The music industry changed forever on October 23, 2001. That’s the day the little company in Cupertino, California unveiled a new way for music lovers to carry “1,000 songs in [their] pocket.” The name: iPod.
Now, the iPod wasn’t really a new idea. Understand that Apple was actually late to the MP3 dance. Three years earlier, Eiger Labs released the MPMan F10, an MP3 player created by a South Korean company. It held a whopping 32MB of audio and promised to revolutionize music. Well, it did and it didn’t. The MPMan was a bust, as was the slew of players that followed it, but the iPod was not. The iPod was a tipping point.
We all know how the music story unfolds, how few people buy CD’s anymore, how piracy and file sharing turned the music industry on its head and forced artists and labels to carve up albums into $.99 singles, and how the music industry will never be the same again. Ever.
There’s a cautionary tale in here for those of us in the publishing biz and those who want to be. Digital book publishing likely won’t be a parallel event entirely, but I think the same market forces that tossed the music industry’s tectonic plates around like will move ours as well. Forces of nature (and demographics) are impossible to stop, after all. And this time I don’t think the changes will take as long to happen. That’s a controversial position to take in my business, but I’m going to take that bet even if I’m proven wrong, which I don’t think I am. And here’s why…
Like everything, disruptive technologies have a life cycle that hinges on three forces: price point, adoption rate, and demographics. The velocity of change in those three categories makes all the difference between an industry changing over the course of twenty years or twenty months. Here’s how it works: a company releases a new technology. At first, it’s used only by the early adopters. The price is high and the adoption rate is fairly low, because people don’t have the extra cashola to buy it or they don’t understand the tech. With time, though, as prices come down we discover that all of our friends are trying out this new gadget. It’s all of a sudden available everywhere and, wow, much cheaper. Of course I’ll spend $99 on a device that holds thousands of songs. Pretty soon, everyone has one and the content business (the labels and artists) have to figure out how to survive in a new world.
Pricing & Adoption. For book publishing it’s just a matter of velocity and I’ve been amazed at how fast things are aligning. Over the weekend, Sony dropped the price on its e-reader to compete with Amazon (Kindle), Borders (Kobo) and Barnes & Noble (Nook), all of which recently dropped prices below $200. The first element, pricing, is in play and I think within a year (maybe by Christmas) we’ll see e-readers around $100. When that happens it will become more attractive for people to try an e-reader without forking over $400 and we’ll see the adoption rate really pick up. It’ll happen. Once adoption begins, it accelerates. Just look at this graphic of iPod sales to date. Keep in mind, it launched in 2001 and since has sold almost 250MM units, which does not include the 50+ million iPhones that have sold to date.
What’s interesting to note here is that Apple launched iTunes in April 2003. Once content providers jumped (read “were forced”) onboard, notice what happens to sales. 2004 was the beginning of Apple’s ownership of the music industry. It didn’t take long. Do you know how many of the six major publishers have jumped on board with Apple? Five of them.
Demographics. This is where technologies become ubiquitous, when a generation becomes so comfortable and proficient with it that it becomes the norm and even viewed as necessary. My five year old daughter is a great example. So are my friend’s grandparents, who live in a nursing home and love the Kindle because (a) they don’t have to leave the nursing home to buy books and (b) they can increase the font size with the touch of a button. But my daughter’s generation might be the real demo that tips things because they are used to both print and digital, and can use both really well. We’re already thinking about getting her textbooks through a digital device. She won’t be lugging a backpack full of books like her mom and dad did in college. Or maybe even high school.
So, things are happening fast. Right now, ebooks only account for maybe 2-3% of total book sales. We shouldn’t get too comfortable with that number, though, because it very well could be 20-30% (or more) in the next couple years. Chances are, it could be higher. My guess is that digital sales will account for at least 50% of new book sales in the next five years. I could be wrong, I could be right. Bottom line is everything is uncharted territory, which levels the playing field in some ways for up and coming authors. If you want to survive in this new world I’d suggest studying how musicians (a good example is Taylor Swift, believe it or not) used the industry disruption to make a name for themselves.