Wednesday, March 17, 2010

Will iPad save books instead?

In a previous posting I discussed the hype around the potential saving of the publishing (newspaper & magazine) industry by the Apple iPad, which has yet to get an official UK launch date beyond "the end of April". This has led me to come around to considering another potential maket for the iPad, that of an ebook reader.

The iBook Store on the iPad has the potential to sell loads of books. Steve Jobs has already said that five of the six largest publishers — Hachette Book Group, HarperCollins Publishers, Macmillan, Penguin and Simon & Schuster— have all signed on to provide ebook content for the new tablet. In fact Mr Jobs himself said at the iPad launch:

“We think iPad will be a terrific e-book reader for popular books and textbooks”

So will the iPad be a major revenue stream for books?

'Well, not anytime soon' is my prediction. That's because of two things:

1. Suitability
You can't read an eReader in the bath, when you don't have power, when you want something light and tangible to idle away the hours, etc.

2. Total market share and the cannibalisation of sales
If you already have the paper book, will you want to buy the electronic version as well? I doubt it and besides, we've been burnt like this before when CD's came out in the 1980's... as the record companies so lovingly suggested we'd like to re-purchase our collections one final time at the higher quality levels. Also what happens when another "even better" ebook format gets released in a year or so?

I personally don't actually see ebooks growing to become a significant part of the overall book market in the short term. According to the Association of American Publishers, book sales increased in the last year in the USA by about 4% ($11.2bn). However, only about $170m, equivalent to about 3%, of those were ebook sales. But although this is an incredibly small part of the overall amount of total sales, the industry should take some consolation from the 177% growth in this figure over the last year. This growth was fuelled by the increasing availability of the Amazon Kindle, which really has beome the major electronic book distribution platform until the iPad was created. (Yes, I know you have others, such as the Sony eBook Reader, but these really haven't been that popular). Its also no secret that Amazon are worried about the potential for the iPad to steal their market share.

However the one thing that is more likely... is that the price of ebooks themselves will soon reduce in price. Their cost of production and distribution is so low (almost zero thanks to no paper & printing costs and online delivery) that a price war for market share is likely
Note: For more information on this, take a look at the maths done by New York Times in its recent article on iPad prices.

It could therefore end up that the price of an ebook is the factor that most influences sales and therefore the market share of each device. The question for Apple will be whether it decides to first squeeze publishers for its proportion of each (commoditised) sale or just goes for its cut of the overall market by under-pricing Amazon.

Neither of these situations looks to be a good thing for the book industry.....

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