New devices could fire up e-book market
By Andrew Edgecliffe-Johnson in New York
Competition in the e-reading market will proliferate from current devices which dominate the market – such as Amazon’s Kindle, Sony’s Reader and Apple’s iPad – to as many as 20 devices, expanding the book market, according to senior executives at Penguin.
“We think e-books are additive. The more convenient it is, the more books we’re going to sell,” David Shanks, chief executive of Penguin Group USA, told the FT.
“Two years ago it was a one-horse race, then it was a two-horse race, now it’s a five-horse race and it could be a 20-horse race in five years,” added Susan Petersen Kennedy, the group’s president.
E-book sales in the US grew by 185 per cent in the year to March, according to the Association of American Publishers, but at $28.5m represent only 6 per cent of the US consumer book market.
Publishers believe that share has grown since Apple’s iPad launched in the US at the beginning of April. Mr Shanks said he was “much more optimistic” about further growth when Apple’s iBookstore becomes available later this year on its iTunes store, making books more easily available on its iTouch and iPhone models.
The emergence of devices including Barnes & Noble’s Nook and a new mini-tablet computer announced by Dell has been marked by tension over e-book pricing.
Penguin, which like the FT is owned by Pearson, was one of five large publishers to adopt the so-called agency pricing model for the iPad, letting publishers set retail prices rather than, as had happened with Amazon’s Kindle, letting e-book stores discount from wholesale prices.
Most top iBookstore titles retail for more than the $9.99 Amazon had charged for Kindle bestsellers, but Jeff Bezos, Amazon’s founder, told its annual meeting last week that he believed $9.99 was the appropriate price.
Mr Shanks disagreed. “We never got a chance as an industry to see what the sweet spot was for e-book pricing,” he said.
Amazon has grudgingly adopted the agency model, but no new Penguin titles were available on its Kindle store from April 1 until the companies reached a deal last week.
“We have a fairly lengthy selling agreement with our customers and it just took a long time,” Mr Shanks said. “We were debating various points, mostly around the term of our agreement with them.”
The speed at which the market is evolving has made publishers wary of long-term agreements.
Skip Prichard, chief executive of Ingram Book Company, the largest wholesale distributor, told a Book Expo America audience last week that changes wrought by e-reading were encouraging even large publishers to consider outsourcing distribution.
Penguin was examining e-books’ impact on its infrastructure, Mr Shanks said, and believed its distribution centres “may become obsolete” when e-books become 70 per cent of its revenues. “I could see shared distribution centres as an option. There are active discussions about it,” he added. “But it’s not going to happen while print books are still 90 per cent of our sales.”
The iPad’s global roll-out began on Friday. Penguin, which publishes such authors as John Grisham and Charlaine Harris, said many publishers would find pricing in different currencies complex.
http://www.ft.com/cms/s/0/5316b096-6d15-11df-921a-00144feab49a.html
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