Five Units a Month?!

This BusinessWeek article about Sony's ebook reader and the market in general pretty much sums up what everyone has assumed up to now: Sony's device isn't exactly flying off the shelves.  What really got my attention though is the tidbit about a Borders store in midtown Manhattan only selling about five units a month.  In midtown Manhattan?!  I'm guessing that means all the stores in the entire state of Indiana are probably selling anywhere from zero to two units in a good month.

I'm still not sure what I found more troubling: (a) the fact that such a popular store would have such a low sales rate or (b) that the store manager was "very happy" with those results.

It's hard to say what's more to blame for the dismal performance of this device.  You could start with the ridiculously high price.  I tend to believe Sony managed to price themselves out of the early adopter market.  It's one thing to charge an arm and a leg for an iPhone, especially with Apple's insanely loyal fan base, but Sony is no Apple.  Not by a long shot.  And let's face it.  An ebook reader isn't anywhere near as sexy as an MP3 player, regardless of who produces it.  Even if they would have launched with a lower price, the closed system, something Sony is so famous for, has also undoubtedly hurt sales.

Maybe Amazon will get the formula right and prove to the world that ebooks can be a high-volume market.  Longer term, regardless of device price point, closed/open model or overall form factor, there's one critical element that will make or break this segment: the price of the ebook itself.

Generally speaking, there are two schools of thought on this subject.  You either feel the ebook must be priced at a similar level as the print book or that it needs to be significantly less than the print book.  The first group talks about "the value of the intellectual property" and how the latter group is too enamored with fire-sale pricing.

The BusinessWeek article gets it right by suggesting that some significant percentage of book lovers "are just not ready to curl up with a hard plastic screen."  Nobody brings visitors into a special room to show off their CD collection but just about every serious book fan proudly showcases their library.  The pass-along factor is huge as well; I've handed off at least 3 or 4 books I recently read to friends and family who I thought would enjoy reading them as well.  Good luck doing that in the DRM world of ebooks!

Even if a killer device existed today there are far too many cons working against the ebook platform for it to succeed at print book pricing levels.  In fact, if something doesn't change soon, the entire concept of a meaningful ebook sector (as opposed to the rounding error it is in the publishing world today) will be laughed at the same way we all chuckle when we think about the "paperless office."

Does that mean that publishers and authors will have to accept life with significantly lower income levels?  Not necessarily.  The initial transaction price might just be one component.  Advertising, subscriptions and any other reasonable model will have to be considered.  Yes, I know most (all?) of these suggestions run counter to the traditional model of book publishing but the future does indeed belong to those who aren't afraid to tinker with the playing field.  If that sounds like the essence of The Innovator's Dilemma it's only because that book is so appropriate for this topic.

Comments

[Michael A. Banks]

You are absolutely right about the price and closed system, Joe. And those only compound the ... what can we call it? ... the concept barrier--the idea of people not wanting to curl up with a plastic screen.

E-books may not catch on until the readers are really cheap. Maybe a modern King C. Gillette will emerge and all but give away the readers, with the intent of making it up on the content. Then again, that may be impossible to do.
--Mike
http://mikebanks.blogspot.com

[Nathan]

Something you should know about that BusinessWeek article is that it is an interesting example of how not to do any research for an article. The writer contacted several people at MobileRead.com (an extremely active and knowledgeable community of e-reading device users), to get their impressions of the Reader, and then told those same folks less than 24 hours later that she was done writing the article. Speaking as someone who was once a journalism major, I think that makes it pretty clear as to how interested she was in getting new information.

Sadly, the tidbit you reference about the five Readers a month sold at the Manhattan Borders store is about the *only* fresh information she included in her article. The remainder is largely a rehash of the early reviews from last October.

Had she actually talked to folks who knew something about the actual devices, or just browsed the forums at MobileRead.com for a few minutes, she might have had some fresh information to add to the subject. For instance, she might have mentioned how TigerDirect sold out of 1000 Readers in a few hours. She might have noticed the burgeoning efforts there towards both creating our own tools to make our own content, as well as hacking the Reader's supposedly "closed" operating system to do all sorts of things that Sony likely never expected. She could have even conceivably noted that the *cost* of the display display on the Reader apparently goes for somewhere better than half of the *price* of the finished unit. She might have picked up on the fact that FictionWise.com (which is in no way affiliated with Sony, nor the Connect Bookstore) has started offering a good chunk of its titles in Sony Reader format -- would they do *that* for so little demand as she managed to find?

She might also have taken the time to wonder if five Readers a month was typical of the outlets that sell Readers. If it was even typical of other *Borders* stores that sell Readers. She might even have done a little checking to see if that were so, and if she had, we might have some information that actually means something more than just more evidence of how lackluster a job some reporters believe their readers will accept and congratulate them for.

You mention that her article "sums up what everyone has assumed" about Reader sales. It does more and less than that. It actually just rehashes the whole gamut of what has been *assumed* about the Reader in general, with not much lip service payed to finding out if any of those assumptions have any grounding in fact.

Thank you for the opportunity to comment, I hope my words are helpful, and I hope they haven't come across as hostile, that's not my intent at all. I'm just still a bit annoyed at the way that BusinessWeek article failed to do anything new at all.

Please feel invited to visit MobileRead.com if you wish to find out what the folks who are actually using these devices are doing with them, and what they think of them.

[Stephen Tiano]

There is nothing like cracking open a real book I've been looking forward to reading. And I'm a bit of a technology junkie. I get the beauty of books on tape (or CD). But the allure of reading off a hand-held screen? I don't see it. Reading off a beautiful 23" Apple Display can get tiring on one's eyes. I don't want to imagine what page after page on one of these Readers would feel like to my eyes.

[Nathan]

Having, literally (you should pardon the pun), read tens of thousands of pages from one of these Readers, I can help you with that: Imagine a piece of light gray paper with words printed on it, inside one of those sheet-protectors for putting inside 3-ring binders, and you'll have a reasonably good idea.

The e-ink displays on these devices, unlike an LCD screen on a computer, do *not* have a back-light (the e-ink is opaque, so it can't be back-lit anyway). The back-light is what causes most of the strain from reading of an LCD screen, e-ink is rather like reading from paper, except that the print on *this* paper can be changed. That allows you to carry a minimum of 64MB worth of books on a 9 oz. device. Especially handy for traveling -- if you're close to the end of one book and want to start another you don't have to carry the dead-weight of the book you're not currently reading.

I can't recommend enough that folks see one of these displays for themselves (find a store that has one, and play with it a bit), you really *can't* appreciate just how great these displays are without seeing one with the old mark 1 eyeball. One common reaction to seeing one for the first time is to think the text is one of those stickers like they put on display electronics in stores (except that it looks even better than those do). That reaction is usually followed with amazement when the 'sticker' changes.

You're right, it's not like cracking open a paper book, but reading from it is just as immersive after you get past the "wow, shiney" stage ... to me, that makes the books I read on it just as "real" as the paper variety. True, it's different, but it has advantages that the paper books don't have.

Oh, and before someone points it out, I don't find charging the battery every 3~4 weeks particularly burdensome. (shrug)

[Abraham Greenhouse]

The idea that there is a single "killer device" waiting to be invented that will eventually take the whole of the potential eBook market into the promised land is one of the major misconceptions holding us back. The market is not homogeneous. Different customers have different reading habits (including different session lengths under different lighting conditions), different portability and form factor concerns, different compatibility needs, and different-sized wallets. Until manufacturers wise up and start doing some serious market research aimed at understanding this segmentation, we'll continue to see device after device that, while innovative on a technical level, fails to offer consumers what they actually want.

Note that plenty of consumers feel just fine about reading eBooks on their Treos and Blackberries. It's things like format compatibility and DRM that concern them - and we can't pin those issues on shortsighted hardware manufacturers.

Ultimately, publishers are going to have to get more directly involved in reader development at the R&D level (including apps for Blackberry and other existing handheld platforms) and take a more active role in making the decisions that affect the distribution of their content.