It’s a bittersweet era for those old-school readers of pulp and binding, those who regard an afternoon in a hammock indulging in a good old-fashioned page-turner as warm engaging personal escape. Many don’t feel quite the same level of intimately comfortable enjoyment reading from a digital screen.
Those people are apparently not the ones buying literature. E-books are now outselling hardbacks and paperbacks are losing market share at a faster rate than even industry insiders ever expected.
Indigo Books & Music Inc. accounts for about half of the books sold in Canada. Heather Reisman, founder and CEO of Indigo, projected that digital book sales would erode 15 percent of Indigo’s traditional book business within five years. Now she’s predicting it will be closer to 40 percent. Her company recently invested in a majority share of Web-based book retailer Kobo, along with American retailer Borders, REDgroup Retail, and Cheung Kong Holdings.
Borders Group Inc., the second-largest book chain in the U.S. and Indigo’s partner in Kobo, was forced to close hundreds of stores and downsize thousands of employees after filing for bankruptcy protection in February. Barnes & Noble Inc., the world’s top book retailer, has been searching for a buyer or investors for nearly a year.
That could prove to be a tough sell. In 2011, U.S. book retail profits before tax are expected to plummet to 1.3 percent of revenue, down from 3.5 percent in 2006. Conversely, e-book sales in the U.S. tallied less than one billion dollars in 2010, but according to Forrester Research estimates, they will nearly triple to $2.8 billion by 2015.
Random House is a good example of how the industry is reacting to the quickly changing market. In late 2009 Random House started to produce all new books in both physical and digital form. By the end of this year, all older books in the Random House catalog will be digitized.
In 2010, e-books represented 3.5 percent of Random House’s sales; by the end of 2011, predictions estimate that figure to be 10 to 12 percent. By 2012, the publisher will have switched all print catalogs to electronic, generating about a 5 percent cost saving.
Though they are much cheaper to produce, and need not incur traditional expenses of running actual retail bookstore locations, e-books are also priced much lower. Therefore, they yield less than half the gross profit of traditional hardcover books.
This proliferating new market has also created a rush to create and market digital readers. Since the inception of the devices, the cost of owning one has dropped drastically. Amazon now offers its Kindle Reader for as little as $114.
Authors are following suit. Jeffrey Alan Payne, whose self-published comedy novel MFN was not selling well in paperback, lowered the price on the Kindle version of his book to only $5.99. He has now experienced a resurgence in book sales, but only on the Kindle website. Sales of MFN in paperback on Amazon are flat in comparison.
Payne conceded that he needed to make a price adjustment, when he found that the late Stieg Larsson’s blockbuster bestseller The Girl with the Dragon Tattoo sells for approximately $7 on the Kindle site. MFN is now priced just a few cents above Payne’s publishing costs.
“My intention is to get people to read my work. Since these waves of change are happening in the book industry right now, with e-books in their hot market growth stage, I felt I needed to lower the price.” The author adds, “The reality is that John Grisham and J.K. Rowling are two in several million; most writers don’t get rich off their novels. I’ll make a very tiny profit margin, but maybe I can attract more readers.”
Like many novelists, Payne also finds contemporary culture’s lack of interest in long form fiction discouraging, “We’re living in an age where many people don’t read books, period. Unless they ride a subway to work or take recreational reading material on a vacation, many people rarely read more than 140 character Tweets on any given day.”
Whether it’s due to a general lack of interest in books, or society’s voracious appetite for new technology and devices, the future is evident. Within a few short years, hardback and even paperback books may only be available as rare finds at esoteric shops and antique markets. You’ll find them right next to the CDs and vinyl record albums.