In 2014, two library systems—Toronto Public Library and King County Library System in Washington—experienced more than 2 million checkouts from OverDrive. Additionally, eight library systems had circulations of more than 1 million. These numbers include ebooks, audiobooks, streaming music and video, and electronic periodicals. Clearly, e-reading is becoming a staple in libraries across North America. Data from BISG’s (Book Industry Study Group) and the Association of American Publishers’ (AAP) BookStats released in June 2014 show a plateauing in ebook revenue after major gains in 2012; it was at $3 billion in 2013. Statistics from the U.K.’s Nielsen Book show a decline of 4% in 2013’s overall book sales.
This is the first article in a two-part report that aims to provide the information you need to catch up and keep up with this complex area of the information industry.
Following the Industry: A Lack of Statistical Evidence
Today, we honestly don’t have a reliable, stable source for statistics on the book publishing industry in the U.S. or abroad. Bowker’s Books In Print used to be a standard source; however, today the industry defies even this standard, which bases its data on the fact that the publisher is responsible for assigning ISBNs for the industry. Nielsen BookScan has been in operation since 2001, but it is subscription-only at costs not affordable to public institutions, and it covers only about 75% of sales in the U.S. market.
BookStats’ publication often lags behind similar reports and is prohibitively expensive, forcing most people to rely on whatever information is released to the press. The most recent AAP data, from December 2014, covers the first three quarters of 2014 and shows that revenue from 1,209 publishers was up 2.8%. “In terms of formats, ebooks were up, hardbacks were down, and paperbacks were up. Total ebook revenues increased by 5.6% over 2013 (to $1.2 billion from $1.13 billion),” The Digital Reader’s Nate Hoffelder notes.
In 2013, Nielsen acquired Bowker’s Business Intelligence and Commerce Solutions products. “This acquisition will build on Nielsen’s existing global book intelligence by adding enhanced offerings in transaction services and sales measurement and analysis,” the press release announced. Yet little information has been made publicly available.
Kobo released its first Book Report in December 2014, which is intended to measure the value of the current worldwide market for ebooks. It estimates the current market at $14.5 billion, with an expectation of continuing growth in the industry to $22 billion by 2017. Michael Tamblyn, Kobo’s president and chief content officer, notes, “The advances that we’re seeing year-over-year are incredible, with more publishers, users and new technology changing the face of the industry at an unprecedented pace.”
Data on ebook adoption in Europe is less strong. “Last year, digital books made up 8 percent of the consumer book market in France, less than 4 percent in Germany and Italy, and 1 percent in Sweden and Norway,” The New York Times reports. “In Asia, Japan led e-book markets with 15 percent of the country’s total consumer book revenues; China and India, meanwhile, lagged far behind with 3 percent each.” According to publishing analyst Rüdiger Wischenbart, pricing has been the biggest challenge affecting the success of ebooks in Europe. “Germany and France have been reluctant to discount e-books for fear of hurting their print business. As a result, the average price for a digital version of a best-selling novel in Germany or France is over $20, compared with $9 in Britain.”
Just as Amazon is now charging local tax rates on orders in the U.S., European Union (EU) policies have mandated charging value-added taxes (VAT) to sales of computer apps and ebooks at the place of the sale instead of the location of manufacture. This means a 23% increase in costs to customers in Ireland, to match the Irish VAT in general. Until now, EU directives allowed for charging the VAT for the country where the retailer is based. The added expenses may further impact sales of ebooks in Europe.
Apple’s Litigation Continues
In what we can hope is the final chapter of the U.S. Department of Justice’s and various states’ lawsuits against Apple and the Big Five publishers, Apple presented its appeal in a Manhattan courtroom on Dec. 15. The judges appeared to be sympathetic to Apple’s position as a competitor to Amazon with regard to the control Amazon has over the market, but the result of the hearing won’t be known until the judges post their decision, and apparently no date has been set for that. Of course, Apple may decide to appeal the case further if judgment goes against the company, as it had in the original trial. We can only wait and see.
PwC’s (PricewaterhouseCoopers) analysts believe that ebooks will edge out print as the most lucrative format for publishing by 2018. DRM and the wide variety of formats that need to be addressed and used are key issues impacting the development of this sector. The long-promised innovation has yet to materialize other than in largely PC/laptop environments where products can more easily be developed to clear standards. With the latest iPhone 6, we may be seeing the evolution of a common PDA/smartphone/tablet format, which will make development a more rational investment.
Are E-Readers Losing Out to Convergence?
E-ink e-readers proved to be a key platform in the early days of mass-market ebooks, and they still have their champions. As one commenter on CNET writes:
Why I like e-ink readers: easier on the eyes than LCD, e-ink looks more like paper than LCD or AMOLED [active-matrix organic light-emitting diode], thinner and lighter than tablets and most books, go weeks on a single charge, read with one hand (turning pages with a paperback is difficult with one hand), read in bright sunlight or complete darkness, carry hundreds of books, instantly purchase books from anywhere, borrow public library books without driving to and from the library, learn the definition of a word by touching it, touch a character’s name and be reminded who he/she is, read user reviews and exchange recommendations with friends, instantly lend your book to your kid on the other side of the country, highlight a good quote and share it with a friend. …
In October 2014, Amazon released its Kindle Voyage to very little public reaction, although reviews of the pricey ($199) device were very positive. In the past year, Amazon put forth a wide variety of e-readers: the Kindle (seventh generation), Kindle Voyage, Kindle Voyage 3G, Fire HD 6, Fire HD 7 (second generation), and Fire HDX 8.9 (second generation). Is this overkill or targeted marketing? Perhaps a larger question is whether the e-reader is losing its luster in the marketplace. This year, e-readers took a major hit, as larger-format smartphones such as the iPhone 6 Plus were released. Strong sales signal that consumers are open to greater physical size in their core mobile devices.