At the Kindle Fire HD release event in Los Angeles, Amazon CEO Jeff Bezos did his best to convince attendees that the end is at hand for print publishing, but are physical books really ready to go the way of the dinosaurs?
In a word: No. In a few words: Sort of, but not really. Let's take a look at the facts, though, before collectively preparing Amazon's victory jubilee. During the Kindle Fire HD release event, CEO Jeff Bezos announced that Amazon's customers are now buying far more Kindle books than their physical counterparts. With several graphs, all conveniently devoid of numerals along the Y-axis, Amazon's chief executive did his best to convince those in attendance that the death of print publishing is upon us. Fortunately, for fans of print publishing, the numbers just don't add up quite yet.
The most obvious issue with treating Amazon's sales figures as the nail in print publishing's proverbial coffin - other than the lack of actual numbers - is the fact that they only reflect the sales of one organization: Amazon. You know, the company currently dedicated to replacing the print publishing industry. The entire purpose behind releasing five generations of Kindle e-readers, two generations of Kindle Fire, and the Kindle Fire HD tablet was to up-end your business model. Frankly, as an investor, I'd have been far more concerned if the graphs showed anything other than Kindle book sales trumping physical book sales at Amazon.
What about Amazon's biggest competitor in the brick-and-mortar retail space? Without including Nook products, sales at Barnes & Noble stores open 12-months or longer are up 7.6% according to the company's first quarter fiscal report. When you include sales figures for the Nook, it actually lowers the stores' sales boost down to a more modest 4.6% bump. So what's with the jump in sales? Executives gave much of the credit to the "Fifty Shades" series, a massively popular trilogy which has sold more than million copies so far. The "Fifty Shades" trilogy also provides a shining example of why it will take some time for print publishing to disappear.
When a book or book series becomes a mainstream hit, the vast majority of those interested in reading the book aren't going to buy an e-reader or Kindle Fire HD to do so. When most people hear about a great book, they either order a copy online or head to the closest brick-and-mortar to make the purchase. They aren't thinking about what other books they might want to read later, or whether they would have the space to accommodate all of the purchases over time. They just want to read the book they're interested in, and $14.99 - $24.99 is still a much lower price range than $69 - $499. Besides, how much longer do you really think that $69 Kindle will be in production if the company really wants the Kindle Paperwhite, Kindle Fire, or Kindle Fire HD to find an audience?
But let's go one step farther, and take a look at global internet penetration numbers. If Amazon really wants the Kindle, Kindle Fire, and/or Kindle Fire HD to play the publishing industry's death knell, it will require a much larger internet penetration rate than exists today. As of Dec. 31, 2011, only about one-third of the world's population has access to the internet. Even the most optimistic projections assume little more than 40% penetration by 2015, and 66% by 2020. That means nearly two-thirds of the world's population still won't even have the option to purchase a Kindle, much less the books to fill one, for at least another ten years. Not only that, Amazon has struggled to find a foothold in the largest economy outside of the United States: China. Even with a device that could rival the iPad 3, until a majority of the world populace has both access and a desire to use their marketplace, it's hard to imagine Amazon forcing existing publishers out of the book industry.
As our population grows, demand will require us to move away from printed words in a great many ways in order to meet global need. Eventually, physical books are likely to become as common as 8-track players or a functioning Virtual Boy in 2012, but I'd be willing to bet that time is at least a decade away. And unless Amazon manages to secure exclusive publishing for the next couple of hit titles, we're talking hits on the scale of "Twilight" or "Harry Potter", there's a good chance it'll take even longer than that.
So, will print publishing cease to exist at some point in the future?
For all intents and purposes, the industry's death is basically guaranteed, but it won't be solely at the hands of Amazon.