It was inevitable, but the speed of the transition is impressive:
In July 2010, Amazon announced that sales of electronic books for its Kindle e-book reader surpassed sales of hardcover books on the site. Six months later, sales of Kindle books surpassed that of paperbacks. Now, customers are downloading Kindle books more than hardcovers and paperbacks combined.
Having built their businesses on the production and distribution of physical books, traditional (legacy) publishers are in big trouble. The cash crop of seasonal, celebrity and cyclical titles that annually supported publishing’s administrative and production overhead is rapidly disappearing. The same information is either readily available for free on the internet, or more quickly and easily produced as an e-book or subscription service. Customers can still get what they want, but publisher are no longer critical to that process.
Attempts by publishers to control (if not fix) the price of e-books have also failed. Even with a lower cost of production, e-books must still provide revenue that offsets the loss of print sales or publishers will necessarily have to reduce those costs — including employment costs devoted to print. Whether Amazon’s numbers are consistent with other retail channels, the trend seems clear: the profitability of e-books will determine the viability of any publisher going forward. (There are probably very real implications for the paper industry as well. Adjust your portfolio accordingly.)
The good news is that content and books as valued objects are not under siege. If anything, many of the books previously sold in physical form and now sold in digital form had little or no value as objects — and probably little or no value after a year on the shelves. Clearing big-box stores of titles that existed only by virtue of a constricted distribution channel obviously means adjustment, but I see no downside for the reader. Physical books will still be available, and probably in better-quality editions. It may also be that independent bookstores will thrive because of their smaller footprint and more intimate knowledge of local reading habits.
Update: The New York Times has more here.