In mid-2007 while publishing Entertainment+Media (an online mag I founded that attracted 20k unique visitors per day) I suggested that record label revenues would be equally split between physical product and digital within 18-24 months. The industry is not quite there and the ‘legacy’ business isn’t yet ready to roll over … mea culpa.
His thinking runs thusly: once ebook sales hit 20-25% of book sales, print run numbers will fall to a point where the current consignment system for sales will break down. Under the current system, most books can be returned for credit, so for every book sold, two are printed. Those “returned” books have the covers torn off, and the guts discarded, so they cannot be put out into the market again. Ebook sales will create smaller print runs, driving up the unit cost, forcing higher prices which, in turn, will kill sales. Game over.
Reasonable analysis except that it seems to assume a large number of variables will remain constant, which they won’t. I also expect that the book biz will mirror the music biz and that while ebook unit sales will grow significantly over the next few years growth will slow more quickly than some expect. Triple figure growth is not sustainable.
Also, the cost of printing a book is nominal; less than a couple of dollars when you’re printing a few thousand, let alone tens of thousands. The print argument is bunkum. I’d take a closer look at supply chain inefficiencies and a woeful retail business model as a more likely ‘sales killer’.
Anyhow, a recent report from Goldman Sachs media analysts (which includes the well respected Ingrid Chung) said this of book publishing trends through 2015:
Industry-wide sales will increase to US$24.9 billion in 2015 from $23.5 billion this year…. E-book sales will jump more than fourfold in the period to $3.19 billion while print book sales probably will fall 4.9 percent to $21.7 billion.
Source: Bloomberg Businessweek.
My experience analysing the music industry supports Goldman’s assessment of likely market growth trends in the book biz. As for the impact of piracy on revenues? That’s another matter entirely!