Evan Schnittman‘s publishing blog Black Plastic Glasses is ending. The blog had been dedicated to digital publishing and eBooks, and Schnittman feels digital has become a mainstream part of publishing.
He explained in his closing post: “We no longer have the luxury of openly discussing the issues at hand, because all of the issues make up the cornerstones of how we do business. Publishing is digital and everything we do is based on digital. Any real discussion of how we approach the business is a discussion about core strategy… and that discussion is usually, if not always, a private, severely limited-audience kind of discussion.”
Schnittman closed the blog with a new pair of glasses, as seen in the photo on the right. He wrote: “Today I move begin the process of building a new brand. I close out this blog not with a word, but an image. Digital and I have both gone mainstream.
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By Evan Schnittman
[A Full Disclosure Note From Evan] Let’s be clear from the start: Neither Amazon nor Sony have told me anything. I get nada, zilch, bupkis when I ask even the most circumspect questions about their respective device sales. If it has to do with Kindle or Reader, I get the standard “go away” line. I have not manipulated sales data, be it OUP’s or any other publisher. I have not analyzed Amazon or Sony ebook sales statistics or rankings. I have not found any secret documents. I have not broken into the vault, I have not cracked the code, I have not had prophetic dreams - well, not about any e-ink devices anyway…
What I do have is a subscription to DIGITIMES that has led me to some pretty outlandish and, I think, substantiated conclusions about Kindle and Sony Reader sales figures. Before you dismiss me as loopy check out the evidence…
When the Kindle first launched there was plenty of predictions about how it and its predecessor the Sony Reader would sell. Over time the chatter died down, halted partly by the Kindle going out of stock. At the end of April, the chatter returned and hit full volume after last week’s Book Expo America in Los Angeles. The catalyst was Jeff Bezos’ speech, which let out some tantalizing, yet cryptic information on ebook sales volume at the Kindle store. The chatter, as reported in the NY Times, has publishers and others speculating that Amazon has sold somewhere between 10,000 - 50,000 Kindles.
I think all the speculations are completely wrong. By my calculations, combined sales of the Amazon Kindle and the Sony Reader will be 1,000,000 units in 2008. This estimate is based on solid data.
The Evidence
Amazon and Sony both use the 6-inch electrophoretic display (EPD), also known as an e-ink screen. Both companies buy their EPD’s from Prime View International (PVI) of Taiwan. DIGITIMES, a daily news service covering the Taiwanese IT market, reported on April 18th, in a story entitled PVI EDP shipments to grow sharply in 2008, that PVI expects EPD module shipments to reach 120,000 units PER MONTH in the second half of 2008. It further explains that the unit price of the screens are $60-$70 per unit and that the current volume has been 60-80,000 units PER MONTH.
Also intriguing is the article’s claim that 60% of the EPD’s go to Amazon and 40% go to Sony. This is an important factor as it implies that there is a market beyond Kindle – a very, very strong market. Taking the figures at face value, Sony was selling (or at least manufacturing) an average of 28,000 readers per month (I took 70,000 units as the average sold per month and then 40% of that). Using this monthly rate, the annual sales of the Sony Reader are at nearly 350,000 units. Using the same formula, Amazon is ordering an average of 42,000 units per month, which will add up to over 500,000 units sold this year.
With production ramping up to 120,000 units a month these numbers will look much better - to the tune of a combined 1.4 million units over 12 months! Even with the Kindle out of stock for a big chunk of the first and second quarter, combined sales of these two e-ink devices in 2008 will most likely top 1 million. If a million devices are out on the street looking to feed, and we know they primarily eat one kind of food, ebooks, then what must this mean for the ebook sales?
Jeff Bezos said last week that ebook sales in the Kindle store had hit 6% of book unit sales. What this means is that of the 125,000 titles available in the Kindle store, the sales of ebooks represented 6% of the sales of those same 125,000 titles in print formats. Another interesting thing that Bezos said was that Kindle buyers purchase at a rate of 2.5 times more than print book buyers… food for thought when thinking through your ebook strategy.
One can draw some ebook sales conclusions from this information. For example, the number 2 seller at the Kindle store is The Last Lecture by Randy Pausch. According to Bookscan, in 4 weeks this book has sold 784,158 units. For the sake of argument, lets ascribe 75,000 units (10% of total sales, a reasonable guess) to Amazon. If Kindle sales were 6%, then Amazon would have already sold 4,500 ebooks. That’s 4,500 people with Kindle’s buying a single title in 4 weeks!
While its clearly amazing that in one month an ebook can sell 4,500 units it is not the best way to calculate the ebook sales impact of Kindle and Reader. A better way to approach this is through good old-fashioned guess-timation. Taking stock of my own experience and the experiences of others I know, I found that ebook buying on either the Sony Reader or the Amazon Kindle ranges from 5 ebooks to over 100 ebooks. Assuming that anyone who buys an e-ink ebook reader is doing so to read ebooks, lets assume that 10 ebooks a year is a reasonable purchase estimate. Using this logic, we should see 10 million ebooks purchased for these two devices in 2008.
The IDPF estimates that in 2007 ebook sales income was $31,800,000 with the caveat that the actual retail income could be as much as double due to retailer discounts, so lets assume that the sales actually totaled $60,000,000. If we use an average retail price of $12 per ebook sold, and if consumers will buy 10 ebooks a year, then they will spend $120 on average, per device. That would lead us to $120,000,000 in ebook sales for the Kindle and the Reader in 2008, double all ebook sales in 2007. (For those of you who cannot swallow the idea of 10 books purchased per device – cut it in half. The result is $60,000,000 in ebook sales – as much as last year!)
Success in technology, like everything else, leads to more success. It’s not uncommon to see five-fold growth the year following a successful technology product launch. Think iPod, think Wii, think Blackberry. Whole micro-economies emerge around products that range from accelerated content creation, and all sorts of aftermarket products and services. Versions 2.0 and beyond create better and better devices. The better the devices, the more accessories, the more content there is, and soon a whole world of business opportunity is rolling downhill picking up speed.
With this in mind, I can easily imagine the success of Kindle and Reader dramatically expanding next year and growing by a factor of five. If that happens, then the formula above leads to a completely new ebook economy. Five million devices would mean ebook sales of $1,200,000,000, which, by my estimation, is 1.3% of the current global book market of $90,000,000,000.
This reminds me of a comment I heard from a music industry executive at a conference a couple of years ago. “One day there was the iPod and iTunes. The next day 20% of our business was digital. The day after that more than 50% of our revenues came from digital music. Yeah, we believe in digital music now.”
I personally don’t see publishing becoming a 50% digital business as books and cd’s are completely different animals. But I sure can see that the 3% - 4% I once predicted isn’t such a crazy notion any more. And yes, I believe in ebooks.
Evan Schnittman is OUP’s Vice President of Business Development and Rights for the Academic and USA Divisions. His career in publishing spans nearly 20 years and includes positions as varied as Executive Vice President at The Princeton Review and Professor at New York University’s Center for Publishing. He lives in New Jersey with his wife and two children.
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