Thursday, August 6, 2009

Why eInk, ePub, And eBooks Will Fail

I'm reading The Art of the Start by Guy Kawasaki.

I came across a sentence that perfectly describes why the current paradigm of eInk, ePub, and eBooks are doomed to failure:
The TAM [Total Addressable Market] is the true size of the potential market you can go after, not the totality of every nickel that's spent in something related to your product or service.

Let me illustrate that:



A = Total number of print book buyers
B = Number of people who use eBooks
C = People who have not yet bought an eInk device
D = People who have bought an eInk device

The chart is illustrative and not necessarily to scale (otherwise B, C, and D would be virtually invisible!).

We can perhaps expect a doubling of the current number of eInk devices. Perhaps even a tripling (though given the continued deterioration of the worldwide economy, that would be extremely optimistic). But that's it. They will ultimately fail.

Why?

As was stated earlier:
... all the electronic reading gadgets on the market are subpar, if you ask me, making the reading of books, newspapers, magazines, and even cereal boxes painful. The resolution is poor. The fonts are crap. The navigation is chunky. Not since the eight-track player has modern technology produced such a heap of garbage. If you're looking for the reason e-books constitute just 1 percent or 2 percent of all book sales, stop the search.

-- Does the Book Industry Want To Get Napstered?

Emphasis added by me.

What's beginning to happen right now -- with so many new eBook publishers and eBook devices -- is a classic Bubble.

This is what I saw happen back in the early 1980s with videogames.

See: North American video game crash of 1983 and Video game crash of 1983. (There is a minority dissenting opinion -- The Video Game Crash of 1983: myth or truth? -- which is best ignored as it's from the point of view of a customer, not the industry participants.)

Videogames are in fact a great analogy to eBooks: "software" that can only play on certain "consoles" (Sony Reader, Kindle), publishers having to strain to produce "software" for each "console" (MobiPocket, BBeB/LRF, Kindle, PDF), and consumers being hyped to get on board The New New Thing.

But understand what happened back then in the videogame industry itself: it died!

It wasn't just major players exiting a market. The market itself dropped dead.

Buyers woke up to the fact they were being deluged with too much too soon -- and most of it was utter crap.

This is precisely what's happening right now.

eInk devices are slow, linear, and use flat and static files. They are simply less efficient than printed books and offer no advantages other than never having to buy another bookcase ever again.

People will wake up that they are shelling out an entry fee ($200-$400) in order to do something that's "built in" to printed books: the ability to read.

They will also wake up to the nightmares of DRM, format incompatibilities, and the insufficiency of ePub eBooks over printed books.

Now let me address B in that graph. Those are the people who are currently using eBooks in two ways: desktop reading of mostly PDFs and the millions of people who have eBook capability on their smartphones (and iPod Touch). That market has the ability to still grow because the reading "entry fee" has been amortized in the cost of the device itself which is primarily used for other purposes.

However, to continue to believe that flat, static, and linear ePub files will triumph there is to invite delusion.

ePub eBooks (as well as Kindle and all other markup-based eBooks) lack respect. People regard them as teeny-tiny files that are a collection of words. The effort, energy, and thinking that are the ingredients of such things -- books -- are lost in the containerless translation.

Piracy will ultimately doom eBooks.

Publishing will try to counteract that with a foolish strategy of ruthless price-cutting. It will lead to a race-to-the-bottom that will ultimately destroy book publishing -- not just as we know it, but period.

Writing will be reduced to a marketplace of talentless deluded amateurs and outright con artists. The few true writers who will try to survive in this uninviting swamp will basically be holding out a tin cup hoping for spare change.

Those inside print publishing who can't see this coming to pass deserve the unemployment that awaits them.

Previously here:

Another Memo Print Publishing Will Ignore
Smart eBook Metadata Notes #1
Apple's Absolutely Brilliant eBook Strategy
Dumb eBooks Must Die, Smart eBooks Must Live
ALL eInk Devices: BAD For eBooks!
eBook Bubble Notes
Amazon Kindle, Amazon ePub, The eBook Bubble

8 comments:

Guy LeCharles Gonzalez said...

Solid post; the video game analogy is a good one, much better than the tired comparisons to music. eBooks are currently like brochureware and "digital magazines", reproductions of the printed product with minimal additional value that don't fully leverage the unique benefits of a digital platform.

Mark Coker said...

Hey Mike, if the latest numbers are to be believed, the ebook market is already larger than you state. Some stats:

AAP: ebooks ~ 1/2 1% of book market for 2008

Bowker: Q1 (jan-march) 2009: 2.4%

Codex: March 2009: 3.7%

Codex: May 2009: 4.9%

Piracy is already dooming p-Books - see the SW blog today.

If the industry can train customers that ebooks are like software, and licensed as software, and therefore limited to personal use only (no sharing, reselling), then ebooks could save books, and do it without DRM.

BTW, I see this a big hurdle to overcome (you can share p-books but can't share ebooks). But the software industry did a decent job of it. Publishers are in the software business now. It's time publisher's learn the lessons from software publishers.

Mike Cane said...

@Mark: Current eBooks as 4.9% of the total book market? I am very skeptical of that figure and would like to see its disaggregated components,how they are defining "eBook", as well as what geographical areas that survey covers.

CyberRead.com said...

Mike - I think you are a smart guy and read your posts here and there.

But I'll have to disagree with you partially. The one thing the book industry is doing right is getting the content out there...quickly.

http://cyberread.com/ebooks-blog/ebook-industry-kudos/

I worked in the digital realm of the music business for years...and sat in the room at the formation of the doomed Pressplay service creation.

The goal was more about making the press happy than providing actual content for consumption. It showed and they were massacred and piracy continued to climb as a result.

Now...I agree that DRM is a nightmare and we are headed for a collision course with consumers from that standpoint. (duh)

http://cyberread.com/ebooks-blog/ebooks-drm/

But I completely disagree that ebooks don't have substantial value in their current format.

Friends, family, existing CyberRead customers and myself...enjoy the value of being able to carry hundreds of books in a satchel or in our pocket. Also, if you are a vagabond like myself and constantly moving...it's quite nice to avoid the massive book boxes I used to tote.

In addition, as processor speeds improve in the ereader/tablet/mobile devices, we'll see expanded functions. We'll also see color screens in the near future...and that should usher in a new area of rich graphics, images, video's etc.

Costs will come down quickly as e-ink is going to suddenly find competition with OLED and other types of screens.

I bet we see a $99 reader next year...and that will start the next round of adoption.

I could be wrong....but those are my thoughts.

Obviously, if you are right I just wasted the last few years of my life....so I have a vested interest. :-)

Clint Brauer
General Manager
CyberRead.com

Mike Cane said...

@Clint: I wouldn't call any experience wasted. But I no longer support the Axis of E: eInk, ePub, eBook. Smart digital books are what publishers will see value in -- and, more importantly, so will readers.

Mark Coker said...

@mike The number was surprising to me. Found it here: http://www.nytimes.com/2009/07/21/technology/internet/21book.html

Vladimir said...

The e-book will win at the moment it becomes $100-$150

Formats are not concern - most devices use Linux, and you can find any software for it in Internet, including converters.

I personally would love to have KindleDX, but not for $480.

InteractMD.com said...

I think the thing that will break it open will be the Pandora model: $100 a year for all the books you can read. A digital for-profit library.

The publishing industry's even more fragmented than the music industry, so this will not be a trivial task. Overdrive shows no motivation.

So I think we discerning ebook consumers should start up such a concern. Who's with me?