Sony forum: the trade talks ebooks

Charlotte Harper rounds up the discussion at Sony’s ebook forum in Sydney:

Digital titles could make up between 20 and 30% of the trade book market within two to five years, according to attendees at a round table event on the future of reading hosted by Sony in September.

Sony Australia arranged the forum in Sydney to discuss the impact devices such as the company’s just-launched Readers will have on reading, writing, literacy and publishing. Panellists included Paul Colley, technology communications manager, Sony Australia; HarperCollins COO Jim Demetriou; REDgroup Retail managing director—ecommerce and digital, Singapore, James Webber; Australian Booksellers Association (ABA) CEO Joel Becker; Get Reading program director Cheryl Akle; and Alex Pollack, media analyst, Macquarie Group.

Their predictions, on the rise of the ebook varied—Akle said she could envisage an 80-20 mix in three years, Becker posited a 75-25 by 2015, while Demetriou guessed at 70-30 in five years, adding that he believed overall volume would increase as digital devices enticed particularly male readers into the market.

‘I’m really positive that more people will come to books,’ said Demetriou, adding that he expected there would be a lot of experimentation in terms of pricing, devices and enhanced ebooks before the market settled down.

The tipping point

The industry was already on its way to a tipping point in terms of ebook take-up, or would reach one within a couple of years as everyone from major players like Apple and Google to small independent booksellers began to sell ebooks.

Demetriou said the tipping point would come when ebook sales reached 10% or more of book sales, and that US ebook sales were still at around 7% but may reach 10% this Christmas. In terms of device availability and retail set-up the US was about 18 months in front of Australia, while the UK was around 12 months ahead.

‘We take our cues from the US and the UK, so I think the tipping point is still a ways off, but we’re definitely seeing signs of movement in the marketplace,’ he said. ‘Our sales are growing rapidly, but from a very small base.’

Webber pointed out that the figures were likely to change dramatically again in a few years, once a generation that has grown up with smartphones, tablets and e-readers—and never reading physical books—comes of age.

He said REDgroup stores (Borders, Angus & Robertson and Whitcoulls) and their websites sold out of the original Kobo devices within three days of launch, and that four months on, ebook sales are two to three times what they’d expected. He said the company saw adding ebooks to their business as necessary. ‘People were thirsty for this change. There is no doubt that people here are wanting to get into this market.’

‘This was going to make our lives difficult unless we were in it,’ said Webber, adding that there would always be bricks and mortar bookshops, just less of them.

Becker said that in the Australian ebook retail market there were only a couple of online retailers as well as REDgroup who were selling ebooks in any quantity. ‘The vast majority of our members, who are independent and specialist booksellers, aren’t in a position to sell ebooks, but want to,’ he said. ‘We’re working with the Australian Publishers Association towards finding a solution so that any bookseller who wants to can sell to any customer who wants to buy an ebook.’

Akle said consumers were moving faster than publishers. ‘I run a consumer-focused program, and people are saying to me, “Where are the ebooks?”,’ she said.’There’s a certain frustration there.’

Demetriou said publishers were catching up. ‘We’re throwing a lot of resources at this. It’s quite a complicated process.’ Publishers were digitising backlist titles that existed in many formats, and negotiating digital rights deals with authors. He said HarperCollins would no longer buy a book if the digital rights weren’t available.

Obstacles and opportunities

Panellists agreed consumers are also frustrated by the implications of territorial rights, a complex legacy of the print-only age. ‘There is a confusion about what international books are available in Australia. People are frustrated that they can’t buy the latest Danielle Steele,’ Demetriou said. ‘It’s holding back the growth of ebooks, and once the publishers, agents and authors sort that out, and local content comes  to the marketplace, I think there’ll be snowball effect once all those things converge.’

Consumers had also made their views of windowing (when a publisher withholds the digital edition for days or weeks after the print publication date) clear, and Demetriou said publishers were moving to simultaneous launch. Webber said the bulk of sales for any one new title came in the first three days, so ‘absolutely, it has to come out at the same time’.

Akle said she believed dedicated ereader devices would suit the youth market well. ‘If you’re looking at children, say between ten and fifteen, I would be inclined to want them to read from a reading device rather than a laptop or an iPad or something like that because there are no distractions. It’s as close as possible to the book,’ she said. ‘And they want to be seen holding it. A fourteen-year-old boy wouldn’t mind being seen with something like this. I think to be reading on a screen is really groovy. They’re going to keep reading and they’ll be voracious readers, and we’ve just got to provide the content and provide it quickly.’

Colley said he believes the devices will also improve children’s literacy. His teenage daughter reads voraciously on the Sony Reader. ‘She raves about the fact that you can click on a word and it tells you what that word means. In the past, she would’ve tried to assume what that word meant, whereas now she can teach herself along the way,’ he said.

Becker said ebooks provided potential for enhancements that would appeal to parents on the lookout for educational tools or enticements for reluctant readers. ‘If it’s a textbook, it can have exercises in it, if it’s a storybook, you can have people go off in different directions, almost like the old Choose Your Own Adventures, but with a lot more direct involvement,’ he said.

Colley pointed out that many of the heavy books in his daughter’s school bag are out of date. ‘With ereading, you can carry your whole library around. You won’t need a locker anymore. And you’ll have the most up to date editions.’

Webber noted that where the devices were sold would have an impact on how they were perceived. ‘You’ve got to sell these things somewhere educational, which is why bookshops are a good place to sell them. If you sell it next to a PlayStation, then I think parents will see it as a toy.’

Webber said REDgroup receives a lot of requests from libraries, schools and hospitals. ‘One of the barriers to that, though, is that the publishers need to get across how you share this stuff,’ he said. ‘At the moment you get one copy, you can’t share it. We can’t do bulk discounts to a library. We can give them ten ereaders, it means they’ve got to buy ten books to put one on each e-reader. The sharing of some of this stuff has got a bit to go,’ he said. ‘It’ll happen, but we haven’t cracked those models yet.’

Demetriou said publishers were looking at multi-copy licences and subscription models where the ebook expires after a couple of weeks. Pollack suggested retailers could work with publishers to offer book club-style packages where a consumer bought a device with a library of titles. Webber said he believed e-readers could be sold on contracts, as mobile phones are now, that included capped access to content. Akle said she’d heard of just such a deal, for $30 a month in the US. ‘The only problem with that is, are we going to be offered limited content on that, or is everybody going to get the straight deal?,’ she said.

Webber indicated selection would be limited as it was unlikely all publishers would sign up for such a program.’You’ll always have the option, though, of buying a single title outside of that,’ he said.

Demetriou said Audible.com offered a subscriptions service already—users pay $10 a month for two books. ‘There’s a model already there. Whether that’s transferable to ebooks, I don’t know.’

Webber said it was critical that pricing ensured that there remained enough value in the title, and in the industry, to keep authors writing. ‘There is a point where books become so cheap that the ultimate value chain that’s keeping authors alive becomes eroded, and it becomes a commodity, which then restricts choice.’

‘Newspapers are a key example of that,’ he said. ‘They’ve given themselves away free, and they’re trying to claw it back.’

What price?

When it comes to pricing, Demetriou said the only thing publishers know is that consumers expect to pay less for an ebook. ‘So we’re experimenting with different price points, because we’d like to charge as much as we can, to see at what point it starts affecting the volume,’ he said.

When it comes to speeding up the arrival of good content, Becker said the booksellers wanted to be part of the conversation, but had no power to make a difference at the moment. ‘Not to point the finger, but the publishers have to figure out all these issues about DRM and format, and then a way to make it available, and then for there to be suppliers,’ he said. ‘The suppliers won’t be the publishers directly, they’ll be Google Editions or an Ingram or a Blio.’

Demetriou agreed there was a publisher responsibility. ‘There is a financial imperative,’ he said. ‘Twelve months ago there was no incentive for publishers. If we weren’t selling anything, then why invest in converting or getting rights? ‘

‘There is an incentive now. So I think that’s happening, and I think it’s happening very quickly. I know from our experience, it’s happening worldwide, digitisation, in terms of rights, in terms of converting all assets,’ he said.

‘The other issue is distribution. [We’d like to supply] as many distributors, as many retailers, as many wholesalers as possible, to get books available as widely as possible, and to get a solution for independent booksellers,’ he said. However, Akle interrupted: ‘The reality is, a lot of booksellers won’t be able to deliver on this.’

Becker disagreed: ‘Any bookseller that has an online sales site will be able to [sell ebooks], and those that don’t, that’s where we have to work with them to get a white label sites, and we’re working already with our US colleagues to look at opportunities,’ he said. ‘Some booksellers may choose not to [sell ebooks], but I think the vast majority will want to. You don’t want to give away any of your client base if you can help it.’

Webber said REDgroup had already diversified from just books into stationery and gifting, as other booksellers have. He said something like 70 per cent of all books bought are as gifts. ‘So we’ve got to go into other stuff,’ he said.

The role of booksellers

Akle mentioned an ABC TV profile of Avenue Books in which its owner, Chris Redfern, said he’d decided against selling ebooks because it would be too hard to do it properly. Webber agreed, saying REDgroup had not found it easy. ‘We struggled to see, how on earth can we get into this. It was Indigo Books in Canada that took the leap with Shortcovers [which became Kobo], and we talked to them. Otherwise, we could never have done it.’

‘So we have access to a global business, and without that, it would be excruciatingly difficult,’ said Webber.

Becker said the ABA’s members want to get involved in the market, but that many had had a tough twelve months and were looking to new models and changing the stock mix. ‘It may very well be, that for a number of independents they just completely stay away from ebooks, or that there’s a solution provided that means it’s treated almost as a special order market, we’ll do it for people who ask for it.’

Becker said the organisation’s primary objective was to prevent leakage offshore. ‘As long as it takes for a solution to be resolved, every day you’ve got people maybe making a switch within the Australian market, which is fine, but maybe just thinking, oh look, Amazon.’

‘We want to say you can go to Borders or Angus & Robertson, or you can go to your high street bookshop,’ said Becker.

Webber said the government needed to look long and hard about how it helps. ‘You look at the exchange rate today. All this does is make our external competitors cheaper. They don’t pay GST on anything. We are paying GST and competing with them,’ he said. ‘Either they’ve got to make these guys pay GST, or they’ve got to take GST off books.’

‘Hear, hear,’ said Becker. ‘And good luck with that,’ said Demetriou.

Becker said in New Zealand booksellers were talking seriously with the government about a solution around GST. As to what the Australian government should do and whether they should contribute funding to help independent booksellers to adjust to the new landscape, he said ‘I don’t want to be prescriptive, I know that there’s the Book Industry Strategy Group right now, which is a Kim Carr initiative with different parts of the industry. We hope that they’ll address it.’

‘It’s always great to say give us money, but there are sometimes other solutions in terms of support that don’t necessary involve dollars,’ he said.

When it comes to cannibalisation of print book buying, Demetriou says US research has shown book buyers now devote 12% of their spend to ebooks, mainly in narrative genres. ‘They will still buy cookbooks and kids books, but there is a certain style that they’ll buy exclusively on ebook,’ he said, adding that consumers would continue to buy print books as gifts too. ‘Seventy percent of our business is done in October, November and December at HarperCollins,’ said Demetriou. ‘People will still want to buy a book, because books are still seen as a high-value item, a no-guilt gift.’

Charlotte Harper is editor of www.ebookish.com.au.

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