Professional Documents
Culture Documents
Foreword
In todays competitive business environment, knowledge and understanding of your marketplace is essential. With over 30 years experience producing highly respected off-the-shelf publications, Key Note has built a reputation as the number one source of UK market information. Below are just a few of the comments our business partners and clients have made on Key Notes range of reports. "The Chartered Institute of Marketing encourages the use of market research as an important part of a systematic approach to marketing. Key Note reports have been available in the Institutes Information and Library Service for many years and have helped our members to build knowledge and understanding of their marketplace and their customers." The Chartered Institute of Marketing "We have enjoyed a long-standing relationship with Key Note and have always received an excellent service. Key Note reports are well produced and are always in demand by users of the business library. "Having subscribed to Market Assessment reports for a number of years, we continue to be impressed by their quality and breadth of coverage." The British Library "Key Note reports cover a wide range of industries and markets they are detailed, well written and easily digestible, with a good use of tables. They allow deadlines to be met by providing a true overview of a particular market and its prospects." NatWest "Accurate and relevant market intelligence is the starting point for every campaign we undertake. We use Key Note because they have a report on just about every market sector you can think of, and the information is comprehensive, reliable and accurate." J Walter Thompson "Market Assessment reports provide an extremely comprehensive source of information for both account handling and new business research, with excellent, clear graphics." Saatchi & Saatchi Advertising
Contents
Contents
Executive Summary 1. Introduction 1 3
2. Strategic Overview
DISTRIBUTION.............................................................................................................................11
Door-to-Door Delivery................................................................................................................12 Bertam Trading Ltd......................................................................................................................12 The Book Service Ltd (TBS), Grantham Book Services Ltd (GBS).........................................12 Gardners Books Ltd......................................................................................................................13 Lightning Source UK Ltd.............................................................................................................13 Overdrive.......................................................................................................................................13 Customer Deliveries.....................................................................................................................13
COMPETITIVE STRUCTURE......................................................................................................14
Contents
ADVERTISING..............................................................................................................................14
Table 2.9: Main Media Advertising Expenditure by Online Bookshops (000), Years Ending June 2009 and June 2010.............................................................................................15
THE CONSUMER.........................................................................................................................15
Table 2.10: Consumer Book Browsing Choices (% of respondents), 2008-2010.............16 Table 2.11: UK Adults Who Had Bought or Ordered Online in the Previous 12 Months by Age (%), 2009.....................................................................................................16 Table 2.12: Reasons for Internet Shopping of UK Adults Who Had Bought or Ordered Online in the Previous 12 months (%), 2009..........................................................18
MARKET FORECASTS................................................................................................................21
Table 2.14: Forecast UK Book Sales by Value (m and %), 2010-2014..............................21 Table 2.15: Forecast UK Book Sales on the Internet by Value and Percentage Share of Total Book Market (m and %), 2010-2014......................................................................22
23
BACKGROUND............................................................................................................................23
Price Comparison Sites................................................................................................................23 Table 3.1: First Ten Price Comparison Search Results for Bestselling Title The Girl With the Dragon Tattoo, August 2010....................................................................................24
MARKET SIZE...............................................................................................................................25
Table 3.2: Total Consumer Market (UK Retail) by Value and Volume (m and millions), 2007-2009.....................................................................................................25 Table 3.3: Number of New and Revised Titles Published in UK, 2007-2009.....................26
CONSUMER TRENDS.................................................................................................................26
Online Spending in the UK........................................................................................................26 Table 3.4: Average Online Spending per Capita by Category (), 6 months to 28th February 2010...............................................................................................27 Table 3.5: Drivers of Consumer Online Purchasing Behaviour in the UK (% of respondents), 2010...........................................................................................................28 Table 3.6: Online Shoppers (% of all shoppers), 2009 and 2010........................................29
MARKETING ACTIVITY.............................................................................................................29
Awards...........................................................................................................................................29 The Bookseller Industry Awards................................................................................................30
Contents
The Man Booker Prize.................................................................................................................30 The Costa Book Award...............................................................................................................31 James Tait Black Memorial Prize...............................................................................................32 Orange Prize for Fiction.............................................................................................................32 Trade Fairs.....................................................................................................................................32 Frankfurt Book Fair......................................................................................................................32 London Book Fair.........................................................................................................................32 Other Marketing Activities........................................................................................................32
COMPETITIVE ENVIRONMENT...............................................................................................33
Table 3.7: Top Ten UK Web Book Websites by Share of Visits (%) June and July 2010................................................................................................................................................33
36
CONSUMER TRENDS.................................................................................................................38
Which e-Book Platform?.............................................................................................................38 The Kindle A Users Review...................................................................................................39 Advantages...................................................................................................................................40 Disadvantages...............................................................................................................................40 Consumer Awareness..................................................................................................................41 Table 4.2: Awareness of e-Book Capable Devices (% of Respondents), 2010.................41 Table 4.3: Likelihood of e-Reader Purchase in Next 12 Months (% of Respondents), 2010..........................................................................................................42 Table 4.4: Factors That Might Persuade Non-E-reader Owners to Buy (% of respondents), 2009 and 2010.........................................................................................43
Contents
52
BACKGROUND............................................................................................................................52
Academies and Free Schools......................................................................................................52 e-Books for Universities..............................................................................................................52
MARKET SIZE...............................................................................................................................53
Schools............................................................................................................................................53 Table 5.1: The UK Schools, Academic and University Market by Value (m), 2005-2009......................................................................................................................................53 School and Public Libraries........................................................................................................54 University Libraries......................................................................................................................54
CONSUMER TRENDS.................................................................................................................55
Table 5.3: Appeal of e-Book Features and Functionality (% of respondents), 2009...........................................................................................................55
MARKETING ACTIVITY.............................................................................................................56
Booktrust.......................................................................................................................................57 Centre for Literacy in Primary Education (CLPE)....................................................................57 Federation of Childrens Book Groups....................................................................................57 The National Literacy Trust (NLT).............................................................................................58 The Reading Agency....................................................................................................................58 The School Library Association (SLA).......................................................................................58
COMPETITIVE ENVIRONMENT...............................................................................................58
Free Texts Online.........................................................................................................................59 Student Services Online..............................................................................................................59
6. An International Perspective
60
CONSUMER BEHAVIOUR.........................................................................................................62
Table 6.3: Online Purchases by Type in the EU (% of respondents), 2009.......................62 Table 6.4 Purchases Downloaded Online in the EU (% of Respondents), 2009..............63 Table 6.5: Reasons for Shopping Online in the EU (% of respondents), 2009................64
Contents
7. PEST Analysis
65
8. Consumer Dynamics
67
Overview......................................................................................................................................67
Q1. What would you say are the main advantages of e-books for publishers?.............68 Q2. Aside from the capacity features of e-book readers, what would you say are the main advantages of e-books for consumers?.................................................................69 Q3. Do you see any threat to publishers from e-books? If so what?...........................70 Q4. Do you see any threat to booksellers from e-books? If so what?.........................71 Q5. At present e-books represent only a very small percentage of total book sales in the UK. Will sales of consumer books in e-book format ever outstrip those in print format, in your opinion?............................................................................................................72 Q6. Are there any genres which, in your opinion, are better suited for e-books than others? Which ones?...................................................................................................................73 Q7. Is there a problem with distribution of e-books to territories for which the publisher does not hold the rights? If so, how can this best be overcome?............74 Q8. What features would you like to see for e-book readers that are not currently available?.......................................................................................................................................75 Q9. Are authors generally keen to have electronic editions of their books published, alongside their hard copy editions? ........................................................................................76 Q10. Can you envisage a future where authors publish in e-book format only?..........76 Key Note Summary......................................................................................................................78
9. Company/Supplier Profiles
79
OVERDRIVE INC..........................................................................................................................79
Corporate Strategy......................................................................................................................79 Strengths and Weaknesses.........................................................................................................79 New Product/Brand Development............................................................................................79 Innovations....................................................................................................................................79 Appointments...............................................................................................................................80 Advertising....................................................................................................................................80 Distribution...................................................................................................................................80 Profitability...................................................................................................................................80
Contents
Contents
Distribution...................................................................................................................................88 Profitability...................................................................................................................................88 Table 9.3: Financial information for John Smith & Son Group Ltd (000), Years Ending 31st May 2007-2009.......................................................................................................88 Future Company Developments................................................................................................88
PICKABOOK LTD........................................................................................................................90
Corporate Strategy......................................................................................................................90 Strengths and weaknesses.........................................................................................................91 New product/brand development............................................................................................91 Innovations....................................................................................................................................91 Appointments...............................................................................................................................91 Advertising....................................................................................................................................91 Distribution...................................................................................................................................91 Profitability...................................................................................................................................91 Future Company Developments................................................................................................91
92
94
Associations.................................................................................................................................94 Publications.................................................................................................................................95 General Sources.........................................................................................................................95 Government Publications ......................................................................................................95 Other Sources.............................................................................................................................96 Key Note Sources ......................................................................................................................97
Contents
100
102 103
Executive Summary
Executive Summary
The Internet as a channel for book retailing has matured. There are just a handful of purely online book retailers remaining from the late 1990s and early 2000s which are now firmly established within the online book sector, and these have been joined online offerings from those bricks and mortar bookshops to which they once seemed to pose a threat. Many publishers also sell their titles directly through their own branded online bookstores. Although buying from online bookstores offers a wide variety of choice and generally lower prices a key factor for customers online sales account for less than 20% of total book sales in the UK, whilst chain bookshops retain 40% market share. However, with higher overheads, this sector is less profitable; Waterstones, the UKs only major book chain since the closure of Borders and Books Etc in 2009, saw profits fall during its 2009/2010 financial year. They were affected in part by a general decline in book sales, and also due to Borders closing-down-sale during the Christmas period, which diverted book sales away from their own stores. The previous edition of this report, published in 2007, discussed the rise in the use of the Internet for buying and selling secondhand books. The leader in this sector was Amazon, which through its Marketplace afforded consumers, dealers and publishers the opportunity to trade secondhand books; the company also owns AbeBooks, which has a vast network of secondhand booksellers, including those offering rare antiquities. There have been changes in the wholesale and distribution sector; the economic recession has witnessed the collapse of the retail giant Woolworths, and although the company was not particularly active in the book sector, the group owned Total Home Entertainment (THE), a major book distributor. THE had previously acquired its rival distributor Bertrams, and the two companies were merged as Betrams/THE. Woolworths administration left Bertrams in difficulties; however, a change to the structure of the WH Smith group saw Smith News PLC created, which then acquired Bertrams in 2009 as part of its growth strategy. The biggest change in the online book retailing sector since the previous edition of this report has been the advent of the e-book phenomena. Downloadable editions of out of copyright electronic books have been available for a number of years, most notably through the altruistic Gutenberg Project which continues to see volunteers transcribing texts for download to computers. Other organisations made important works, such as those of Darwin, available for free download, but new books were not readily available in e-book format early on initial reading devices were prohibitively expensive.
Executive Summary
With the launch of several new readers, especially from Sony and Amazon with its Kindle in 2008 this changed, and the publishing industry began to adapt. 2010 has seen a rapid growth in the e-book sector as new technologies, particularly Apples latest iPhone and in April the iPad, have made e-books more accessible. Amazon has responded by launching new editions of its Kindle reader at a lower cost. The e-book sector is still very much in its infancy however. Despite Amazons claims that e-book sales outnumbered those of hardback, e-books remain a fraction of the total online book market; there are still many issues to be resolved, especially involving digital rights. This report has a particular focus on e-books; Key Note invited spokespeople from across the industry to take part in a virtual roundtable, in order to give their responses to a series of questions related to e-books and the issues that surround them. The full discussion can be read in Chapter 8 and Key Note is grateful to representatives from the Publishers Association, the Society of Authors, TheBookseller and e-book Magazine, Accent Press and the Book Depository for taking part. This report also looks at the online book industry as a whole, with depth analysis of the consumer and academic sectors as well as the consumer market for e-books.
Introduction
1. Introduction
REPORT FOCUS
The previous edition of this report looked at the increasing importance of the Internet as a tool for buying and selling second-hand books, a market dominated at the time of publication by AbeBooks and Amazon. In August 2008, Amazon bought AbeBooks a move intended to further increase Amazons supremacy within the online book market. This report highlights the growth of the e-book sector and will discuss both the e-book format and e-book readers. The online consumer, and the online schools and academic market, are also discussed. Once again Key Note is indebted to members of the book industry for the use of the data they collect, with special thanks to The Booksellers Association.
DEFINITION
For the purposes of this report, the definition of the market under review is that which accommodates: the purchasing of books or related services using the Internet for both ordering and payment, or the purchasing of books or related services using the Internet to make orders but making payments offline.
Strategic Overview
2. Strategic Overview
BACKGROUND
The Internet is now very much part of the mainstream for sales of goods and services of any kind. Online retailers of books comprise those with bricks and mortar outlets, such as Waterstones, those for which the Internet is the sole sales channel, such as Amazon, and publishers, such as Penguin Books, for whom the Internet represents an opportunity to sell directly to the consumer. For book-buyers the internet affords all of the resources they need to make their book selections and purchase them from reading book reviews and others recommendations to visiting price comparison sites to find the best deal. Both publishers and booksellers have embraced the Internet as a sales channel, having taken their lead from the pioneering Amazon. Amazon also led the way in popularising e-books, with the development of the Kindle reader which utilised the revolutionary E ink electronic paper display. The Kindle was first available in the US in November 2007, although the first model was never offered for sale in the UK. It wasnt until October 2009 that the second generation Kindle 2 became available here. The Kindle 3 in two versions, both with wireless capability was launched in July 2010 in response to increasing competition, notably from Apples iPad. Priced at 149 for the go-anywhere 3G model and 109 for the model with WiFi connectivity only, both then the least expensive e-readers on the market sold out in the UK and US within days. Amazon do not release sales figures for the Kindle, nor for the number of orders on its waiting list, which makes it difficult to gauge just how big the demand for e-books is from consumers. It does, however, follow that the demand will only grow as the price of readers continues to fall.
Strategic Overview
Table 2.1: UK Retail Outlets Market Share by Volume and Value (%), 2007 and 2009
Volume 2007 Total chain bookshops Other bookshops Total supermarkets Total Internet Total direct mail Total other shops 32 16 15 13 13 12 2009 33 16 15 14 11 10 Value 2007 36 13 10 16 15 9 2009 40 15 10 17 11 7
Strategic Overview
The following shows the top 20 online retailers taken, with permission, from the Top 100 List.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Amazon UK Argos Play.com Apple Tesco Amazon.com Your M&S Next Tesco direct easyJet.com John Lewis Ryanair B&Q Thomson ASOS Expedia.co.uk New Look LoveFilm.com Debenhams Topshop.com
www.amazon.co.uk www.argos.co.uk www.play.com www.apple.com www.tesco.com www.amazon.com www.marksandspencer.com www.next.co.uk direct.tesco.com www.easyjet.com www.johnlewis.com www.ryanair.com www.diy.com www.thomson.com www.asos.com www.expedia.co.uk www.newlook.com www.lovefilm.com www.debenhams.com www.topshop.com
Amazon UK also features highly in the overall top websites, appearing at number 13 in a list headed by Google and Facebook.
Strategic Overview
Table 2.3: UK Top 20 Websites by Number of Visits, Week Ending 31st July 2010
Visits 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Google UK Facebook Windows Live Mail YouTube eBay UK BBC Homepage MSN UK Google Yahoo! UK & Ireland BBC News Wikipedia Yahoo! UK & Ireland Mail Amazon UK BBC Sport Google Maps UK Sky Sports Bing BBC iPlayer BBC Weather Yahoo! Search UK & Ireland 9.4 6.7 2.3 2.1 2.0 1.4 1.3 1.0 0.9 0.9 0.9 0.7 0.6 0.6 0.5 0.5 0.4 0.4 0.4 0.3
Experian Hitwise do not classify Amazon as a bookseller but as a department store, and Play.com is categorised as primarily a music and entertainment site. Although both sell books, bookselling is not considered their primary classification, and for this reason neither appears in Experian Hitwises Top Ten Online Booksellers. Experian Hitwise kindly made the following data available to Key Note.
Strategic Overview
Table 2.4: UK Top Ten Online Shopping and Classifieds Sector Booksellers (% share of sector), July 2010
Sector Share (%) 1 2 3 4 5 6 7 8 9 10 Waterstones.com WHSmith AbeBooks.co.uk The Book Depository.co.uk audible.co.uk David Icke Books The BookPeople AbeBooks The Magazine Group Barnes & Noble www.waterstones.co.uk www.whsmith.co.uk www.abe-books.co.uk www.bookdepository.co.uk www.audible.co.uk www.davidicke-books.co.uk www.the-bookpeople.co.uk www.abe-books.com www.magazine-group.co.uk www.bn.com 11.56 9.00 6.42 3.88 3.71 3.62 3.17 2.85 2.31 2.03
Data supplied for June 2010 showed Alibris.com 10th in the list. Barnes & Noble slipped from the 7th position in June to tenth in the July list, and The Magazine Group made an appearance in July at number 9. The top six positions were the same in each month, although market share changed slightly, with Waterstones gaining share from 10.76% in the June list to 11.56% in July. It is worth noting that despite its own absence from this list, Amazon owns both Abe-books and audible.co.uk.
Market Size
There is a general downward trend in the value of the UK book market according to data published by the National Statistics Office. 2009 saw a 4.2% fall over 2008, which also suffered a fall over 2007. 2009 saw the value of the UK book market at its lowest for 5 years and the downward trend looks likely to continue, with the first quarter of 2010 (January, February and March) also showing a decline from the comparable quarter in 2009.
Strategic Overview
Table 2.5: Total UK Book Sales by Value at Non-Seasonally Adjusted Current Prices (m), 2005-2010
2010
Q1
623 -6.5
Source: Consumer Trends Q1 2010, National Statistics Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queens Printer for Scotland)/Key Note
The Internet is gaining market share of book sales; Table 2.1 shows a 17% share in the value of overall book sales, equating to 531.76m. The following table estimates market share for the years 2005, 2006 and 2008. This shows that despite an increase in market share, the value of Internet book retailing has also fallen as a result of falling book sales overall.
2006 3,332
e13.5
2008 3,265
e16.8
3,398
e11.5
390.77 -
449.82 15.1
546.89 -2.3
Online booksellers increasing share of total book sales is in line with an increase in overall Internet retail sales recently. According to the Office for National Statistics Retail Sales Statistical Bulletin, published in June 2010, the average weekly values for Internet retail sales for the first 6 months of 2010 were consistently higher than those for the comparable periods in 2009.
Strategic Overview
Table 2.7: Non-Seasonally Adjusted Internet Retail Sales (m and %), January-June 2009 and 2010
Total Average Weekly Value of All Retail Sales 2009 Jan Feb Mar Apr May Jun 2010 Jan Feb Mar Apr May Jun 5000 5100 5,300 5,400 5500 5500 373.7 369.0 367.1 388.8 419.3 437.4 7.5 7.3 6.9 7.2 7.6 7.9 4900 4900 5,100 5,300 5300 5400 323.7 317.3 336.8 300.6 304.5 307.4 6.6 6.5 6.6 5.7 5.8 5.7 Average Weekly Value of All Internet Retail Sales Internet Sales as % of Retail Sales
Source: Statistical Bulletin, Retail Sales, June 2010, National Statistics Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queens Printer for Scotland)
Broadband Internet access has been a key driver in the increase in online activity generally this includes the growing popularity of online shopping. By 2009, 63% of UK households had broadband connections, with a further 7% possessing dial up connections, leaving just three in ten households with no Internet access. In 2007, this was just under four in ten households.
10
Strategic Overview
Source: Statistical Bulletin, Internet Access, Households and Individuals, August 2009, National Statistics Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queens Printer for Scotland)
DISTRIBUTION
The supply chain is fully automated with information flowing electronically between publishers, wholesalers and retailers through three main information service providers. These are Batch, owned by The Booksellers Association, Nielsen BookNet, owned by Nielsen Book Services Ltd, and PubEasy, owned by RR Bowker LLC. Batch: (batch.co.uk) The Batch system enables booksellers and publishers of all sizes and technological ability to deal with one another electronically, from processing ordering and invoicing to returns. Nielsen BookNet: Nielsen BookNet, like Batch, is a book transaction service. Nielsen BookNet comprises part of Nielsen Book, whose other services include Nielsen BookData, a bibliographic data service and Nielsen BookScan, which monitors retail sales and provides the book bestseller charts to the media. PubEasy: owned by US-based book data provider RR Bowker, PubEasy is a global Internet-based book enquiry and ordering service working with booksellers, publishers, distributors and wholesalers. PubEasy provides a free ordering service for booksellers. Not all service providers provide the full range of services a bookseller might need; the trade supply chain organisation BIC (Book Industry Communication), sponsored by The Booksellers Association, the Publishers Association, the British Library and the Chartered Institute of Library and Information Professionals (CILIP), is dedicated to improving the efficiency of the trade and library supply chains, reducing cost and automating processes. One BIC initiative is e4books which has the aim of increasing e-commerce transactions with trading partners in the book industry supply chain and its website contains all of the information booksellers, publishers and distributors need to automate their systems, including detailed analysis of which services need to be accessed, according to company size and type.
11
Strategic Overview
Door-to-Door Delivery
In terms of physical book distribution there has been no fundamental change since the previous edition of this report was published; the major book distributors supply all areas of the book industry. Some publishing groups own their own distribution networks, whilst others outsource to third party distributors. There is another layer between online booksellers and their customers the onward distribution to the customers themselves. Whilst some online booksellers carry a high percentage of their stock in their own warehouses, it is not possible to carry all the titles they offer for sale, and many of which are held in their distributors warehouses. Most book distributors offer a business to consumer delivery service for their clients through web shopping basket facilities. The shop window is on the booksellers own website but all customer details are captured on the distributors secure database, whether that be the publishers own distributor or a third party, and from there the orders are assembled and dispatched. Distributors also offer to handle returns, in accordance with their clients returns policies. The main independent book distributors are:
The Book Service Ltd (TBS), Grantham Book Services Ltd (GBS)
Both TBS and GBS are owned by the Random House publishing group which in turn is part of the media conglomerate, Bertlesmann AG. TBS handles over 100 million books a year and is Britains largest book distributor operating from a purpose-built 24,300 square metre site at Frating, near Colchester. GBS distributes around 13.5 million books annually on behalf of 30 independent publishers. The company has an operating capacity of approximately around 109 square metres. Both companies have launched a new Print-on-Demand (PoD) service, in partnership with Lightening Source Ltd and Antony Rowe Ltd, which uses existing warehouse systems with orders passing onto a digital printer electronically. The printed books are then merged for delivery with other orders.
12
Strategic Overview
Overdrive
Relatively new into the e-book market is Overdrive, specialising in the distribution of e-books. Overdrives software and digital warehousing enables the upload, hosting, and sharing of audiobooks, e-books, music, and video through an administration portal which provides sales tracking and reporting.
Customer Deliveries
The main carriers used by online bookstores and distributors to deliver to end customers are DHL, UPS, Royal Mail and Home Delivery Network Ltd (HDNL).
13
Strategic Overview
HDNL grew out of Business Express, originally formed as a result of a postal strike in the 1970s, and Reality Group, owned by GUS, the retailing giant which included the mail order shopping catalogue Littlewoods (as well as the stores) in its portfolio. The merged companies became Shop Direct Group from which HDNL became independent in 2008. HDNL delivers for over 350 retailers in the UK, including Amazon, Bibliophile and The Book People.
COMPETITIVE STRUCTURE
The Internet is reaching maturity as a channel for book retailing; there are few barriers to entry, as online selling has become more straightforward and affordable for anyone who wishes to set up an e-commerce website. As with any market, new entrants face competition from the established giants. In the UK, as in the US, Amazon continues to dominate and other Internet book retailers such as Play.com and the Book Depository compete with the online presence of high street chains Waterstones, WH Smith and Blackwells, among others, as well as competing with the publishers own direct online sales channels. Amazon has also established itself as a marketplace for other sellers in return for monthly fees and a percentage of the selling price. Many booksellers, of both new and secondhand books, have been attracted by Amazons leading position, enabling them to access buyers that they would not be able to find otherwise. However, Amazon uses its might to retain its competitive edge, introducing a new Price Parity Policy early in 2010 whereby booksellers who sell through its Marketplace cannot offer them more cheaply than elsewhere online. This means that no bookseller selling through Amazons Marketplace can undercut Amazon, thereby ensuring that Amazon is guaranteed its percentage of sales. Smaller independent online booksellers, through the Independent Online Booksellers Association (IOBA), are fighting back; the IOBA has declared Amazons scheme anti-competitive, especially as the costs for selling via Amazon are higher than selling directly through independent booksellers own sites and, in June 2010, wrote to government authorities in the UK and Europe accordingly. The IOBA represents some 20 independent booksellers across the UK and Europe, and 250 globally.
ADVERTISING
The Bookseller (www.thebookseller.com) is the only major UK trade magazine for the publishing and bookselling industry. The Publisher, having been in print for 29 years, was forced to close in July 2008 owing to the same dramatic downturn in advertising revenues that was felt throughout the media.
14
Strategic Overview
The decline in advertising spends has continued into 2010, with online booksellers spending reducing by 66% in the 12 months to the end of June 2010 over the same period to the end of June 2009. However, online retailers generally increased their spending in the main media by 17%. Amazon, interestingly, increased its spending in the 12 months to the end of June 2010, perhaps as a result of its Kindle e-reader promotions.
Table 2.9: Main Media Advertising Expenditure by Online Bookshops (000), Years Ending June 2009 and June 2010
2009 Online Bookshops Play.com Sub-threshold brands (24) Total online bookshops % change year-on-year Other Online Products Amazon Product Range Total online % change year-on-year Source: Nielsen Media Research 0 42,853 81 50,205 17.2 134 149 258 0 95 95 -66.4 2010
THE CONSUMER
The Bookseller regularly conducts research into consumer behaviour, and its Reading the Future Survey for 2010 shows the increasing importance of the Internet to consumers when looking for books whether that be the Internet generally or through social networking sites. Bricks and mortar bookshops and supermarkets have lost ground to the Internet, although a quarter of respondents continue to browse in chain bookshops.
15
Strategic Overview
With regard to book purchases, government statistics for 2009 show that four in ten UK adults who had made Internet purchases in the previous year bought books, magazines, newspapers or e-learning material. This rose to half of those aged 65+, with this category comprising the main purchasing category for people in this age group. In contrast, the youngest age group, those aged 16-24, were more likely to buy clothes or sports goods than books.
Table 2.11: UK Adults Who Had Bought or Ordered Online in the Previous 12 Months by Age (%), 2009
16-24 25-44 45-54 55-64 Films, music Clothes, sports goods Household goods (eg furniture, toys, etc.) Holiday accommodation (hotels etc.) Books, magazines, newspapers or e-learning aids Other travel arrangements (transport tickets, car hire, etc.) Tickets for events 53 61 29 23 28 24 30 57 51 54 46 43 42 41 48 44 49 46 41 45 38 39 36 45 51 47 49 36 65+ 21 35 47 47 50 40 26 All 50 49 47 42 41 40 37
Table continues...
16
Strategic Overview
Table 2.11: UK Adults Who Had Bought or Ordered Online in the Previous 12 Months by Age (%), 2009
...table continued
16-24 25-44 45-54 55-64 Electronic equipment (including cameras) Video games software and upgrades Food or groceries Other computer software and upgrades Share purchases, insurance policies and other financial services. Telecommunication services (eg TV, broadband subscriptions etc.) Computer hardware Medicine Other 65+ All
26 35 14 18
31 28 28 20
25 25 22 20
28 15 19 20
21 21
28 26 22 20
18
19
18
17
15 13 4 4
16 18 -
15 14 -
14 14 5 5
Source: Internet Access: Households and Individuals 2009, 28 August 2009, National Statistics Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queens Printer for Scotland)
Convenience is the overwhelming reason for shopping over the Internet: almost eight in ten cite this as the main reason for shopping online. Ease of use, opportunity to buy products not locally available and lower prices were all also popular reasons for buying over the Internet and, to some extent, assurances about legal rights, website quality and feedback from other users were important.
17
Strategic Overview
Table 2.12: Reasons for Internet Shopping of UK Adults Who Had Bought or Ordered Online in the Previous 12 months (%), 2009
Very Much Convenience Easy to use the website Opportunity to buy products not available in my area Lower prices Wider choice of goods Certainty about legal rights and guarantees Certification of quality of quality of website services Opinion rating and feedback 79 61 61 60 52 33 32 32 To Some Extent 18 32 29 32 38 46 42 44 Not At All 3 7 10 8 10 21 26 24
Source: Internet Access: Households and Individuals 2009, 28 August 2009, National Statistics Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queens Printer for Scotland)
18
Strategic Overview
16.4 13.7 12.0 7.6 3.3 3.3 2.1 2.0 39.6 100.0
Trade Associations
The Booksellers Association
The Booksellers Association (BA) represents over 95% of booksellers in the UK and the Republic of Ireland. The BA also owns batch.co.uk, the National Book Tokens scheme, and plays a key part in administering the BookStart scheme for babies and pre-school children through National Book Tokens. In addition to running conferences and industry events, the BA offers advice and information to booksellers and runs a stockists scheme with the Open University. The BA officers are: Jane Streeter (President) The Bookcase, Lowdham Bob Jackson (Vice-President) Gardners Books David Prescott (Vice-President) Blackwell UK Tim Godfray (Chief Executive) The Booksellers Association Willie Anderson (Chairman, Book Tokens Ltd) of John Smith & Son Group Ltd
19
Strategic Overview
Bill Samuel (Chairman, batch.co.uk Ltd) Foyles Tim Trigg (Finance Officer) BA Group.
20
Strategic Overview
In June 2010, the Association wrote to several European government offices, including the European Commission Directorate General for Competition, the EU Antitrust and General Registry and the UK Office of Fair Trading to protest against Amazons Price Parity Policy.
MARKET FORECASTS
The previous edition of this report (2007) forecast a steady increase in UK book sales of 4%. However, the effects of the economic recession have dented sales, and figures for the first quarter of 2010 already show a 6.5% decline in sales from the first quarter of 2009. 2009 sales represented a 3% decline in sales from the first quarter of 2008, according to government statistics (Consumer Trends no. 56, Quarter 1, 2010). Key Note forecasts that UK book sales will continue to decrease as, despite the economy moving out of recession, the full impact of government spending cuts have yet to be felt by consumers. The VAT increase, in force from the beginning of 2011, from 17.5% to 20% will affect e-books and e-book readers. Alongside other taxation increases, this will undoubtedly affect consumers disposable incomes, even for printed books, which are not subject to VAT. A slight recovery is forecast from 2013 onwards, as consumer confidence returns, especially after the goodwill generated by the London Olympic Games in 2012.
The Internet share of total book sales has exceeded the forecasts made by Key Note in the previous edition of this report. The share of total sales value was 17% according to the Books and the Consumer report from BML. Key Note forecasts the percentage share to increase to around 20% by the end of the forecast period.
21
Strategic Overview
Table 2.15: Forecast UK Book Sales on the Internet by Value and Percentage Share of Total Book Market (m and %), 2010-2014
2010 Internet book sales (m) % change year-on-year Internet book sales as a % of total book sales Source: Key Note 540 1.6 2011 542 0.3 2012 559 3.2 2013 564 1.0 2014 590 4.6
18.0
19.0
20.0
20.0
20.5
The forecasts are for print editions of books. E-books, comprising a tiny percentage of book sales currently, will increasingly contribute to the overall value of Internet book sales this will only have a really considerable effect when the market sees e-book readers greatly reduced in price.
22
23
www.find-book.co.uk Most require the name of the book or the author to be entered into the search query box. Results are generally returned with the cheapest option in terms of price and delivery charges presented at the top. Key Note searched for Steig Larssons The Girl with the Dragon Tattoo (list price 7.99) on 20th August 2010 which, by way of example, showed the following results at Book Butler.
Table 3.1: First Ten Price Comparison Search Results for Bestselling Title The Girl With the Dragon Tattoo, August 2010
Availability The Book Depository Amazon .co.uk Waterstones.com Amazon.co.uk Marketplace Alibris Abe-books.co.uk WHSmith.co.uk Pickabook Foyles Tesco in 48 hours in 24 hours see shop in 1-2 days see shop in 2 5 days see shop in 24 hours see shop in 14 days Price 3.98 3.99 4.39 2.20 3.04 2.96 4.39 5.19 6.79 7.99 Shipping 0.00 0.00 0.00 2.75 2.79 3.35 1.99 2.50 2.50 2.74 Total 3.98 3.99 4.30 4.95 5.83 6.31 6.48 7.69 9.29 10.73
initial ten of a total of 68 results returned Note: This search was for the paperback edition published by Quercus, July 2008, ISBN 1847245455 - ISBN-13 9781847245458.
Source: www.bookbutler.co.uk
Amazon famously includes reader reviews on its site, as well as customers own top ten picks, but for those unable to decide which book to choose next there are numerous review sites. Some of the sites allow their visitors to add their own comments. These sites include (but are not limited to): www.lovereading.co.uk: offers a search facility to find authors with similar writing styles to those readers already know. The site also includes book extracts, as well as a price comparison facility; it sells books directly but does not offer reader reviews. www.booklore.co.uk: centres on reader reviews. The site is very text heavy, and at the time of writing held 915 reviews for 790 books.
24
www.thetruthaboutbooks.com: borne out of a book blog, this site provides independent professional reviews, with, at the time of writing, 29 active and 345 archived reviews. www.thebookbag.co.uk: reviews on a selected number of books across most genres, with comments from viewers allowed. Affiliated with Amazon to allow book purchase. www.readysteadybook.co.uk: this was borne out of a book blog by Mark Thwaite, former of The Book Depository and currently with the publisher Quercus. This site is more literary than most, with an impressive roster of contributors including best selling literary authors. Also worth mentioning is www.whichbook.net, a website funded by the National Lottery; the site allows readers to find books through mood selectors such as Happy or Sad, Funny or Serious, Safe or Disturbing, Gentle or Violent. Having made a selection, the site then allows readers to connect to their local library service to borrow the book. The site is not yet very user friendly.
MARKET SIZE
According to Nielsen Book, which produces sales data for the consumer book market, there has been a downward trend in both value and volume in consumer books in the past 2 years. The value of the market was down 1.5% in 2008 over 2009 and down again, by 1.2% in 2009. Volumes also show a falling trend, down by 0.4% in 2008 and 0.5% in 2009. Nielsen collects transactional data from the tills and dispatch systems of all major book retailers, covering over 90% of all retail book purchases in the UK from some 8,500 retailers (both online and off).
Table 3.2: Total Consumer Market (UK Retail) by Value and Volume (m and millions), 2007-2009
2007 Value (m) % change year-on-year Volume (million) % change year-on-year Source: Nielsen Book (www.nielsen.com) 1,800 237.7 2008 1,773 -1.5 236.8 -0.4 2009 1,752 -1.2 235.7 -0.5
25
Conversely, Nielsen Book shows an increase in the number of new and revised titles published, with an 8% increase in 2008 and a 3% increase in 2009. Of course, a greater number of titles published does not equate to a greater number of books printed, but this does show that publishers are offering consumers more choice each year; perhaps this encourages existing customers to buy more titles, rather than attempting to encourage more people to buy copies of the same title.
Table 3.3: Number of New and Revised Titles Published in UK, 2007-2009
2007 Number of titles % change year-on-year Source: Nielsen Book (www.nielsen.com) 119,465 2008 129,057 8.0 2009 133,224 3.2
CONSUMER TRENDS
Online Spending in the UK
Online spending is expected to increase across the board. The PayPal Online Retail Report 2010, published at the end of April 2010 and kindly made available to Key Note, shows a slight increase in consumer spending confidence, with 10% of UK shoppers expected to increase their spending in the 6 months following the interview, in March 2010, compared with just 5% at the same time in the previous year. The research, conducted by Experian and the Future Foundation on behalf of PayPal, shows that shoppers fall into two categories, namely young and child-free creeping optimists and more cautious families and retired people. According to the research, a fifth of the UK population shop online at least once a week, 1.6 million more people than in the same period 12 months previously. It is the ability to compare prices through tailored sites that has been one of the key drivers of increased spending. This allows shoppers, in this period of economic uncertainty, to find the best deals, especially in essentials such as food.
26
Table 3.4: Average Online Spending per Capita by Category (), 6 months to 28th February 2010
2009 2010 (Nov 08-April (Sep 09-Feb10 09) ) Travel Financial services Grocery, food & drink Major purchases (e.g. white goods, cars) Technology Furniture and homewares Clothing General entertainment Small electrical appliances
shoppers own calculations Note: Grocery, food & drink includes alcohol sales.
Book purchases are categorised under the general entertainment heading, which is the third most popular category (after electrical appliances and technology) for shoppers to compare prices within. The following table shows the percentages of shoppers who compare prices online before buying, and who factors in online consumer and or expert reviews before making their purchasing decisions.
27
Table 3.5: Drivers of Consumer Online Purchasing Behaviour in the UK (% of respondents), 2010
Compare Prices Small electrical appliances Technology General entertainment (e.g. books, music, DVDs, toys, films) Major purchases (e.g. white goods/cars) Travel Financial services Furniture and homewares Clothing Health and beauty Grocery, food and drink
Note: Grocery, food and drink includes alcohol.
Read Reviews 35 50 30 44 36 37 34 21 22 15
61 59 58 49 49 49 41 33 23 17
As can be seen, most shoppers tend to compare prices for small electrical appliances online before purchasing and whilst a majority of shoppers buying technology products also compare prices online half take what other consumers and experts have said into consideration before making their purchasing decisions. The entertainment category, which includes books, is the third most popular category for shoppers to compare prices within, but just three in ten read reviews before buying. Table 3.5 shows how shoppers use the Internet to help them make their purchasing decisions, whether that be buying online or off. The following table shows the percentage of shoppers who make their purchases online. As can be seen, fewer than half of shoppers in any category buy online, and the percentage of those shopping online for entertainment (which includes books) decreased between 2009 and 2010. By comparison, this percentage increased in relation to almost all other categories, with the exception of technology, and health and beauty, which each saw a small decrease.
28
2010 44 41 33 25 17 16 13 10 9 6
42 46 31 26 15 13 14 9 9 7
Since the PayPal report was published, the UK has seen a change of government, and an emergency budget release in June 2010 announced large scale spending cuts in the public sector. However, PayPal, in a press release issued on 29th June 2010, stated that it, along with research partners Experian, expected online spending to grow much faster than the broader retail sector, doubling its retail market share by 2010 with a total spend of over 30 bn.
MARKETING ACTIVITY
Awards
Awards are an invaluable form of promotion for the winners in any industry and book publishing and selling is no exception. The trade magazine, The Bookseller, runs its own awards for the trade, whilst the two major book prizes, The Man Booker Prize and The Costa Book Award undoubtedly help promote sales of not just the winning books but of those shortlisted too.
29
30
The 2010 Man Book Prize long list was as follows: Peter Cary: Parrot and Olivier in America (Faber & Faber) Emma Donaghue: Room (Picador) Helen Dunmore: The Betrayal (Penguin) Damon Galgut: In a Strange Room (Grove Atlantic) Howard Jacobson: The Finkler Question (Bloomsbury) Andrea Levy: The Long Song (Headline Review) Tom McCarthy: C (Jonathan Cape) David Mitchell: The Thousand Autumns of Jacob de Zoet (Sceptre) Lisa Moore: February (Chatto & Windus) Paul Murray: Skippy Dies (Penguin) Rose Tremain: Trespass (Chatto & Windus) Christos Tsiolkas: The Slap (Grove Atlantic) Alan Warner: The Starts in the Bright Sky (Jonathan Cape). This long list represents the best 13 books of 138 that were considered for the prize by the judges. Howard Jacobsons The Finkler Question, published by Bloomsbury, eventually won the 2010 prize, after being shortlisted alongside Peter Carey, Emma Donoghue, Damon Galgut, Andrea Levy and Tom McCarthy.
31
Trade Fairs
Also of importance to the bookselling trade are the annual trade fairs, notably the Frankfurt Book Fair and the London Book Fair.
32
These activities have extended to the social networking phenomenon; publishers and booksellers have their own Twitter and Facebook accounts, and many companies conduct special promotional campaigns exclusive to followers of these media. The Bookseller is the main vehicle for publishers trade advertisements.
COMPETITIVE ENVIRONMENT
Experian Hitwise do not consider books to be the prime offering from either Amazon or Play.com, which is why they do not appear in their monthly top ten lists. The data for June and July 2010 were kindly made available to Key Note by Experian Hitwise, and the following table shows the percentage share of the online market according to the number of visits received by each site. The top ten command just under 50% of the market between them, with Waterstones holding over 10% of the market.
Table 3.7: Top Ten UK Web Book Websites by Share of Visits (%) June and July 2010
Domain Waterstones.com WH Smith Abe-books.co.uk The Book Depository.co.uk audible.co.uk David Icke Books Barnes & Noble Abe-books The BookPeople Alibris The Magazine Group Source: Experian Hitwise www.waterstones.co.uk www.whsmith.co.uk www.abe-books.co.uk www.bookdepository.co.uk www.audible.co.uk www.davidickebooks.co.uk www.bn.com www.abe-books.com www.thebookpeople.co.uk www.alibris.com www.magazinegroup.co.uk June 10.76 7.85 6.07 3.71 3.67 3.56 3.51 3.03 2.98 1.91 July 11.56 9.00 6.42 3.88 3.71 3.62 2.03 2.85 3.17 2.31
33
There are numerous other online booksellers; most chain booksellers also sell books online, although for many independents the inability to offer books at a competitive price means their websites tend to be information sites promoting their shops, rather than sales channels. Amazons affiliate scheme also makes it easy for anyone to include a referral to Amazon to purchase books mentioned on their own websites, and this is a popular tool for book review sites, reading group sites and blogs. The previous edition of this report listed examples of several independent online booksellers. Of the 11 booksellers listed three have disappeared: anotherbookshop.co.uk, historybookshop.co.uk and readmore.co.uk. In addition, the-bookplace.co.uk was temporarily unavailable at the time of writing. Those that remain are: computermanuals.co.uk (from Computer Manuals Ltd, which also owns bookfellas.co.uk and sprintbooks.co.uk) countrybookshop.co.uk, which was originally launched in 1997 and also runs Peak Publish, a specialist publishing company alongside the Peak Literary Festival dvd.co.uk, sells music, DVDs, games, electronics, t-shirts, toys and books lovereading.co.uk, which also includes lovereading4kids.co.uk, lovewriting.co.uk and lovereading4schools.co.uk, and is essentially a review site, although its affiliation with Amazon allows purchases to be made pickabook.co.uk (see company profile, Chapter 9) studentbookworld.com, based in Peterborough and has been trading for 7 years to 2010 thebookpeople.co.uk, winner of two 2007 bookseller retail awards, who claims to be one of the largest UK booksellers. There are also a number of media companies which sell books online, and these include: bbcshop.com guardianbookshop.co.uk books.telegraph.co.uk booksfirst.co.uk (The Times) independentbooksdirect.co.uk (The Independent) thetvbookclub.co.uk (Channel4) Publishers themselves were initially slow into the market and although several publishers were selling online when the previous edition of this report was published, some were not. However, it would be regarded as unusual for a publisher not to sell directly now.
34
It is interesting to note that those early into the online sales space mentioned in the previous edition of the report, most notably Penguin Books, Random House and HarperCollins, have also been early to trial selling e-books online.
35
36
MARKET SIZE
This sector is still very much in its infancy and, although accelerating fast, the data to measure the size of the market takes time to collect. It has to be sufficiently robust to offer a reliable market size calculation, which means that e-book sales data is not yet routinely published. Nielsen BookScan told Key Note that the company is building its e-book panel, but as of August 2010 there was insufficient data to measure the market. However, data is available from the US, collected by the International Digital Publishing Forum (IDPF), a trade and standards organisation dedicated to the development and promotion of electronic publishing and content, in tandem with the Association of American Publishers (AAP). The data shown in the following table represent US trade revenues only, collected from between 12 and 15 trade publishers. It does not include library, educational or professional electronic sales, and reflects the wholesale, rather than retail, revenues of publishers. The definition of e-books utilised is all books delivered electronically over the Internet or to hand-held reading devices.
2008
2009
10,829 -
The above table is included in this report to show how rapidly sales of e-books are accelerating in the US. Although anecdotal reports suggest that the UK market is just 1% or 2% of the total consumer market, it would be premature to extrapolate a potential market worth using that percentage.
37
CONSUMER TRENDS
Which e-Book Platform?
Although e-books can be downloaded to, and read from, a computer or laptop, e-book readers have the advantage of using technology which reduces the glare and eyestrain that readers can incur when monitor screens for any length of time. It is here that the industry has devoted much development time, with the launch of the Sony e-book reader, which uses non-glare e-ink, in 2006 followed in 2007 by Amazon with the Kindle. Other technologies have developed beyond the computer, and indeed beyond their own original purpose. Mobile phones, with the advent of the smartphone, contain computer and wireless technology enabling them to fulfil a multitude of applications. This includes the downloading of e-books, in addition to making and receiving phone calls and texts. This is demonstrated with the launch of a new breed of web-enabled devices, including Apples iPad in May 2010 in the UK; the device is known generically as a tablet computer, through which e-books may be downloaded and read. The battleground for dominance of the e-book format is being drawn up: e-book readers, versus smartphones, versus tablet computers. The majority of the potential e-book buying market is waiting to see which device, at which price, will provide the best solution for their needs. For some, interested only in downloading and reading e-books, an e-book reader would seem to be the first choice; this section of people are faced only with the decision of which e-book reader to choose. In July 2010, Dr Jakob Nielsen published the results of a reading test he conducted into the usability of the iPad and Kindle 2, both compared against each other and against a print edition of a book, and computer download of the same Ernest Hemingway short story. The study was conducted among 24 subjects who enjoy reading books. Each read a story using each medium (print, Kindle 2, iPad, computer monitor). The reading speed measurement revealed that neither the Kindle nor the iPad could match the printed book, with the iPad delivering a 6.2% lower reading speed and the Kindle a 10.7% slower reading speed. However it is the user satisfaction score which is most revealing; using a range of 1 to 7 for the satisfaction score, with 7 being the best, the iPad scored 5.8, the Kindle 5.7 and the printed book 5.6. The PC scored just 3.6. The study also showed that users disliked the heavy weight of the iPad and the less crisp grey-on-grey of the letters on the Kindle as well as its pagination, preferring that of the iPads e-book application. Subjects also mentioned that using a computer to read reminded them too much of work. What the study did not show were other factors that might influence consumers decision to purchase.
38
E-book readers tend to use less power than other comparable electronic devices, giving a longer battery life although they have no backlight, unlike the iPad. While the weight of the Kindle is under half that of the iPad, it does not offer the same level of computer, video or Internet capabilities. It is the additional functionality of tablet computers, and perhaps smartphones (although they have a much smaller screen), that may prove to be the limiting factor for e-book readers which could seriously impact future sales. Price, however, is likely to be the core deciding factor. Amazon responded to the launch of the iPad by reducing the price of its Kindle, which they indicate boosted sales, although Amazon do not release actual sales figures. Key Note predicts that if e-book readers become so low in price as to be almost disposable, as some commentators believe they must, they could yet be the device of choice for reading e-books. What is not in doubt is the assured market for the smartphone, where Apples success with the iPhone seriously challenged the Blackberrys dominance. Smartphones are a world away from earlier Internet enabled mobile phones which used Wireless Application Protocol (WAP) technology. Smartphone applications (apps) are available across the whole gamut of information technology, and e-book apps are no exception including Kindle apps for the iPhone, iPad and Android as well as for PCs, both Windows and Mac. Estimates suggest the worldwide smartphone market has grown on average by as much as 55% year-on-year, comparing the second quarter of 2009 and 2010. Smartphones share many advantages with tablet computers and e-book readers, and the rapidly enlarging market for them suggests that they will become the norm as users gradually replace their existing handsets with smartphones (as contracts allow). The biggest issue for consumers however is the lack of cross-platform portability of the e-books they buy, as e-books remain platform specific. Although consumers can choose to download the same e-book to any of the devices they own, they cannot transfer that book from one to the other. Another issue is that where consumers are used to buying printed books which they then own and are free to pass on to someone else, the purchase of an e-book is for the licence only, which prohibits users from passing on their e-books to any third party. Perhaps the biggest limitation is for students for whom the secondhand market in text books is important. Trials of loaning schemes, where books can be checked out and then returned by other users have been launched recently.
39
Advantages
It is light, at 10.2 ounces. It means that you can carry around your whole book collection and dip into it at whim. You can also get newspapers, magazine subscriptions and emails. The pages are remarkably like reading a real book in their look and feel; I was very concerned about reading from a screen, but have had no eye strain whatsoever. The page turning function is addictive not sure I would be very happy to go back to real books again! I love being able to download a sequel immediately, it is hugely addictive. You can read a book sample before you buy. This is great and actually saved me buying a couple of books that I think I would have hated. Its relatively environmentally friendly. Think of the saved trees! The battery seems to last for a long time as long as you switch off the wireless when you arent using it. There is a text to voice function that allows you to have the Kindle read to you. This works perfectly for me on the school run. There is a nifty dictionary function that allows you to clarify the meaning of words as you read. I dont use this much, but when I let my 9 year-old use it, its very useful for her. You can bookmark pages, make notes, etc. I didnt think I would use this function but I have actually used it a fair bit for the books that I read for my book club. When you switch it on it knows where you were up to in a book. This is great for me as I used to regularly spend time flicking through books to work out where I was up to. It looks and feels just so cool! This is part of what makes it so utterly addictive. I am a complete book lover and I thought that part of that was the physicality of the book holding it and inhaling the musty pages. It turns out I was totally wrong; I actually prefer the Kindle.
Disadvantages
It doesnt have a back light. This is a little frustrating for me as I hoped to read in bed at night whilst my husband was asleep. However, the pages really do look like paper which means that you need a light to read as you would with a book. You can purchase a light separately but I think it should be built in somehow.
40
There is something a little transient about the book purchases you make; I have thousands of paper books and I expect to give them to my children some day. I suspect that I wont be handing on my Kindle library. Having said that, my paper books take up vast parts of my house my Kindle takes up a bit of space in my handbag. The battery lasts a long time (which is good) but I am hopeless at remembering to recharge which is a lot less of an advantage. Books never need recharging. You really need the extended warranty in my opinion, which again adds to the cost. You cant just lend out or pass on a book although given the amount of paper books I have lost this way, perhaps that is not such a disadvantage! I worry about investing too much money in something that I know will be obsolete fairly swiftly. Note: Source: Amazon Kindle E-book Reader (Latest Generation), A Review, The Font, hubpages.com, August 2009.
Consumer Awareness
The Booksellers Reading the Future: 2010 (containing research conducted by the research and trends consultancy Next Big Thing) revealed that three quarters of the people interviewed in an online poll of 3,000 people across the UK, all of which had read at least one book in the past year, were not aware of the Amazon Kindle; only marginally more were aware of the Sony Reader (41%). Almost three quarters, however, had heard of the BlackBerry and almost as many had heard of the iPhone and Nintendo DS.
Table continues...
41
As can be seen, awareness of e-readers other than the Sony Reader and Kindle dwindled to 5% and below. Awareness of the iPad, having received a great deal of editorial coverage at its launch, was much greater, with six in ten respondents having heard of it. The survey also asked if readers might buy some sort of e-book reader in the next 12 months; the vast majority responded either definitely not or that it was unlikely.
Just around 28% of those surveyed were open to the idea of buying an e-book reader, and the survey asked all respondents what might persuade them to buy. This question was also asked in the 2009 survey, and it shows that the issue of price became more important in 2010, although even in 2009 a device costing under 100 was only likely to influence just over one in five respondents.
42
Table 4.4: Factors That Might Persuade Non-E-reader Owners to Buy (% of respondents), 2009 and 2010
2009 If it cost less than 100 If it was as easy to read as a book If downloadable books cost less than normal books It was easy/simple to use If there were a lot of books available to download If it was a combined mobile phone and digital reader If it looked good/was well designed and attractive If it integrated with the web (e.g. could download books, use Wikipedia) If print/electronic versions could be bought together as package If supports, enhanced, e-books (e.g. with colour, video, sound) 17.25 21.54 23.10 12.66 15.00 5.68 4.77 n.a n.a n.a 2010 22.23 19.86 16.84 11.09 10.31 5.29 4.79 3.80 3.50 2.32
n.a percentage not applicable, as factor not suggested to respondents in this year Note: factors are ranked by 2010 results.
As the price of an e-book has come down to below that of a printed book in many cases, the issue of downloadable books costing less was not as much of an influencing factor in 2010 as it was in 2009. The additional factors mooted with respondents in 2010 showed that a very small percentage of the sample could be persuaded by them, especially the idea of web integration. Enhanced media books effected the least influence.
MARKETING ACTIVITY
The main advertising spends in the e-book sector are employed by Amazon and Apple as each company promotes its devices. Both are seriously marketing to the mainstream, with advertising spots on major commercial TV channels as well as in the print media. Advertisements for the Kindle necessarily focus on the convenience of an e-reader and the summer campaign, launched in August 2010, highlights the newly low cost of a Kindle, at 109. The iPad campaign, also launched in August focuses on the versatility of the device, highlighting several apps along with the iBooks app.
43
The greater functionality of the iPad allows it to become an advertising platform in its own right through downloadable branded apps.
COMPETITIVE ENVIRONMENT
Rights
The summer of 2010 saw a rights war between the literary agent Andrew Wylie and the publishing giant Random House. The Wylie Agency, having set up Odyssey Editions in order to publish e-book versions of its authors works (exclusively with Kindle), fell foul of Random House; it claimed Wylie did not own the rights to do this. Originally, 20 titles were offered through Kindle in the US from authors Martin Amis, Philip Roth, Salman Rushdie and John Updike. However, after a meeting between Andrew Wylie, President of The Wylie Agency and the CEO of Random House, Markus Dohle, Wylie agreed to withdraw 13 of the titles, leaving just 7 with Kindle. Random House will now make the titles available as e-book editions on a non-exclusive basis. The remaining 7 Odyssey Editions are: The Adventures of Augie March, by Saul Bellow Ficciones, by Jorge Luis Borges Junky, by William S. Burroughs Love Medicine, by Louise Erdrich The Naked and the Dead, by Norman Mailer The Man Who Mistook His Wife for a Hat, by Oliver Sacks Brideshead Revisited, by Evelyn Waugh. In the meantime, in the UK Tom Holland, Chairman of the Society of Authors, criticised publishers for their unfair stances on electronic rights, and urged authors to push for higher royalties for e-books than the standard. The Society of Authors believes authors should receive a 50% royalty for e-books, rather than the standard current royalty, which is typically around 25%. The Society has no quibble with publishers controlling the rights to e-books, especially as they need royalties from bestselling authors to invest in new writers, but it does believe that authors should benefit from lower warehousing and distribution costs in the long term, once the initial investments in digital infrastructures have been met. The Society has given Key Note permission to reproduce its recommendations on e-books, as published on its website.
44
45
Consider granting publishers a licence for verbatim unenhanced e-book rights for 5 or 10 years, rather than for the full duration of copyright; Royalties on e-books should be considerably higher than they are. Until the economics and scale of the market become clearer, we consider that publishers should share e-book income equally with their authors. In any event we particularly encourage authors to try to negotiate steep increases to their royalties at agreed sales thresholds (as publishers recoup their set up costs). On other forms of electronic access e.g. rental and pay-per-view authors should receive at least 50% of the publishers receipts. Authors should have the right to initiate a review of e-book royalty rates every 2 years and have the right to insist that royalties be increased to match those then prevailing in the trade. 3b: Enhanced e-books: Examples of enhanced e-versions: the text of the work with an author interview tacked on; a childrens story including sound and graphics and interactive elements, e.g. a supporting computer game; a recipe app for a mobile. All are different sorts of content, accessed in different ways, often on different platforms. Therefore terms for enhanced e-books both the use and the royalties must be negotiated on a case-by-case basis. The author should have a right of approval over any enhanced or otherwise altered version of his/her work (as opposed to a straight change of format). The author should also have right of first refusal to create enhancements, abridge the work, etc where practicable and be entitled to a fee or fresh advance for so doing. Based on our experience of e-versions in the educational publishing sector (where Internet, intranet, whiteboard and other digitised forms of learning are already a reality): even if the authors work is a small part of the whole in terms of quantity, if it remains the principal component, the author should receive as close as possible to full e-book royalties. Likewise full royalties may well be appropriate for the reuse of only a small part of the original, e.g. for an app;
46
if the new version includes a substantial amount of additional literary, artistic or musical material created by freelances, it is reasonable for the royalties to be shared with such creators (and it may also be reasonable for the royalty to be shared with the supplier of dedicated but not generic software). If the suppliers of significant original new content are being paid one-off fees (as is often the case), it may be reasonable for some of those costs to be a first charge against the authors royalties but the authors royalty should not be reduced in perpetuity. If the work includes enhancements which are created by the publisher in-house and/or are more in the way of packaging and marketing, the publishers should absorb the costs. If the enhanced work includes additional materials from existing sources (e.g. illustrations or music), it should generally be the publisher who pays copyright permission fees (though in some instances it may be reasonable for some part of those fees to be offset against the authors royalties). 3c: Meaningful termination clauses: Contractual provisions giving the author the opportunity to terminate the agreement and revert rights have traditionally been based on the premise that arranging a reprint would be time-consuming and costly. Now works can remain in print indefinitely in electronic form or as print-on-demand at almost no cost to the publisher, when sales have all but ceased. Contracts need to reflect this, especially where the author is committed to an e-book royalty for many years. Many contracts, particularly those negotiated by agents, specify a sales threshold below which the termination provision can be invoked. But some publishing contracts specify that if sales fall below the agreed threshold, the remedy is for the author to give written notice that the publisher must reprint the book. An obligation on the publisher to reprint when sales are already very low makes no sense. Likewise when a work is available only as an e-book or by print-on-demand, there should be an obligation that the work be available almost instantaneously, in which case a reprinting notice period is not appropriate. The Societys model termination clause is: If, at any time, the Work becomes unavailable in volume, the Author may terminate unless either the Work is reprinted in a print-run of no less than [500 copies] within 9 months from written notice by the Author, or the Work is made available as POD within one month from written notice by the Author. Should the work be available only as POD and/or as an e-book, and sales have been below [200 copies] in the preceding 12-month period, the Author may terminate on 1 months notice provided the advance has been earned out or more than [3 years] have passed since first publication (whichever is the sooner).
47
E-book Technologies
There are a number of digital formats in which e-books may be published, but not all formats are compatible with all platforms; this means that publishers must publish several different editions of the same e-book, each with its own International Standard Book Number (ISBN). The International Digital Publishing Forum (IDPF) develops and maintains the industry standards for text-based e-books and publications. It is they who developed the Open Publication Structure (OPS) standard, and also the OCF format which allows components to be zipped for digital transport and delivery. Files using these formats have the ePub extension; ePub is the most frequently used standard, and is compatible with many readers, including Apples suite of products such as the iPad and iPhone. It also works with products which use Googles Android technology, as well as the Sony Reader (since 2009) and others. The Amazon Kindle uses its own proprietary format, AZW, which is also supported by Apple with a Kindle app available for its products. Another common format is Portable Document Format (PDF) from Adobe Systems. The format is very common and can be viewed (and printed) on a variety of computer platforms. PDF documents can easily be created from other publishing software products, but the standard is more commonly used for digital versions of manuals, magazine articles, brochures, leaflets and so on. It is also used for some full length books, although this format does not offer the same kind of flexibility to publishers as ePub and AZW. Earlier e-book formats, designed primarily to offer out of copyright texts by specific e-bookreader designers, including those such as Mobipocket e-book applications for Portable Digital Assistants (PDAs). They were also developed for readers such as Gemstar and eRocket, Hie-book, alongside HTML and plain text e-books for Windows.
48
Almost all online booksellers sell e-books, and are most available to readers compatible with the epub format or PDF versions for PCs or Macs. They also tend to sell e-book readers, notably the Sony versions, but other models are also available, such as the Cybook Opus eReader from Foyles. In terms of price, however, none can compete with Amazons Kindle. Meanwhile the price of many best selling e-books remains comparable or even higher than that of the respective print editions. Barriers to entry for the e-book market are much greater than for the selling of print books online, as the supply chain is very different and not yet as streamlined as that for print books. With e-books supplied in digital format to re-sellers, there is an issue of trust for publishers who cannot necessarily keep track of sales as readily as they can for print books. Although new entrants may have the physical capability to sell e-books, it is unlikely they will have the trust required from the major publishers to offer the widest range of e-book titles. However, there are opportunities in the market kobobooks.com, developers of the Kobo e-book reader in the US, launched in the UK in February 2010. Kobo (an anagram of book), is backed by Borders (which survived in the US, and which sells the Kobo e-book reader) as well as other investors. Its main selling point is that its books can be read on any e-reader, with the exception of the Kindle whose users are tied into buying their e-books from Amazon. The UK offering includes e-books from all of the major publishing houses including Random House, Penguin Group, Bloomsbury, Simon & Schuster and Faber & Faber, and there are intentions to work with smaller publishers too. Whilst a dedicated e-book store is to be welcomed, Kobo needs to tailor its offerings more specifically towards the UK market its Football category, for example, contains books on American football rather than soccer, and the category listings are somewhat bizarre, with (for example) a book on Keith Richards appearing under Crafts and Hobbies. In the US, other online booksellers devoted purely to e-books are beginning emerge. Examples include cyberread.com and e-books.com, and in addition there are also numerous sites offering free e-books, which are largely digital editions of out of copyright books, as pioneered by Project Gutenberg.
Be-Book Mini
Weighs 150 grams with a battery life of 9,000 pages. Includes a text to speech function. The list price in the UK is 179, but it is available from Foyles for 159. 100 free e-books come pre-installed as standard.
49
CyBook Opus
Weighs 150 grams with a battery life of 8,000 pages. It retails in the UK for 179, but is available at Tesco Direct for 149.97.
COOL-ER
Weighs 174 grams, with a battery life of 7,000 pages. Although there is no search or built-in dictionary, the e-reader offers a bookmark and menu facility. It is listed at a recommended retail price of 189 in the UK, although retailers such as Argos may offer it for less. Its plastic casing makes it less robust than some other models.
Elonex 511EB
Weighs 180 grams, with a battery life of 8,000 pages. Originally launched by Borders in the UK, the reader is now available through stores such as Currys where it retails for 149.99. It comes pre-loaded with 100 e-books, and features include an in-built microphone to make notes as well as an integrated speaker with headphone sockets to enable music listening.
Kindle
Weighs 241 grams, with a battery life of 1 month (with wireless turned off). Features include text to speech, built-in dictionary and notes/highlighters, making it useful for students. It has an anti-glare screen, unlike many other readers. Available from Amazon for 109.
Kindle 3G
Weighs 247 grams, with all the features of the Kindle wireless reader but with additional 3G Wireless. Available from Amazon for 149.
50
Nook
The Nook reader, from Barnes & Noble, is unique in that it allows lending of e-books to other Nook users (although the original owner cannot read the book during the 2-week lending period). It also has colour navigation of book covers (as does the iPad) and wireless connectivity. However, at the time of going to press, it was not yet available in the UK.
51
52
Most university bookshops located near to universities in the UK also maintain online bookstores. They are, however, currently less likely to offer texts in e-book formats, and students are limited to using their university library resources for access to these. One exception is to be jscampus.co.uk, the online bookshop of the university book shop chain, John Smith and Son, although this was not yet launched and functional at the time of going to press.
MARKET SIZE
Schools
The value of the educational market, including books for schools, academic institutions and universities is estimated at 453,927 for 2009. This figure is based on all book sales, and includes those purchased online. Table 4.1 is based on publishers sales figures to 2007 available from the Office of National Statistics (ONS). Figures for 2008 and 2009 have been estimated by Key Note, extrapolated from volume data supplied by Nielsen BookScan. As can be seen, an increase of 4.1% has been estimated in value for 2009 from the 2008 figure, although a decline of almost 1.8% was estimated for 2008 from 2007. Estimates for both 2008 and 2009 show a marked stalling in value growth from 2007, a reflection of the economic downturn. The following table includes spending in schools, academic institutions and universities.
Table 5.1: The UK Schools, Academic and University Market by Value (m), 2005-2009
2005 Educational % change year-on-year
e Key Note estimates
e2008
e2009
349,787 -
436,140 -1.8
453,927 4.1
Source: PRA 22110 Publishing of Books 2007, National Statistics Crown copyright material is reproduced with the permission of the Controller of HMSO (and the Queens Printer for Scotland)/Key Note
53
University Libraries
University libraries are an important resource for students; the combined library resources of the University of London colleges, for example, comprise almost 3 million volumes, thousands of journals, specialist research materials and special collections of important first editions, as well as political pamphlets from across the globe. These libraries provide over 12 miles of open shelf access. The University of London is, like all university libraries, also increasing its e-resources, which include databases and journals amounting to almost 3 million volumes. There are a number of suppliers of e-content to the university library market including NetLibrary, perhaps the largest provider. It runs an e-book division, and is increasing its services as an e-content provider for academic, public, medical, corporate and other libraries, providing access to multiple formats and titles from publishers worldwide. Other library resources for electronic content include: Construction Information Service (CIS) Credo Reference Early English Books Online (EEBO) Eighteenth Century Collections Online (ECCO) FORENSICnetBASE Lexis Library Literature Online (LION) Westlaw. Whilst university libraries provide a valuable resource, students still need their own text books, many of which are too highly specialised to be stocked by high street booksellers. They are therefore largely bought online, directly from the publishers websites or traded secondhand through specialist websites.
54
CONSUMER TRENDS
The benefits of e-books and e-book readers to students may seem obvious especially in the relative ease of transporting many texts on a portable e-book reader but there are some disadvantages, as discovered by a usage study conducted by the University of the West of England (UWE) Library Service. The study, funded by Elsevier publishers and the Library and Information Research Group (LIRG) was designed to ascertain whether e-books meet users needs, and if there is a place for e-books within the context of a multidisciplinary academic library collection. The survey found that the overwhelming appeal of e-books was their accessibility, with 88% of the 2,214 responses to this question citing this as a key benefit.
88 77 68 50 42 38 28 12 4 3 1
Source: UWE Library and Information Research Group, Library and Information Research, Volume 33, Number 104, 2009 (pp 45-65)
Of the students surveyed, 62% identified themselves as e-book users. Those who did not use e-books cited not knowing about them as the most common reason, which the authors of the report construed as perhaps a criticism of the librarys promotional efforts. However, some also expressed a preference for print books and the advantages here included: The physical aspect the look, feel and even smell of print books, as well as the ability to visualise where the information is on a page.
55
The fact that no technology with the potential to break is required. The ability to easily annotate print texts. The fact that it is easier to concentrate when reading a print book, and the information is more easily retained. The reliability of print books and their availability in print form (as opposed to lack of specific availability in electronic form). Academics were also interviewed for the study; they saw various roles for e-books, including essential readings for students, reference, exploitation of primary sources and for interactive use in lectures (for example to demonstrate a working mechanical part). Academics also identified some drawbacks, inertia being cited most frequently, arguing that if recommended texts are easily available in electronic format students and staff might be seduced into using only these and not searching more widely for other relevant information. There was also concern that e-books would reduce students library and research skills. Both academics and students mentioned eye-strain resulting from screen reading. Other concerns included the time needed to become familiar with the usage of e-books, especially the different forms and interfaces. Most still felt a need to print off information accessed from an e-book. The study concluded that whilst the availability of e-books is an advantage, the range in particular discipline areas is limited, especially for secondary materials. Also e-books may not be meeting the needs of students if their use leads to surface (as opposed to deep and affective) learning, and inertia. However, the study also concluded that there are many roles for e-books within the academic library, especially in relation to dictionaries and reference books, as well as for core texts.
MARKETING ACTIVITY
University and other educational book publishers and bookshops advertise their titles in various educational and trade magazines, as well as exhibiting at the major book fairs, especially Frankfurt and London. There are also trade shows dedicated to the educational publishing sector, most notably the TES Education show which for 2010 is held at the beginning of October at the London Olympia Exhibition Hall and the Education Show, which for 2011 will be held at the NEC, Birmingham, in March. The childrens book market which includes educational books is very well served by various organisations which promote reading. Brief summaries of the most active of these are given below, reproduced from Key Notes 2010 Childrens Book Publishing report.
56
Booktrust
Booktrust began as the National Book Council in 1924, before becoming Booktrust in 2001. It is an independent UK-wide charity dedicated to the enjoyment of books for all people, of all ages and cultures. Booktrusts strategic aims are for universal, but targeted access to books, achieved through; the Bookstart scheme, which provides free books for children from babies to 3-year-olds; Booktime, for primary school children; and Booked Up, which provides one free book for 11-year-olds, after they have started secondary education. The universal aspect of its strategy is achieved through The Letterbox Club, which focuses on improving the educational outlook for children aged 7 to 11 in foster families by providing them with a parcel of books, maths activities and educational materials every month for 6 months. It also provides a tailored selection of free books for deaf and visually impaired children up to the age of 5, and plans to develop ways in which it can support socially excluded children and families through working with hospitals, hospices, Pupil Referral Units (PRUs), traveller groups and home-educated children. Booktrust administers several literary prizes including, for adults, the BBC National Short Story Award, the Orange Prize for Fiction and the Orange Prize for New Writers among other awards.
57
COMPETITIVE ENVIRONMENT
There are several well established university presses, the Cambridge University Press and Oxford University Press being perhaps the best known. There are also book publishers associated with other universities: the Liverpool University Press, Manchester University Press and Nottingham University Press. University presses tend not to sell books directly to the public online, although many titles may be bought from the major online booksellers. Educational publisher account holders tend to be university and other educational libraries. Educational and academic e-book publishing appears to be growing rapidly as university and higher educational libraries increase their stock and promote the use of e-books to staff and students. Students, using their student IDs, can often log into the library system and browse e-books online. The systems appear to limit the reading of e-books to computer screens only, which ties students to their computers rather than allowing the flexibility that an e-book reader affords.
58
Issues of DRM (digital rights management) prohibit the sharing of e-books between devices, in effect barring students from borrowing e-books from their university libraries to read at their leisure on their own e-book devices. Another potential issue is where students are permitted to take reference texts into exams. Should the texts be available only in e-book format their use would be more difficult to monitor, complicating the task of exam invigilators. For these reasons it is unlikely that e-books will take the place of printed primary texts in the foreseeable future.
59
An International Perspective
6. An International Perspective
MARKET DEVELOPMENTS
The US remains the key driver behind technological advancements in the online book market, from Amazon.com the grandfather of online booksellers and creator of the Kindle e-book reader, Apple whose tablet computing technology may yet revolutionise the way e-books are read and Google which set the standard in search technology to Project Gutenberg, which began in 1971 at the dawn of the internet revolution, with founder Michael Hart typing in texts into the University of Illinois computer for sharing on the Internet. Although online trading isnt necessarily limited by geographical barriers, copyright restrictions restrict how books, including e-books, may be bought and sold online with orders from one territory, for example, unable to be fulfilled by another if the publisher of the title in that territory does not have rights to sell in another.
COMPETITIVE ENVIRONMENT
Table 6.1: Top 10 UK Export Regions by Value (m), 2008 and 2009
% Change 2008-2009 -2.6 -9.5 14.8 15.9 -0.6 5.4
2008 US Republic of Ireland Germany Australia Netherlands France 172.3 160.5 120.0 86.6 97.8 72.6
Table continues...
60
An International Perspective
Table 6.1: Top 10 UK Export Regions by Value (m), 2008 and 2009
...table continued
% Change 2008-2009 4.7 27.8 21.5 1.8
2008 Spain Japan South Africa Italy 59.7 47.1 47.9 48.9
Source: Publishers Association, BIS Value of Book Exports 2009 (based originally on HM Revenue & Customs data)
The US remains the biggest market, followed by the Republic of Ireland, but the value of each decreased in 2009 compared to 2008. The previous edition of this report noted a continuing decrease in the US market (it had stood at 221.1m in 2005); the value of exports to the Republic of Ireland has generally increased since 2005, when they stood at 114.7m, although this value decreased in 2009 compared to 2008. Between 2008 and 2009, the only other market which showed a decline was that of the Netherlands; all other markets grew in value, with both Japan and South Africa growing by over 20%. Overall, the value of UK book exports grew by 4.7%, although there was a slight decline in the value of exports to those Western and Eastern European countries not included in the EU. The biggest decline, of 8.5%, was to those American countries which do not include North America.
61
An International Perspective
Table 6.2: Value of UK Book Exports by Area (m), 2008 and 2009
% Change 2008-2009 4.7 1.5 -1.5 -2.4 0.1 -8.4 17.3 16.1 14.0
2008 UK world Total EU 27 Western Europe Eastern Europe US Other (non-US) America Middle East and North Africa Sub Saharan Africa Asia and Oceania 1,591.7 799.2 66.2 29.1 201.1 42.9 87.4 77.4 288.5
2009 1,666.9 811.2 65.5 28.4 201.3 39.3 102.5 89.9 328.8
NB: Western Europe, Eastern Europe and the Middle East and North Africa exclude the 27 territories of the EU.
Source: Publishers Association, BIS Value of Book Exports 2009 (based originally on HM Revenue & Customs data)
CONSUMER BEHAVIOUR
Table 6.3: Online Purchases by Type in the EU (% of respondents), 2009
Travel, holiday, accommodation Clothes, sports goods Household goods Tickets for events Books, magazines, newspapers or e-learning material Films, music Computer software (inc. games) Electronic equipment Computer hardware 19 17 13 13 12 12 11 10 7
Table continues...
62
An International Perspective
Whilst travel and services associated with travel are top of the list, books are bought by a higher percentage of individuals than those buying computer software. Film and music purchases are made by the same percentage of individuals as books and magazines. The films and music category tops the list in the UK survey listed earlier in this report (see Table 2.11). However, where purchases are downloadable, films and music are bought by a higher percentage in the EU than downloadable books and e-learning material, as shown below.
Price is the main driver for shopping online, with 50% of individuals stating that lower prices are a very important factor in their decision to shop online.
63
An International Perspective
As consumers across the globe continue to feel the effects of the economic recession, the Internet will continue to play an important part in helping consumers search for the lowest prices.
64
PEST Analysis
7. PEST Analysis
POLITICAL
The Academies Act, passed in July 2010, enables any school, including primary schools, to apply directly to the government for Academy status. Academy schools are not under the control of Local Authorities, and nor are they required to follow the National Curriculum. They may also set their own working hours and term times. The Act also allows for the creation of new Free schools which can be run by any charity, business or interested group, and will enjoy the same freedoms as Academy schools. The implications for book publishers and sellers, especially those who plan their catalogues around the National Curriculum, will take time to be understood. The emergency budget announced shortly after the coalition government came to power in May 2010 declared that VAT would rise to 20% on goods and services from January 2011. Although VAT is not payable on printed books, periodicals or newspapers, it is payable on downloadable electronic versions and the increase will have a negative effect in both the consumer and educational book buying sectors.
ECONOMIC
Government spending in the private sector is being radically reduced, and although new jobs are expected to be created in the private sector, it is likely that unemployment will rise considerably during 2011. Spending cuts and rising unemployment will affect consumer confidence and spending on books will continue to decrease. However, book buying on the internet will increase, as consumers already use it to seek out the best bargains, and those online booksellers offering the best prices will gain.
SOCIAL
The Internet continues to be the prime market for trading secondhand books, through eBay, Abe-books and Amazon Marketplace, as well as via numerous other classified advertisement sites such as Gumtree. Consumers are no longer passive they are reviewers and sellers too. Social networking sites, especially Facebook and Twitter, are used by brands to connect directly with consumers, and booksellers are no exception with many including follow me buttons linking to their various social network pages on their websites. This affords a way of keeping in touch with interested and engaged customers in a more informal way. The barriers to entry into the online bookselling market remain low, but competition is fierce and without the cost-saving infrastructure of the major sellers, new entrants cannot compete on price. It is price which is the deciding factor for the majority of shoppers.
65
PEST Analysis
Even value-added services, such as book comparisons and relevant and interesting book reviews, sales are not guaranteed; shoppers may simply absorb content from one site before buying it from another cheaper seller. The market for buying and selling printed books online is now mature. Still in its infancy is that for e-books, and here the model differs. E-books are formatted for use on particular devices, and because of the restrictions of DRM, consumers cannot move e-books from one device to another. There is no market for re-selling e-books, as the price paid is not for the book itself but for a licence to download the book to a specific device.
TECHNOLOGICAL
Mobile phone technology has developed considerably since the last edition of this report was published. 2007 saw the launch of a new generation of multimedia and Internet enabled smartphones, including Apples iPhone which owes more to the computer than the basic cell phone, utilising touchscreen technology and virtual keyboards. Open-source technology (allowing third party developers access to the source code for applications) saw a multitude of new applications become available for download to smartphones, and this continues apace. It includes e-book reader applications (or apps) which enable consumers to download e-books to read on their mobile phones. Although Apple was not first into the market with its iPhone, its high media profile means its products rapidly enter the consumer consciousness as was the case with its launch of its tablet computer, the iPad in April 2010. Tablet computers are mobile computers and use similar technology to smartphones, including wireless and touchscreens. Again, a variety of apps may be downloaded to tablet computers, including e-book readers. E-book readers themselves also continue to evolve. E-ink and e-paper, and being non-backlit (unlike a computer screen) replicate the reading experience of a print book but require external light for reading. The grey-on-grey tones are also easier on the eye, but the advent of tablet computers with backlit screens and the introduction of colour to e-books, may make tablet computers a more desirable purchase for e-book reading.
66
Consumer Dynamics
8. Consumer Dynamics
Overview
Key Note invited industry practitioners, including publishers, booksellers, industry commentators and representative trade associations to comment on a series of questions with an e-book focus. Those taking part were: Katie Allen, Media Editor, The Bookseller magazine The Bookseller is the prime trade magazine for booksellers. Hazel Cushion, Managing Director, Accent Press Ltd Accent Press is an independent publisher founded by Hazel Cushion in 2003; she has won several awards including the Pandora Women in Publishing Award and Entrepreneur of the Year and Best New Business. The company has four specialisms: developing new writing talent, charity books including celebrity cook books, educational and erotic writing aimed mainly at women. Martin Hoscik, Owner, Editor and Writer, e-Book Magazine e-bookmagazine.co.uk was founded by Martin Hoscik in 2009 as an online magazine for news, advice and reviews of e-books and e-book readers. Although the site also sells books and e-books, its prime function is as a news and comment source. Emma House, Trade & International Director, The Publishers Association The Publishers Association is the prime trade association for book publishers. Mark Le Fanu, General Secretary, The Society of Authors The Society of Authors was founded in 1884 to protect the rights and further the interests of authors. It has over 8,500 members. Kieron Smith, Managing Director, The Book Depository The Book Depository was founded in 2004 by Andrew Crawford, one of the key founders of Amazon in the UK. Kieron Smith was previously Managing Director of bookrabbit.com and Head of eCommerce at Waterstones Booksellers, and joined the company in August 2008.
Please note that some respondents did not feel qualified to respond to some of the questions.
67
Consumer Dynamics
Q1. What would you say are the main advantages of e-books for publishers?
Katie Allen, The Bookseller: Cheaper fewer costs such as printing/transportation. Speed quicker than a print title so can be more reactive to current events. Marketing opportunities for example buy the book, get the e-book as part of a bundle; or free downloads of extracts/entire book leading to print sales. Chance to reinvigorate the backlist. Introducing authors/books to new/different readers and larger audiences. Opportunities for enhanced e-books/multimedia e.g. video, images, author interviews a more interactive and appealing product, especially for younger and more tech-savvy audiences. Hazel Cushion, Accent Press: E-books offer great benefits for publishers especially regarding the supply chain. They are immediately available, can be easily updated and revised. There is no cost to print, store or ship plus payment (from our own sites) is immediate. Emma House, Publishers Association: By offering a new platform for reading, e-books could potentially expand the market and refresh the traditional reading experience for consumers. For example, publishers can experiment with the digital format in e-books, making them more interactive and developing their functionality, to appeal to a broader market base. Publishers can also reach more readers through the enhanced access to books which downloading offers. E-books can also be read on an expanding number of hardware tools, which are proving ever more efficient, user-friendly and multi-functional, and may serve to attract more readers in the long term. Martin Hoscik, e-Book Magazine: I think the biggest benefit, especially with Internet connected e-Readers, is that books have joined music and, to a lesser extent, TV & film in being an impulse buy instead of having to visit a store or wait for the postman to bring an online purchase, books can be in the readers hands in seconds.
68
Consumer Dynamics
However the buying public widely perceive the main benefit to as being lower overheads which, as they see it, publishers are refusing to pass on to customers. When the e-book version of a particular title costs 16 and the hardback 9.99, customers simply conclude that theyre being ripped-off. The industry as a whole needs to accept that buyers will never be convinced that removing the need to print, bind, ship and store physical books has no cost benefit which can be passed on to them and find a way to bring at least price parity between formats. Kieron Smith, The Book Depository: There are obvious advantages in extending the reach of a title, both physically (i.e. geography, territories that have poor or little distribution or prior arrangements arent in place) plus in terms of extending the life of a title beyond the existing lifecycle. They also have the ability to at least be a little adaptable, e.g. text size can be increased so removing the need for large print editions, and text can also be read out loud where there isnt a competing audio licence. For many publishers they will see the key potential advantage as total control over content, distribution and DRM means no secondhand market, and potentially more direct control of price. Yet the format almost inevitably leads to more commoditisation as it is consistent, available across the board and is difficult to augment, so could in fact lead to further destruction of value within the book industry.
Q2. Aside from the capacity features of e-book readers, what would you say are the main advantages of e-books for consumers?
Katie Allen, The Bookseller: Price current pricing wars mean that retailers are falling over themselves to offer cheaper titles. Ease a download rather than visiting a bricks-and-mortar store; much quicker. Variety infinite range online as opposed to the limited stock in store. Hazel Cushion, Accent Press: With regard to our erotic range, Xcite Books, I believe the main advantage is the discreet and immediate nature of e-books. They are available instantly and our recent survey showed that 60% of our customers simply read them on their PCs or laptops. Emma House, The Publishers Association:
69
Consumer Dynamics
E-books offer a route for consumers to access books on a wider scale. Some readers may find buying e-books a more convenient experience through downloading, rather than visiting a physical shop. E-books can be more interactive, graphic and experimental than print books, offering variety to consumers, and may subsequently have a broader appeal beyond the traditional print book market. Martin Hoscik, e-Book Magazine: The biggest benefits are the obvious portability of the devices themselves, as well as the ability to switch between various books without having to make a conscious decision to take them with you or making the effort to carry them around. Many e-book fans I speak to are especially vocal in advocating the format for holiday reading, for these reasons. Kieron Smith, The Book Depository: Dont take up space, available immediately. For example one highly consumer area is that of the smaller romance titles, where many are read and disposed of quickly.
70
Consumer Dynamics
Publishers currently treat e-books as a potential alternative revenue stream. Much like the hardback/paperback context, e-books are simply another conduit for readers to access the works that they want. Martin Hoscik, e-Book Magazine: The competing DRM (digital rights management standards and formats (Apples iBooks, Adobe ADEPT DRM, Kindle) appear to be encouraging people to consider breaking the copyright protection on their books in order to achieve portability across devices. There seems an especially significant level of interest in breaking the Adobe DRM used by for e-books historically read on standalone devices to allow the books to be side loaded into the iPads iBooks application. As I see it, the danger is that once people have cracked the files, theres only a very short logic gap between doing so to put your existing purchase on your new device and offering a copy to a friend. Publishers and retailers need to work at rallying around a single DRM format (or ideally none) before e-book piracy becomes as wide and acceptable as digital music piracy. Kieron Smith, The Book Depository: Further commoditisation, difficulties adding value to the book, further pressure on physical sales and booksellers this means that there will be a skills gap in actually selling titles, merchandising and pricing them to market.
71
Consumer Dynamics
Publishers value booksellers enormously, both online and on the high street. It is of particular note that around 95% of booksellers revenue comes from print books. E-books may take up more of a percentage of sales as their popularity grows, but we do not believe that they will replace print books, or the act of buying print books, altogether. Martin Hoscik, e-Book Magazine: The belated arrival of Kindle in the UK, and Apples iBooks essentially an extension of its hugely popular iTunes store are a real threat to other booksellers. As previously mentioned, both use non-standard DRM formats which lock other retailers out of those devices and apps. Although the iPad can access bookstores from other companies, anecdotally it seems customers want their books available within a single app or on a single device. By not being on the iPad from launch, traditional UK e-book sellers risk ceding the market on that device to Apple. With more tablet devices expected to launch, its probable the days of standalone readers are numbered, long before they ever really become mainstream. Its therefore vital that traditional retailers look to the apps sector if they are to have a future in e-book retailing. Kieron Smith, The Book Depository: Same as Q3, plus the belief from publishers that they should one, maintain pricing, and two, own the relationship in an attempt to remove booksellers from the equation.
Q5. At present e-books represent only a very small percentage of total book sales in the UK. Will sales of consumer books in e-book format ever outstrip those in print format, in your opinion?
Katie Allen, The Bookseller: One day I think so. At the moment it seems consumers are driven by price and ease, so I think once the price of e-readers/the iPad comes down and the devices become more affordable and as more people have iPhones/phones with Android capability, sales of e-books will take off. It will be a very slow process though, as people are unlikely to want to give up their print books but as more grow up using e-books they are likely to become the dominant format. In fact I believe Victoria Barnsley of HarperCollins said e-book sales would be 50% of the market by 2020. Hazel Cushion, Accent Press:
72
Consumer Dynamics
Yes, in certain genres such as erotica. We have already seen a fivefold growth in our Xcite e-book sales this year. Emma House, The Publishers Association: This is a possibility, but we believe that print books will prove to remain popular even if e-books become a staple of the market. Martin Hoscik, e-Book Magazine: Generally I dont see this happening. Maybe it will with certain genres or authors, but its hard to see the driver behind such a development. Certainly while paper books remain cheaper than their e-book counterparts its not going to happen, and that price disparity is an oft-cited barrier to people adopting the format in the first place. Kieron Smith, The Book Depository: No.
Q6. Are there any genres which, in your opinion, are better suited for e-books than others? Which ones?
Katie Allen, The Bookseller: The form seems to be very popular with science fiction/fantasy readers, who are already early adopters of digital formats. Romance also works well. Academic is the obvious choice as it enables students/lecturers etc to carry around what would have been heavy tomes. Non-fiction is trickier to produce because of the need for enhancement videos, links, pictures, etc which will, I think, ultimately make the titles really exciting and interesting, but they are still in early development stages. Hazel Cushion, Accent Press: For us, self-help is also selling well, followed by commercial fiction. I think the discreet nature of delivery is ideal for erotica and self-help. Avid readers enjoy the availability of fiction titles and are more likely to try a new author in e-book. Emma House, The Publishers Association: Travel or business-related books may be better suited as e-books in the long term. For instance, having access to travel information that is bespoke to individual holidays and circumstances, plus the benefits of keeping the information on a portable, travel-friendly device, may be more appealing to consumers. Certainly, academic and educational works have been converted into electronic files for decades. Those books which provide a practical function can transfer easily into the digital sphere.
73
Consumer Dynamics
Martin Hoscik, e-Book Magazine: Until recently, the general lack of colour screens would have prompted me to say fiction and non-image based books were better suited for the format. However, the arrival of e-book capable tablets, complete with instant internet access and full colour screens, opens the way for content rich books which could transform manuals, educational books and other factual genres. Kieron Smith, The Book Depository: Romance (e.g. Mills & Boon), erotica, computer programming and travel.
Q7. Is there a problem with distribution of e-books to territories for which the publisher does not hold the rights? If so, how can this best be overcome?
Hazel Cushion, Accent Press: We dont have this problem as we always buy world rights. Emma House, The Publishers Association: Respect for territoriality is as important in the digital world as it is in the physical world. Book rights are often divided up by territory and as with e-tailers selling physical books, there must be respect by the e-tailer for the territorial arrangement an author has with a publisher for digital product. This is a complex issue on technical and legal grounds, meaning that solutions will not be so easily implemented in a short amount of time. Publishers are assisting e-tailers with alleviating any problems that may arise by ensuring that the correct metadata is inserted when a book is advertised online metadata refers to the relevant information about a book including, for example, a description of the story, an ISBN code or rights information. An online retailer is generally following the metadata, so if this information is wrong then territorial requirements become confused. Additionally, online retailers security and payment systems must be bolstered to ensure that books are sold within their appropriate territories. The process of buying a book cannot have any discrepancies which would allow, for instance, a US version of a book to be bought in the UK. Martin Hoscik, e-Book Magazine:
74
Consumer Dynamics
I think consumers are often confused by the wild variations in the availability of titles between e-book stores titles one store has may not be available in a rival, and the confusion and sense of frustration is often increased when a web search shows a given title is available, say in the USA, but not in the UK. Also, there are some major authors not available in e-book format which again can be a barrier for take-up. Kieron Smith, The Book Depository: This is relatively well controlled at the moment; publishers must work closely with booksellers over onix feeds and [Internet Protocol] IP restrictions on sites, onix should be revisited when rights sales are made. This can only really be overcome when publishers focus on getting worldwide rights for all titles.
Q8. What features would you like to see for e-book readers that are not currently available?
Katie Allen, The Bookseller: I just think they need to be a lot prettier to combat the Apple iPads stylishness. Hazel Cushion, Accent Press: I think most people will wait until e-readers offer Internet and email access as standard features. I also appreciate the opportunity to listen to audio books on mine. Martin Hoscik, e-Book Magazine: Despite the claimed superiority in the screen technology over multi-purpose devices, Im not convinced standalone readers have a long term future at least not at a price point which allows for a rich feature set and ongoing improvement. Were already seeing the marking down of major brand e-readers as manufacturers and retailers struggle to make grey-screen, non web-enabled devices seem attractive against newer entrants. If standalone readers have any future, its probably at a sub 30 price tag, where they become almost disposable. If you look at how digital TV boxes and MP3 players have become commoditised and priced at a level that you pick them up with your grocery shopping almost on impulse, I suspect thats the fate of dedicated e-book readers and also that well get there quite quickly. I dont see anyone paying more than 50 for a standalone grey-screen e-reader by the end of 2011. Kieron Smith, The Book Depository:
75
Consumer Dynamics
Q9. Are authors generally keen to have electronic editions of their books published, alongside their hard copy editions?
Katie Allen, The Bookseller: I think they are keen to have their books out there in whatever format, as long as the e-book sales add to, rather than cannibalise, their print sales. Although lots of authors (especially those of a more traditional bent), like readers, love the feel and smell etc of a print book, so are unlikely to feel as pleased aesthetically by digital versions. Hazel Cushion, Accent Press: Yes, generally we have had an excellent response, and now publish some titles only as e-books with the option of printing them in the future. Several of our authors are now earning higher royalties from their e-book sales than print editions and we pay these monthly so they really appreciate the regular income stream. Mark Le Fanu, Society of Authors: Without consulting all our members, it is hard to be precise. At the risk of stating the obvious, most authors wish to have their books read as widely as possible and to be remunerated fairly, preferably handsomely. There does not yet seem to be enough data available to indicate to what extent, if at all, electronic editions are eating into traditional sales. I would guess that most writers will be keen to have electronic editions of their books published unless and until there is evidence that e-books sales are damaging volume sales, in which case the timing of the publication of the e-book edition may need careful consideration. Authors are concerned that publishers ensure that the integrity of the book is maintained in its electronic form and that active steps are taken against pirates. The low royalties paid on electronic editions remain controversial.
Q10. Can you envisage a future where authors publish in e-book format only?
Katie Allen, The Bookseller: As in my answer to number 5, it seems that eventually that may be the case. But I think most people will be loath to give up print editions for a very long time. I can imagine that self-publishing authors will embrace the e-book only format readily.
76
Consumer Dynamics
Hazel Cushion, Accent Press: Yes, we are already doing this. Emma House, The Publishers Association: There may be some authors who choose to publish in e-book format, but we dont believe that this would become a general rule for all authors. Publishing only in e-book format could prove to be rather limiting for an author, as the print format is still highly popular. With a reduced range of platforms to promote a book, this would mean fewer deals and a restricted audience-reach. However, e-book formats can be of some benefit to authors. For instance, by publishing one book as an e-book, this may drive sales of the backlist of authors previous works in print format. Authors could also convert their out-of-print works into digital form to give them a new lease of life. So there is a balance to be struck between the print and digital formats, in terms of utilising both to get the best deal for the author, and ultimately, the consumer. Martin Hoscik, e-Book Magazine: If you mean mainstream authors were probably a long way before this is routine, however e-books do allow a low-cost way for self publishing authors and smaller firms to get their books out. Services such as Wattpad are already allowing them to do this. Mark Le Fanu, Society of Authors: When publishers are negotiating with authors or their agents, they usually insist on having the right to reproduce the verbatim text in e-book form as well as in book form. As most authors see publication in traditional book form as desirable and necessary, I doubt that many professional writers will think of being published in e-book format only, at least for the foreseeable future. It is possible that some new or emerging authors might opt for initial publication in e-book form if unable to secure an offer from a reputable publisher. However, in that case they might also self-publish via print on demand. Kieron Smith, The Book Depository: This does happen already for some technical titles, but I still see the physical product as having some life in it for a good while.
77
Consumer Dynamics
78
Company/Supplier Profiles
9. Company/Supplier Profiles
OVERDRIVE INC
Corporate Strategy
OverDrive Inc was founded in 1986 by Steve Potash, who remains the Chief Executive Officer (CEO). The company was originally formed to develop interactive diskettes and CD-ROM products, progressing from physical digital media to downloadable media as technology developed. Its customers include libraries, schools, publishers, retailers and enterprises. OverDrive has offices in Cleveland, Ohio and New York, and plans to open a London office during 2011. It works with publishers worldwide, and its aim is to become the leading digital infrastructure provider for managing, protecting and distributing download media.
Innovations
In 2000, OverDrive launched Content Reserve, an online digital warehouse which, as of September 2010, contained over 200,000 downloadable titles from hundreds of publishers. In 2002, Digital Library Reserve was launched to extend the companys services to libraries, and School Download Library was launched in 2006.
79
Company/Supplier Profiles
Appointments
There will be no significant new appointments until the UK office opens, but as an expanding company there are a number of positions for which the company is recruiting.
Advertising
OverDrive maintains its own sales force for direct sales. The companys marketing is primarily through the Internet, trade shows, trade advertising and direct marketing.
Distribution
Distribution is all online.
Profitability
OverDrive is a private company and does not publish its financial information.
80
Company/Supplier Profiles
Innovations
Bertrams has personalised its website since the last edition of this report was published, with an informal blog from employees about the books they enjoy. The company also offers marketing support for its customers including point of sale material, updates of books in the media, media reviews of books, an events diary and author-signed copies.
Appointments
There have been no significant new appointments at Bertrams, although a board reshuffle in August 2010 saw several senior executives extending their roles. The companys Managing Director (MD) is Michael Neil.
Advertising
The company markets its services through direct sales and marketing, the trade press and trade exhibitions.
Distribution
Smiths News (including Bertrams) operates from 64 distribution centres (including the two main distribution hubs in Swindon and Norwich) across England and Wales, and employs 5,500 staff.
81
Company/Supplier Profiles
Profitability
The Bookseller reported, at the time of Smiths News takeover, that Bertrams had sales of 122.5m in 2008. Financial information for Smiths News PLC for the years ending 31st August 2007 to 2009, is as follows:
Table 9.1: Financial Information for Smiths News PLC (000), Years Ending 31st August 2007-2009
2007 Turnover Pre-tax profit Source: myICC.co.uk 1,232,400 36,400 2008 1,240,600 32,600 2009 1,326,00 18,400
82
Company/Supplier Profiles
Innovations
The companys statement said Waterstones.com was approaching its one millionth e-book sale from a range of 30,000 titles. The retailer will launch a new e-book store in May 2010.
Appointments
Waterstones MD Gerry Johnson was asked to resign in January 2010, and replaced by the former strategy and development director, Dominic Myers. Tim Watson was appointed product director at the same time. In May 2010 Tim Owrid, formerly of Entertainment UK (owner of the distributor THE), was appointed as supply chain director to oversee operations at the Book Hub. Graham Sim was appointed as Group Head of Marketing in August 2010 to oversee both HMV (for which he was previously responsible) and Waterstones brands.
Advertising
Waterstones continues to advertise bestselling titles in the national press, with the most recent campaign at the time of going to press being for Tony Blairs A Journey in The Independent, the Daily Telegraph, The Times and The Guardian.
83
Company/Supplier Profiles
Distribution
Waterstones moved to a new distribution system, labelled the Book Hub, in 2009. Based in Burton upon Trent in Staffordshire, The 150,000 sq ft distribution centre is run by the logistics company Unipart on Waterstones behalf. The Book Hub is designed to allow just one delivery of books to stores per day, rather than several Waterstones envisages this will save between 4m and 5m in the 2010/11 financial year, some of which will come from redundancies within stores.
Profitability
Table 9.2: Financial information for Waterstones Booksellers Ltd (000), Years Ending 28th April 2007, 26th April 2008, 25th April 2009 and 24th April 2010
2007 Turnover Pre-tax profit Source: myICC.co.uk 268,370 475 2008 273,423 1,823 2009 521,212 4,020 2010 488,901 -2,133
84
Company/Supplier Profiles
The company has a unique strategy of working with Amazon, in order to offer its own customers the opportunity to buy (via links from The Book Depository Site) from Amazon if they wish especially if they are unable to provide the title themselves. Unwilling to compete with Amazon on price on the bestsellers, The Book Depository exploits the long tail principle, selling small numbers of a very wide range of books as opposed to a large number of the same book. Like Amazon, the companys holding company, Book Depository International Ltd (which owns 100% of The Book Depository Ltd), is located offshore, in Guernsey, a strategic positioning for earning international revenues.
Innovations
The new website includes a feature which is a live, real-time map of who is buying which book where, with a pop up on the map saying Someone in [country] bought [book title] with free delivery [time lapse] minutes ago. The pop up shows the cover of the book and the country flag. A click on the pop up takes the viewer to the book details and where they can buy it for themselves.
85
Company/Supplier Profiles
The Book Depository also offers over 340,000 e-books (including 11,000 free e-books); although it does not sell e-readers, it allows customers to select their own e-reader from a comprehensive illustrated list (including the Kindle to which free e-books may be downloaded). It also provides a custom feature to enable future e-book purchases for that format. At the time of going to press, however, not all e-books were available for all of the e-readers listed.
Appointments
There have been no significant new appointments since Kieron Smith became Managing Director in 2008.
Advertising
The Book Depository depends very much on the positive PR it generates through its innovations and its market position as the only serious alternative to Amazon.
Distribution
The Book Depositorys distribution centre is in Gloucester, from where it ships over 1.4 million titles within 48 hours. It also has a network in the US, from where it can ship books to fulfillment centres across Northern America, and also has partnerships with other major book distributors and publishers. Shipping to over 90 countries the currencies accepted are the pound, US, Canadian and Australian dollars and the euro.
Profitability
The Book Depository Ltds holding company is Book Depository International Ltd, based in Guernsey. No financial information is available for this company. The Book Depository Ltd, based in Gloucester in the UK, is listed as a small private company and as such does not publish its revenue figures. However, The Bookseller reported in August 2010 that The Book Depositorys sales for the year ending in June 2010 increased by over 12m to 74.2m, an increase of more than 20% on the previous years turnover.
86
Company/Supplier Profiles
Innovations
John Smith plays to its strengths and, through the Hammicks brand, offers a legal information service as well as a specialist online legal bookshop. Through the Hammicks BMA brand the company offers similar services for medical professionals.
87
Company/Supplier Profiles
Appointments
There have been no significant new appointments.
Advertising
John Smith & Sons is marketed through the trade and specialist press, as well as PR and attendance at relevant trade exhibitions.
Distribution
John Smith uses VitalSource, an interactive e-textbook platform from Ingram Digital (part of the Ingram Content Group Inc) to distribute its e-book texts and journals. Individual retail outlets have autonomy to order their own stock according to their individual needs, working directly with publishers and wholesalers although payment is through the head office.
Profitability
Table 9.3: Financial information for John Smith & Son Group Ltd (000), Years Ending 31st May 2007-2009
2007 Turnover Pre-tax profit Source: myICC.co.uk 28,313 203 2008 29,502 146 2009 39,389 359
88
Company/Supplier Profiles
Innovations
In the summer of 2010, Accent Press introduced its own Loyalty Points scheme, whereby one loyalty point is earned for every 1 spent (excluding delivery), which can be redeemed against future purchases. The company is also committed to making its titles available in e-book format, with many titles in its erotic Xcite range available only in e-book format.
89
Company/Supplier Profiles
Appointments
There have been no significant new appointments.
Advertising
The company makes full use of social media to promote itself and its authors. Accent has promoted its Xcite titles using cover mounts on Scarlet and Forum magazines.
Distribution
The company works with Enhanced Editions to make its titles available through iPhone applications. The first title, We Won the Lottery, was released in 2010. Accent Press also offers an affiliate scheme, which allows web owners to earn commission from books sold via their own websites.
Profitability
As a small private company, Accent Press do not make financial information public.
PICKABOOK LTD
Corporate Strategy
Pickabook Ltd was first formed in 1999 by Geoffrey Newsome and Michael Ratcliffe. The management team remains small there are fewer than five working full time from the office based in Cheltenham, Gloucestershire. Pickabook is a pure-play online book retailer, although the company is increasingly offering other products such as DVDs, and has always offered more unusual printed material such as sheet music. The company offers over 5 million books from stock (all new it does not offer secondhand books) and discounts of up to 80% off the recommended retail price.
90
Company/Supplier Profiles
Innovations
The biggest innovation Pickabook has made to its website is to add automation which allows the system to advise customers as to what might suit them, depending on their buying history. Pickabook also offers an account service for educational establishments, which means they can order books on account without having to pay by credit card.
Appointments
There have been no new appointments.
Advertising
All of Pickabooks advertising is conducted online through its affiliate programme, Google Adwords and email marketing.
Distribution
Pickabook uses the wholesaler Gardners, as well as other suppliers, to fulfil its orders.
Profitability
As a small private company, Pickabook do not publish its financial information.
91
The Future
92
The Future
MARKET FORECASTS
Internet purchases represented 17% of sales value of the total book market in 2009, and are forecast to reach 20% by 2014. E-book sales will take an increasing share of all online book sales; some forecasters believe the market share will stand at around 50% share by 2020. Studies have shown that regular book buyers also buy secondhand books, borrow from libraries and buy from both high street booksellers and online bookstores; it is therefore likely that this sector of the market will buy e-books whilst continuing to buy print books. Another bar to any dominance by the e-book sector is the gift market, which accounts for a sizeable proportion of sales Key Notes Childrens Publishing 2010 report showed that almost 60% of childrens books are bought as gifts. Whilst e-books cannot be transferred from one user to another, the buying of e-books as gifts remains prohibited.
Table 10.1: Forecast UK Book Sales on the Internet by Value and Percentage share of Total Book Market (m and %), 2010-2014
2010 Forecast Internet sales (m) % change year-on-year As % of total book sale forecast Source: Key Note 540 1.6 18.0 2011 542 0.3 19.0 2012 559 3.2 20.0 2013 564 4.6 20.0 2014 590 4.6 20.5
The forecasts are for print editions of books. E-books, comprising a tiny percentage of book sales currently, will increasingly contribute to the overall value of Internet book sales. It is unlikely that e-book sales will make any significant contribution to Internet book sales overall until the market sees e-book readers greatly reduced in price.
93
Further Sources
94
Further Sources
Publications
Book2Book PO Box 394 Harpenden, AL5 1XJ http://www.booktrade.info The Bookseller Endeavour House 189 Shaftesbury Avenue London, WC2H 8TJ Telephone: 0207-420 6006 Fax: 0207-420 6102 http://www.thebookseller.com
General Sources
Dun & Bradstreet Marlow International Parkway Marlow Buckinghamshire, SL7 1AJ http://www.dnb.co.uk Nielsen Media Research Atrium Court The Ring Bracknell Berkshire, RG12 1BZ Telephone: 01344-469 100 Fax: 01344-469 102 E-mail: mediacommunicationuk@nielsen.co m http://www.nielsenmedia.co.uk
Government Publications
National Statistics 1 Myddelton Street London, EC1R 1UW Telephone: 0845-601 3034 Fax: 01633-652 747 E-mail: info@statistics.gov.uk http://www.statistics.gov.uk Economic & Labour Market Review, May 2010 Family Spending (2008 latest) Monthly Digest of Statistics, August 2010 National Population Projections (2008 based) UK Business: Activity, Size and Location, 2010
95
Further Sources
Other Sources
Book Marketing Ltd (BML) St Andrews House 18-20 St Andrew Street London, EC4A 3AG Telephone: 0207-832 1770 http://www.bookmarketing.co.uk Book Marketing Society St Andrews House 18-20 St Andrew Street London, EC4A 3AG Telephone: 0207-832 1770 http:// www.bookmarketingsociety.co.uk Amazon.com Inc 1200 12th Avenue South Suite 1200 Seattle Washington, 98144-2734 US Telephone: +1 206-266 1000 http://www.amazon.com Amazon.co.uk Patriot Court 1-9 The Grove Slough Berkshire, SL1 1QP http://www.amazon.co.uk Batch 272-274 Vauxhall Bridge Road London, SW1V 1BA Telephone: 020-7802 0802 Fax: 020-7802 0803 http://www.batch.co.uk Bertram Books Ltd 1 Broadland Business Park Norwich Norfolk, NR7 0WF Tel: 0870-4296 600 Fax: 0870-4296 709 http://www.bertrams.com MyiLibrary Ltd EMEA Ingram Digital Ltd Avon House Headlands Business Park Ringwood Hampshire, BH24 3PB Telephone: 01425-485 900 Fax: 01425-485 895 http://www.myilibrary.com Nielsen Book Data 3rd Floor Midas House 62 Goldsworth Road Woking Surrey, GU21 6LQ Telephone: 01483 712 200 Fax: 01483 712 201 http://www.bookdata.co.uk Ofcom Riverside House 2a Southwark Bridge Road London, SE1 9HA Telephone: 0300-123 3000 Fax: 020-7981 3333 http://www.ofcom.org.uk
96
Further Sources
97
Further Sources
98
Further Sources
99
100
TGI data used in Key Note reports are broken down by age, social grade and standard region.
Social Grade
This is normally based on the occupation of the Head of the Household, or if the Head of the Household is retired, their former occupation. If this information is not available, social grade is based on environmental factors such as type of dwelling, amenities in the home, presence of domestic help, etc. Social grade is assessed by the interviewer when collecting the information and is, therefore, based on information given personally and verbally by the respondent. Social grade is checked by Kantar Medias coding and editing office. The following table broadly defines the six social grades used. The relationship between social grade and net income of the Head of the Household is a complex one and readers should note that income is not determinant of social grade.
Social Grade A B C1 Social Status Upper middle class Middle class Lower middle class Head of Households Occupation Higher managerial, administrative or professional Intermediate managerial, administrative or professional Supervisory or clerical and junior managerial, administrative or professional Skilled manual workers Semi and unskilled workers State pensioners or widows
C2 D E
Skilled working class Working class Those at lowest levels of subsistence (no other earner)
Standard Region
This is as defined by the Registrar-General.
101
102
Cigarettes & Tobacco Cinemas & Theatres 2010 2010 2003 2002 2005 2010 2010 2001 2008 2010 2010 2009 2009 2007 2010 2009 2007 2010 2009 2009 2008 2010 2010 2010 2009 2008 2008 2009 2004 2002 2009 2009 2010 2010 2009 2009 2010 Closed-Circuit Television Clothing Manufacturing Clothing Retailing Commercial Radio Commercial Vehicles Computer Hardware Computer Services Computer Software Confectionery Consumer Internet Usage Consumer Magazines Contraception Contract Catering & Foodservice Management Contract Cleaning Cooking Sauces & Food Seasonings Corporate & Promotional Giftware Corporate Hospitality Cosmetics & Fragrances Cosmetic Surgery Courier & Express Services
D
24 9 12 15 7 8 15 8 9 7 28 4 17 4 21 21 3 3 6 22 8 16 3 6 11 3 4 1 2 19 7 13 1 14 5
2010 2001 2010 2008 2009 2004 2009 2010 2010 2008 2010 2000 2010 2009 2010 2010 2008 2008 2007 2009 2010 2010 2004 2010 2010 2000 2009 2009 2003 2009 2009 2009 2007 2009 2005
Access Control Accountancy Aerospace Agrochemicals & Fertilisers Air Freight Airlines Airports Animal Feedstuffs Arts & Media Sponsorship Automatic Vending Automotive Services Autoparts
B
11 14 12 3 2 21 14 11 3 24 7 19 14 2 23 16 19 17 24 14 27 16 5 17 10 13 9 14 10 13 17 16 13 13 8 15 27
Baths & Sanitaryware Bearings Betting & Gaming Biscuits & Cakes Book Publishing Bookselling Bread & Bakery Products Breakfast Cereals Breweries & the Beer Market Bricks & Tiles Bridalwear Builders Merchants Building Contracting Building Materials Bus & Coach Operators Business Press
C
Dark Spirits & Liqueurs Debt Management (Commercial & Consumer) Defence Equipment Design Consultancies Digital Broadcasting Digital Communications Digital TV Direct Marketing Discount Retailing Disposable Paper Products Document Imaging Systems Domestic Heating Dry Cleaning & Laundry Services
Cable & Satellite TV Camping & Caravanning Canned Foods Carpets & Floorcoverings Catering Equipment Chemical Industry Childrenswear Chilled Foods China & Earthenware
103
Title E
Edition
Published
Title
Edition
Published
Electrical Contracting Electrical Wholesale Electricity Industry Electronic Component Distribution Electronic Component Manufacturing Electronic Games Equipment for the Disabled Equipment Leasing Estate Agents Ethnic Foods Exhibitions & Conferences
F
9 5 6 12 11 4 5 12 17 16 11 2 24 4 11 8 14 7 4 16 12 8 17 24 13 21 6 13 5 19 15 26 15 10 22 9 19 13 17 24 19
2009 2009 2009 2002 2002 2003 2009 2003 2008 2010 2009 2003 2010 2002 2000 2006 2010 2007 2009 2009 2010 2004 2009 2009 2010 2009 2009 2009 2009 2010 2009 2010 2010 2010 2003 2002 2009 2009 2008 2009 2009
Household Appliances (Brown Goods) Household Appliances (White Goods) Household Detergents & Cleaners Household Furniture
I
11 16 16 18 14 8 5 8 12 8 9 13 25 7 9 14 9 10 1 21 17 5 24 7 2 2 3 18 3 21 5 17 14 13
2008 2008 2009 2008 2010 2001 2000 2001 2009 2005 2009 2010 2009 2009 2008 2002 2010 2003 2005 2010 2009 2009 2010 2010 2007 2007 2002 2010 2010 2008 2009 2010 2010 2010
Ice Creams & Frozen Desserts Industrial Fasteners Industrial Pumps Industrial Valves Insurance Companies Internet Usage in Business IT Security IT Training
J
Factoring & Invoice Discounting Fast Food & Home Delivery Outlets The Film Industry Finance Houses Fire Protection Equipment Fish & Fish Products Fitted Kitchens Football Clubs & Finance Footwear Franchising Free-To-Air TV Freight Forwarding Frozen Foods Fruit Juices & Health Drinks Fruit & Vegetables Further & Higher Education
G
Kitchenware
L
Management Consultants Market Forecasts Meat & Meat Products Medical Equipment Metal Recycling Milk & Dairy Products Mobile Phones Mobile Telecommunications
N
Hand Luggage & Leather Goods Health Clubs & Leisure Centres Health Foods Heating, Ventilating & Air Conditioning Home Furnishings Home Shopping Horticultural Retailing Hotels Housebuilding
Office Furniture Offshore Oil & Gas Industry Ophthalmic Goods & Services OTC Pharmaceuticals Own Brands
104
Title P
Edition
Published
Title T
Edition
Published
Packaging (Food & Drink) Packaging (Glass) Packaging (Metals & Aerosols) Packaging (Paper & Board) Packaging (Plastics) Paper & Board Manufacturing Personal Banking Photocopiers & Fax Machines Plant Hire Plastics Processing Poultry Power Tools Premium Lagers, Beers & Ciders Printing Private Healthcare Protective Clothing & Equipment Public Houses
R
6 13 12 14 15 14 11 14 13 10 4 5 9 15 21 7 26 7 11 10 10 3 24 16 22 12 14 4 8 12 20 1 17 3 12 15 7 25
2010 2008 2003 2008 2010 2002 2000 2005 2007 2003 2010 2007 2010 2010 2010 2009 2010 2008 2009 2010 2010 2009 2009 2010 2009 2010 2009 2001 2000 2010 2010 2010 2008 2009 2009 2009 2009 2010
Take Home Trade Telecommunications Timber & Joinery Toiletries Tourist Attractions Toys & Games Training Travel Agents & Overseas Tour Operators Tyre Industry
V
17 21 19 23 5 24 18 23 4 9 4 8 18 10 5 20 20 1 21 13 11 11 3 7 10 11 18 8 2 19 10 10 1 15 3 3 3 1 12 2 9 1
2008 2007 2008 2010 2001 2010 2009 2010 2008 2010 2007 2005 2010 2010 2010 2010 2009 2005 2009 2010 2004 2009 2007 2003 2009 2009 2008 2010 2009 2009 2005 2009 2005 2005 2010 2010 2010 2001 2008 2010 2010 2003
Wallcoverings & Ceramic Tiles Waste Management Water Industry Windows & Doors Wine White Spirits
Rail Travel Ready Meals Recruitment Agencies (Permanent) Recruitment Agencies (Temporary & Contract) Renewable Energy Restaurants Retail Chemists & Drugstores Road Haulage
S
Market Reviews
Catering Market Clothing & Footwear Industry UK Computer Market Construction Industry Contracted-Out Services Defence Industry Distribution Industry DIY & Home Improvements Industry Drinks Market Energy Industry Film Market Food Industry Healthcare Market Insurance Industry The Legal Services Market Leisure & Recreation Market Leisure in the Home Leisure Outside the Home Local Government Services Mechanical Handling Motor Industry Music Industry Office Equipment Industry Packaging (Food & Drink) Industry
Sauces & Spreads Shopfitting Short Break Holidays Slimming Market Small Domestic Electrical Appliances Snack Foods Spirits & Liqueurs Soft Drinks (Carbonated & Concentrated) Soup Market Sports Clothing & Footwear Sports Equipment Sports Sponsorship Stationery (Personal & Office)
105
Title
Edition
Published
Title
Edition
Published
Passenger Travel in the UK Pharmaceuticals Industry Process Plant Industry Publishing Industry Railway Industry Security Industry Sports Market Travel & Tourism Market UK Internet Market
5 6 1 13 2 13 13 17 1
Customer Loyalty in Financial Services Customer Magazines & Contract Publishing Customer Relationship Management Customer Services in Financial Organisations C2DE Consumer
D
2000 2009 2008 2010 2010 2009 2007 2010 2010 2000 2006
Diet Foods DINKY Market 2010 2009 2007 2000 2010 2000 2006 2010 2000 2000 2002 2010 2003 2002 2008 2008 2008 2002 2005 2008 2010 2000 2009 2010 2009 2008 2010 2010 2002 2009 2000 2008 Direct Insurance Direct Mortgages Domestic Lighting and Electrical Products Domestic Telecommunications
E
ABC1 Consumer Activity Holidays Advertising Agencies All-Inclusive Holidays Alternative Healthcare Audio-Visual Retailing
B
Baby Foods Baby Products Baths and Showers Beds, Bedrooms and Upholstered Furniture Betting and Gaming Book Retailing on the Internet Bottled Water Bridalwear Business Postal Services B2B Marketing Business Travel Market
C
E-Commerce: The Internet Grocery Market E-Commerce: The Internet Leisure & Entertainment Market Electronic Banking EMU The Impact on the UK Financial Services Industry E-Recruitment E-Shopping Estate Agents and Services Ethnic Foods European Electricity Industry European Gas Industry European Long-Term Insurance European Oil & Gas Industry European Renewable Energy Industry European Short Breaks European Telecommunications European Tourist Attractions European Trends in Food Shopping European Water Industry Extended Financial Families
2009 2008 2008 2003 2006 2002 2010 2002 2007 2007 2008 2007 2008 2008 2008 2010 2009 2009 2007 2005
Cable and Satellite Services Charity Funding Childcare Childrens Publishing Clothing Retailers Coffee & Sandwich Shops Commercial Dynamics in Financial Services Commercial Insurance for Small Businesses Condiments and Sauces Consumer Credit & Debt Contact Centres Contraception Cooking & Eating Cross-Border Shopping Cruise Market
106
Title F
Edition
Published
Title L
Edition
Published
Financial Services Marketing to ABs Financial Services Marketing to ABC1s Financial Services Marketing to BCs Financial Services Marketing to C1C2DEs Financial Services Marketing to DEs Financial Services Marketing to Over 60s Financial Services Marketing to the Affluent Financial Services Marketing to the Retired and Elderly Financial Services Marketing to Start-Up Businesses and the SelfEmployed Financial Services Organisations on the Internet The Fish Industry Forecourt Retailing Functional Foods Funding in Higher Education
G
Lifestyle Magazines 2006 2000 2009 2006 2009 2004 2009 2007 Low-Fat & Reduced-Sugar Foods The Luggage Market
M
2008 2008 2000 2003 2009 2010 2007 2008 2008 2002 2009 2008 2005 2010 2008 2004 2010 2007 2010 2000 2005 2009 2004 2002 2009 2003 2010 2008 2009 2008 2005 2009 2001 2007 2001 2004 2001 2000 2000 2001 2009
Marketing to Children 4-11 Marketing in the Digital Age Media Marketing Medical & Health Insurance Men and Womens Buying Habits Mens Toiletries & Fragrances Millennium Youth Mobile Marketing Motor Finance
N
The Newspaper Industry 2010 2009 2001 2010 2010 2002 2010 2007 2007 2008 2009 2008 2009 2008 2009 2000 2008 2005 2008 2009 2005 2002 2006 2010 Non-Food Sales in Supermarkets Nutraceuticals
O
Off-Trade Spirits Opticians & Optical Goods Organic Baby & Toddler Care Organic Food & Drink OTC Pharmaceuticals Over-40s Consumer Over-50s Consumer
P
General Insurance Generation Y Global Waste Management Green and Ethical Consumer Grey Consumer
H
Pay TV Pension Extenders Pensions Personal Banking Personal Lines Insurance Personal Loans Pet Market Planning for Retirement Plastic Cards in Europe Plus-Size Fashion Private Sector Opportunities in Education Public Relations Industry Public Transport
R
In-Car Entertainment Independent Financial Advisers Individual Savings Accounts Insurance Prospects Internet Advertising Internet Service Providers Issues and Challenges in the UK Life Assurance Market Issues in Higher Education Funding IT Recruitment
The Railway Industry Ready Meals Recycling and the Environment Retail Credit Retail Development Rural Economy
107
Title S
Edition
Published
Title U
Edition
Published
Savings & Investments Saving Trends in the Eurozone Singles Market Shopping Centres Short Breaks Slimming Market Small Businesses & Banks Small Office Home Office Consumer Small Office Home Office Products The Soup Market Sponsorship Supermarket Own Label Supermarket Services Sweet & Salty Snacks
T
2010 2002 2009 2008 2004 2009 2010 2001 2001 2001 2000 2009 2007 2010 2008 2009 2003 2008 2007 2005
Utilities
V
Teenage Fashionwear Teenage & Pre-Teen Magazines Teleworking Trends in Food Shopping Trends in Leisure Activities Tweenagers
108