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Digital Futures
E-Book Distribution: What Went Wrong; What's Next
February 2002

Authors:   David Rader
Martin Schwirn
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About This Report
Table of Contents
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About This Report

Among the major media, print has been the slowest to make the transition to digital. Calls for the paperless office were met by an explosion in laser printing. More recently, advocates for replacing paper have zeroed in on books and magazines, arguing that Internet distribution combined with low-cost display devices will render these centuries-old artifacts obsolete. But as with other new technologies, the hype exceeded the practical realities, and many e-book ventures crashed in the 2001 collapse of the Internet bubble.

In fact, e-book distribution—the sale of titles as digital files that one can read on various computing devices—does offer solid economic benefits for publishers and authors and a potentially better user experience for some readers in certain contexts. But the many challenges that remain mean that adoption—even in the most promising segments—will take at least five years to become significant. This report weighs the benefits of e-book distribution against the obstacles across the major segments of the print-media market. It also forecasts adoption in each of the major segments.

We welcome feedback about this report and the program, and we encourage you to contact us with any questions or suggestions. For more information, please contact Ed Christie, director, Digital Futures; telephone: +1 650 859 2400; fax: +1 650 859 4544; e-mail: echristie@sric-bi.com. We appreciate your support of our program and look forward to working closely with you as a Digital Futures sponsor.



Table of Contents

About This Report ii
The Drive toward E-Book Distribution 1
Advantages of E-Book Distribution 3
  New Markets for Authors and Publishers 3
  New Flexibility in Print Distribution 4
  Pros and Cons for End Users 4
E-Book Challenges 5
  Readers' Resistance to Change 5
    Early Reaction from Users 6
    Avoidable Obstacles to User Acceptance 7
  Technology Status 7
  Business-Model Issues 10
    Gemstar: A Case Study in a Closed System 11
    Title Pricing 12
    Format Wars 13
    Digital Rights Management 13
Market Segments 15
  General Interest 15
  Vertical Markets/Professionals 15
  Education 16
  Libraries 17
  Periodicals 18
Market Prospects 19
Tables
Printed Media and Displays: A Comparison of Reflection 8
Current Dedicated E-Book Readers 9
E-Book Business Models 11
E-book Applications among Vertical Industries 16
Worldwide Installed Base of E-Book Readers and Substitutes 19
E-Book Distribution by Segment 20



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