, and this goes for their literary diet as well. Hence their penchant for portability.
Yet they’re not ready to give up on the dead tree format: they prefer books to digital versions by a 60-40 margin. In a few years, when e-books are as readily available as other content that kids are used to consuming on handheld devices, that ratio may well be inverted.
Sifting through the data for some positive trends, the Scholastic folks report the following:
- Nearly two in three online tweens and teens have extended the reading experience via the
- 37% of kids use the Internet to look for books in similar series
- 27% go to book and authors’ websites
- 18% go to websites with blogs about books or by authors
- 16% are posting on chatrooms and messageboards about the books they read
The study does not offer any crosstabs based on income level; it merely states that the average family income was $58,000, well above the poverty level. It would be helpful if the data was broken down this way to make some policy recommendations about bridging the digital divide.
You can always count on The Economist for a cogent and succinct analysis of an important trend or development that promises to change the way either producers or consumers act. In last week’s issue, they turned their attention to the U.S. book publishing industry, with a piece covering Jeff Bezo’s announcement at BEA that Kindle sales now account for 6% of sales of the 125,000 titles available in both print and electronic versions.
None of the handful of e-book manufacturers will divulge sales figures. First-quarter sales of mass-market e-books in America have tripled since the same period in 2005, but they were worth just $10m. But Kindle and its kind are merely the first generation of a product that is sure to evolve quickly in the coming years. Eventually, e-books point the way towards a cleavage of content from platform, threatening publishing with the wholesale change that has hit the music industry. It is a familiar story: fearing piracy, publishers are already adopting various mutually incompatible security technologies that are sure to annoy readers—although ePub, a new standard backed by many big publishers, may clarify things.
This paragraph zeroes in directly on the essence of the threats and opportunities facing the publishing business. First, until recently, miniscule sales, a fact which is largely explainable by the myriad of confusing and conflicting formats to present the content, and by the fact that:
Unlike digital music or video, digital books require consumers to change their consumption habits.
This is a pivotal distinction: except for consumption of live music or performance, consumers have used some sort of electronic device (albeit not necessarily a digital one) to enjoy their music and video for decades. But the book, as we all know, has survived in a very analog format for more than 500 years. As Bezos himself remarked: “It’s hard to out-book the book”. So there is naturally a fair amount of resistance to changing one’s ingrained habits to adapt to a piece of new technology. The benefits must far outweigh the costs of switching and breaking old habits. Convenience is one compelling feature: downloading almost any book you can think of in under a minute is one that comes to mind – but only if you’re a voracious reader. (just as having 500 channels to watch is not a strong attraction to someone who never watches TV.)
Just as with all new technology, the early adopters pay the premium for what’s essentially a beta release. Prices must drop significantly for the device to reach mass acceptance. And mass acceptance is what it will take in order for Amazon to be successful with the Kindle. That’s what will drive demand for e-books, which is really what they’re after. Let’s face it: Amazon is not a hardware company; they sell content, and high volumes of consumption of content drive their margins higher. How sane would it be for a company like CBS to start manufacturing TV sets to facilitate distribution of their programming content? Shareholders would shout “Stick to your knitting-let someone else provide the hardware.” But Bezos recognized that no one had come up with the ideal device to consume digital books on, so he created one.
By offering the Kindle, Amazon has jumpstarted the whole e-book market, and shaken up the moribund publishing industry yet again. But in order for this effort to be successful, they will need to get the price point down to a level where it’s a no-risk proposition for the late-adopter. That means around $99 or so. Bezos might think about the approach another tech visionary is taking with his game-changing gadget. Just this week Steve Jobs announced the new and improved version of the iPhone will drop in price from $399 to $199. This strategy is no doubt a recognition of the benefits of subsidizing the development of the overall ecosystem, which drives greater overall demand for content offered on the device, (see iTunes) or for other, much higher margin products, like Macbooks.
If some Taiwanese manufacturer came up with a sub-$100 e-book reader with color touch screens and a Gig of storage, I predict Amazon would cede the device business to them. Then they could concentrate on selling more e-books, and continuing their gradual domination of the book selling business.