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The Future of Digital Media: Led by…Books?

“When you influence a billion dollars, people have to take you seriously.”

This fairly obvious observation is part of a new report from Forrester Research, which prognosticates on a future in which books are the leaders of the entire digital media industry. The premise of the report is that digital books will close out 2010 with $966 million in e-books sales, and that by 2015, the industry will have nearly tripled to almost $3 billion.

Predictions of how many millions of units, or billions of dollars, e-books will command in the future are a dime-a-dozen. The report by Forrester brings a bit more gravitas to the forecasting, combining revenue data along with behavioral analysis of how digital books are consumed, used, and shared. The behavioral analysis includes some interesting data on who e-book readers are, and what potential they hold to set the tone for the future digital book market.

The 7% figure – the rough percentage of readers who take their books in digital form, is the statistical starting point in the Forrester report (the firm surveyed some 4,000 people). But that 7% has potential that far outweighs its current size. As the report, written by James McQuivey, says:

“They happen to be a very attractive bunch: they read the most books and spend the most money on books. And here’s the kicker – the average e-book reader already consumes 41% of books in digital form. Oh, and that includes the people who don’t have an e-reader yet, which is nearly half of them.”

So a small percentage of readers represent a multi-billion dollar market in the near future, and also, therefore, the future of publishing. What does this mean for the publisher – and for us? According to McQuivey, what it means is a whole heap of new questions about how to adapt, and how to make sure publishers don’t get outsourced or upstaged (as if we needed more of those…).

Given the potential size of this digital market, publishers must make catering to it their number-one focus – digital must become “the new default for publishing.” And – this is where it may get a tad controversial for some book lovers – publishers must “prepare for a day in which physical book publishing is an adjunct activity that supports the digital publishing business.” Let’s leave the jury out on that. But among the safer predictions McQuivey makes is this: The music industry – which is an overused comparison for publishing – had a relatively diverse set of revenue streams – CDs, radio, concerts, merchandise. It couldn’t protect it’s status quo against the digital tide. Books, as McQuivey points out, rely nearly entirely on a single (albeit broad) stream of retail revenue. Books are published and sold entirely as retail products, making publishing a “single-revenue business.”

Perhaps it’s a bit of hyperbole, but the Forrester report contends that “in the end, once the only channel from which revenue is derived starts to get remodeled, it’s not long before the whole structure gets torn down and rebuilt to accommodate the new dominant distribution model.” This future sounds promising – but also extremely uncertain.

Digital is coming, and it will be big; that generality hardly qualifies as “news” anymore. The takeaway from this report though, for publishers, is that adaptability to new revenue streams is going to be a much needed survival skill. Rights and royalty management are complicated today, and we wouldn’t count on them getting any simpler anytime soon. There are a number of ways to prepare for, and capitalize on, the wider and wider prevalence of technology in technology.

Incorporating a broad number of verticals means getting really comfortable with technology, and using it to your business advantage. We can’t answer every question that digital will raise, or solve every potential problem it will bring, but we do have ideal solutions for publishers to be ready for tomorrow, next year, and beyond.

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MetaComet Systems, Inc., Computer Software Publishers & Developers, South Hadley, MA

Have any questions?
+1 (413) 536-5989