Why have eBooks stalled at 20% to 30% market share?

First, a little bit of history

1. When the current iteration of ebook readers started, with Sony Reader in 2006/2007 and Kindle in 2007, the Dream for companies manufacturing eReaders and pushing ebooks was – Every Book for $9.99 in eBook Format. To take a 65% cut and make $6.50 per ebook
   1. Until Apple came out and started giving authors 70%, the ebook stores were only giving 35%
2. B&N came out with Nook eReader and Nook Color reading tablet and started pushing 1 Million free public domain books. It really started to work, and by 2009 end, Nook started doing very well
3. Amazon’s counter strategy to fight Free was to leverage indie authors and use ‘New + Free’. B&N says – you can get free public domain books on Nook. Amazon says – You can get NEW free books on Kindle
4. This war between Amazon and Nook became a race to zero. It was not uncommon for authors to make their book free, and without any promotion, give away 40,000 or more copies. There were companies like Pixel of Ink that had millions of Likes on Facebook and hundreds of thousands of email subscribers. Most of the books they featured were ‘curated free books’ and did very, very well
5. After Amazon won the war and got to over 60% market share in ebooks in the US, it started to worry about the forgotten Dream – selling ebooks for $9.99. How can you sell ebooks for $9.99 if authors are busy giving them away for free?
   1. The simplest way is to hide the free and cheap books
6. Meanwhile Barnes & Noble too began to realize that cheap and free ebooks were not doing any favors for their sales of higher priced ebooks. What was worse – free and cheap ebooks were a danger to paperback and hardcover sales
7. The big established Publishers also got worried. They had paperbacks and hardcovers selling for $10 and $20 and low priced ebooks threatened that market
8. We suddenly had a very interesting ‘we are on the same team’ moment, experienced by all the warring parties. Amazon, Barnes & Noble, Publishers, and perhaps other large companies, realized that $0 ebooks and $0.99 ebooks would completely wipe out the Dream of $9.99 ebooks, and the reality of $10 to $20 paper books
9. These companies all are still trying to beat each other. Yet, they somehow all figured out, almost simultaneously (in early 2013), that there would be nothing left to fight over if everything went to $0.99 ebooks and $0 ebooks

Second, a little bit of conjecture

1. All the established large players in the ecosystem started making moves to hold back the rise of cheap and free ebooks
2. Publishers made sure that all new ebooks were $10 to $15. This had dual benefits – they made more per ebook sale, they protected sales of hardcovers and paperbacks
3. Amazon and Barnes & Noble started de-emphasizing free books and cheap books. The ‘bestseller lists’ got replaced by ‘highest grossing lists’. That is why you see absurd things like a $10 children’s ebook supposedly selling more than a $1 Romance Box Set with 5 full length books from New York Times Bestselling Authors
   1. Do you really believe the market for a $10 children’s ebook for middle grade kids is bigget than a $1 Romance Box Set aimed at 50 Shades of Grey lovers?
   2. That the $10 children’s ebook stays in the Top 100 for 3 weeks, while the $1 Romance Box set disappears from the Top 100 within 2 days?
4. The ebook stores make a lot of money from physical books. Because they also happen to be the two biggest sellers of physical books. It should not have been a surprise that when they realized ebooks at $0.99 and $0 would take over the market, they pulled back significantly
5. What we have right now is an extremely artificial market. All those readers, trained to expect free ebooks and $0.99 ebooks, are being asked to forget all that and go back to $9.99 ebooks and $7 paperbacks and $20 hard covers
6. We have readers who want cheap ebooks. We have self published authors who are willing to supply cheap ebooks. Yet, the Connectors of readers and authors, the ebook stories (Freudian slip perhaps), are loathe to lose all the money they make from $10 to $20 physical books. They are even more reluctant to give up their Dream of selling $9.99 ebooks and making $6.50 per ebook sold

Finally, a little bit of forecasting

1. What we are going to see in the coming decade is more and more pressure on the ebook stores to reflect what readers are asking for (free ebooks, $0.99 ebooks, ebooks under $5), and perhaps equally importantly, what self published authors are willing to supply
   1. If the boy and the girl are in love, it is not the Mayor who gets to say Yes or No to the wedding proposal
2. We are also going to see more and more drastic attempts by ebook stores and book stores and Publishers to mindzap readers into buying $10 to $15 ebooks
3. The ebook stores become a weapon, used by the people who currently control the industry, to create the perception that high priced ebooks are what are actually selling
   1. This also has the nice side benefit of preserving paper book sales
   2. Paper backs still have 70% to 80% market share, because the corresponding ebooks are being sold for $10 to $15
4. The Internet and websites and email lists and apps become the weapon, used by self published authors, to connect directly to readers and push forward ebooks under $5 and $0 ebooks and $0.99 ebook deals
5. As there is no business where $10 product is winning over free product and $0.99 product (music is subscriptions, apps are free, games are free), we will have a system break down at some point between 2022 and 2027
   1. The ebook stores will keep showing ‘what they want readers to buy’ and not ‘what is actually selling’
   2. Readers and Self Published authors will keep trying to find new ways to connect to each other
6. After there is a system breakdown, there will be very strong attempts to create a new ‘reality’
   1. This might take the form of a subscription service. Kindle Unlimited is Amazon’s bet for a future where their $9.99 ebook dream gets shattered and paperback sales go down
   2. This might take the form of a new type of store
   3. This might take the form of something like Wattpad
7. The most likely outcome remains a complete switch
   1. eBooks go from 20%/30% market share to 70%/80% market share
   2. eBook prices go to $0, $0.99, $2.99
   3. Self Published authors take over a very large part of the market (60%) because traditional publishers and traditional companies simply can’t survive on $2.99 and $0.99 ebooks

There is a very simple battle that will decide the future of books

1. Will the people very strongly invested in selling $10 to $20 paperbacks, and $10 to $15 ebooks, manage to somehow convince readers that cheap and free ebooks do not exist
2. OR
3. Will the authors willing to sell $0.99 and $2.99 ebooks and give away $0 ebooks, find some way to connect with readers, and break down the current system