E-books and the Future of Publishing

You’ve probably heard much lately on the perils of the publishing industry.  Many have been reporting on the death (or at least significant decline) of the industry for years.  Getting beyond the hyperbole, Ken Auletta offers a detailed analysis of the behind the scenes wrangling between Amazon, Apple, Google, the publishing industry, and book retailers.  You may have already been aware that e-books were creating downward pricing pressure on publishers, but you may not have known just how dire things have gotten:

The industry’s great hope was that the iPad would bring electronic books to the masses – and help make them profitable.  E-books are booming.  Although they account for only an estimated three to five percent of the market, their sales increased a hundred and seventy-seven percent in 2009, and it was projected that they would eventually account for between twenty-five and fifty percent of all books sold.  But publishers were concerned that lower prices would decimate their profits.  Amazon had been buying many e-books from publishers for about thirteen dollars and selling them for $9.99, taking a loss on each book in order to gain market share and encourage sales of its electronic reading device, the Kindle.  By the end of last year, Amazaon accounted for an estimated eighty percent of all electronic book sales, and $9.99 seemed to be established as the price of an e-book.  Publishers were panicked.  David Young, the chairman and CEO of Hatchette Book Group USA, said, “The big concern – and it’s a massive concern – is the $9.99 pricing point.  It it’s allowed to take hold in the consumer’s mind that a book is worth ten bucks, to my mind it’s game over for this business.”

Among publishers, the hope is that the iPad will offer a corrective to the downward pricing trend consumers have come to expect of e-books.  The publishing industry is hoping for a much more collaborative relationhip with Apple (among others) when it comes to establishing what consumers are expected to pay.  But as Auletta points out, the $9.99 price point may be as good as gets – event better than hoped – when it comes to what the public feels is a good price for content:

According to Grandinetti, publishers are asking the wrong questions.  “The real competition here is not, in our view, between the hardcover books and the e-book,” he says.  “TV, movies, Web browsing, video games are all competing for people’s valuable time.  And if the book doesn’t compete we think that over time the industry will suffer.  Look at the price points of digital goods in other media.  I read a newspaper this morning online, and it didn’t cost me anything.  Look at the price of rental movies.  Look at the price of music. In a lot of respects, teaching a customer to pay ten dollars for a digital book is a great accomplishment.”

Whatever the outcome, one things seems clear: consumers stand to benefit immensely from the accelerated availability of electronic content.  Wherever the needle finally stops, it’s likely to be a place that makes content much more widely available for all.  The educational implications of this battle are not, in the short term, especially clear.  But, in the long term, they look bright.  Classrooms are likely to have a wide availability of e-readers and cheaply available, interactive content available from a variety of sources.  Once the dust settles, schools, and especially students, are as likely to benefit as the individual consumer.

Auletta offers a compelling snapshot of the current landscape – read the whole thing.

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