Wednesday, December 15, 2010

E-books: Are publishers keeping up?

Sandra Parshall

A New England prep school has replaced traditional books with a library of e-books and e-readers. The University of Texas at San Antonio’s Applied Engineering and Technology Library has removed all paper books and replaced them with a digital collection.

Anomalies or harbingers of a digital future? I lean toward the latter. Printed books may still be around for a long time to come, but only ostriches can deny that an e-book revolution is underway and picking up speed.

So how are traditional publishers coping with the flood of new e-readers and the consumer demand for new content? Are they shifting or expanding their focus to stay alive in a market where e-book sales may soon equal or surpass hard copy sales? Are they making money on e-books? Two surveys conducted by Aptara this year show how rapidly the market has grown in only a few months and indicate that publishers are racing – not always successfully – to catch up with demand and make their books available for numerous e-readers.

Aptara, a company that has converted millions of pages of content to digital form for the Kindle, Sony Reader, and Apple iPad and iPhone, questioned about 300 publishing professionals early in the year and did a second survey of more than 600 industry representatives during the summer. Results of the second survey were released last week. The biggest development between the first and second surveys was the release of the iPad, which provides a platform for illustrated books and educational materials that don’t translate well to text-only e-readers. Although the iPad wasn’t released until April, by summer 36% of all publishers (and 50% of trade publishers) were producing content for Apple’s tablet device.

In the space of a few months between Aptara’s two surveys, the overall percentage of publishers producing e-books jumped more than 10% and stood at 64% at the time of the second survey. The biggest increases occurred in trade publishing (the segment of interest to novelists), which saw a jump of 23%, and scientific/technical/medical publishing, which went up 24%. By summer, 74% of U.S. trade publishers were producing e-book versions of some of their products. Of those, 83% said e-publishing is an important element of their company strategy and growth plans. The new source of revenue and the chance to reach a new audience are the main reasons publishers give for making digital content available.

But are publishers making money on e-books? Only 15% of trade publishers say the return on e-books is better than that on printed books, about half say they don’t know yet, and 13% say they see a lower return of investment on digital than on print.

The Aptara report points to two possible reasons why publishers aren’t profiting as much as they could from e-books: they may not have shifted yet to streamlined procedures that would keep costs down; and no industry-wide format exists that will work with any e-reader. EPUB, the de facto standard, is accepted by almost all e-readers – but not Kindle, which has its own proprietary format (AZW). EPUB has some drawbacks, but a revised version expected next spring promises to increase function and reduce incompatibilities between e-books and e-readers.

The format of the source files can also create obstacles to fast and low-cost conversion of print to electronic form. The two most common source formats are PDF and Adobe Design, but the far more flexible XML is gaining ground. The Aptara survey points out that XML allows publishers to separate the text from its formatting, then easily and simultaneously generate e-books for a variety of e-reader formats.

Right now more than a quarter of publishers are taking a hybrid approach to producing e-books, doing part of the work in-house and farming some of it out to commercial services, while about the same number use outside conversion services exclusively.

Despite the rapid move to digitize backlists and offer e-book versions of new publications, publishers haven’t been as quick to produce enhanced and interactive e-books that would include videos and other material not available in print books. Nearly a third of publishers surveyed say they’re still investigating the possibilities, and 13% say they have no plans to provide enhanced e-books. Others say they’re holding off for various reasons.

Consumer demand for enhanced books is likely to grow, however, as more people buy devices capable of hosting them. Aptara predicts that multi-function tablets like the iPad will take over the e-book market in the next couple of years unless makers of single-function readers like the Kindle make their devices more versatile.

Will publishers ever make a profit on e-books? Yes, if they learn how to produce them economically and make their backlists available in digital form. Backlist e-books could be a saving source of income for traditional publishers. As the Aptara survey notes, “Backlists are critical assets with infinite resale value and significantly higher profit margins than front lists... Publishers are no longer dependent on one or two bestsellers to cover the cost of lesser-known authors.” 

A final note: More than one-third of the publishing representatives surveyed said they don't personally read e-books, but among those who do the iPad has rapidly eclipsed the Kindle as their favorite e-reader.

You can download the study free of charge here. You will be asked to provide a minimally invasive amount of information about yourself.


Ann Charles said...

Thanks for the interesting read over breakfast. It sounds like a good-sized backlist is key for any author (traditionally pubbed or e-pubbed), which means writing until our fingers fall off and we can't count our money. ;)

I'll take that chance. Back to the keys.

Ann Charles

Sandra Parshall said...

Some publishers may regret letting so much of their backlist go out of print and letting rights revert to the authors. Now there's a potential market for those books, and the authors get to keep all the profits.


Great read. The marketing of my self and novels is the hardest part of being a self published author. I gave up on mainstreet agents and publishers after sixty<thanks, but...."
After eading this article I am going to focus more on the electronic side of the biz.
Mike Pettit

Lonnie Cruse said...

I'm a Kindler hoping at some point to be able to afford an iPad. Four of my own books in the Metropolis Mystery series are available on Kindle and I enjoy reading other authors' work on the Kindle and on an iTouch because it is small and light for purse carrying. ALWAYS have a book with me that way, and audio books.

I would love to see Kindle and my local libraries come together so I could check out books rather than having to always buy them. And some books are rather expensive on Kindle.

I still love/read both hard copy and Kindle books. No idea how much that will change. Problem: the hardbacks I buy are only from authors I collect/keep forever so that won't change any time soon, new authors I hesitate to buy until I can check them out through the library. Sigh.

Great post, Sandra!

Sandra Parshall said...

Lonnie, many libraries offer e-books for downloading. Kindle's proprietary text format is a stumbling block, though. I don't own a Kindle, but my guess is that you can't download a library file to the device. Am I right, Kindle owners?

The move is definitely toward tablet devices that have color screens and do a lot more than display books. They're more expensive, but people are buying them.

Marilynne said...

I think the publishers are having a hard time adjusting to the world of eBooks. I was ready for them years before they were easily available.

I have a Kindle. It has over 50 books on it, about half of them read. I wish the Kindle would allow me to mark the list of books once I've read them. It's clumsy to put a note in a book saying it's read, and then having to open it to see if I have read it.

As much as I love Kindle, I still love my paper books. It will be a long time before Art Books and How-to books with illustrations will work well as an eBook. I still love the look and feel of a well made book.

Sandra Parshall said...

Marilynne, tablet devices (iPad,etc.) are ideal for displaying art books and photo books, although you may not get the full size of the print versions.

L.J. Sellers said...

Thanks for a thoughtful post. I'm skeptical about the idea that the iPad will take over e-book sales in the next couple of years...unless it becomes much more affordable.