Digital to Represent 20 to 28% of Publishing’s Profits, says Forum d’Avignon/Bain & Co. Report

In Europe by Edward Nawotka

By Edward Nawotka

A new study, “Publishing in the Digital Era,” commissioned by the Forum d’Avignon and compiled by Bain & Co. states that e-readers, tablets other digital reading devices “could be in the hands of 15 to 20% of the developed world’s population by 2015,” and offers an unprecedented opportunity for publishers and authors. The “redistribution of value among players, a redesign of their roles and, potentially, an evolution in the way content is created could produced significant new value for the industry…”

Bain suggests that digital formats are likely to represent “20 to 28% of industry profits in the medium to long term.”

The study surveyed some 3,000 consumers across the United States, Japan, Germany, France, United Kingdom, and South Korea. Among those countries, the United States and South Korea lead in the device penetration, with South Korea expected to hit 11% and the United States to hit 8% by 2012, respectively.

So far, men have outnumbered women as early adopters. Buyers of e-readers tend to have higher than average incomes, aged between 20 and the early 30s. Many are already avid readers, and more than 40% (52% in the United States) report reading more now than they did prior to owning a device. As the market expands, growth is expected primarily among women age 35 and older.

The biggest obstacle to adopting a digital device, cited by 41% of respondents, is the unwillingness to abandon “the paper experience.” The second issue, which many consider still too high, though this is likely to diminish as the price of devices declines, a “psychological threshold.” Bain predicts that e-readers “could capture as much as a third of the market” for their ability to replicate the experience of reading on paper.

Piracy, while still a problem, appears to be a less urgent matter, with 70% of those surveyed saying that they purchased the majority of their e-books.

While children’s books, reference works, and illustrated titles have potential to take off in digital formats, Bain found that over the short-term, literature would “likely remain the most widely read digital genre through 2015.”

Certainly, the outlook for publishing industry is be rosier than some might have thought as recently as a few years ago, but news and magazine publishing is likely to continue to suffer. Bain found that only 10% of those surveyed said that they were willing to pay for news, primarily only in areas of “financial information, local news or investigative journalism.” Of those, consumers prioritized local news, with 43% saying they would pay for this type of content. At the same time, consumers said they would typically “spend three times less for digital news than for the print version.”

Of all the nationalities surveyed, South Koreans -– coming in at 22% –- pay for online content.

Opportunities are Equal Across the Board

Bain found that the opportunity to profit from digitization falls evenly across authors, publishers, distributors, and retailers -– though the landscape is shifting.

Authors are taking advantage of digitization by opting to publish their own works, thus forcing publishers to “provide clear value.”

Retail distribution networks are at risk, but those that can transition into digital distributors –- Barnes & Noble is cited as one likely candidate –- will be best positioned for survival. Nevertheless, “the digitization of 20 to 30% of today’s printed volumes challenges the very nature of current physical distribution networks.”

Meanwhile the emergence of powerful distribution platforms, such as Apple and Amazon, with algorithms to recommend books have enabled them to “step into the advisory role of the individual bookstore owner,” and, perhaps of even more importance, “might even contribute to the emergence of truly global book publishing markets.”

A Taxonomy of Digital Formats

The study offers its own taxonomy of digital formats.

Hybrid: Multimedia books that supplement text with video and audio, such as those produced by Vook.

Nonlinear: Aggregators, like Memorandum, that bring together diverse, like-minded content into a single format or website.

Interactive: Text and literary projects that are directed by a single author/company that invite participation from readers. One example of this is The Amanda Project (which we covered earlier in the year.)

Social: Digital publishing that employs a “feedback mechanism, where authors can communicate directly with their audience and readers can communicate with one another.” Here, Bain includes HarperCollins’ and Hachette Livre’s MyBoox.

Overall, the report offers few surprises, but it does offer a very concise overview of the current state of the digital markets.

If there’s one overlooked opportunity that the reports identifies, it’s the preservation of digital content. “Congress libraries, national and private, have already begun digitizing paper-based content to secure its preservation,” says the report. “It is a colossal task requiring equally large investments. And it is unclear how digitally born contents will be sifted, particularly in non-linear, hybrid and social formats,” adding, “What is transient and what is heritage? The great classics of digital publishing age of yet to be written.”

DISCUSS: What are the New Digital Classics?

DOWNLOAD: The full report (PDF)

About the Author

Edward Nawotka

A widely published critic and essayist, Edward Nawotka serves as a speaker, educator and consultant for institutions and businesses involved in the global publishing and content industries. He was also editor-in-chief of Publishing Perspectives since the launch of the publication in 2009 until January 2016.