A Question and Some Random Observations

I’ve spent the last two and one-half days with about 1500 of my closest friends at Digital Book World 2012, this week’s entry into the publishing conference sweepstakes. The conference has grown tremendously in terms of attendance, number of sponsors and breadth of programming over its three-year life and along with some very good speakers and panels, provides an excellent networking opportunity. (Disclosure: I’m a conference junkie and this is one of eight or ten I’ll attend this year. Additional disclosure: I serve as an unpaid advisor to the Digital Book World Community Board, which does not have formal input into the conference, but there you are.)

Of all the presentations and panels I attended, several that presented hard data (by book conference standards anyway) stood out in my mind, partly because I like data and think it’s key to our successful future, and partly because there seems to be something going on that I can’t quite get my arms around and that may be significant.

To set the stage we began Tuesday morning with a presentation  by Kelly Gallagher of Bowker (who have tracked ebook sales for the Book Industry Study Group for several years)reporting that the slope of the growth curve for ebook purchases has flattened somewhat (unsurprising, given the exponential growth over the past few years. The punch line of Gallagher’s data was that instead of ebooks capturing 30-40% of the market in the next couple of years (as had been predicted at last year’s conference), ebooks were more likely to hold a share of around 20% in that time frame. Obviously, this will vary by category.

This would seem to stand in contrast to data presented by Marco Ferrario of BookRepublic, developed with the help of consultants AT Kearney, who showed charts indicating staggering growth in the number of devices (dedicated e-readers and tablets) that have come into consumers’ hands over the past year. While many of those devices were holiday gifts which didn’t allow the new owner to do heavy downloading in calendar 2012, it raises a question in my mind: “How do you reconcile the growth of the device market with a slowdown (relatively speaking) in downloaded book content?

Several possible answers have been suggested to me, including the following:

·         Many of the new devices are iPads and other tablets which are used for activities other than reading; in fact, some of those devices are not used for reading at all.

·         A certain percentage (14% reportedly in the US) of those who received Kindles as holiday gifts had not downloaded a single book as of January 15;

·         Agency (read: “mostly higher”) pricing for ebooks has driven down demand;

And more ominously:

·         “Power purchasers” of ebooks (those who download and read the most) have mostly been converted to digital content and new readers will acquire fewer books for their devices going forward.

Though certainly they all apply to some degree I’m not sure they’re a satisfactory explanation (at least not for me) and I’d love to hear alternate explanations or theories. Perhaps it’s an anomaly that will correct itself as devices become even more ubiquitous. We’ve known for some time that the slope of the market share curve would change, but if it’s flattened sooner and more dramatically than anticipated, it has ramifications for every industry player.

If it’s true, what would be the implications for your business? One thing I’m sure of is that it should not provide an excuse to say, “Whew, we have more time. Let’s slow the rate of development and level of investment in our digital program for now.” Whatever the number, digital readers (both devices and humans) are here to stay and for publishers not to be on top of the game is to risk losing it entirely.

And a Few Observations

·         Words of the conference were “discovery” and its ugly first cousin “metadata”. 

·         Despite the keynote speaker (“futurist” Michael Houle) telling us that one of the key “Flows” for the future is globalization, there was only one panel and one presentation that I’d classify as non-US-centric. We need to think more broadly. 

·         Amazon made a presentation that, while short on data, was surprisingly transparent and very helpful in sharing of their future plans for devices and the accompanying tools and features. 

·         Amazon bashing continues, though it was more muted this year than last.

·         Publishers spoke increasingly about being more customer-centric, though they seem, by and large, to be struggling with just how to do that.

·         Direct-to-consumer models continue to be discussed; how difficult that is to execute those models continues not to be discussed.

·         There were fewer eye-popping startups on show here than at the recent FutureBook conference in London. Is there more innovation going on in the UK and Europe than in the US, or is US innovation mostly taking place within the larger houses here?

·         Related, I heard no discussion of subscription, rental or lending models.

·         Despite some cheerleading here and there, there was a distinct lack of optimism (again vis-à-vis FutureBook) among most publishers.

·         With 1500 attendees paying up to $1495 per person to be at DBW (not including expenses), somebody still has enough money to send staff to conferences.

·         My conclusion from the previous observation is that we should all be in the publishing conference business.

 

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