eBooks: Reinventing an industry

When you mention Internet marketing, people immediately think of search marketing, brands on Twitter and email newsletters. In other words, it’s usually the P of Promotion that jumps to mind. When asked to think of other aspects of marketing online, people will think of online shopping, or the P of Place (distribution). But some industries have been changed entirely –that is, all four Ps have been changed as they move online.

One case is eBooks. The product itself is mostly a digital experience, with the exception of the hardware used to read it with –an eReader like the Amazon Kindle or laptops and mobile phones. Its distribution is also an internet experience. Users can either buy them from a provider like Amazon or Barnes & Noble, or download them from Google. Until now, eBook communications depended heavily on online mediums, with online advertising, PR and word of mouth being key drivers in this niche industry. Pricing also follows the standard models of digital downloads: most of the money is made from hardware sales and the books themselves are priced lower in digital form, or may even be free.

Until now, the market has remained a niche. Though the Kindle has some devoted followers, the mass market has not adopted eReaders yet. Some market analysts say that may change soon. Forrester predicts that eReaders will be a “breakout success” this holiday season, stating that lower prices for hardware, more titles and hype around new products will push sales. Forrester expects sales of eReaders this year to jump to 3 million units (Emarketer.com shipment estimates for 2008 are close to 1 million). But despite the excitement, there are some important barriers to adoption to consider and issues with other technologies that will influence adoption.

Barriers to adoption

The most obvious barrier is the trade-off that consumers will have to make when using an eReader. EReader manufacturers and eBook distributors highlight convenience: whether it’s the Kindle, nook or your mobile phone, you can read on the go without the weight of a book (especially if it’s a hardcover). If you’re traveling or away from a store, you can just buy books through an internet connection.

But what are people losing? First of all, the experience of owning a book and a library. Books are often emotionally-involved purchases and can be a sign of status. Showing off a bookcase full of Tolstoy and Shakespeare makes many people happy. And though technically you “buy” eBooks, Kindle users were shocked to see that Amazon actually erased books from their Kindles earlier this year, because the company that was distributing them did not have the rights to distribute them. Though Amazon refunded them, this raised discussions about ownership of digital content.

There is also the touch and feel of the book, especially hardcovers. As someone who loves to cook, I wouldn’t trade my cookbooks for eBooks even if they cost one-fifth of the price. There’s nothing like having that heavy hardcover on the counter and flipping through recipes in my free time.

Another issue is the display. I’ve thought of downloading the Barnes & Noble app for BlackBerry, but then I think: “I spend so many hours watching a screen as it is, why would I do this to myself?” However, everything changed when I actually saw an eReader. I was sitting in a bus stop and a girl was reading a book using a Sony eReader (similar to the one in the picture). The E-Ink technology that the Kindle, Nook and Sony eReaders have is actually a lot more reader-friendly than most computer and mobile phone screens. That was the experience that made me really, really want one.

But I was faced with the fourth issue: eReaders are very expensive. When you realize that they can cost the same as a BlackBerry or iPhone, often require subscription or ongoing purchases or eBooks to be worthwhile and that they don’t have nearly as many functions as most smartphones (or touch screen mp3 players like the iPod Touch) then you wonder if it’s worth investing so much in them. Manufacturers have realized this and are dropping prices. But according to Forrester, most users think that they have to be around $99 (the cheapest ones available right now are refurbished first-generation Kindles for $149). Considering all the subsequent expenses that an eReader brings, it makes sense. Even if you consider this as a replacement for buying books, it can still be cheaper to share books with friends and borrow some titles from libraries –two functions which eBooks can’t provide.

The fifth issue is that many publishers still refuse to convert to the online model, so best-sellers like the Harry Potter books are not available for download on any format.

In my next post, I’ll give some ideas on how online distributors and eReader manufacturers can overcome these barriers.