Four Reasons Why the Sales Growth of e-Books Will Be Slower Than Industry Executives Think

Last week I attended Digital Book World in New York. More than 1,300 industry professionals showed up, doubling last year’s attendance. It’s clear that digital represents the fastest growing segment of the book industry, but will it grow as fast as industry executives think?

A Businessman Trying to Read a Crystal Ball - Photo courtesy of ©iStockphoto.com/VallarieE, Image #12041842

Photo courtesy of ©iStockphoto.com/VallarieE

Forrester Research presented a fascinating study, based on a survey of book publishing executives. One conclusion was that “by 2014, [publishing] executives predicted that half of units sold will be e-books, although it was not clear at what price e-books will be sold.”

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I have no doubt that we are in the midst of a digital transition. It is here to stay and is proving disruptive—especially to brick-and-mortar booksellers. The only question is. how fast will the migration to digital happen?

In my opinion, not as fast as the majority of my colleagues in the industry think. I do not believe that by 2014, 50 percent of all books sold will be digital. I believe the number will be closer to 25 percent. That is, in fact, the planning assumption we are using at Thomas Nelson.

Here’s why:

  1. Forrester’s study was based on a survey of industry executives. Honestly—with all due respect to my colleagues—who cares what they think? The only audience I care about is readers. And, unfortunately, consumers are notoriously bad at telling you what they are going to do. The only accurate predictor of trends is how consumers actually behave.
  2. E-book sales are still relatively small. The media hype has outstripped the reality. According to a study by BISG, e-book sales for the fourth quarter of 2010 were only 7 percent of all book purchases. That’s up from 2 percent in 2009 and represents dramatic growth. But this is still a long way from “50 percent by 2014.”
  3. The music industry hasn’t even reached this benchmark yet. Apple launched the first iPod in the fall of 2001. Almost ten years later, digital music sales are still only 46 percent of the overall music market. Yet, if you read the press, you would think CD sales died years ago. Certainly, the music industry has gone through enormous disruption, but digital music has not yet reached half of all music sales.
  4. Readers are more attached to print books. Music has always been an audible experience. It doesn’t matter if the device generating the sound waves is a CD player or an iPod. For everyone but audiophiles, the experience is the same. This is not true of books. Holding the book and flipping through the pages is a cherished part of the reading experience for many readers. (Even e-readers try to replicate the page-turning experience.) So expect readers to embrace e-books more slowly that music lovers have embraced digital music.

Let me be clear: I am not arguing that the book publishing industry is not in the middle of a digital transformation. It is. I am only arguing that the rate-of-change will be slower than the media, consultants, and hardware and software manufacturers—those with something to sell—suggest.

Thankfully, at Thomas Nelson we are ready regardless. Ninety-five percent of the books that generate 99 percent of the revenue are available for sale today in all the major e-formats. In addition, we are publishing every new book simultaneously in e-book and print formats. Regardless, I envision being in the print business for some time to come.

Update: PriceWaterhouseCoopers (“PWC”) agrees with my basic premise. They just released a new study called Turning the Page: The Future of eBooks. They project that digital sales will be 22.5% of total book sales by 2015. They say, “The Gutenberg era is not about to come to an end. … In coming years, printed books will still account for the majority of sales.”

Question: Do you agree with my assessment or disagree? You can leave a comment by clicking here.
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  • http://stainedglasspickup.blogspot.com/ Cathy Messecar

    My books have underlining, dogged ears, highlighted paragraphs, notes in the margins. I’m requesting an electronic reader for my birthday and enjoy my grandson’s color Nook and see multiple benefits. But, I still want the industry to offer recyled paper in book form. Cut down trees and reforrest. I still don’t mind papercuts from books.

  • http://www.printhead911.com/ new print head

    Its very informative post. thanks for the great information.

  • http://www.motleyhealth.com/ Jon @ Motley Health

    I received a Kindle the other day (a prize). I have an OU book now on Kindle, on my PC in pdf and in paper form. I still only read the paper book, so much nicer, easier to read, does not need battery, do not mind dropping it anywhere either. Books are just better in so many ways. But, having 1000 books to chose from on a tablet device is a handy thing when on the move too.

  • Lynne

    Many authors are making money by self-publishing via kindle (which has also led to print contracts and movie options). Self-publishing in print has carried a stigma. Will doing so electronically be a viable option for authors and wannabes?

  • http://twitter.com/paulfrancisnrs paulfrancis

    Now a days the people doesn’t buy the E books.They used to borrow the e books.We can see the many of the sites have pirated the E book.That’s why E book customers are so less t buy it.
    I have agreed that the four reasons of the which the E book has less percentage to buy it.
    _______________________
    Paul
    Ebook

  • Angelica

    I love to hold a book and would be saddened if the shelves in my house that are currently filled with all kinds of books were replaced by an e-reader. On the flip side of that though, I was hard pressed long ago to believe that one day my vinyl record collection would be obsolete.

    Personally, I wouldn’t want to take a Kindle on the beach and I don’t have to think about recharging a book. If a paperback falls out of my purse, well, I pick it up and there is no screen to break. I don’t want to have to worry about an e-reader AND my phone, AND my iPod. Books are easy and smell good and feel better.

    That being said, I think e-readers will grow faster that is being predicted here. Why? A large percentage of voracious readers are savvy and smart. Savvy and smart people tend to move with the times, and times are a moving…

    In addition to electronic readers taking over the world, I predict that POD publishing will also. I think there is less potential industry waste- there is a dollar savings in addition to reducing our footprint on natural resources.

    The shakeup is here and hopefully the fallout to the industry staples will be minimal. Randall states, and I do concur, that some companies, are run by old school slow to change publishers. That being said, just look at what happened to Blockbuster because they didn’t keep up with emerging technology.

    E readers and POD is here to stay and growing by the minute.

  • Walter Petticrew

    Hello Michael, I concur with your hypothesis regarding the rate of change in the transition to digital books and it is based upon 30+ years in high-tech product development. Back in 1997 at a conference I presented the notion of the High-Tech Slinky …. yes that original toy from Hasbro. My assertion was and still is that high-tech developers and marketers are at the head of the Slinky and they are pulling and stretching forward and assume the entire Slinky is with them. The reality is that the opposite, the Slinky gets tangled in people’s lives, behaviors , business models, ecosystems that are not living in the same reality as high-tech developers. I could site several real life examples of where I have seen this same scenario play out in many very successful and respected companies. We need developers pulling the Slinky forward, and in almost all cases the “Slinky” goes forward WHERE they thought it would, but not WHEN they expected. Much of the over optimistic transition date hype comes from industry publication writers/blogs because they reference and enjoy the notions of high-tech developers. They become a powerful and fairly accurate guide for the roadmap but they should not assign dates, that is not their forte.

    • http://michaelhyatt.com Michael Hyatt

      That’s a really interesting concept. I’d like to see someone write a book about it.

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  • http://www.rockbridgeseminary.org Daryl Eldridge

    Michael,
    I believe you are correct in your forecast of the growth of e-books. However, as a president of an online seminary with students around the world, we are glad that you are foresighted to provide this medium for our students. Digital libraries and e-books have made it possible for our students to have access to materials that before was very difficult to obtain. I encourage you to make 100% of your books digitally available.

  • Nancy D.

    Maybe somebody already brought this up, but a big obstacle for the growth of ebooks is the standardization of format. I have a Kindle and was dismayed to learn that I had to buy the books (I’m a librarian). The lending program on the Kindle is very limited, to say the least. Overdrive software, purchased by some public libraries, doesn’t work on Kindles. I work at a University and we purchase thousands of ebooks that can only be read on computers. Not everyone has an iPad, though I guess people could read the books on 3G enabled Kindles. Am I missing something?

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  • Bradenton322

    I think that you are correct in your assumption that about 50 percent of books being sold in E-book format. I do not think we are close to achieving that number by 2014. I think the number may be higher than 25 percent you predicted. We are at a crossroad. The large bookstores that we once knew are struggling to survive (even when the economy is good). Being able to have a brick and mortar store dedicated to books alone is something that may not last.

    One problem is technology is still evolving for the E-Book. Younger people are tied to smart phones, e-readers, and other devices in which an E-Book can be easily read. Middle Age to Older People are adopting new technology but not fully embracing it. The “Nook” or “Kindle” devices are now getting better in their design to allow for those with vision issues to view text or other content.

    Even so, great strides in technology allow words to be published everywhere. Another problem is that we are moving to a generation of the instant. Right now we have instant news, instant sports, and with e-books technology, instant authors. It is really easy for someone to sit down and prepare a manuscript in an E-book format. What is contained in that manuscript sometimes in not really able to meet publishing standards.

    Books are published today almost instantly after a major event. Sometimes the events are still unfolding when the book hits the marketplace. Even worse, the facts published in the book may be completely wrong. This can be a major issue for a reputable publisher. Do they publish the book in E-book to get it out or do they wait and possible loose sales.

    Thankfully publishers like Thomas Nelson wait for the truth and make sure publishing standards are being met. Technology will continue to improve as we get more affordable devices and devices that will allow you to read books right from your large screen television. When we do so, then we will get to the large number of E-Books replacing printed word.

    God Bless and Thank you for all you do at Thomas Nelson.

    Mike Bragg (Bradenton322)

    • http://michaelhyatt.com Michael Hyatt

      Thanks, Mike. That was a very thoughtful response. In terms of the percentage of books being digital by 2014, I might be way off. Time will tell.

  • Anonymous

    I agree with your overall conclusion, but I think it is more of a generational thing. Once the older generation (that grew up without the digital world) becomes less and less of the majority that is buying books I think we’ll see a radical change. Here are 7 reasons why I think it’s better reading digital:
    http://tomorrowsreflection.com/7-reasons-you-should-use-a-digital-reader/

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  • http://twitter.com/jchatraw Jason Chatraw

    I couldn’t disagree with you more, Michael. http://bit.ly/hqPTHS

    • http://michaelhyatt.com Michael Hyatt

      Thanks for your comments. I disagree with you, but that’s okay. We can come back in a couple of years and see who was right!

      • http://twitter.com/JasonChatrawDCJ Jason Chatraw

        The joy of being a futurist! There is a big different from what I’m seeing between the increase of sales in fiction and non-fiction. Either way, it’s an exciting time in the industry.

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  • RamMohan Narasimhan

    Already there are a lot of complaints that Amazon is charging more for ebooks as compared to paperbacks for many titles.  This would certainly dampen the ebook sales.  As far as India (my country) is concerned, the physical books are available at a fraction of the cost as they are priced lower to take care of lower purchasing power in India.  There is no such preferential pricing for Indian customers for ebooks for obvious reasons.  Therefore, I doubt if ebooks will ever take off in a big way in India