Three Implications for the Rise of E-Readers

For the first time ever, Amazon.com sold more electronic than printed books. In other news, Kindle e-readers are flying off the shelves and one article suggests Barnes and Noble’s saving grace will be their Nook reader.  What gives with this sudden transition to e-books and what are the implications of this e-reading trend?

An Economist article titled “Great Digital Expectations” highlights the rapid rise of e-books. And “rapid” is exactly the right word, as it was just in 2006 e-reader sales were a measly 100,000, whereas 25 million units are expected to be sold in 2011.

The Economist article mentions some startling ramifications of this trend towards electronic reading and publishing (paraphrased):

• E-Books have higher profit margins
• E-Romance novels are selling like hot-cakes
• Digital piracy is a threat
• Pricing is all over the map

As more people switch to e-readers, and the tablet craze really takes off, there are certainly some implications.

First, the Long Tail, will be much more of a selling force. In the past, publishers would rely on big box stores such as Borders or the like to prominently display their wares. In addition, publishers would expect discount stores and warehouse firms such as Costco, to move book volumes.  With digital publishing, it’s conceivable that more players will have a “fair shot” at publishing success as clustering algorithms on Amazon and BN.com suggest books based on our browsing history or past purchases.   For sure, blockbuster titles will continue to have a conspicuous display on Kindle and Nook homepage screens, but readers will discover more book options as expert recommendation engines suggest likely interests that can be purchased in seconds.

Second, pricing will take on added importance. Today, print publishers wrestle with initial price setting as they must deliver books to stores that will sell and also create profits. Pricing must be decided before printing, because each book has a printed list price on the back cover.

However with digital publishing, there is essentially no need to establish a “set in stone” price. In a virtual world, publishers (and online retailers) can experiment with pricing every day, perhaps setting different rates by country, discounting “on the fly” based on daily e-book sales, or offering deals to Amazon Kindle customers through their “Special Offers” Kindle. Amazon shoppers know it’s not uncommon to view a book, say “Harry Potter and the Deathly Hallows” one day at $21.24, and then come back to the site tomorrow and see it listed for $22.09.  Pricing experimentation will happen instantaneously based on near real time data analysis—without the need to change store signage and update retail POS systems.

Third, as e-readers take over the market, there is danger of increasing the digital knowledge divide between “haves” and “have not’s”. If a person requires a $100 e-reader to check out a digital library book, will this create a knowledge gap between socio-economic groups?

These are just three implications for rising e-reader ownership and there are certainly dozens more. Can you think of other implications for the rise of e-books?