The 2010s were supposed to bring the ebook revolution. It never quite came.

PG’s last post on December 24 was about the following Vox article that purported to talk about what a bust ebooks have turned out to be.

If you missed it in the holiday rush, there were some good comments and, yes, it is a Vox article, so you can assume the author was born yesterday.

From Vox:

At the beginning of the 2010s, the world seemed to be poised for an ebook revolution.

The Amazon Kindle, which was introduced in 2007, effectively mainstreamed ebooks. By 2010, it was clear that ebooks weren’t just a passing fad, but were here to stay. They appeared poised to disrupt the publishing industry on a fundamental level. Analysts confidently predicted that millennials would embrace ebooks with open arms and abandon print books, that ebook sales would keep rising to take up more and more market share, that the price of ebooks would continue to fall, and that publishing would be forever changed.

Instead, at the other end of the decade, ebook sales seem to have stabilized at around 20 percent of total book sales, with print sales making up the remaining 80 percent. “Five or 10 years ago,” says Andrew Albanese, a senior writer at trade magazine Publishers Weekly and the author of The Battle of $9.99, “you would have thought those numbers would have been reversed.”

And in part, Albanese tells Vox in a phone interview, that’s because the digital natives of Gen Z and the millennial generation have very little interest in buying ebooks. “They’re glued to their phones, they love social media, but when it comes to reading a book, they want John Green in print,” he says. The people who are actually buying ebooks? Mostly boomers. “Older readers are glued to their e-readers,” says Albanese. “They don’t have to go to the bookstore. They can make the font bigger. It’s convenient.”

Ebooks aren’t only selling less than everyone predicted they would at the beginning of the decade. They also cost more than everyone predicted they would — and consistently, they cost more than their print equivalents.

. . . .

When the Kindle entered the marketplace in 2007, Amazon had a simple sales pitch: Anyone with a Kindle could buy all the ebooks they wanted through the online marketplace, and many of those ebooks — in fact, all New York Times best-sellers — would cost no more than $9.99.

$9.99 is a steal for a new book. At the time, most hardcovers were averaging a list price of about $26, and many cost more. But for Amazon, this price point was an apparent no-brainer. The first generation Kindle was expensive, and value conscious customers needed some incentive to buy into it. Why would anyone spend $399 on an e-reader if they couldn’t expect to make up at least part of the cost in a discount on ebooks?

And while this point is often glossed over, Amazon was actually following a precedent set by publishers in its pricing model. In her opinion for US v. Apple, Judge Denise Cote noted that before 2009, most publishers discounted ebooks by 20 percent from the price of a hardcover, which often led to a suggested list price of around $9.99.

But by 2009, publishers had changed their minds. Now they considered the idea of $9.99 ebooks to be an existential threat. Printing and binding and shipping — the costs that ebooks eliminated — accounted for only two dollars of the cost of a hardcover, publishers argued. So the ebook for a $20 hardcover book should cost no less than $18. And according to publishers, by setting the price of an ebook at $9.99, Amazon was training readers to undervalue books.

. . . .

Before we delve further into the weeds here, a quick primer on how book prices are set. Print books are generally sold under a wholesale model, which works like this: First, the publisher will set a suggested list price for a book; say, $20. Then it will sell the book to resellers and distributors for a discount off that suggested list price. So if Simon & Schuster wants to sell a $20 book to Amazon, Amazon might negotiate a discount of 40 percent for itself and end up paying Simon & Schuster only $12 for that book.

But once Amazon owns the book, it has the right to set whatever price it would like for consumers. The $20 list price that Simon & Schuster set was just a suggestion. Under the wholesale model, Amazon is free to decide to sell the book to readers for as little as a single dollar if it chooses to.

Until 2010, ebooks were sold through the wholesale model too. So if Simon & Schuster was publishing a $20 hardcover, they could choose to set a suggested list price of $18 for the ebook — two dollars less than the hardcover — and then sell that ebook to Amazon at a 40 percent discount for $10.80. And Amazon could, in turn, feel free to sell that ebook for $9.99 and swallow a loss of 81 cents.

To be clear, the numbers we’re using here to get a handle on how pricing works are imaginary. (Amazon negotiates different discounts for itself at different times from different publishers, sometimes around 40 percent, but at other times higher and at other times lower.) But we do know that Amazon was making very, very little money off ebook sales in 2010, and was in fact probably losing money on most of them.

. . . .

“Amazon can still discount whatever they like on the print side,” explains Jane Friedman, a publishing consultant and the author of The Business of Being a Writer. On the ebook side, however, Amazon now lists publisher-mandated prices, often with the petulant italic addition “Price set by seller.” “So the market is very weird, and often the ebook costs more than the print,” Friedman says. “Sometimes it feels like Amazon is trying to make the publishers look ridiculous.”

And because ebooks are often more expensive than Amazon’s heavily discounted print books, traditional publishing’s ebook sales seem to have fallen off — and Amazon is more dominant than ever in the print book market. “It’s so much cheaper,” says Friedman.

In this new market, high ebook prices make it harder than ever for young authors in particular to survive. “The split has really hurt debut novelists,” says Friedman. “It’s hard to ask readers to take a chance on someone unproven at that high price point, and since the ebook market does lean towards fiction, it’s hurting the new people.”

Self-published authors, meanwhile, are flourishing. They’re allowed to set their own ebook prices just like publishers are — and consistently, they set their prices very, very low. “It’s a shadow market,” Friedman says. “Novelists with huge backlists go and put them out as ebooks independently. And if a reader has a choice between reading this great series at $2.99 a pop or a $12 novel, what are they going to pick?”

Antitrust law professor Christopher Sagers argues that the outcome of the DOJ’sebooks case shows that the real problem with the industry is not just that Amazon has a monopoly. The big trade publishers, he says, have a monopoly too.

“There used to be hundreds of publishing companies. They’re now mostly owned by five,” Sagers says. (After that Department of Justice lawsuit, Penguin merged with Random House, and the Big Six became the Big Five.) “Why are ebooks expensive? It’s not because Amazon is vicious. It’s because there’s no competition at the wholesale level.”

. . . .

The Big Five publishers “are huge, and they have been able to put in place practices that are kind of unfair and that authors have to put up with,” Friedman allows. “That said, they need that kind of size to be able to effectively deal with something like Amazon. If you look at an indie publisher, I wouldn’t want to be one of them.”

Link to the rest at Vox and thanks to DM for the tip.

PG notes that the OP devotes one paragraph to independent authors and that paragraph implies that indie authors are primarily publishing their revered backlist titles.

Unlike Big Publishing, nobody is really beating any publicity drums for indie authors.

One other point the OP doesn’t discuss is that Barnes & Noble is still cratering and, when it finally goes down the drain, retail bookselling via physical bookstores will take a huge hit and publishers who have failed to develop their chops selling ebooks and encouraging readers to buy them will regret that their profitability will take an enormous hit.

15 thoughts on “The 2010s were supposed to bring the ebook revolution. It never quite came.”

  1. Correlates price of book to consumer with quality of writing – but books are not widgets. Many backlist books are very dated – few stand the test of time.

    As for the ebook revolution, this post completely missed it. The writer probably still uses a buggy whip to make his car move faster.

    If I may update an old joke: a writer died and went to Heaven. One of the staff angels took him around to meet his new community. The angel put a finger to her lips and they tiptoed past one door which was closed, after which the writer asked why. The angel responded, “Oh, that’s the traditional publishers room. They think they’re the only ones here.”

  2. Since big publishing wants to protect their print books by making ebooks outrageously expensive, it might have some correlation to why ebooks are not as popular as they could be.
    From my own observations, I think they missed the point with the generation who are ‘digital natives’, from what I see, they read but prefer bite size snippets delivered via app or other source. They don’t seem (in general) to want to dive into doorstop books for casual reading, however unlike the author, I don’t claim to know for sure.

  3. “Why are ebooks expensive? It’s not because Amazon is vicious. It’s because there’s no competition at the wholesale level.”

    This -guy just told us about the low-priced independents. Consumers don’t make a distinction between independent books and those derived from a wholesaler.

  4. My thoughts on ebooks are complex. I’m a rural public library trustee and I view publishing from my own vantage point. In our library system, both paper and digital circulation are increasing. Digital more rapidly than paper, but paper has picked up speed. When I talk to young people, they don’t make as much of the distinction between digital and paper as older folks. The biggest fans of Kindle seem to be the older generation who like the lightness of a Kindle reader and the ease of going to large print on a Kindle device.

    I see that traditional publishers are confused about the role of libraries in reading culture. A few view libraries as threats, most are in favor of libraries. I observe that heavy library users are also heavy book buyers. Book buying and public library use are intertwined.

    Authors, publishers, and libraries would do well to be partners rather than opponents. Indie authors should try to work with libraries. I observe that acquisition librarians, the ones who choose which books to buy, are favorable to indies, but there is too much friction in the indie channel. Acquisition librarians want books that are cheap to put on the shelf and are likely to be highly circulated. Make that clear to them and you have a big boost to sales. It’s not easy, but it is a path to success.

    • I see that traditional publishers are confused about the role of libraries in reading culture.

      I’m confused, too. I’m especially confused by the role of taxpayers and city councils in reading culture. What is the role of libraries in reading culture, and who determines what that role is? Are there differing ideas about these roles? How have those roles changed over the past 150 years?

      • Free taxpayer supported public libraries began in the early nineteenth century in the U.S. Andrew Carnegie gave public libraries a boost when he offered to build a libraries in cities and towns that agreed to supply books, staff, and maintain the building. In my state (Washington) a law authorizing rural library junior property tax districts was passed around WWII. I believe similar laws was were passed in many states.

        Some libraries in our state are operated entirely by cities: they own the facilities, maintain the staff and collection, paid for by city taxes and are controlled by the city council. Other public libraries are operated by county or regional library systems which are supported by library taxing districts.

        Typically, the library system does not own the facilities. The buildings are constructed, owned, and maintained by either a municipality in incorporated areas, or, in unincorporated areas, a voluntary non-profit organization, usually called a “Friends of the Library” group. The tax-supported library system contracts with the municipalities or Friends to staff the libraries, stock the collection, and provide library services. I am a volunteer county library trustee appointed by our county council. The board of trustee’s job is to represent the taxpayers in library operation oversight.

        The taxes are not adequate to completely fund the libraries. The Friends groups regularly raise additional money which generally contributes to capital improvements such as new furniture. We also have a Foundation that also raises money.

        Currently, our board and staff feel system needs one new and another major replacement library. These needs were identified through demographic studies and requests from community groups, which have been actively fundraising for several years now. If these new facilities are built, they will be paid for through private contributions, state grants, and possibly an additional tax levy passed by the voters.

        Our county population has been growing, and library circulation has grown faster. Actual door counts have been steady or decreasing, although our meeting rooms all are in constant use and have long waiting lists. More often than I would like, every seat in our reading rooms is occupied. I like to write in the library and I notice a lot of high school and college students come to the library to study.

        Usage patterns are clearly changing. I think people stay longer for study or meetings at the library but come less often to browse. This, I believe represents the rise of digital circulation, on-line catalogs, and changing ways that people relate to their communities. I wish I understood all this better!

        • OK. Those are interesting activities. What role in the reading culture do they support? The role I and publishers are confused about.

          • A public library is a place where the community has chosen to provide reading materials to anyone: rich, poor, educated, self-educated, uneducated, literate, illiterate, employed, or unemployed can get free access to the reading culture, which, among other things, is the key to full participation in a democracy where power is ultimately controlled by an informed populace.

            Our library offers all kinds of fiction and non-fiction. We acquire books based on community demand. Our guiding principle is that if someone asks for a book, we will try to supply it. Our community is a rather diverse mixture of a university town, rural areas, and tribal reservations. We strive to satisfy all sides of the political, social, cultural, and religious spectrum.

            Our contribution is that we remove barriers, both economic and cultural. Folks see books on our shelves that represent view from all corners and strata of our county and they read them. From tractor repair manuals to quantum mechanics. From far-right to far-left, from Dawkins to Douthat, Buddhists, Lutherans, Reformed, and Baptists. From Christian fiction to NYT best-sellers and literary outliers. Picture books to YA to Greek and Latin classics. If we detect a need, we try to fill it.

            Our churn is continuous. We have no extra shelf space: for every physical book we purchase, one has to come off the shelf. Digital also churns because our budget is limited and digital licenses are more expensive than paper per user read. (We balance paper v digital based on reader demand.)

            We give kids a lot of attention. Our goal is to promote readers, not just the kids who do well in school and have a nurturing home life, but the ones who struggle to find their way in a literate world.

            For the community, it means that anyone in our county has the opportunity to be well-informed, not just of what is going on in their own cultural bubble, but over a wide spectrum of our culture. An informed community is one of the pillars of American democracy and culture.

            For authors, it means that their books will be available to a wide range of potential readers who may not be able or willing to spend money on their books, or who may never know that their books exist.

            The benefits to publishers are similar to the benefits to authors. Young and old are exposed to books and encouraged to become and continue to be readers.

            Non-readers do not buy books. Libraries build readers and library users buy lots of books.

            Also, remember, we do this because our community is wise enough to want us to. We are a state where our absolute tax dollars are limited to 1% increase per year, a much lower rate of increase than our population growth, increases in cost of living, and increases in property values. That means to maintain services we have to go to the community for dollars all the time, in the form of votes on levies, donations, and volunteer hours.

            • OK. That describes a role. For a public library it seems to boil down to, “Our guiding principle is that if someone asks for a book, we will try to supply it.” That then entails all kinds of activities to support the objective.

              Given the easy access to books in the market today, we might ask why local government sees its role as supplying whatever book people ask for.

              It’s also reasonable to note that the role described is not at all hard to understand once presented by an advocate. (And one can understand it without agreeing with it.) Publishers can easily understand it. It’s not hard.

              But it would be a mistake to think that publishers have an obligation to support that objective simply because some city council has adopted it. It would also be a mistake to think their lack of support indicates a lack of understanding of the advocate’s preferred role. No supplier has an obligation to support it. Not the guy who supplies Xerox paper, and not the publisher who supplies romances and thrillers.

              I’d suggest it might also be wise to consider that as market prices fall, numbers increase, and availability of books becomes wider, the comparative utility of a public library decreases. Amazon can do the same thing with a click and no taxpayer funds.

              Libraries are financed by the public, but are not a public good. (And levies are taxes.)

              To simplify things, we might just ask why we want taxpayers financing my reading of John Grisham’s latest.

              • We argue from different premises. In my community, and I think all communities in the United States, local government represents the voters. It is not some abstract entity with a will of its own. When the local government does something, it is because a majority of the voters want it done. In my own small town, almost every incumbent council member who was up for election this fall and the mayor were replaced. A new government was sworn in last week. That is what the voters wanted and they got it.

                Specifically, our library supplies the books people want because the voters and the community have repeatedly endorsed doing it. For myself, I donate time and business experience to the library system because I believe in what libraries do and I also believe most of the people in my community agree with my support.

                Publishers (and authors, for that matter) are not compelled by their community to support libraries, but the evidence indicates that they would do well to support libraries. (Most publishers charge libraries more for books than other consumers anyway.) Library users buy a lot of books because they are exposed to them in the library.

                The sale of publisher’s product, books, depends on a population that has one of the most difficult skills that humans ever acquire. It takes years of training and experience to learn to read at the level of most TPV participants. Reading is also a skill that our country depends on to maintain the level of participatory democracy and economic efficiency that we have attained. Public libraries keep those skills vital by helping people find and read the books they need and providing a supportive environment for reading.

                I agree that books are more easily acquired today than in the past, but that does not obviate the role of libraries. The ready availability of books has not decreased public desire for libraries. During my term as a library trustee, I’ve seen support increase for libraries, not decrease.

                Why? I’ll use myself as an example. I am fortunate that I have the skills and funds to acquire and read almost any book I care to. But I still need the public library. As home to a large university, our county has lots of bookstores, but none compare with the depth and breadth of the county collection. I’m on the computer network almost constantly but the library is a place where I go to sample, talk with other readers, get a sense of what others are reading thinking, if only because I notice the titles they have in their hands. I don’t get that anywhere else. My need has increased, not decreased with increased availability. This is even more important for people who are not as fortunate as I am to be immersed in groups like TPV.

                I’ll turn your final question around. Why do taxpayers choose to finance reading John Grisham’s latest? Because a majority of taxpayers believe their community is improved if everyone can freely read John Grisham and any other book they want. Improved enough that the majority vote to pay taxes for libraries and many people go farther and also donate their dollars and time to support libraries.

    • The biggest fans of Kindle seem to be the older generation who like the lightness of a Kindle reader and the ease of going to large print on a Kindle device.

      Weight is indeed important. If I put my mind to it, I know I can build the strength to haul around paper copies of the 286 books currently on my Kindle. I suppose I could lighten the load by carrying only the unread books.

  5. Just to add, as one of the “older generation” – there are other reasons for our preferences changing from ink to electrons.

    Not all of us need larger print, but most of us DO need larger storage spaces. We have accumulated rather large amounts of “stuff” over the years, and really don’t have the option any longer of simply buying a bigger house. (We can gain space temporarily by the children moving out – but it is amazing how fast a “new room” disappears!) More bookshelves simply will not fit, especially if you have a library like mine where many books are relegated to the “dark shelves” – where I actually have to grab a flashlight to search for a rarely read tome. Not an issue with the Kindle (although I do have to swap books back and forth between it and the desktop every so often).

    Those of us with a spouse also appreciate that we can read in bed with “blue shade” on and brightness turned down, which tends to make said spouse less cranky. There is also the fact that when we fall asleep and drop our book onto our chests, our place is not lost (inevitable with a paperback).

    Lightness – well, compared to a hardcover, naturally. However, comparing my Fire 7 (which is a rather small form factor these days) to an ~600 page paperback I happened to have handy, the Kindle feels somewhat heavier.

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