Schewanick Computer Services

The Current State of the Market
In my first article, I outlined the massive advantages to eBook publishing, particularly for the author! Now you have become excited by that, it is time to inject a little realism! Ever since the emergence of personal digital assistants (or 'PDAs') and the growth of the Internet, market enthusiasts have been predicting the ultimate demise of the printed book.
This is, of course, nonsense! Traditional books do not require a power supply or batteries and can be read even when badly damaged (so called "graceful degradation"). Printed pages have better contrast and fonts are serifed, to aid the eye in scanning the text. Readers do not need technical skills or expensive and fragile devices to access them. Traditional printed books are here to stay!
Over time – and as technology improves – some of these differences will be eroded. However, at the moment, eBook sales are still only a tiny fraction of overall book sales wordwide and electronic publishing remains a very immature industry. There are many companies, testing different possible business models. There are also competing software formats and handheld device manufacturers (as well as traditional PCs). This diversity will, in the short term, hamper progress.
Future Growth Prospects
It is also wrong to dismiss eBooks as an idea that will never take off (as several industry stalwarts seem wont to do). Why? Well, because that fact is that (a) eBooks are already doing pretty well and (b) the major players are still investing!
Lightning Source, the eBook distributor used by Amazon in the US, sold its millionth print-on-demand book in April 2004. Try telling them that it's an idea that'll never work! In 2005, Amazon recently bought French company Mobipocket from Franklin for $2.5 million (to distribute eBooks) and BookSurge.com (to cover print-on-demand books). Look at the Amazon PageRank of eBooks on Amazon's site and you might be surprised how well many are doing!
In fact, eBooks are particularly suited to the distribution of business, computing and academic works (with a small but high value niche market). They have also proved to be a viable complimentary channel for popular mass-market paperback titles. Members of the Open eBook Forum (OeBF) reported $3.2m of sales in Q3 2004, a 25% increase over the same period in 2003. The equivalent volume increase was 11%, so eBooks are commanding higher prices as consumer acceptance grows.
Features of the eBook market
At a basic level, one can distinguish five main components to the emerging ePublishing market:
1) Free distribution - epitomised by Project Gutenberg; started in 1971 (in the very earliest days of the internet) and now maintained by an army of volunteers. At time of writing, there are 16,700 free etexts in it's catalogue and approx. 1.8 million downloads a month. Top 20 downloads include the War of the Worlds by H. G. Wells and Pride and Prejudice by Jane Austen. Peer-to-peer (free and generally illegal) distribution using Internet Relay Chat (IRC), Usenet and file sharing software (like Kazaa, BitTorrent & Limeware) has yet to take off in the book market as it has in recorded music. It might be easy to burn MP3s from a CD, but scanning a book, page-by-page to create a text file is beyond the skills and patience of almost everyone! Everyone, that is, other than the dedicated volunteers at Gutenberg!
2) Own distribution - all about selling your eBooks via your own website. I recommend this option as a complementary channel to Booksellers, Distributors and Aggregators. At the basic level, you register a domain name via a hosting agency (e.g. 1&1 Internet Ltd) and create some pages using Net Objects Fusion or similar design software. PayPal is emerging as the simplest and most widely accepted payment interface (with 71 million users worldwide).
3) Bookseller distribution - the biggest and most confusing component of the marketplace. At one end of the spectrum is the online equivalent of the traditional 'vanity publisher' companies; where you are charged an up-front fee to list your book but then get 100% of the sales receipts. Examples include ebookpalace.com and ebookomatic.com. With Alexa PageRanks over 170,000, there are just not enough users regularly visiting these site to make them worth your while (especially when one excludes the hapless authors admiring their works).
In the middle of the spectrum is the royalty bookseller who does not levy an up-front charge but instead pays you a %age royalty on each eBook they sell for you. Examples include lulu.com, ebookad.com and cyberread.com. Unlike some less reputable operators, Lulu do not levy hidden up-front charges on top of royalty percentages. They also generate reasonable web traffic, with an Alexa rank of 5,421 – so I would consider Lulu but ditch the rest in this category.
Finally, at the other end of the spectrum are the major online booksellers. Of the big four (Amazon, Borders, Barnes & Noble and BOL.com) only Amazon distribute eBooks on their site and even then Amazon only accept titles from their distributor, Ingrams.
4) Distributors - The best "back door" into Ingrams (who normally do not deal with small publishers) and thus into Amazon is via their subsidiary Lightning Source International (LSI) LSI handle the inventory and technology for secure download of titles on Amazon.com, eBookmall.com, Diesel-Ebooks.com and Powells.com. I receive most of my sales via LSI (bot surprising when one considers Amazon have an Alexa Rank of 13! Sites with low AR get tens of millions of visitors per month. Sites with an AR over 100,000 get thousands (and thus will only convert hundreds or less into actual sales across the whole catalogue).
5) Aggregators – Content Reserve are the biggest and best known, serving a growing number of public libraries, as well as a network of retailers including eBooks.com, WHSmith, SimonSays, Fictionwise and eFollett.com. However, Content Reserve do suffer from a "bad press", at times, in Internet forums on their speed of payment. They also charge up-front storage fees for holding inventory (a charging structure that penalises small publishing outfits with few titles).
eReader.com and Mobipocket complete this group, being both vendors of (free to download) eBook reader software and a repository for eBook downloads. Whilst eReader is currently more popular, particularly with Palm users, Mobipocket looks set to grow in importance, given it's recent sale to Amazon Europe and Amazon's plans to integrate Mobipocket into Amazon UK. Mobipocket's reader software also works on Blackberries and Smart Phones (thus being more platform independent) and is compatible with the emerging and non-proprietary Open eBook format.
Conclusions
With such a limited number of publishers testing eBook models, the market for me essentially boils down to Lulu, LSI, Content Reserve and Mobipocket. Whilst immature and limited by diversity, the eBook market is growing rapidly. This growth looks set to continue.
In chapter 3 of my free eBook Publishing Guide ("writing your eBook"), I explore how to write and format your book for eBook distribution, including the creation of covert art.

About The Author

David Viney is the author of the eBook Self-publishing Guide; Desktop to Amazon in 10 easy steps. The book is a handy pocket guide on how to get your eBook distributed via Amazon and other sites in the UK and US and marketed for maximum sales. To read further free extracts, or purchase a copy, see http://viney.com/free-ebook-self-publishing-guide.
david@viney.com