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.