So e-books are taking over the world. Depending on who you ask, that’s either a good thing (readers who travel) or a very bad thing (publishers). Either way, the genie is out of the bottle for good. The big challenge is how to tap into the gift market.

If I purchase a p-book (you know, the traditional paper kind), I can read it myself, lend it to others, or give it away. There’s a lot of value in all three of those options. When I purchase an e-book, leaving aside the problem of being trapped on one type of e-reader, I can mainly just read it myself. That’s pretty limiting to the expansion of the market.

Barnes and Noble have tackled the lending issue with the Nook, which lets you lend an e-book to another Nook owner. While the book is out on loan, you get locked out of reading it yourself. But the loan feature has some major flaws, including the fact that you can only lend an e-book title once and there’s a two-week limit to the loan period. Who reads a loaned book in 2 weeks?

So far, no one has created a legal way for the general public to give e-books as gifts. There are ways to cheat to provide free copies to your friends, but that certainly isn’t happy news for either authors or publishers.

The illicit trading of music files is one of the ways that MP3s permanently transformed the music industry. In response, Apple started iTunes and legitimized the buying of music in single tracks. Now a whole “good” portion of the population is comfortable buying music online. Unfortunately, Apple hasn’t solved the issue of giving music as a gift, other than offering the ubiquitous gift card. E-books suffer the same fate.

Trouble is, gift cards don’t create emotional connections to a personally selected item, like a particular book can. With books being a popular gift (and my favorite), this is a big issue to solve. Wish I knew how to crack this one. I’d be sitting pretty on the royalties.

We’ve entered a time where getting a book to market is as simple as 1, 2, 3. First, write the book. Second, make sure it gets a thorough edit. Third, self-publish in print and e-book form. Boom — “published” author. That isn’t to say it’s easy, but there has certainly never been a better time to get a manuscript off the shelf and into the hands of interested readers.

But some are asking, in a world where anyone can become published, how do you find something “good” to read? How do readers sift through the exploding number of titles to find the gems in the pile?

The answer may be, “just as they do now.” Even with a flood of new titles available, it stands to reason readers will continue to choose titles using the same criteria they have in the past. Google has determined (through some fancy algorithms) that there are nearly 130 million published books in the world. Readers have managed thus far to sort through those millions of book titles to find the ones they’re interested in. With that in mind, one can only assume readers will be able to do the same as the self-published market explodes over the next few years.

People gravitate towards what they like. They find authors or genres or subject matters they care about and are interested in, and make choices out of that pool. In fact, adding more titles will only grow the pot for readers, giving them even greater options on the subjects they enjoy.

Author Scott Nicholson explains it well in his article on the topic. He offers the analogy that despite her popularity, he has no idea what Lady Gaga sings, nor does he ever care to. But he finds new music that does appeal to him, when he wants to, through the channels he always has. Finding book titles would be the same. He finds and reads what he already likes.

Perhaps the growing wave of self-published titles will create some complexity and debris in the market, but how much it affects consumer buying and reading habits, if at all, remains to be seen.

UPDATE - July 13, 2010 - Well, it’s happened already. Sony just broke the $100 e-reader barrier. Looks like there will be e-readers for everyone this holiday season! - R.S.

May 1st was a big day for the e-reader market. That’s when the Kobo, at $149, became the cheapest and most stripped down e-reader you could buy. Soon after, Borders started selling a competitive but cheaper reader, the Aluratek Libre for only $119.99. Now Barnes & Noble has a version of the Nook at $149, and Amazon Kindle promptly slashed its price to $189. Sony, not to be left out of the fun, has also dropped their prices. What’s really going on here? Is it simply competitive pricing, or something more?

Let’s look to the printer and toner pricing structure for a possible answer. Each day, printers are sold with more features, and at lower prices. The catch is the toner: It continues to be ridiculously expensive. I break out in hives when I have to buy toner cartridges for my colour printer. I even purchased a new printer once because it was cheaper than buying the toner! Don’t worry, I found the old one a new home at a recycling charity. Seems e-books are the new toner, and e-readers the new printers.

The first e-readers were expensive ($359 for the first Kindle), and e-books were cheap (typically about $9.99 per book). The publishers didn’t like it, but they had to live within a model where the retailer set the price. When Apple’s iPad launched this spring they forced a change that swept the industry, and now retailers have less discount wiggle room. Not surprisingly, e-books prices have shot up to the $12 range today.

The only lever left to support the rapid rise of digital book sales (and save the publishing industry) is for e-reader prices to continue to drop. Cheaper means much more accessible, and the number of people who own an e-reader will explode. Back to my printer and toner analogy, almost anyone can buy a colour printer these days, but the toner is a whole other story. We need to keep an eye on e-book pricing, and take bets on which e-readers will survive the price wars (the iRex has already filed for bankruptcy protection in the USA), and which ones will go down with last year’s colour printer models.

As Bette Davis/Margo Channing said in the movie, All About Eve, “Fasten your seatbelts. It’s going to be a bumpy night!”

In the not-so-distant future, say 10 years from now, books will be sold in three main formats: e-books, cheap print-on-demand paper books, and specialty hard cover collector editions.

1) E-Books
Digital readers are becoming cheaper every day. The Kobo is priced affordably at $149 and the magic sub-$100 price point is coming very soon. At the same time, digital readers are also getting better: better screens, better graphics, color eInk options, wireless and Bluetooth capabilities, and more memory for more books. Although the iPad may not crush the Kindle, it introduces a different kind of experience complete with audio, video, and virtually anything else you want to add. The environmental/green angle of digital books is also a great selling point. Kobo (formerly Shortcovers) was created in 2008 for a digital book market that was expected to account for 5-10% of all book sales within five years. Now the estimate is as high as 95% in 10 years. Add it up and digital is the future of books.

2) Print-On-Demand Books
Some people will still want their “beach-proof” copy of a book or something they can mark up in the margins. Technology like the Espresso Book Machine has made it cheap and easy to print single copies of a book and have it available in minutes from your local bookstore (yes, they will still exist), Costco, or even the public library. The difference is that these books will be produced digitally, then output to a paper format for a small group of buyers. They still make vinyl records after all, so we won’t be done with paper for a long time.

3) Specialty Hard Cover Collector Editions
Back in the old days of publishing, there were two types of books published: inexpensive paperbacks meant for mass consumption, and leather-bound hard cover books that only institutions or the wealthy could afford. The latter were as much to be collected and displayed as to be read. Well, what goes around, comes around. J.K. Rowling may have single-handedly created the rebirth of the collector concept when she packaged Tales of Beedle the Bard for Christmas 2007, complete with jewel-encrusted cover and handwritten manuscript.

Collector books will have full-colour interiors, embossed covers, and other features that will make them feel like pre-Gutenberg illuminated manuscripts. They will be gifts for people who have everything or decor for people who want to be seen as having everything. They will not meant to be read, just visually enjoyed. Remember the special edition of The DaVinci Code with all the beautiful pictures? Like that, only more so. Prices will be upwards of $75.

So where will you be in the transition? Leading the wave with your e-reader device or lugging around printed books? As I always tell my 85-year-old mother-in-law, how do you know you don’t like it if you haven’t tried it? Just like cell phones 15 years ago (who needs one of those?!?), e-readers are here to stay.

The e-book self-publishing world is about to get a little more crowded. With the launch of Pubit! this summer, Barnes & Noble (B&N) has inserted itself directly into the publishing process, joining other retailers like Amazon and Sony. Pubit! is a DIY option for independent publishers and authors to deliver their works digitally through B&N’s site and e-book store.

While this may on the surface seem like great news for the indie publishing crowd, there are definite issues. For example, B&N has been noncommittal up to this point about royalty information, which makes it difficult to know if Pubit! can offer a more attractive deal or not. Another challenge authors and publishers face with an ever growing list of retailers offering self-publishing is how to choose. Which retailer might offer the best audience and reach? Does it make sense to manually publish with every major retailer, one by one, to make sure the playing field is covered despite the time and effort?

In order to make this really work, and work well, we’re going to have to see some consolidation happen. A company that is already running ahead with this is Smashwords. Publish with them and they do the distribution for you to their own site, as well as Kobo, Apple, Amazon, Sony, and even B&N. One site, one process, and one revenue payment makes it simple and transparent. What a concept! Big book retailers like B&N should consider taking a page out of Smashwords success manual.

One of the challenges publishers and authors face with e-books is that no one knows what anyone’s reading. Without eye-catching book jackets displaying the author’s name prominently, the potential for word-of-mouth marketing is virtually lost.

GelaSkins, a company that makes covers for every imaginable mobile device and all the major e-readers, could offer a solution to the branding dilemma of e-books. You can currently buy ready-made GelaSkins for devices, or custom design something unique; the options for design are endless.

An author could create a GelaSkins cover of her latest book and offer it as a giveaway to readers. Or publishers could host a contest, like an iPad draw, and cover the prize with a custom-designed book skin. Authors could also sell skins alongside their books to generate extra revenue. With any of these scenarios, the consumer gets a visual cue as well as protection for their e-reader, and the author and publisher get their names displayed for the world to see.

At about $20 per skin this isn’t exactly an inexpensive option, particularly since e-books still come in below that price. But if e-reading continues to grow like it has, authors and publishers will be looking for creative ways to brand their books. GelaSkins might be a product to do it.

Give us your take: Would you pay $20 for a skin that looks like your favourite book cover?

Image credit: Bookshelf design for Kindle 2 by Colin Thompson

No question, e-reading recently got a whole lot sexier. Apple’s iPad, the latest e-book reader, is sleek and shiny, and has definitely upped the ante. Not only can you read your favourite book (in colour), you can surf the web, play games, keep up with social networks, display photos, and so much more.

It’s estimated there are some 10 million downloadable book titles available and a dizzying array of readers to enjoy them on. On the first day of its launch, Apple’s iBookstore saw 250,000 downloads alone. Before the iPad, Amazon’s Kindle was the sweetheart of the industry with a whopping 90% of the market share. Sales of the iPad show it’s looking for a takeover, and many wonder if it will sink the Kindle altogether and leave all other readers in its dust.

But if the iPad is being used specifically as a reader, word on the street is that the Kindle, or other single-purpose reader, may be a better option. There’s the matter of eInk, the technology that makes the Kindle screen delightfully easy to read in any light. Take an iPad to the beach on a sunny day and good luck reading the screen. Then there’s the battery. The Kindle has enough juice for up to two weeks of reading. The iPad? Ten hours.

If the iPad hype and sales have shown us anything, it’s that e-books are teetering on the edge of becoming mainstream, and consumers want digital content and are willing to shell out for it. From that perspective, the iPad could become the tipping point for the e-book market, and publishers and authors need to focus on the implications and opportunities that will bring.

Amazon has recently announced two changes to its Kindle publishing program that will be of interest to self-published authors.

1] International authors now have access to Kindle publishing.

Up until last week, only US publishers were able to create and sell Kindle versions of their e-books through the Amazon site. Now the Kindle publishing option is available to publishers worldwide. Payment to all international publishers is made by cheque, direct deposit still being available only to those in the United States.

2] Amazon will soon offer publishers royalties of 70% on e-books.

Yesterday Amazon announced a new program that would allow publishers and authors to earn 70% of their e-book’s list price, net of Amazon’s delivery costs. Currently, publishers earn 35% of list on Kindle books. At first blush, the new program seems generous — which it is — but it’s also Amazon’s way of enticing publishers to play by its rules about pricing and availability. To qualify for the new royalty rate, the e-book must meet certain criteria:

• Have a list price between $2.99 and $9.99
• Be priced 20% below the lowest physical book price
• Be made available for sale “in all geographies for which the author or publisher has rights”
• Participate in a bundle of features, including text-to-speech
• “Be offered at or below price parity with competition”

Both the old and new royalty programs will exist side-by-side and publishers will be able to choose which one they wish to participate in. The new program comes into effect on June 30, 2010. Note: the 70% royalty option will initially be available to US publishers only.

March 8 -14 is Read an E-Book Week. In keeping with the spirit of the event, I thought I’d try to summarize what an author should know about Kindle, the e-reader from Amazon.

I’m going to assume that you’ve heard about the Kindle but you don’t really know too much about it. My aim with this post is to provide enough information for you to evaluate the market and figure out if it’s worth pursuing. So let’s get started.

What Is the Kindle?

• The Kindle is a dedicated e-book reading device, meaning it reads e-books, along with some newspapers and magazines, but not much else. Version 2 of the Kindle was released in February of this year.
• It uses E ink technology for the display. E ink is very different from a computer screen or the screen on, say, an iPhone. It is not backlit and so the experience of reading on a Kindle is very much like that of reading off paper. There’s no eye strain and it can be comfortably used for long periods of reading.
• The Kindle is relatively small and lightweight. It weighs just 10.2 ounces and has a 6″ screen on the diagonal. It’s very convenient for carrying, and many users appreciate its portability over heavy books.
• The Kindle 2 can hold about 1,500 books at a time.
• The device currently sells for $359 USD.

There are many video reviews online that will give you a more detailed look at the Kindle and its features. Here are a few good videos I have found:

• Kindle 2 first impressions from Michael Hyatt, CEO of Thomas Nelson Publishers
  
• CNET Kindle 2 review
• Kindle 2 user feedback video from Amazon

Who Uses a Kindle?

• Amazon will not release any sales data about the Kindle devices so no one really knows how many they have sold or who is buying them. Guesses from industry watchers range from 300,000 units sold to as high as 500,000.
• Contrary to what you might intuitively guess — that the biggest users are kids of the ‘Net generation — anecdotal evidence points to users 40 years of age and up as the primary market. This older audience appreciates the resizable type, the light weight and portability, and the convenience of instant access to content. Typically, they also have more money and are able to afford the $359 ticket price.
• Oprah Winfrey endorsed the Kindle on her show in October 2008, raising the device’s profile with the public in a big way. Demi Moore twitters about how much she loves her Kindle.
• Right now, the Kindle is only available in the United States. There is some speculation that version 3 will be available in other countries, but Amazon has yet to confirm that this is true.

What About the Content?

• There are about 245,000 book titles currently available in the Kindle format, including 102 of 111 current New York Times bestsellers.
• Amazon reports that Kindle books have been selling briskly, now accounting for about 10% of sales for titles where both print and Kindle editions are available.
• Kindle books are proprietary files. The files are wrapped in DRM (Digital Rights Management) technology, meaning they are encrypted. They can only be read on a Kindle or on the Kindle app for the iPhone. There is a great deal of debate and criticism in the publishing industry over Amazon’s choice to encrypt its files. Many publishers are pushing to standardize e-books around an open file format called ePub. (More on that in a later post.)
• The typical price for a Kindle book is about $9.95. Amazon keeps a 65% commission on each sale. This is higher than the 55% commission they keep on print book sales.

What’s the Upshot?
While Amazon has taken its share of criticism over the Kindle for a variety of reasons — some of it well deserved — it can’t be denied that the device is helping bring e-books to the mainstream and creating new opportunities for book sales.

If you are an author with an existing print book, or one in production, publishing a companion Kindle version is pretty easy and inexpensive. For a small additional investment, you can make your book available to an audience that craves new content and wants it quickly. This audience is relatively small right now but will continue to grow over time. It’s almost certainly a good investment to make.

Part of being a self-published author is figuring out ways to get as much mileage as you can out of everything you create. Producing your book is a time-consuming effort. It pays to look for ways you can repackage, tweak, pare down, extend, translate, or extend the content for greater reach and greater revenue.

One repackaging tactic is to sell downloads of individual chapters, on top of making the full book available. The thinking behind the strategy is to appeal to people who might want to explore only one or two specific tactics in a book, or who might want information immediately through downloading.

This past year, Random House began selling individual chapters of Made To Stick by Chip Heath and Dan Heath for $2.99 a pop. Made to Stick had already sold 220,000 hard cover copies before the single chapters were made available. It’s hard to say whether sales of the printed book would have been cannibalized by offering the single chapters earlier. My guess, however, would be that selling single chapters would only boost sales. The low price encourages readers to take a nibble with minimal risk. As more and more people download a chapter and share the content with others (yes, it will happen — so embrace it), the more your book buzz is spread.

Selling by the chapter is not quite the same thing as serialization. Publishing a book as a serial implies that readers will eventually read the whole book through installments that are delivered in sequential order. By-the-chapter sales allow a reader to buy one chapter, with no commitment to buy any others.

Selling single chapters works best for non-fiction since each piece has to more or less stand on its own. Travel publishers, for example, can benefit from selling sections on specific cities or areas from within full country guides. Lonely Planet is already doing this through what they call their Pick & Mix menu. Other topics that lend themselves to single-chapter sales include business (one strategy, idea, or tip explained), essay or story anthologies, cooking, and fitness.

Parallels have naturally been drawn between publishing and the music industry. In music, we have seen a shift from full album sales, purchased on recorded media such as a CD, to individual song downloads. In publishing, while I doubt that piecemeal downloads will eclipse sales of the full product, I do think it likely that individual chapter downloads will increase in popularity.

Chapter pricing is still very much up in the air due to its relative newness. Random House charges $2.99 per chapter for Made to Stick. Lonely Planet charges $2 to $5 per chapter, basing the price on the length of the chapter and the price of the book from which it was excerpted. If the music industry can again be looked to as a sign of things to come in publishing, we may see chapters eventually priced at $.99 each.

Are you an author or publisher who has tried single chapter sales? As a reader, what are your thoughts on buying one or two chapters from a full book?