First of all, if you're interested in the e-book revolution and haven't already read Ken Auletta's April 26th New Yorker article, Publish or Perish: Can the iPad topple the Kindle, and save the book business? you might want to check it out. It's a standout piece on an often-discussed topic that really puts Apple and Amazon.com's role in the e-book revolution into interesting perspective.

One thing I found particularly interesting about the article was its exploration of some of the stats and financial figures that attest to the speed with which e-books are gaining traction in the book marketplace.

A few highlights:

"Between 2002 and 2008, annual sales had grown just 1.6 per cent, and profit margins were shrinking."

It's not stated explicitly, but the implication here is that this figure refers to print book sales. It's a pretty grim picture, especially in light of the extent to which authors of print books have been empowered (mostly by the Internet and social networking) to participate in the effort to build an audience and get exposure for their books. You'd think that that this would lead to a considerable spike in book sales and revenues for publishers, but instead we're barely above a flatline. That in itself is troubling.

But then again, it's no secret just how much is competing for our time and attention these days, thanks in large part to the very same technologies that authors are using to build platforms and get exposure for their books. Such is life, I suppose.

 

"E-books are booming. Although they account for only an estimated three to five per cent of the market, their sales increased a hundred and seventy-seven per cent in 2009, and it was projected that they would eventually account for between twenty-five and fifty per cent of all books sold."

Now that's a little bit more encouraging, at least on one level. I'm guessing this is a comparison from 2008 figures. If so it sends an encouraging message about what happens when such an important point of infrastructure for the e-book market--namely a well accepted e-book reader--gets released and people start gobbling them up like candy. And that's in a year that was dominated by Kindle and Nook, without benefit of the mighty iPad.

Now onto the nitty gritty:

 

"Traditionally, publishers have sold books to stores, with the wholesale price for hardcovers set at fifty per cent of the cover price. Authors are paid royalties at a rate of about fifteen per cent of the cover price. A simplified version of a publisher's costs might run as follows. On a new, twenty-six-dollar hardcover, the publisher typically receives thirteen dollars. Authors are paid royalties at a rate of about fifteen per cent of the cover price; this accounts for $3.90. Perhaps $1.80 goes to the costs of paper, printing, and binding, a dollar to marketing, and $1.70 to distribution. The remaining $4.60 must pay for rent, editors, a sales force, and any write-offs of unearned author advances."

Talk about a distressing breakdown! I've never been wild about authors retaining only 15% (and in practical reality sometimes considerably less) of the cover price but some other things seem really out of whack here, especially when you consider the number of titles released in a given year that don't earn out their advances.

"There are now an estimated three million Kindles in use, and Amazon lists more than four hundred and fifty thousand e-books."

It's a funny thing about e-book readers. Once you have one, there's this natural impulse to fill it up with books. So the sheer numbers of e-readers out in circulation (again, prior to the release of the iPad) suggests a whale of a bright future for the e-book market, especially once some of the kinks are worked out with regard to pricing, digital rights management (DRM) and release date planning. If the economic model, even this early in the game, makes for a more favorable royalty split between author and publishers and at the same time solves some of the profit-sucking distribution challenges that have plagued publishers' balance sheets for years (such as returns), we have a truly win/win situation, at least for those two parties.

Online booksellers and e-book distributors stand to win big too. But what about those independent brick and mortar booksellers?

"According to the American Booksellers Association, the number of independent booksellers has declined from 3,250 to 1,400 since 1999; independents now represent just ten per cent of store sales. Chains like Barnes & Noble and Borders account for about thirty per cent of the market, and superstores like Target and Wal-Mart, along with clubs like Costco, account for forty-five per cent, though they typically carry far fewer titles."

Well, that's another story I suppose. For all the upside that a perpetual optimist such as myself sees in this amazing transformation for publishers, authors, e-book reader producers, and the environment, the remarkable trajectory of e-publishing seems like it's only likely to make hard times harder on mom & pop bookstores, at least in the short term.

My hope is that with the evolution of the technology that holds so much promise on so many levels comes some kind of new frontier for bookstores and libraries and other venues where people gather and savor the experience of the physical book.

(image courtesy of flickr user jblyberg)