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E-books Fever and How Quickly Good Data Can Turn Bad

Important Details: On January 15th, 2010, the Book Industry Study Group (BISG) issued a press release announcing results from a survey of US consumers and their attitudes toward e-books. The release highlighted several interesting nuggets of information that an accompanying report detailed in depth. For example, respondents indicated “affordability” as the number one reason they would choose to purchase an e-book over a print copy. Another highlighted finding indicated that approximately one fifth of respondents had stopped buying print books in favor of digital copies during the last 12 months.

The release was picked up by several news outlets including the UK newspaper The Independent, which titled its article covering the survey: Study finds 20% of US readers have switched to e-books. That is a catchy headline but it greatly distorted the actual results. Digging deeper into the BISG press release allowed one to realize that survey respondents were limited to those who had either bought an e-book in the last 12 months and/or owned an e-reader device such as a Kindle or Sony Reader. The survey was therefore of current e-book consumers and not representative of the broader book market.

Implications: Given our own research into the habits of US news consumers, such a misleading title can spread bad information quickly. Our recently released survey report News Users 2009 shows that 44% of visitors to Google News scan the headlines without reading the full story. As newsrooms face more and more job cuts, such errors of omission are likely to increase. This means more vigilance is needed when ingesting information at a time when the volume of such information is increasing on everyone’s desk.

With regard to the BISG study, the questions asked certainly look worthy of exploration and the targeted respondent base allow a reader to discern current habits among e-book buyers. But applying those results to the broader population ignores some differences between the two groups. For example, the finding that cost is the primary factor driving a buyer’s decision to purchase a digital book over a print copy ignores the cash outlay that many of these consumers have already made for the e-reader device. If cost were truly the deciding factor, would not a local library be the primary source of procurement? Again, the survey data looks interesting but it needs to be kept in context.

That said, the survey does inadvertently provide one piece of insight into broader trends of e-book adoption. From an initial pool of 36,000, only 868 (or just under 2.5%) qualified to respond. That number alone is telling. In the US, e-book adoption is likely in the 2 - 3% range - a far cry from the implications of the story run by The Independent. Rather than 20% of US readers abandoning print, the figure based on the initial survey pool is closer to around 0.5%. Said another way, less than 1% of US readers have abandoned print for digital books.

In short, the data was good but in all the hype it quickly turned bad. This should provide a gentle reminder that as new markets emerge it is important to apply a careful eye. Another piece of information on the topic that was recently inflated surrounded Amazon’s disclosure of e-book sales. The company reported that on Christmas Day for the first time ever it sold more digital books than print copies. This statement was interpreted by some to indicate that the sales trajectories of these two models had crossed in some permanent fashion indicating the demise of print. However, what was missed in that analysis was that those sales were driven by the large number of new (and relatively empty) Kindles being unwrapped on that day which led to a onetime sudden uptick in e-book sales. Outsell’s 24 February 2009 E-books Market Size, Share & Forecast Report found that e-book sales in the US to amount to 2.9% of the total book market. We’ll be updating that report in the coming months but as we do it is unlikely we will find penetration beyond low single digits. E-books present a new opportunity but in light of the growing attention around the emergence of new reading devices it is important to remember they remain a small fraction of the market today.

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