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Ken Auletta has a substantial report (6100+ words) in The New Yorker on whether or not the iPad can topple the Kindle and save the book business. It’s very helpful as an overview of what’s going on in the secular market with regard to books, publishing, and -ebooks.

An apt joke:

Publishing exists in a continual state of forecasting its own demise; at one major house, there is a running joke that the second book published on the Gutenberg press was about the death of the publishing business.

E-books are booming:

Although they account for only an estimated three to five per cent of the market, their sales increased a hundred and seventy-seven per cent in 2009, and it was projected that they would eventually account for between twenty-five and fifty per cent of all books sold.

Why Amazon was making publishers nervous:

Publishers were concerned that lower prices would decimate their profits. Amazon had been buying many e-books from publishers for about thirteen dollars and selling them for $9.99, taking a loss on each book in order to gain market share and encourage sales of its electronic reading device, the Kindle. By the end of last year, Amazon accounted for an estimated eighty per cent of all electronic-book sales, and $9.99 seemed to be established as the price of an e-book. Publishers were panicked.

Paper vs. paperless:

If the same book is available in paper and paperless form, Amazon says, forty per cent of its customers order the electronic version.

The decline of booksellers:

According to the American Booksellers Association, the number of independent booksellers has declined from 3,250 to 1,400 since 1999; independents now represent just ten per cent of store sales. Chains like Barnes & Noble and Borders account for about thirty per cent of the market, and superstores like Target and Wal-Mart, along with clubs like Costco, account for forty-five per cent, though they typically carry far fewer titles.

On why Amazon wants to undermine publishers and physical books:

Amazon seems to believe that in the digital world it might not need publishers at all. . . . A close associate of Bezos puts it more starkly: “What Amazon really wanted to do was make the price of e-books so low that people would no longer buy hardcover books. Then the next shoe to drop would be to cut publishers out and go right to authors.”

How Apple changed things:

A close associate of Bezos said, “Amazon was thinking of direct publishing—until the Apple thing happened. For now, it was enough of a threat that Amazon was forced to negotiate with publishers.”

State of the publishing industry:

The industry produces more than a hundred thousand books a year, seventy per cent of which will not earn back the money that their authors have been advanced; aside from returns, royalty advances are by far publishers’ biggest expense. Although critics argue that traditional book publishing takes too much money from authors, in reality the profits earned by the relatively small percentage of authors whose books make money essentially go to subsidizing less commercially successful writers. The system is inefficient, but it supports a class of professional writers, which might not otherwise exist.

Enter Google:

Google will open an online e-books store, called Google Editions, by the middle of the year . . . The store’s e-books, unlike those from Amazon or Apple, will be accessible to users on any device. Google Editions will let publishers set the price of their books . . . and will accept the agency model. Having already digitized twelve million books, including out-of-print titles, Google will have a far greater selection than Amazon or Apple. It will also make e-books available for bookstores to sell, giving “the vast majority” of revenues to the store. . . .

How the iPad is doing:

Apple said that more than three hundred thousand sold the first day, and analysts have guessed that between five and seven million will be sold this year.

Publishers like Steve Jobs—for now:

For the moment, Jobs is the publishers’ best ally. . . . Apple agreed to the agency model for just one year, and, as publishers are acutely aware, Jobs has a history, with music and television companies, of fighting to reduce prices. One publisher said, “Maybe Apple will want to come back in a year and bite our heads off.”

How the iPad could expand Amazon’s customer base:

The iPad may even make it possible for Amazon to reach new consumers. Apple now offers about sixty thousand e-books, far fewer than Kindle does, and Amazon has launched an app that allows it to sell e-books on the iPad.

There’s a lot more info like that in the article.

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