Kindle and the Rise of E-Books

In a late February talk in Washington, HarperCollins chief executive Brian Murray declared that Amazon.com seeks to put publishers out of business. “No-one,” he said, “has yet discovered how to compete with Amazon.” He regards Amazon as more powerful than Walmart.

Amazon’s Kindle that was unveiled in 2007, said Murray, triggered the explosive growth of ebooks, which now comprise 20% of all books sold in the United States. At Harper Collins, number two of the big-five publishers, the percentage is an even higher 50% of sales. Three quarters of all ebooks in the United States are in the Kindle format. “Everyone,” said Murray, “underestimated the speed at which ebooks would be accepted.”

The digital shift, said Murray, is pervasive, impacting every facet of the journey from author to reader. It means that anyone can be published. “For authors,” said Murray, “there are more opportunities now than ever before.” However, printers and retailers are collapsing.  Forty-two percent of book sales are online.

Significantly, publishers are coping. After several years of slow or no growth HarperCollins is publishing more books than ever, some 3,500 last year or 15 titles each day. The transformation of retailing has cut down on returns and thus boosted profits. In the pre-Amazon days 50% of books went unsold and came back to the publishers. Books—both printed and digital—comprise a $25 billion industry.

Murray’s message was that unlike music the publishing industry is figuring out how to compete and survive.  He pays tribute to Amazon, saying it is amazing that anywhere in the world a reader can order a book and have it delivered to his Kindle in seconds.

In his biography of Amazon founder Jeff Bezos (The Everything Store—Jeff Bezos and the Age of Amazon), Brad Stone says it was the success of Apple’s iPod that led to the Kindle. Released by Steve Jobs in 2003 along with the iTunes music store, they had the effect of destroying the traditional music business.  Realizing that, Bezos launched Lab 126, a secret mission to reinvent the clunky ebook readers, which had been around in primitive form since the late 1990s.  Bezos, argues Stone, understood that he had to destroy the old way of running Amazon in order to control the ebook business, just as Apple had reshaped music.  In effect, the iPod made the Kindle.