An American Editor

September 22, 2011

The Survey Gives a Lesson?

A few days ago, Harris Interactive released the results of a survey on ebookers and ereaders (see “One in Six Americans Now Use E-Reader with One in Six Likely to Purchase in Next Six Months”). Personally, I didn’t find the results unexpected because, as I’ve noted in previous articles, the survey results simply mimic my own habits.

The survey omits some important questions and definitions — for example, how many of the “purchased” ebooks were freebies — but it does highlight two important trends: first, that electronic reading is here to stay, and second, that smart publishers will jump on the ebook reading trend with both feet and both arms rather than toe by toe.

The survey spoke a lesson to me. Well, not really a lesson, I suppose, but it made me immediately think: If I were a publisher, how can I harness this increased interest in reading volume? That’s the real issue: the volume.

If I were a publisher, I would start thinking about how I can increase the number of ereading devices in use because there is a clear correlation between the growth in devices and the growth in number of books read and purchased in a year. If I were a publisher, I would also start thinking about how I can open — not further close or constrict — the ebook eco system.

Publishers have learned neither the lesson of the music industry nor of their own foray into agency pricing. The absolute worst thing that can happen as ebook reading expands geometrically, is for most of that expansion to occur at Amazon. The more dependant ebookers become on the Amazon eco system, the more power Amazon will be able to exert over pricing, taking us back to where we were before agency pricing. With the Harris results in front of them, publishers should be thinking about how to combat the Amazon eco system before they can’t.

That was the lesson that the music industry didn’t learn when it didn’t combat the iTunes eco system early enough, focusing instead on the Napsters of the world. Apple is really just a more sophisticated Napster, smart enough to throw some placating crumbs the music industry’s way. Now the music industry is at Apple’s mercy; soon publishers will be at Amazon’s mercy, at least in the United States, which remains the largest book market.

One thing publishers could do is agree on a standard format that every book would have to be “created” and sold in. Publishers could say that their books can only be sold in ePub format and with a standardized DRM. Doing so would best serve consumers even if it would make competition among booksellers more keen. This would probably cause some near-term drop in revenue for publishers, but in the end it would give publishers better control over the marketplace. It would also work to eliminate the possibility of one retailer becoming so dominant that it could dictate terms to the publishers.

If every reading device was able to read a particular book, consumers wouldn’t care where they bought the book unless there was a price differential. The Stephen King bought from Amazon is no different, content-wise, from the same title bought from Barnes & Noble.

Publishers need to demonstrate some gumption and adopt such an approach while they still can. As Amazon and B&N grow their own publishing services, they will be able to feed their own eco systems. At some point, authors will care more about being in the right eco system than about being with a traditional publisher. When that point is reached, Amazon wins and the publishers lose — game over!

From a consumer perspective, the sad thing is that Amazon holds all the cards because it is willing to lose money today to rake it in tomorrow, whereas publishers are so conservative and turtlesque, the value of the cards they do hold decreases by the minute. Consumers would be significantly better off with a standardized format and DRM than the current system, just as was the case when the Betamax vs. VHS war ended with a single standard.

And the time for publishers to act is now before the growth of ebook devices and ebook purchasing stabilizes. The more mature the market and the more a single vendor owns a large portion of the mature market, the more difficult it is to make changes.

But then, perhaps the real intent of publishers is simply to rollover for Amazon and hope for the best. I guess we’ll know the answer in the not-too-distant future.

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