The Future of US Book Sales

Book sales are far from dead. Recent statistics from the Association of American Publishers show that overall book sales rose nearly 5% in 2014. Of course, e-book sales edged out print books. And--no surprise--sales of children's and young adult books were strong, while sales of adult books were not.

As shown above, e-book sales vary by genre and by time of the year. Print books sell best in the 4th quarter for holiday gift-giving. E-books sell better in the first half of the year, apparently because consumers who receive digital devices as holiday gifts (tablets, e-book readers, etc) stock up on books. Nielsen has a detailed analysis of print vs e-books in its slide show here. Amazon lists the best-selling e-books of 2014 here.

So while book sales are far from dead, what's in transition is how people are reading. And how consumers are buying books. Barnes & Noble says earnings for its book division are flat, which actually is good news--considering how many book retailers have gone under in recent years. There is a future for US book sales, the question is what the marketing channels will look like and how the media will be consumed. 

Getting to Know YOU, Reader of E-Books

When you download a book from Amazon or Barnes & Noble, the retailers really get to know you. Did you finish the book or stop at page 50? Did you read every page or skip ahead to find out what happens? Did you buy the sequel even before finishing the current book?

Barnes & Noble found, by tracking how readers read e-books downloaded onto its Nook, that long works of nonfiction don't get read cover to cover. In fact, some nonfiction e-books are put aside after a few pages or chapters. As a result, B&N is introducing "Nook Snaps," brief takes on nonfiction topics, intended to be read when you have a few minutes here and there. Sales of Nook books and snaps are up 119% over LY figures, as B&N continues to adapt to the evolving e-book market. In other words, B&N has leveraged its knowledge of e-book reading habits to fill a need.

Amazon has mountains of data about readers of e-books: what page you stop and start at, what phrases you underline for emphasis or to remember, any notes you enter on a page. When you bought your Kindle, you agreed that Amazon can collect this data about your e-reading habits. Here's the exact wording from the Kindle License Agreement:

The Software will also provide Amazon with information related to the Digital Content on your Kindle and Other Devices and your use of it (such as last page read and content archiving). Annotations, bookmarks, notes, highlights, or similar markings you make using your Kindle or Reading Application and other information you provide may be stored on servers that are located outside the country in which you live. Any information we receive is subject to the Amazon.com privacy notice located at www.amazon.com/privacy.

Even now, it's not clear how much personally identifiable information Amazon has about you as an individual owner of Kindle and a reader of e-books, thanks to the way its Silk operating system operates.

On the plus side, Amazon is known for its excellent recommendations engine, offering you a number of ideas based on books or other products you've purchased in the past. That's a real positive because if you like one type of e-book, you're very likely to enjoy reading something else by that author or in that genre. Smart marketing, clearly.

But what about the potential negatives of so much data being collected? Under the Video Privacy Protection Act (dating back to the days before e-books, in 1988), video stores aren't allowed to hold onto your video rental info for very long, and they can't disclose it to outsiders. The California Reader Privacy Act offers some similar protections for readers of e-books. Are more protections needed for readers of e-books?

Retailing E-books and E-readers--Welcome to the Revolution

E-book readers are becoming the trendy gadget du jour. Remember when hotels furnished iPods along with hiply-decorated suites? Now Fairmont Hotels offer Kobo e-readers to their best guests. Plus, when guests check out, they receive coupons for discounts on Random House titles.

Welcome to the revolution. The rapid rise of popular e-book readers such as Amazon's Kindle and multifunction devices such as Apple's iPad, accompanied by a sharp increase in e-book sales volume, has publishers and retailers thinking hard about the future. The price war in e-book readers such as the Barnes & Noble Nook (above) is helping to drive sales volume higher and faster. Which products and retailers will reinvent themselves and thrive--and which will dive?

Barnes & Noble, the largest US book retailer, tells the New York Times: "The growth in our e-books business is about nine months ahead of our plan." To cope with the unexpected timing of this shift in consumer buying patterns, the retailer is retooling its merchandise mix by adding games and other non-book products. Remember, Barnes & Noble stores have lots of shelves to fill, and the peak holiday buying season is just ahead.

Holiday buying brings up one more revolution spreading across the retail world: Gift cards. Lance Ulanoff, writing in PC Mag, suggests that Amazon create a mechanism for people to gift specific Kindle e-books. He also wants Barnes & Noble to create a similar card for Nook users. With consumers changing their buying habits and Black Friday still 15 weeks away, the retailers have time to follow up on Ulanoff's idea.

Price War in E-readers

When Barnes & Noble cut the price of its Nook e-book reader just a few days ago, Amazon responded quickly by slashing the price of its Kindle (above) to $10 below the Nook's price. Suddenly e-readers are priced below $200 and the price war is attracting consumer attention.

Meanwhile, the iPad is being touted as an e-book reader (among other functions). And Toshiba is one of many manufacturers launching new e-readers with buyer-friendly features and pricing.

CNBC asks an intriguing question: Why doesn't Amazon just give Kindles away? Amazon, after all, makes most of its money from selling content. Razor manufacturers price new razors low to get consumers to buy their high-margin blades. This is what CNBC suggests for Amazon, especially given the intense competition from Apple's iPad, which some predict will crowd one-function e-readers out of the market in the very near future.

In my opinion, the shakeout in e-readers is leading to consolidation that only the strong will survive. That's good news for buyers, who will get better products at lower prices. And ultimately it's good news for marketers, who will concentrate their efforts on fewer but better e-readers. Only the strongest will survive.