Sunday EBook News: Dying eReader Companies
May 19th, 2011 | 
Author: A few weeks ago, IRex announced bankruptcy. Following was the announcement that NewsCorp had purchased the Skiff reading platform but not the hardware platform. The Skiff digital reader appears to be vaporware. Another highly publicized reading device that appears to NOT be coming to market is the Plastic Logic Que. Plastic Logic has canceled all pre-orders.
What does this mean for the eReader market? My guess is that with the introduction of the iPad, investing in a dedicated ereading device is a poor choice and thus it is not likely we will see many new (if any) dedicated devices in the future. Innovation for these devices will largely have to come from Barnes and Noble, nook, and maybe Kobo. Copia, a new company that has yet to launch its reading platform or its devices, is advertising 5 different types of eReaders. Sony still has its line up of three devices (and I do love the Sony Pocket Reader) but with the price slashing by BN and Amazon, it will be interesting to see how long Sony stays in the eReading business. In a recent article, Sony reported it sold 10 million books between the day of its launch in September 2006 and May of this year. Sony expects to do twice that number in 2011. This article also says that Sony has about 40% of the e book market share. WAT?
The numbers surrounding the ebook market are insane. At the June WWDC, Steve Jobs showed a slide that said iBooks had 22% of the ebook share. In dialogue, Jobs accurately limited the iBooks ebook share by stating:
The other interesting thing is the five of the six biggest publishers in the US who have their books on the iBookstore tell us that the share of ebooks now that are going through the iBookstore now is about 22 percent. So iBooks market share now of ebooks from five of these six major publishers is up to 22 percent in just about 8 weeks.
In an article in Crains, Barnes and Noble was reported as having increased its digital market share to about 20% (“helping BN.com grow its e-book market share to around 20%“). Amazon is supposed to have 80-90% of the digital book market (per a report from the Wall Street Journal earlier this year).
So, let’s see, the ebook market share is about 200% according to these financial analysts. Insane, right?
The fact is you can’t trust any of these so called facts by these financial analysts. Probably the only ones who know what kind of market share these companies have are publishers and the retailers but none of these parties find it very useful to share this information with us. I have to laugh because I see a lot of blog posts condemning Amazon for not sharing its sales information but why don’t these big publishers tell us what the breakdown is between the different formats if that information is vital?
As Guy LeCharles Gonzalez noted, transparency should come to the digital book market for the benefit of everyone. For publishers, how can their Agency pricing scheme be useful if they don’t know how much of the decline in ebooks share is related to price as opposed to a flattening of the market? For Amazon, perhaps better information would lead to better pricing of its devices or books so it wouldn’t engage in epic battles that leave readers out in the cold.
What we know so far is that with Agency pricing, publishers had to see a growth of 20-30% in order to make up the monetary loss Agency pricing would bring. With ebook growth declining in the last few months, publishers aren’t likely to see the necessary increase before Apple changes its pricing terms next year (publishers have only a one year agreement with Apple). The publishers attempts to put a brake on the ebook market growth is in direct conflict with the movement of retailers–Borders, Barnes and Noble, and Amazon– toward digital sales. Borders is putting up e zones within the stores to show off a panoply of ebook reading devices and Barnes and Noble have its own stations for the nook. This is real estate that, in the past, would have been given over to promoting paper books. On the best parts of their websites (above the scroll, right in the center), Borders, BN, and Amazon are hawking their digital devices instead of the most recent releases. While ebook growth is slowing down, I don’t think publishers win this battle in the end but I honestly don’t know the future of dedicated devices.
All three retailers: BN, Borders, and Amazon, appear committed to creating apps for every platform which means that it isn’t banking on the viability of dedicated devices either. Perhaps dedicated devices will be phased out for multifunctions in the next ten years.
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