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The Kindle Revolution May Take a Later Train

The Kindle and its kin, like the newly announced Sony e-readers, will undoubtedly change the face of publishing in time, but the Delphic pronouncements of its partisans may be a tad overblown.
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In late February, Sandy Cox, a 62-year-old educator in Southern California, bought a Kindle 2, the updated version of Amazon's sleek electronic reading device. Cox was not immediately enamored. Reading on the Kindle wasn't unpleasant, she found — its screen is designed to minimize eyestrain — but neither was it markedly superior to paper books, to which she soon found herself drifting back.

In late April, Cox went to Manhattan on a short vacation. On the plane, she read a Lee Child thriller, The Persuader, on her Kindle. "All of a sudden I got it," she recalls. "Here's this thin little thing I could have a couple hundred books on, as well as newspapers and magazines. When I finished my book in New York, I just ordered a new one. No trees were cut down to get it to me. And the Kindle fit right into my purse."

Now, Cox happily evangelizes Amazon's electronic reader to her friends. She says she's not normally given to waxing rhapsodic about consumer products, but she doesn't hesitate to call the Kindle 2 "fabulous."

The outlines of Cox's story are familiar. Since the launch of the Kindle 2, digital book reading has garnered the kind of keyed-up press coverage that occasionally attends the appearance of new consumer products thought to have paradigm-shifting capabilities.

Much of the reporting flirts with the oracular. A Newsweek cover story in 2007 announced that the Kindle signifies nothing less than a "revolution that will change the way readers read, writers write and publishers publish." Another Newsweek mash note in March declared the Kindle "represents a milestone in a time of transition. Printed books ... are going to join newspapers and magazines on the road to obsolescence."

Are printed books on the road to obsolescence? If so, what might it mean for the vast industry dedicated to their production and sale? Digital books are value neutral — they're nothing more than a different distribution platform for the same product, the written word - but, if the rhetoric is accurate, they may be about to cause a "massive amount of pain and suffering in the book industry" as one analyst recently put it to me.

On the face of it, it's difficult to understand why the book industry has been "hijacked" by an "increasingly frenzied conversation" about e-books, as the New York Times recently reported from the New York book expo. For while Sandy Cox may be typical of the media coverage of e-reading, she's not yet close to being a typical book buyer. Last year $113 million worth of e-books were sold - a substantial figure that's less impressive in light of the more than $24 billion in U.S. book sales last year.

Amazon, meanwhile, zealously guards Kindle sales figures, but speculation among various technology Web sites seems to have settled into a general consensus that the Kindle has hit or exceeded most or all of the sales goals Amazon has set for it. The introduction of two competing e-readers by Sony generated headlines that suggested an all-out war was brewing in the space.

"It's crazy," says Jim Milliot, the business and news director of Publisher's Weekly. Pointing out that they constitute only about 2 percent of the market, he says that impact of e-books is being exaggerated.

"E-books will take their place as a format. More of them will be sold in the future, but there's no reason for e-books to replace paper books. There are always going to be a large number of people who don't want to read a screen, no matter how good it is."

Milliot subscribes to the argument that paper books possess irreplaceable virtues. They're pleasant to page through. They smell good. The margins can be marked up. They can be loaned. They attain a certain beauty when lined up, one aside another, on a shelf. A paper book is a simple, elegant and timeless piece of technology.

But this view is being progressively marginalized. Many in the book industry believe that paper books are destined to go the way of compact disks, made obsolete by a new, much cheaper digital platform. Some major textbook publishers are making their always-pricey wares available, and USA Today is rolling Kindle book sales into its bestseller list.

And of course, a decade ago digital downloads were just a nuisance in the music industry — until one day they were the music industry.

"Printing on paper is something we did because we didn't have another way to do it," says Mike Shatzkin, founder and chief executive of the Idea Logical Company, a consultant to publishers on digital issues. "The delivery of information on paper is an anachronism, and in 10, 15 years from now books [of text] are going to be 100 percent digital."

Shatzkin, who writes an influential blog about books, doesn't see why, on the merits, a person would prefer a paper book over its digital counterpart. Either way, he says, the eventual ascension of e-books is inevitable for a more prosaic reason: price. E-books are cheap, and most analysts, Shatzkin included, expect them to remain that way.

This is a big problem — an "extremely disruptive fact for the book industry," as Shatzkin put it.

In recent years bookstores and publishers have been blindsided by the advent of digital commerce. Amazon and eBay in particular have profoundly destabilized publishers by hugely expanding the market for used books and cut deeply into the profit margins of independent and chain bookstores alike. On top of that, the current recession has dealt both industries severe blows: news comes every day of a new round of cutbacks at a major publishing house, or the closing of another iconic bookstore.

So what will the e-book mean for the diverse galaxy of interests that comprises the book business?

For authors the answer is unclear, except that self-publishing will probably become easier and more common. But will e-books increase royalties? Sales? Exposure? Or the reverse? Many authors seem to be agnostic on the subject.

Asked what future they had, Roy Blount Jr., the humorist and writer who heads The Authors Guild, responded gnomically: "I read in the newspaper this morning that there's no such a thing as an electric cigarette. E-books surely have a bigger future than that." Beyond that, he didn't speculate.

For publishers, the risks and opportunities e-books represent are fairly straightforward. Between 30 and 40 percent of all published books go un-purchased, and must be remaindered or pulped. E-books would eliminate the costs associated with overruns, as well as with the printing and delivery of books. That's the opportunity. The risk is that e-books will substantially and irrevocably reduce the amount of money consumers are willing to pay to buy new books.

In the fall of 2007, when Amazon launched the first Kindle, it decided to entice buyers by setting the price of most e-books at $9.99 or less. That price, with some upward variation, has since become the de facto norm for e-books across the industry, reminiscent of Apple's clout in pricing iTunes except that there, the device is the loss leader, not the content.

This might be more palatable to publishers if the Kindle and other e-readers were leading people to buy more books. But so far, that hasn't been the case. According to a May survey conducted by the Codex Group, a book market research company, when people buy Kindles the number of books they purchase increases by only a minor amount — about 7 percent. The average price of those books, in the meantime, decreases by 10 percent.

It's widely speculated that e-books are losing Amazon money by cannibalizing sales of its print inventory, a belief that a spokesman for the company didn't deny in a recent interview with Publisher's Weekly. As more e-readers hit the market — the Apple Tablet is rumored be coming in the fall, and a handful of others are expected before 2011 — and the price of the Kindle is correspondingly reduced (as most analysts expect it to be), e-book prices may inch upwards. But there's virtually universal agreement that digital books have a much lower price threshold than paper books.

This has put publishers in the knotty position of having to decide whether to release new titles in digital format. Peter Hildick-Smith, president of the Codex Group, believes emphatically that they should not. The only way publishers can protect their margins, he says, is to "stand firm and say, ‘When we do hardcover, we're not going digital.'"

Recently Dominique Raccah, the head of Sourcebooks, an independent publisher based in Illinois, decided to delay by six months the e-book publication of Bran Hambric: The Farfield Curse, a hotly anticipated children's book by Kaleb Nation. Her decision has been the talk of the book industry. In an interview, Raccah said that as long as e-books are priced like paperbacks, she sees no reason to release new titles in digital format. "If the e-book format is akin to a cheap trade paperback, or an expensive mass-market paperback, then we'll delay [a title's] digital release until we're ready to publish it in paperback form."

Any day, the Knopf Doubleday Publishing Group is expected to announce whether it will release The Lost Symbol, the new Dan Brown novel that's being published in hardcover on Sept. 15, in e-book format — a decision that could end up representing a watershed moment in the evolution of e-books.

If publishers can find a way to coexist in a mutually beneficial relationship with Amazon, e-books could be a boon. Bookstores, already on a losing streak, stand only to lose from the digitalization of books. Bookstores have been hemorrhaging for years, due partly to a general turndown in storefront retail commerce around the country, and partly because of the huge growth of online booksellers.

For months, iconic bookstores across the country have been shutting down — Dalton's in Los Angeles, Robin's in Philadelphia, Olsson's in Washington, D.C. Even the mighty Powell's, of Portland, Ore., is in financial trouble. And the chains are faltering as well. Borders may be near bankruptcy, and Barnes & Noble's shares have been plummeting, even as it has laid off hundreds of corporate employees. Among publishing houses, the crisis is even more pronounced. And although some of the bloodletting is ascribable to the recession, the problems in the book business long predate it.

But while this may seem to be a perhaps tragic but mostly local concern, it actually has implications for the entire industry. Surveys consistently show that the most important source of publicity for books intended for a general audience is through merchandizing, by a wide margin.

"The No. 1 way people learn about new books is looking at books in their local bookstore," says Hildick-Smith. "Music has concerts and the radio. Movies have theatrical releases. The bookstore is the theatrical release, the radio and the concert of the books industry. If you take it away, there's not much left. Ultimately if the big retailers go away, the industry implodes."

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