Nate Hendley

Seeing Through the e-Book Threat

(originally published December 2003 in Canadian Printer)

This September, the New York City-based Open eBook Forum (OeBF) released the first-ever comprehensive sales assessment of the global electronic publishing industry. An international, nonprofit association, the OeBF represents companies that deal in electronic books – that is, digitized tomes read on a desktop, laptop or a handheld device.

The OeBF study confirmed what many in the printing industry already suspect: while the ebook market is rapidly expanding, there’s little chance such works will replace their paper-based counterparts any time soon.

According to the OeBF, retailers and publishers sold less than $10 million of ebooks during the first half of 2003. By way of comparison, traditional Canadian book publishers generated revenues of over $2 billion in 2000/2001.

The OeBF study was compiled from data submitted by 34 ebook publishers and retailers, most of them based in the United States. The report refutes any notions about the imminent death of paper-based books. Such predictions were common during the dot com era of the late 1990s, even in mainstream printing circles.

“Three or four years ago, we thought our business was going to the dumpster,” admits Jacques Gregoire, senior vice-president of the book group at Transcontinental Printing Inc. in Montreal, Quebec. “We’re still concerned, but now we’re looking at [online publishing] with different eyes.”

ebooks currently pose “very little” threat to traditional publishing, says Lisa Charters, vice-president, director online sales and marketing for Random House of Canada. “I think that the ebook is giving an alternative, but not necessarily supplanting [traditional] print in the short term.”

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According to the Open eBook Forum, publishers sold 620,277 ebooks in the first half of 2003, a 60 percent jump from the same period in 2002. The number of ebook titles published in the first half of 2003 increased to 3,614 from 2,485 during the same period in 2002. Publishers generated $3.6 million in ebook sales during the first six months of 2003, versus $2.8 million in the first half of 2002.

Retail data – some of which overlaps with figures from publishers – was also included in the study.

During the first half of 2003, retailers sold 660,991 ebooks, a 40 percent jump from the same period in 2002. The number of ebook titles available through retailers increased to 280,590 in the first half of 2003, from 114,736 in the first half of 2002. Retail ebook sales hit $4.9 million in the first half of 2003, a 30 percent increase from the first half of 2002.

These figures represent global sales. Canadian-specific statistics are not available. Most ebook publishers are American and typically don’t track separate Canadian sales, explains Charters.

While on the rise, electronic book sales remain miniscule compared with paper-based books.

The latest Survey of Book Publishers and Exclusive Agents - a biennial census by StatisticsCanada - pegged Canadian publishing revenues at $2.4 billion for the 2000/2001 fiscal year. This is a 9.4 percent increase from the 1998/1999 fiscal year and a 20 percent increase from 1996/1997.

The same survey noted there were 672 active book publishing firms in Canada in 2000/2001. These publishers released 15,744 new titles and reprinted 12,053 old titles in 2000/2001 – an increase of over 13 percent from 1998/1999 and nearly 50 percent from 1996/1997.

The lack of a standard reading platform is one of the main factors hindering the ebook trade.

“There are three or four different platforms for ebook delivery,” states John Pelletier, executive director of the Association of Canadian Publishers, a national trade association for book publishers. “Each one has a different reader.”

The most popular ebook formats are Adobe Acrobat (which reads PDF files), Microsoft Reader and Palm Reader, says Pelletier.

Traditional print books have a low-tech appeal that ebooks can’t match.

“The big advantage of print is user friendliness,” says Prof. Manfred Breede, of the school of graphic communications management, Ryerson University. “There is nothing more user friendly than a book. It requires no technology to read it, and is portable.”

While a print book can be shared, the content of most ebooks can’t be copied. In order to share an ebook, you have to lend out your laptop or Palm Pilot.

These factors have contributed to low sales. Low sales have led some book companies to drop their ebook offerings. The Barnes and Noble bookstore chain, for example, recently shut down their ebook operations.

For all their flaws, large book publishers such as Random House and HarperCollins continue to sell electronic books.

HarperCollins launched an ebook publishing wing called PerfectBound in February, 2001. As far as he knows, PerfectBound remains the only global ebook publisher in the world, says Ardy Khazaei, senior vice-president of electronic media at PerfectBound.

PerfectBound currently offers about “500 – 600” ebook titles, says Khazaei.

Random House, meanwhile, offers “over 1,000 ebook titles,” says Charters.

Both companies sell popular fiction and non-fiction ebooks in a variety of formats.

Despite their foyers into the online market, neither HarperCollins nor Random House plan on cutting back on the number of paper books they publish. HarperCollins’ electronic division is meant to complement, not compete with, the company’s core book business, says Khazaei.

British-based publisher, John Wiley and Sons, take a slightly different approach to electronic books than HarperCollins or Random House. The company sells technical, scientific and medical ebooks through a website, which universities and corporations pay to access.

Kimberley Allan, marketing and communication manager for Wiley and Sons, says electronic publishing offers several advantages.

“There’s always a copy available with online books,” says Allan. “If multiple people in an institution want to access the same material at the same time, they can. You don’t have to leave your working environment to access the content and you can conduct a search … to provide tailored content.”

There’s a general consensus that scientific, reference and educational tomes work well as ebooks, while trade books (i.e. popular fiction and non-fiction don’t).

“Electronic [books] are good for content that changes quickly is information based,” says Curwin Friesen, president and Chief Operating Officer of Friesens Corporation, a book printer in Altona, Manitoba.

As examples, he cites encyclopedias, school textbooks, and medical and scientific works. Ebooks that cover these categories take up considerably less shelf space and are far easier to navigate than traditional, paper-based books. This is one reason why Nick Bogaty, executive director of the Open eBook Forum, believes ebook sales to libraries will jump dramatically over the next few years.

For all their suitability in the educational field, few people think electronic books will make much of a dent in the trade book sector. Consumers seem unwilling to substitute paperbacks for Palm Pilots when reading trade books in the “bathroom, bedroom or beach,” says Steve Fyfe, sales manager of the Newmarket, ON branch of Timsons Inc., a British book press manufacturer.

While Random House and HarperCollins sell trade sector ebooks, both companies offer print-based versions of the same works.

The narrow appeal of ebooks has some electronic publishers looking at other options, particularly, Print on Demand (POD).

Shannon Mobley, an executive with Victoria, BC based Electric eBook Publishing, says her firm just recently expanded into the POD domain. Launched in July, 2000, Electric eBook Publishing was one of the first Canadian businesses solely dedicated to ebooks.

“We found that the electronic books were not selling all that well,” says Mobley.

To remedy this situation, Electric eBook linked up with a South Carolina company called BookSearch that specializes in tracking down rare or out-of-print books. Out of this union, a new company has emerged called BookSearch Canada. Clients of BookSearch Canada will be able to purchase extremely limited, local runs of various books.

The system works like this: publishers upload PDF files of their books into a centralized server. When an order comes in, BookSearch Canada sends an electronic file to a printing facility in the country where the order emanated. Said facility prints the book then ships it locally to the person who placed the order.

Mobley says BookSearch Canada has struck deals with printers in Canada, the United States, the United Kingdom, Spain, the Netherlands and Australia. The company doesn’t have to stock books in a warehouse and hopes to save a bundle on shipping costs.

BookSearch Canada just launched in November, so it’s too early to tell if their business model will fly.

For their part, traditional printers and publishers view POD in much the same light as ebooks. That is to say, they see POD as an intriguing, but ultimately limited, technology.

“Print on demand is taking off, but for very specific applications, like newsletters or university presses,” says Gregoire.

Friesen predicts that major bookstores might eventually install their own printers, to crank out books on the spot.

Such an instore POD system could only print a tiny number of books per day, however, which would limit it’s appeal.

As Friesen notes, “You wouldn’t want to have a [printer] doing one book every 10 minutes and try to get a Harry Potter book out.”

For all the drawbacks inherent in electronic publishing, industry insiders say publishers and printers would be foolish to ignore the medium. Charters points to the record industry, which was blindsided by the advent of Napster, a technology that allowed people to download music for free from the Internet.

For the moment, however, readers seem to prefer paper books purchased in stores to digital files coming from cyberspace.

“The book has stood the test of time,” notes Fyfe. “It’s difficult to replace something that has the portability [of books]. When you’ve got the perfect medium, it’s hard to replace.”

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