The State of Ebooks 2015


BEST PRACTICES SERIES

Article ImageOnce a tremendous engine of growth for the publishing in­dustry, ebook sales have lev­eled off in recent years as the market matured. This has left publishers and retailers struggling to find the next frontier in ebooks. Sluggish sales are prompting publishers to seek new distribution channels for their titles, while retailers continue a race to the bottom with ebook pricing. Mean­while, one dispute caused the ebook industry to hold its breath in 2014­-with the prospect of more fireworks in the year to come.

THE YEAR IN REVIEW

"To be honest, I did not see Amazon and Hachette coming," says Richard Nash, an entrepreneurial con­sul­tant with experience in the publishing industry. "I didn't think that either of them would take the un­necessary risk of an extended, visi­ble conflict."

And yet, they did. The protracted and very public dispute-waged over which party would set ebook pricing-was finally resolved in November 2014, with both sides claiming victory. Although the terms of the agreement were not made public, it appears Hachette has gained agency pricing (the ability to set ebook pricing on its titles). David Naggar, Amazon's VP of Kindle, said in a statement that the company will offer "specific fi­nancial incentives for Hachette to deliver lower prices."

"The agency model was something that all the Big 5 publishers moved away from after the Department of Justice suit," says Richard Bellis, senior editor at Digital Book World. "It's been about 2 years since the Big 5 publishers have priced ebooks on their own. Getting this back was some­thing the other major publishers really wanted. They saw Amazon's dis­count­ing as something that was ultimately detrimental to their busi­ness and to authors."

Nash thinks Hachette and the other publishers are fighting the wrong battle, as they "should be fo­cusing on building other revenue streams than just digital download revenue streams" due to down­ward price pressure on all kinds of digital con­tent, including ebooks. Subscription ebooks are one alternate revenue stream for publishers; both of the major players are adding users, of­fering more titles and getting more buzz (and skepticism) in the industry. "We see them making inroads," Bellis says. "Readers may want this, but it may not ultimately pay off for au­thors or publishers." Scribd has add­ed an audiobook feature.

Scribd and Oyster may be gaining traction and getting more attention from customers and suppliers, but it's not clear that they have viable business models, according to Bellis. Amazon noticed the potential of subscription ebooks, and it launched the subscription pro­gram Kindle Unlimited. While none of the Big 5 publishers have signed on yet, Amazon has plenty of other titles, including many self-published ones. So "it was kind of a no-brainer for them" to join the subscription band­wagon, says Bellis.

In another attempt to counter Amazon's dominance of the ebook industry, HarperCollins Publishers started selling directly to consumers on its website. Other Big 5 publishers have yet to follow HarperCollins' lead. "Subscription models weren't really on anyone's radar 3 or 4 years ago," Bellis says. "And now, they are definitely things that everyone is thinking about."

A LOOK AHEAD

The large will become larger in 2015, as global competition drives more mergers and acquisitions in the publishing game. "Publishers are realizing that publishing physical books is, in a sense, only one aspect of their business," Bellis says. "As digital content becomes more the thing that publishers do, that also means a robust digital distribu­tion network and rights and licensing. That all requires, in many ways, just being bigger."

One author and book industry critic is hoping that a business makes it easier to find new authors-or any authors-in a virtual bookstore with unlimited titles. "I think discover­ability is the big nut that everyone needs to crack," says Dana Wein­berg, author, sociologist, and full professor at Queens College and the Graduate Center of the City Uni­versity of New York (CUNY). "I think it's just getting harder and harder for authors to be found."

Weinberg believes Apple could be that business, if it hasn't lost too much ground after the ebook price-fixing lawsuit. "If Apple can make a run for it, I think we'll see some really interesting changes in the mar­ket," she says, noting Apple's 2014 purchase of BookLamp, which makes it easier for readers to find books by looking at other book titles. With the technology from BookLamp, Apple "might be able to make really tailored recommendations; that would be a real advantage" over Amazon, ac­cording to Weinberg.

Self-publishing ebooks has be­come increasingly easier in the last few years, and Bellis thinks that trend will continue in 2015. Self-publishers are "becoming more accustomed to essentially becoming small biz own­ers and, in some cases, not so small biz owners," he says. Ac­cording to Bellis, a maturing market means that it's easier than ever to "professionally produce and market self-published ebooks."

Gazing a bit further into the fu­ture, Nash wonders if the future of digital publishing has to do with the "quantified self," wherein readers track what they've read and get re­warded for it. Nash singled out Degreed-a company that is "Jail­breaking the Degree"-which allows users to get credit for reading The New Yorker articles or listening to TED talks, for example, making life­long education a game. "I feel like the killer app around digital reading has something to do with allowing users to track their own reading as if it were a Fitbit," he says. "You could call it Litbit."

Bellis says there could be another Amazon versus Big 5 publisher dis­pute in 2015. Who knows whether Macmillan and the remaining Big 5 publishers will be able to adopt agen­cy pricing with Amazon. "Pen­guin Random House is the world's biggest trade publisher, and they're on deck," he says. "It will be interest­ing to see what they do. What's in­teresting about this industry is that you don't know what's going to happen next."