Turning the Page: The Future of eBooks
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aggressively digitize and market their
electronic books, even if eBook revenue
does not cover costs in the short term.
These investments are necessary to
establish the market, and provide a
legitimate alternative to any pirated
materials that may be available on file-
sharing websites. Publishers should also
design a pricing strategy that attracts
customers without undermining the value
of content. A well-thought-out pricing
strategy may also help publishers and
content owners gain new customers –
those who would not have purchased
a traditional book but may be inclined
to buy an eBook that costs less, offers
additional features, and works on a digital
device they already own. The strategy
of offering eBooks at a price lower than
that of printed books is a step in the right
direction. As soon as a mass market has
been established, the investments will
demonstrate their worth because eBooks
also provide an attractive source of
revenue.
In the future,
publishers will need to
position themselves as content providers,
and not just the suppliers of physical books.
They will have to make content available
on multiple media, in multiple formats,
on multiple platforms. This content may
not be limited to the text of a book itself
– it may also include audio, video, and
games. This additional content may lead to
incremental revenue.
Market participants will have to rethink
their strategy and adapt to changes in the
value chain. Traditional bookstores face
the risk of exclusion from the expanding
market for digital content. More than
ever, the traditional bookstore will have
to emphasize its strengths in terms of
customer knowledge, customer retention,
and competence. And it will have to
distribute book content in all formats and
all channels.
US companies have been successful by
providing user-friendly reading devices
with instant and simple delivery of
content through mobile wireless or wi-fi
connections, built-in links to online
stores, and competitive prices. The
device manufacturers are now facing the
challenge of rolling out this development
worldwide. Manufacturers do not have
to vertically integrate the entire value
chain for this purpose. Cooperations with
publishers and online bookstores are a step
in the right direction.
Online bookstores appear to be best
situated for digital transformation, thanks
to their built-in customer bases and their
experience as Internet retailers. However,
European-based online bookstores may be
challenged by new players, who can offer
customers a wider range of products, or a
more engaging experience through reviews
and integration with social networks.
Amazon has already established itself as
an online retailer in Europe and has begun
selling the Kindle in several European
markets. Although Apple’s iBookstore
does not carry many non-English books,
retailers should not underestimate the
company as an online content seller,
evidenced by the growth of its iTunes
Store.
For every company involved in the
book industry, these developments are
challenging but exciting. For the first time,
consumers can purchase eReaders that
are relatively inexpensive and easy to use.
Customers in the United States already
enjoy eReaders with integrated Internet
access, which allows them to purchase
books directly on their devices or through
a website and begin reading them in
about a minute. Some of these devices are
available in Europe, and more are on the
horizon. The iPad and other tablets give
publishers and authors the ability to put
color pictures, videos, and music in their
books. While today’s eReaders are mostly
limited to black and white, future models
will introduce color and video capabilities
while maintaining the longer battery life,
thinner form factors, and lower prices that
separate dedicated reading devices from
the iPad and other tablets.
Publishers should view these technological
advancements as opportunities to move
established readers to eBooks, which can
improve operating margins and reduce
production costs while creating a new
market for customers who are not frequent
book buyers but might find eBooks with
multimedia content attractive. If the book
industry fails to establish the marketplace
now, companies may find themselves
playing catch-up later after losing sales and
customers to newcomers. What is more, by
waiting, established players may lose the
opportunity to establish pricing policies,
eBook format standards, and partnerships
that set consumer expectations and
define the marketplace. In addition, if
legitimate vendors fail to meet consumer
demands, either in terms of content
choices or reasonable prices, their potential
customers may turn to file-sharing websites
for pirated books – a situation similar to
the one that set back the music industry.
It is clear that many people are willing to
make the transition from printed books to
eBooks and eReaders. Recent examples
in the United States prove that consumers
will adopt eReaders, which ease the
process of buying and reading eBooks.
While the publishing industry, especially
in Europe, is at the beginning of its digital
transformation, the breakthrough is under
way.
