The Fall of Print Books?

When Amazon came out with the Kindle, many said that digital books were no substitute for the real thing. Others, however, predicted that e-books would spell the end for their print antecedents. Signs are now emerging that the latter group may be proved right. In mid-July Amazon announced that it sold 180 e-books for every 100 hardcover copies – an astounding statistic especially when considering that just four weeks before that, the figures were 143 e-books for every 100 real books. Price seems to have been a key reason for this recent ascendance of e-books. For example, when in June Amazon dropped the price of its Kindle from $259 to $189, its sales tripled. This high elasticity of demand (PED value of 7.4) isn’t surprising considering the vast number of substitutes, namely, physical book publishers and the numerous other brands of e-readers. One can safely say that the ratio of 180:100 will only increase following Amazon’s recent price drop to $139.

In China too, it seems as if digital books have caught on. Shanda Literature just announced the launch of its Bambook e-reader which allows users access to a library of three million books and 1000 journals. Shanda is looking to challenge Hanvon Technology which, with a market share of almost 90% in the mainland, has monopolised the industry. Hanvon also predicts robust sales growth from 270,000 e-readers in 2009 to two million in 2010. These great growth prospects are only set to continue. 24.6% of mainlanders aged 18 to 70 now read books digitally. More worryingly for book stores and hardcover printing houses, that figure is 49% for mainlanders aged under 29 (Source: Joint Publishing, Chinese Institute of Publishing Books).

While this growing trend may be great for consumers, it will have harmful implications on the hardcover industry. Nearly half of China’s private bookstores have terminated operations in the past 10 years according to the Book Industry Chamber of Commerce under the All-China Federation of Industry and Commerce. This said, the impact on unemployment won’t be that great as many people who work in bookstores have skills that are transferrable to jobs in other shops.

Despite recent promising figures for e-readers across the world, they still have a long way to go. Yu Guoming, vice-dean of the school of journalism and communications at Beijing’s Renmin University, says that the industry hasn’t yet reached the stage where it experiences significant economies of scale. When it does, he says, ‘the price will fall’ and, judging from the elasticity of demand, that will lead to a tremendous rise in e-reader sales. In China at least, e-readers will have to contend with books available on the internet and on mobile phones. Books read in these forms currently corner the digital market – each form has a customer base 15 times larger than that of e-readers. So, in short, the era of hardcover books could be over and the digital age is just emerging.