The paperback represented an intimidating revolution to the 1930s book industry. It took high literature to a far wider audience. But established publishers disdained it, fearing it would cheapen the industry and drive down profits. It might not have been – as its ancestor the pamphlet novel was in the 1840s – assailed as a threat to the “eyesight of a rising generation”, yet the reaction had much else in common with how the emergence of the electronic book is now being regarded.
At the Frankfurt Book Fair this week, the talk has been all about the impact of the e-book, with scores of sessions and seminars devoted to discussing the implications of devices such as Amazon’s Kindle and the Sony Reader. Another hot topic is Google’s digitisation of, so far, 10m books including about 9m still protected by copyright.
The Google Books project, arguably the first attempt to collect the planet’s collective knowledge in one (cyber) space since the Library of Alexandria was founded in the third century BC, also includes plans to allow people to buy out-of-print books from Espresso printing and binding machines.
The internet has already given the retail distribution model of the $114bn (€77bn, £70bn) consumer and educational book industry an enormous shove in the back, making Amazon a force that publishers are frightened to criticise in public. Now, hand-held devices – be they Kindles or Apple iPhones – along with a dilution of the concept of intellectual property and the prospect of books printed within five minutes on an Espresso feel to publishers like a gun in the back.
By contrast, the paperback was a pinprick to an industry that has seen little change since Johannes Gutenberg usurped centuries of patient monks hand-copying on to sheepskin parchment, by using what may have been a converted wine press to produce the first printed Bible in about 1450. One of the first lessons was that, in order for the printers to pay for their presses and staff, they needed a separate group – publishers – to ensure the right subject matter was printed and the correct and sufficiently wealthy audience was reached.
The next publishing revolution, through the likes of William Caxton translating scripture into a language that someone without higher education could understand, looked to the ruling orders of church and state like a serious challenge to their authority. In the 21st century, management consultants would call it disintermediation of the clergy. In the 16th, Mary Tudor’s torturers called it heresy.
So as they stroll the modern cloisters of Frankfurt, the book industry’s college of cardinals are seeking the best way to strike deals with the pamphleteers of Amazon and Google and perhaps even to exploit the new presses that make a book in less time than it took Gutenberg to set a line of metal. In a study published this week, Benedict Evans of Enders Analysis points to the pincer threat represented by Amazon and Google, one aiming at dominating the market on future sales, the other trying to monetise the global archive.
“Book publishing is moving from a slow-moving, localised, opaque, oligopolistic and often highly uncommercial world to an open, global, highly liquid and highly commoditised world,” writes Mr Evans, adding with dry understatement: “This is not a shift that we would immediately associate with higher profits for incumbents.”
According to PwC, sales of downloaded digital books reached $1.1bn in 2008, or 0.9 per cent of the total. They have been growing at rates of several hundred per cent a year in the few markets, such as the US, Japan, South Korea and the UK, where they have a hold, say Nielsen Bookscan and others who keep tally.
The base was so low, however, that the numbers are barely significant. In the US, digital sales were 2 per cent of a $17bn market. In the UK, Waterstones, the division of HMV that dominates e-books, said last month it was selling one every two minutes, which sounds impressive – except that it equals 262,800 a year, or 0.13 per cent of all books sold in the UK in 2008.
The size of the market is not so great as to force publishers to face their big concerns. Yet.
Arnaud Nourry, chief executive of Hachette Livre, one of the world’s largest book publishers, says the devices, such as the Kindle 2 that Amazon launched internationally just before Frankfurt priced at $270, are not mass-market formats. “It is something for the upper class, people over 45, big readers, big travellers, early adopters. They are not 25 per cent of the book market,” says Mr Nourry. “The core of the market is people who buy between three and six books a year. You can’t buy a machine for that, certainly not at $300.”
Even then, there is something about the book that excites feelings no electronic device can match. “There is quite a strong parallel between the book and the vinyl album,” says John Makinson, chief executive of Penguin, the consumer publishing arm of Pearson, owner of the Financial Times. “Somehow you could have a relationship with vinyl. I loved my albums: maybe it was the cover art, I don’t know, but you could never feel that way about a CD, could you?”
Not everyone agrees. Paul Lee from the media practice at Deloitte says: “There is always going to a segment of society that favours the digital format because it’s clever and shiny. For example, in some markets like in South Korea there is a culture of constantly upgrading.”
That would be one reason why Japan and South Korea have the largest consumer e-book markets: $251m and $227m respectively. Add in textbooks, however, where companies such as Pearson and McGraw-Hill have large market shares, and the US leap-frogs those countries to a total of $522m, with the Asian countries totalling $265m and $229m respectively. The UK is fourth with a mere $10m.
Overall, industry executives and analysts expect digital books to reach about 20-25 per cent of the market over the next decade as publishers await their “iPod moment”, the appearance of a piece of hardware that gives the digital incarnation of the written word the same volcanic momentum that transformed the consumption, and the business, of music.
Amazon has 350,000 e-books for the Kindle in the US and Sony has 100,000 for its e-reader, giving them a potential grip on pricing power. Publishers are nervous of this but, says Mr Makinson: “At one level it isn’t an issue: we sell a digital book to Amazon at the same price as a physical book. They then choose to sell it at $9.99. Admittedly, it does cause a price expectation that an e-book is cheaper than a hardback.” But publishing executives recognise this is not sustainable. “Amazon is losing money and they won’t do it for ever,” says one senior industry figure.
Richard Charkin of Bloomsbury says this is the reason publishers want to see other manufacturers come into the device market. “We are very keen to have a multiplicity of channels and models,” he says.
If there are latent concerns about pricing, Google Books has provoked defensive alarm in the same way as illegal downloading has done for music. “Piracy isn’t the discussion we keep having,” says Mr Makinson. “It’s more about the legitimate file-sharing model, particularly Google, that has exactly the same consequences in terms of freely available distribution of copyright material.”
In short, how can a publisher justify charging £5.99 for a copy of Jane Austen’s Pride and Prejudice when it can be downloaded free from Google Books? The answer, publishers say, is that you can – as long as the books look good and offer additional benefits such as introductions by editors, footnotes and illustrations. Digital versions are also 20 per cent cheaper to produce because of savings in paper, printing, storage and transport. The dilemma is how much of the saving to keep and how much to give to the author and customer.
Such issues only underscore the inefficiencies of the traditional publishing model, which analysts argue is crying out for the change that new technology can bring. Christopher Bielenberg, a consultant who has advised household-name publishers in the UK and US, points to the peculiarities of a system in which publishers “pay what are often very large advances and then have a long period of time in which a book is written, edited, printed and distributed before getting any money back”.
He adds: “It is a juggernaut, very unresponsive, but with new technologies [such as the Espresso], there are some pretty significant gains to be made, especially in working capital, receivables and inventory.”
That last category has been the death of booksellers. In 1999 Dorling Kindersley, now part of Penguin, was destroyed as an independent imprint by printing 14m copies of a Star Wars book of which it sold only 3m.
In public, those milling around the Frankfurt Buchmesse this week say the digital book will allow publishers to experiment – testing public demand for a work in a way that, for the success stories, could breathe fresh life into sales of their traditional product. Privately, they pray it will not suffocate it.
Source : Financial Times, 15/10/09
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