E-books: some household math

Six weeks after the Kindle came home, our book spending is down

Chez O’Leary, we track expenses way too closely, so I ask for some indulgence when I say that, from 2000 through the first quarter of 2009, we bought $8,503 worth of books across 280 different purchases.  That comes down to about 2.5 purchases a month, averaging $30.36 a purchase or $77.28 a month.

In the reported time frame, we have had children attending two different colleges, so I hasten to add that this does exclude textbooks.

In February, my wife ordered and started to use the Kindle 2.  Since buying the Kindle, we’ve increased the number of purchases (six in six weeks), about twice what we were doing before.  But spending is down, as we’re ordering just one book at a time, and the average purchase is $7.32.  Total spending is about half of what it was before.

There are caveats: one month, just getting started, doesn’t include holiday spending (all duly noted).

There is debate about whether e-books are good or bad for the book business; I’m of the mind that the genie cannot be put back in the bottle.  That said, a technology that cuts our book spending by 50% without cutting our reading sounds like a good thing in a household where every dollar gets tracked.  The question is, how do publishers make that work?

I’ll come back to this topic again as data rolls in.  I’m not sure if I’ll tell my wife, though.

Posted by Elizabeth Burton
Apr 06, 2009  at  04:14 PM

Mainstream publishers view ebooks as a way to supplement hardcover sales. In other words, they sell the ebooks to help recoup the production costs of the print version. I know this because several of them said so in various articles 5-6 years ago when they were just starting to think about doing ebooks.

Since one has to factor the cost of returns into that as well, it’s not hard to see why they want to charge the full cover price for an ebook, and deny that ebook production is any cheaper so charging a lower price isn’t economically feasible.

By that argument, though, shouldn’t they then also be charging full hardcover price for the mass-market paperback?

But I digress.

They can argue that point all they want, but for the last decade, while they were dithering around fussing about DRM and whatnot, a whole slew of indie ebook publishers have been selling full-length novels for under $10. Some for under $5. They still do. Their entire business, in some cases, is supported by ebook sales; and they’re doing quite well, thanks very much.

However, in the process, those people who read ebooks on a regular basis have come to the conclusion that there is no reason to pay an exorbitant price for same. This is particularly true of those who purchased the ill-fated Gemstar reader and paid those full cover prices, only to have their entire investment vanish into corporate hell.

By ignoring this fact, the mainstream publishers, in my opinion, CAN’T make ebooks work. Oh, there will always be those who will pay whatever is required to get their favorite author, but as more people discover there are some pretty good books available from Kindle and Fictionwise that cost a fraction of what the mainstream industry is demanding…

And most don’t have DRM, to boot. Just check out the multi-format offerings at Fictionwise, which offers both Kindle and Sony formats.

Ebooks need to be viewed as what they are, a distinct version of the book. That doesn’t mean, as the ISBN people would love, that each FORMAT should be considered distinct. However, looking at the ebook as an adjunct to the print version is short-sighted.

Posted by Brian O'Leary
Apr 06, 2009  at  04:22 PM

I agree, and completely. You’ve amplified and put in context what I did much less aptly in my initial post.

The calculations I gave reflect the “O’Leary-McCarthy household” view of less expensive e-books: we’ll buy more, and we’ll read more, but we’ll pay less.  That’s a good thing to us.  Publishers who feel we ought to act differently will probably go out of business.

Posted by Elizabeth Burton
Apr 06, 2009  at  04:31 PM

I fell into the indie ebook business back in ‘98, first as a writer and editor and then, in ‘03, as a publisher. You can imagine the irony I felt when Harlequin “invented” ebooks a few years ago, knowing there were romance publishers doing them as early as 1996, and successfully.

Granted, they’re to be commended for being ahead of their peers, and they do seem to get the price business. As did Amazon, which had people hanging out where ebook readers gathered for several years prior to launching Kindle.

Consumers shouldn’t have to foot the bill for bad acquisitions. If a hardcover or paperback can’t pay for itself, deal with it.

Posted by Brian O'Leary
Apr 06, 2009  at  04:39 PM

Given all that, it will not surprise you to hear that the bulk of early purchases are in the romance category.  E-book devices are great for the recreational read.  Or so I am told.

Posted by chai g
Apr 06, 2009  at  05:31 PM

Just look to the music industry for where the book publishing world is headed. Now that there is a viable e-reader, it will make e-books a legitimate option.

Say hello to book piracy, and Amazon.com becoming the e-literary version of iTunes.

Book stores are about to become as common as record stores.

Posted by Brian O'Leary
Apr 06, 2009  at  06:01 PM

I agree that retail outlets would be challenged by the rise of e-books, as the digital products are sold directly or through an online channel (Amazon).  I’m not sure I agree that the music industry is a valid model for how e-books will change publishing.

The purchase and consumption behavior for songs differs widely from that for books (while some folks do re-read favorite books, it is rare).  The share of people who read 20 or more books in a year (my back-of-the-envelope reading level to justify spending $359 on Kindle) is probably less than 10% of all book purchasers.

We’ve done some work on the impact of piracy and free content distribution on book sales - a presentation on it is available elsewhere on the site.  The early analysis indicates that it coincides with an increase in sales.

Posted by chai g
Apr 06, 2009  at  06:14 PM

The book industry is about a decade behind the music industry in terms of digital distribution. Just as Mp3’s were a non issue pre-ipod, the e-book won’t have much effect on the publishing industry until the e-book reader becomes ubiquitous.

Posted by Brian O'Leary
Apr 06, 2009  at  09:40 PM

I’m still not sure that digital formats will kill the book, but if you’re arguing that publishers need to prepare now for cross-platform and content reuse, I agree (see another post on this site on that topic: http://tinyurl.com/dn4eyz).

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