Kindling an Interest in eBooks

From an online revenue perspective, eBooks today represent a small market.

Amazon is out to change that. The e-commerce giant, doing well despite a sagging economy, recently introduced Kindle 2. This next-generation reading device comes with a library of over 240,000 books, worldwide newspapers, magazines, and blogs. It’s got 3G wireless for book downloading, an improved screen, and it’ll even read books out loud to you.

Sony offers the “Reader Digital Book,” a Kindle competitor. Both Amazon and Sony are banking on early adopters who want to read books electronically and remotely. With the Reader Digital Book priced at $400, and Kindle selling for $359, consumers will need to read a lot of eBooks to make their investment worthwhile.

But the more interesting Amazon announcement came on March 4, when the company said that iPhone and iPod users could get a new free Kindle application that gives them access to the entire Kindle library.

Just days after Amazon’s iNews, Barnes & Noble announced a $16 million purchase of eBook retailer Fictionwise. Barnes & Noble’s eBook sales sputtered in the past, but now it will try to give Amazon a run for its money.

The Amazon iPhone/iPod application and the Barnes & Noble acquisition may help ramp up eBook sales. But there’s no guarantee book publishers will be fully onboard. A recent article in Financial Times stated:

“What is perplexing for publishers is the long-term viability of the existing model. The profit margins are difficult to determine… E-books are sold at a fraction of the suggested hardcover price on the physical edition with many new Kindle titles sold at $9.99.”

The “existing model” that concerns publishers is the fact that eBooks sell for under $10, while hardcovers sell for upwards of $25. eBooks are a little more expensive than paperbacks, but paperbacks are typically published only after a hardcover edition’s selling cycle has ended. Publishers have to cover the costs of marketing and author advances, whether a book is published as a hardcover, paperback, or eBook.

Still, with book publishers facing continuing declines in profits, you’d think the industry would embrace any avenue to increase sales, especially if it actually decreases their dependency on printing and distribution. But book publishers are not known for being visionary.

Book publishers do follow consumer demand, however. So if a critical mass of consumers creates a true demand for eBooks, publishers would have to commit to publishing them. Will that really happen? Maybe the reading public will want to retain the admittedly old-fashioned but treasured tactile experience of leafing through printed books. Or maybe, as Amazon hopes, they will begin to see a book as one more searchable electronic document to be viewed on a screen.

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Barry Silverstein is a freelance writer/marketing consultant and co-author of the McGraw-Hill book, The Breakaway Brand.