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Sunday EBook News: Dying eReader Companies

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.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

30 Comments

  1. Mike Cane
    Jun 27, 2010 @ 11:09:14

    Eh, I said there was a bubble. It’s now popping. It would have anyway, but the iPad is speeding that up.

    Borders proposed “Area E” will be their downfall. They’ll wind up owing money to publishers *and* device makers. They want to stock an inventory of *ten* readers? First, did they ever bother to read “The Paradox of Choice”? Second, didn’t their own accountants warn them of those carrying costs?

    And the Agency Model will kill book sales. Uniform pricing everywhere is not what Americans are used too — despite the lack of discounts on Apple products.

    Kobo has a shot of staying in because they’ve been more aggressive than Sony internationally and have basically sewn up New Zealand and Australia, from what I’ve been reading. If Kindle had started out with ePub, it would have been all over for everyone a long time ago.

  2. Jane
    Jun 27, 2010 @ 11:11:07

    @Mike Cane: I was thinking about the Kindle’s next move today. They can’t open up, can they? Wouldn’t it reduce their competitive advantage? Alternatively, I suppose they could use “epub” but wrap it with their own encryption scheme much like BN does.

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  4. Ridley
    Jun 27, 2010 @ 11:33:51

    Can we stop pretending iBooks matters yet?

    Blackberry’s OS and Android OS are both outselling iOS.

    Apple is not going to own ebooks like they did mp3s. They got in the game too late and are shunning Verizon’s huge user network for their phones. Verizon, rather than any particular tech advantage, is driving the meteoric rise of Android OS.

    Kindle is now synonymous with ereading, like Zamboni and ice resurfacers no one not steeped in the industry knows other brands. That’s a tough thing to crack, and a $500 gadget locked into the universally reviled AT&T network isn’t going to do it.

  5. Richard
    Jun 27, 2010 @ 11:44:58

    The 10 year prognosis is pretty optimistic. Think two years.

    Technology issues that are not “publisher” are moving so much faster. ePub is dead no matter how many meetings they have and how many upgrades because it is a vested interest standards group. Kindle has called it right here. The readers destroy the format so their 90s technology looks great alongside the ’10s technology. What an incredible situation.

    The winner is the one who gets to market, and as solid as ePub is, the implementations by Adobe and Apple are either technically bad or visually insulting and so retro they make ’90′s technology look cool. It can, and will be so much better. Very soon.

  6. Moriah Jovan
    Jun 27, 2010 @ 12:51:29

    As a now-full-time formatter, I don’t care what format wins. I do the most popular ones and when the fallout occurs, I can just stop doing the others. Yay.

  7. Brian
    Jun 27, 2010 @ 14:00:13

    IRex is getting help from the Dutch government so they might not be out of it yet. They of course had a different target market than other manufacturers and didn’t really try moving towards regular consumers until the 800 at which time they were probably already hurting.

    As for ‘declining sales’ I think some of those numbers have to do with Agency books not being available everywhere (Amazon etc.), heck some retailers still don’t have them from all five. Same with the iBooks 22%. Lots of sellers did 0% due to not having the books to sell so how helpful is that number really?

  8. Statch
    Jun 27, 2010 @ 14:39:22

    I just went in the opposite direction…from multipurpose device (iPod Touch) to dedicated ereader (Sony PRS-600). I still use the Touch but wanted to be able to read in direct sunlight. The iPad can’t do that, and it’s just too heavy for me to use regularly for reading.

    I think that if device prices keep coming down, there’s still a market for the dedicated device among people for whom ease of use is the key factor. My mother asked me the other day which ereader she should get. I won’t buy a Kindle for myself because I don’t want to be tethered to a store, and I’m comfortable handling different formats…but I would recommend it to her.

    Of course, in 10 years I’d expect that part of the market to be substantially smaller…

  9. Christine Carmichael
    Jun 27, 2010 @ 15:49:26

    In the UK, Tesco (a supermarket) Harlequin ebook sales rose 59% at Christmas due to people downloading ebook gift vouchers to their kindle and iphones. The age range was 19-35yrs and female. No sign, thus far, of numbers decreasing and many readers are downloading to their laptops and phones. The digital sales in this company are going through the roof worldwide.

    The best place to get the true numbers are from the market places that sell gift vouchers – you can see exactly where the money spent is going. Harlequin are also publishing their best selling author’s backlists.

    There is do doubt we are in the middle of a revolution. But I truly believe the reader will decide where we go and how much they are prepared to pay. It doesn’t take long for the word to go out to readers where the best deals are and what books are value for money. At the end of the day, the reading public will decide. The thing the publishing industry needs to tackle is the way the market changes instantly. Only a company who is nimble footed, customer focused, forward looking and aware will survive.

  10. Mike Cane
    Jun 27, 2010 @ 17:57:34

    Amazon apparently has ambitions to be Son of iPad and has been hiring engineers to that end. I supposed they figure they have a lock-in market of all those hardware buyers already, but that doesn’t explain why they left open the loopholes of an iPhone and iPad app. Seems like two different directions to go.

  11. j.n. duncan
    Jun 27, 2010 @ 18:07:27

    I’m by no means an expert with any of this, but it is certainly fun to speculate. I believe ereader prices will continue to come down. It’s when they reach the point of becoming a common, easy to purchase gift item that they’ll proliferate more. I’m guessing in the $79 range for a basic reader. They’ll come bundled with titles for Christmas or with kids books for children or romance books for the romance reader. When people who don’t read a lot are getting them for birthdays and xmas because it’s a “cool” gift idea, the market will expand. The winners will be the companies that hit this low end market first. It won’t be ten years either. I’m guessing within 3-5 years.

  12. MikiS
    Jun 27, 2010 @ 19:06:17

    I started out reading on my PDA. I really wanted to move to something equally multifunction (that also worked with the programs I already had), but the best options at the time were $1000 UMPCs that just cost too much for a glorified PDA.

    Today, I love the fact that even if I read on it a few hours a day, I still don’t have to charge my Reader more than every one or two weeks. I’m not sure I’d be happy with a Windows-based version of the iPad (I won’t buy Apple), given the serious decrease in battery life…although I would be tempted to have one maybe for “at home” use!

  13. eggs
    Jun 27, 2010 @ 21:23:12

    @Ridley, the iphone/ipad may be locked to one phone company in the USA, but in the ROW (rest of the world), it’s not. The kindle may continue to dominate the US market for ebooks for the reasons you describe, but ibooks will get the lion’s share of the ROW, a market that will be enormous once ibooks are available in all regions. Apple is advertising right now for people to manage these ibook markets. Once that happens, kindle will never catch up with them in ROW.

  14. Kaetrin
    Jun 28, 2010 @ 04:07:28

    Kobo readers have recently become available in Australia. I have a Sony PRS700 but I’d seriously consider the Kobo if something happened to my reader or I was in the market for a second device. They’re selling for $AUD199 and they read the same formats as the Sony so all of my current library could just be transferred/shared. I had to import my Sony (I got it on eBay) and I think I paid $AUD600 for it so $200 is much better. One of the things that made me a little nervous about buying my Sony was that there was no local support if I had a problem. The Kobo seems to have that covered.
    (@Jane) Although I saw in your article re the Nook vs. Kindle that you didn’t think the Kobo was all that, at least at this stage.

  15. Jane
    Jun 28, 2010 @ 04:56:13

    @Kaetrin: I’ve heard a lot of complaints about the Kobo from people I trust. It crashes. It’s slow. It’s software doesn’t work well (hard to delete a book for one).

  16. Kaetrin
    Jun 28, 2010 @ 05:11:31

    oh. Sad. Lucky I’m not currently in the market then! Maybe they’ll fix it one of these days?

  17. lynnd
    Jun 28, 2010 @ 07:31:30

    I have a KOBO reader and for the most part, I’m quite happy with it. There are some formatting issues with some of the books I purchased from other sources than the KOBO store; however, I understand that there is a firmware update coming this week to deal with that issue. I live in Canada and for the price I paid ($149.00 Cdn), I’m quite happy with it. Also, the books at the KOBO store are often cheaper than anywhere else (which is amazing since we always have to pay significantly more for print books than you in the U.S. do).

  18. Joy
    Jun 28, 2010 @ 08:22:31

    I would wager the crashing and other issues with the kobo reader are due to its being a brand new product. I had similar issues with the nook when it first came out but in a few months they had updated it to something very nice and stable.

  19. Kristine
    Jun 28, 2010 @ 08:37:53

    I am likely in the minority by saying that I hope the future of ereaders reserves a spot for people like me who just want a book reader. My worst nightmare is that the ereader will morph into a “be-all” device; Apple’s iPad is a good example of what I fear. I am of the Baby Boomer generation so maybe my age and my lifestyle are factors here. I don’t need all of the other things; I just want to read. Picture me looking and feeling like a dinosaur.

  20. Lynnd
    Jun 28, 2010 @ 09:53:34

    @Kristine: I agree with you. The fact that the Kobo Reader just permits me to read books is one of the reasons (along with price) that led me to buy the Kobo. Knocking on wood, I haven’t had any problems with it aside from some formatting issues with some books I purchased from third parties. If they get that fixed with the firmware update, I’ll be a happy camper.

    I might consider a tablet device at some point, but not primarily for the purposes of reading books – I find the eInk screen very easy on the eyes.

  21. CourtneyLee
    Jun 28, 2010 @ 09:59:01

    I still don’t get why the big publishers are so resistant to ebooks. Are they so attatched to their hardcover business model that they literally can’t envision anything else? Is it fear? In this day and age, resisting technological advancement is incredibly stupid. I just don’t get it.

    Also, I sincerely hope the dedicated reader doesn’t disappear. Like Kristine, sometimes I just want to read. It’s too easy to get distracted on my laptop, where I read my ebooks currently, and I really want a device I can use in sunlight. I don’t use personal technology much outside my home, but I would love to have an ereader that I can just stick in my purse and use at the beach, the park, and the car.

  22. S.L. Armstrong
    Jun 28, 2010 @ 10:10:30

    I like my Kindle. When the iPad came out, I worried I’d want one after purchasing my Kindle, but I don’t need what is, essentially, a mini-computer. I just want to read e-books, nothing more. I have a laptop and desktop if I want to use the internet or surf websites or watch movies (and, wow, I still have a television where I can watch television shows and movies!), so the iPad isn’t a draw for me.

    My Kindle is, IMO, sturdy, easy to handle, and perfect for what I want. I dislike the poor formatting and almost no meta data many e-publishers put out, but I can fix that myself before I load it on my Kindle. I’d just like to see costs for e-books to come down a little, as both my husband and I have sadly turned away from popular mass market titles because of the cost of the e-book.

  23. LVLM
    Jun 28, 2010 @ 10:35:04

    I’m with Kristine. I just want a freaking ereader that is about 6″ and has either built in backlight or LCD screen and can read many formats. I already have and iPod, phone and other stuff. Just want a reader.

    iPad is way too big and cluncky just for reading. iTouch, which I’m considering because it does have an LCD screen and I can download Kindle, B&N, and Stanza onto might be just a bit too small.

    I have an eBookwise and I love it. If eBookwise was capable of reading more formats, I’d buy another one in a heart beat. It’s got an ergonmic handle edge so I can hold it with one hand easily. And the back/forward buttons are large and easy to push and it has a back light, which I absolutely need due to reading in the dark a lot. And I love the touch aspect. I can highlight, bookmark and it has a file system to keep track. *sigh* So far, I haven’t found anything that suits me better.

    Also, I tried out many of the lnk eReaders like Sony and Astak, which can read almost all the formats, but I can’t see the screen that well and the load time is slow. Plus, you have to push like a 1000 buttons just to get to a book. I want a touch screen, is that too hard to ask for?

    Reading the Nook vs Kindle thread, I almost considered a Nook due to better options now that the price has gone down, but again, I want a back light. Not an extra light that I have to put on the thing.

    Until someone comes up with a reader that has the features I want, I guess I’m sticking to my eBookwise and the occasional use of a PDA for reading mobi books. Too bad

  24. Moriah Jovan
    Jun 28, 2010 @ 10:44:51

    @LVLM:

    I have an eBookwise and I love it. If eBookwise was capable of reading more formats, I'd buy another one in a heart beat.

    You ain’t whistlin’ Dixie. They’ve pretty much given up on it, but it’s damn near perfect. If they tweaked it to read EPUB… And at that price? Hoo boy.

    I got a CrackBerry so I could have the all-purpose device I wanted, but… I’m still using my eBookWise for at-home reading, not on-the-go reading.

  25. Kaetrin
    Jun 28, 2010 @ 16:22:00

    I’m with Kristine, Lynnd and LVLM et al. I just want an e reader – I’m not fussed about the multifunction device. I’m happy enough to be able to read books on it.

    @ Lynnd – I hear you about the high price of paperbacks – in Australia, the range is $17-22 for a MMP from a Borders, Dymocks or Angus & Robertson. Even with the agency pricing, if I factor in postage etc, it’s usually a lot cheaper for me to buy an ebook. Or, I go to the Book Depository and get it way cheaper than I could locally!

  26. XandraG
    Jun 29, 2010 @ 08:14:43

    The longer I’m in this game, the more I think the winning ereader/reading device will be the one that reads displays interfaces with PDFs (display and annotate in a form that doesn’t leave you cross-eyed).

    It’s not a game of multi-function anymore–kids like toys and like an ereader that can play games and music.

    Grown-ups (sorry to those on the younger side of things, but your liquid income flow has a limited shelf-life) need something that can serve as a multi-USE device. It’s not just for reading “The Lovely Bones” but also the TPS reports for the past 8 weeks which are still formatted for 8.5×11/A4 paper, and electronically saved as an afterthought. In PDF.

    Ditto for all those older books going to digital. It’s far, far easier for a backlist of legacy material that may only exist in scannable paper to get scanned and saved as PDF, then moved on to the next book, than it will be to have it scanned, saved, monkeyed with, and converted to Amazon/Apple-approved garbage.

    Digital reading’s becoming ubiquitous in the entertainment sector will render demand for digital reading in the business and academic sectors, and people will want to use their ereader they bought for Alice Sebold to also keep their academic journal papers, monthly memos, or tech manuals on.

    It’s the wave of the future, but driven by the past. People don’t need an ereader that can shop–they need one that can connect to their teacher’s website or company intranet and download their reports for annotation so they can get their *work* done first, and *then* they can go shop for novels.

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  30. Gary
    Oct 14, 2010 @ 17:14:20

    Sony is getting left in the dust regarding newspapers and magazines. I took them to task about this fact when I reviewed one of their mags-but you won’t see that review-they didn’t allow it.
    Seems Sony is a bit sensitive about their lack of variety. Too bad ’cause I love my Sony Pocket Reader also. Next time around t I won’t be buying one of their eReaders though.

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