Thursday, November 04, 2010

Australian e-Book Industry Report

The Australian Government has invited submissions to the Book Industry Strategy Group (BISG) on Digital book production, by 10 December 2010. Under the BISG Terms of Reference, group has until April 2011 to "... develop a comprehensive strategy for securing Australia’s place in the emerging digital book market, while making the Australian book industry more efficient and globally competitive...".

In my view, the best way to help the Australian publishing industry transition to the digital age would be with education for those in the industry. Authors and editors in particular need to know how the technology and business models work. Also key to this is the role of libraries and universities. In addition the publishing industry needs to explore links with other creative industries, particularly video game production, which has overtaken film production in terms of revenue.

So far the group has commissioned a report "Digital Technologies in Australia’s Book Industry" (Jenny Lee, July 2010). Unfortunately this 73 page report starts by saying it is already out of date, due to rapid development. However the analysis is reasonable and new data is unlikely to change the conclusions.

What is of concern is that the report, along with other BISG documents, is provided in PDF and RTF, not in a web based format. This is contrary to the advice of AGIMO, the Government's own e-publishing experts. It is of concern that the group advising the government on digital book production is not able to produce its own report in an acceptable digital publishing format. This calls into question the competence of this group to provide advice to the Australian Government.

From the BISG Terms of Reference:

The Book Industry Strategy Group will deliver a report to the Minister that tells us:

  1. What digital platforms for books are available in Australia, how they work, what features they offer, and how extensively they are used.

  2. How fast the market for digital delivery of books will grow in Australia and internationally, what factors might slow or hasten that growth and what is the relative position of printed books.

  3. The potential size and structure of the Australian digital and printed book markets, taking into account (a) demand from individuals, libraries, government agencies, and research, educational and cultural institutions; (b) the needs of the aged and people with disabilities; and (c) the needs of regional and remote communities.

  4. How the supply chain for trade, educational, scholarly, scientific and technical books has been and will be affected by digital technologies, taking into account the impact on authors, publishers, printers, wholesalers, retailers and consumers.

  5. Options for encouraging efficiencies in the supply chain for printed books, integrating it with digital delivery of books on a global scale, and increasing the overall competitiveness of the Australian book industry.

  6. (a) How business models are likely to change in the digital environment; (b) how this is likely to affect business models for printed books; and (c) what can be done to facilitate these changes.

  7. Opportunities for the Australian book industry to participate more actively in the global marketplace for printed and digital books over the next decade, including by creating, adopting, and using new technologies.

  8. How existing Commonwealth programs and activities can be refocused to support the industry’s adaptation to new technologies.

From: Digital Technologies in Australia’s Book Industry" (Jenny Lee, July 2010):

Executive Summary

1. Digital platforms in the Australian book supply chain

The key digital platforms in the Australian book supply chain are those through which end users obtain books, whether in print or electronic form.

The conventional printed book is now part of a continuum that includes:

  • digital files printed in small or even single numbers;

  • pay-per-view files where a single item may be purchased;

  • audiobooks;

  • electronic books (ebooks): digital files that reproduce the layout and typographical characteristics of printed books); and

  • ‘enhanced’ ebooks in which text is linked to video, sound and interactive elements.

Books in all these forms, including print, are increasingly available through digital platforms. Retailers and libraries are the primary agents in this process, though publishers and other parties in the supply chain also play a role.

Retail platforms

Australian consumers make extensive use of online retail platforms to purchase printed books. This practice has been encouraged by:

  • copyright provisions permitting individuals to parallel import books for personal use;

  • the exemption of online global retailers from Australian GST; and

  • the appreciation of the Australian dollar.

The dominant players in this field are global suppliers such as Amazon and The Book Depository, but Australian firms have also set up online book supply platforms, either as stand-alone enterprises or in conjunction with bricks-and-mortar stores.

Ereaders and ebooks have also become more widely available in Australia since the second half of 2009. Ereaders have black-and-white screens that simulate ink on paper. Since the global release of the Kindle ereader, through which users can purchase ebooks from Amazon’s store, several competing devices have appeared and prices have fallen sharply.

Consumers can also read ebooks on multipurpose devices such as the Apple iPad, which is also linked to an online store, and on computers and mobile phones. Google Editions, due to be launched by the end of 2010, will be a global platform offering ebooks that can be read through a computer’s web browser.


Digital platforms supplement libraries’ traditional role by helping users to gain access to printed material. Libraries also increasingly provide books, journals and other documents in electronic form.

The growing emphasis on online services enhances the visibility of the larger public libraries, which have built up extensive collections of digital resources, but the cost implications for smaller libraries warrant further examination.

In particular, any significant shift from printed books to ebooks could impose additional costs on libraries. Because ebooks are generally made available for lending only to registered users at a particular library, libraries may need to purchase multiple licences rather than sharing resources through interlibrary loans. Costs may also be affected if territorial Digital Rights Management (DRM) restricts libraries to purchasing Australian editions.


All sectors of the publishing industry use digital platforms to promote their publications, but they differ in the extent to which they have adopted online delivery of electronic texts.

  • Digital platforms are most widely used in scholarly journal publishing, where electronic texts have virtually replaced print.

  • Online delivery is also common in reference and professional publishing, especially in fields where frequent updates are required.

  • In the publication of scholarly monographs, conventional print publishing (subsidised by the universities) co-exists with Print on Demand (POD) and the production of electronic texts.

  • Various forms of online delivery are used in higher education publishing, both as a means of providing supplementary material and in compiling customised textbooks.

  • School publishers also make use of supplementary digital materials, either delivered through password-protected areas of their websites or supplied with print textbooks on CD-ROM.

  • Publishers of consumer/trade books have generally been hesitant about producing ebooks because of concerns about piracy and price, but many are now producing a selection of books in electronic form and in some cases making them available through their websites.

The Australian Publishers Association has also announced that its online TitlePage service, which supplies retailers with information on the availability of printed books, will be extended to permit customers to be supplied with ebooks through independent retailers who do not have online delivery facilities of their own.

Other parties in the book supply chain

There is a wide range of practices among authors. While some maintain a digital presence through websites, blogs and social media, others have little involvement in online media outside their agents’ and publishers’ websites.

Other parties such as distributors and printers use online platforms mainly to assist commercial transactions in printed books.

Finally, end users participate both actively and passively online as researchers, readers, reviewers and commentators on books. Their activities help to support online book retailing platforms, and also sustain a variety of special-interest sites where part of the mix is online discussion of books.

At this early stage, it is difficult to assess how far Australian readers view digital texts primarily as supplementing printed books or as substituting for them. The position warrants monitoring as trends become clearer.

2. Digital platforms in use outside Australia

The principal contrast in the availability of digital platforms for books is between the USA and the rest of the world, with Australia in the same position as Britain, Europe and other developed nations. The gap is closing as platforms previously available only in the USA are released in other markets.

The most obvious case of a technological lag is in the supply of ereaders and consumer/trade ebooks, where US availability improved markedly from November 2007 with the release of the Kindle ereader. US sales of ereaders and ebooks have risen sharply since then, though from a low base.

This development is less a result of new ebook technologies than of longer-term changes that have formed an infrastructure for consumer adoption of ebooks. Much of this infrastructure is also available elsewhere, though there are some exceptions:

  • Some of the most popular online retail platforms and ebook readers, notably the Barnes & Noble Nook, are only available to US consumers.

  • Specialised digital asset distributors have made rapid headway in the conversion, storage and distribution of ebooks. Similar firms are becoming active in Australia, but there has been a considerable lag.

  • There is a higher level of activity in online self-publishing and micropublishing in the USA than in Australia, partly because it is difficult for Australian authors to establish a presence in the much larger US market.

It is also evident that the rapid globalisation currently taking place in the market for ebooks poses numerous unresolved questions and challenges for established practices in the global book supply chain.

3. The extent to which digital technologies are currently being used in the Australian book supply chain

Digital technologies are almost universally employed at all stages of the Australian book supply chain. To date their primary use has been in streamlining print production, but the same technologies are being adapted to supply electronic resources. The current use of digital technologies at each stage in the book supply chain is summarised below.

  • Authors: Qualitative research for this report indicates that authors almost universally prepare their books as digital files, and most perform research online as well as using print. Some also make use of technologies such as digital photography, scanning and voice recognition. It is difficult to quantify the extent of authors’ digital technology use, however, because the category ‘author’ is itself elastic. Only 3798 people identified their primary occupation as ‘author’ in the 2006 census, but a 2007 study by ABS estimated that some 244,000 people, about 1% of the Australian population, were engaged in writing books. The bureau did not gather information about their technological practices.

  • Agents universally use digital technologies in communication with authors and publishers, and often secure authors’ digital files against illicit copying before submitting them to publishers for consideration.

  • Publishers in most sectors make extensive use of digital technologies to streamline print production. The publishing process is based on a single set of digital files, which is transformed into a print-ready book by editing, proofreading, indexing, illustration and book design, using word-processing software in the first instance and desktop publishing software in the latter stages. Publishers can also integrate these processes with the production of electronic resources, including ebooks. This integration has proceeded furthest among higher education and professional/reference publishers, which together accounted for 11.4% of industry income at the last ABS industry survey in 2003–04. The use of digital processes to integrate print and electronic production remains a work in progress in the two largest sectors of the industry, school textbook publishing (23.2% of industry income in 2003–04) and trade/consumer publishing (65.4%). While no quantitative information is available about the extent to which publishers are integrating print and electronic production, qualitative information from interviews suggests that most major firms are actively reviewing their processes to this end. Among the consumer publishing firms that are already producing print and electronic resources side-by-side are Pan Macmillan, Allen & Unwin, Lonely Planet and the University of Queensland Press. The largest global publishers also employ sophisticated publishing software to manage and monitor operations such as budgeting, scheduling and royalty payments. These technologies are mostly beyond the means of small and independent publishers.

  • Book printers use computer-to-plate technology to produce printed books, and have invested extensively in digital printing technologies that allow books to be printed in small numbers, or even in single units using POD. Printers also supply a range of other digital services, including file storage and archiving.

  • Book distributors have used digital technologies to streamline the supply of both print and electronic materials, especially through the use of online searching and ordering. In trade publishing, the major global publishing firms have invested heavily in computerised distribution facilities for printed books and have made these facilities available to selected independent publishers.

  • Book retailers employ computerised stock management and database searching throughout their operations. The most recent ABS survey of book retailers in 2003–04 found that 75% of specialist bookshops had computerised stock control, almost 90% were recording transactions by barcode, and just under half had online ordering services.

  • Libraries have invested heavily in digital technologies at every level, including providing computer and internet facilities to people without private access. Electronic resources are a large and growing component of expenditure in university libraries, where they accounted for 62% of expenditure in 2008. The public libraries’ acquisition of electronic resources is less even, with the proportion of library budgets spent on electronic resources ranging from 20% in the ACT to 3% in South Australia and NSW.

  • Readers in Australia, especially women, are enthusiastic consumers of books, with average per capita purchases of about three books per annum at a cost of $60, representing by far the largest item of personal expenditure on cultural goods. Book purchasing is skewed towards higher-income households, but disadvantaged sections of the population, especially the unemployed, are overrepresented among library users. The question that remains unanswerable at this stage is how the general interest in book reading is likely to translate into demand for electronic texts. There are no official statistics on Australians’ online reading habits, but Australia now has much of the infrastructure that has underpinned the recent growth in demand for ebooks in the USA. For example, an ABS study of internet penetration in December 2009 placed the number of active users in Australia at 9.1 million, with the fastest-growing category being those with mobile access. There is scope for further research into Australians’ reading of electronic texts, especially in view of the current pace of change.

  • The supply chain information infrastructure has greatly benefited from the introduction of digital technologies and internet-based communication, with the provision of online bibliographical information through Thorpe-Bowker’s Books in Print, price and availability information through the Australian Publishers Association’s TitlePage, and sales data collected by Nielsen Bookscan.


The changes currently occurring in the global book market are potentially epochal in nature. The rise to prominence of major players from outside the sector signals an intensification of competition in the supply of books.

Although digital technologies already play an important role in the book supply chain, to date their main role has been to support the production and distribution of printed books. In recent times, however, alternative channels have opened up for supplying books directly to readers in digital form online.

It is difficult to assess the impact of these changes in Australia, but they have the potential to affect all stages of the book supply chain. Australia is already a small player in the global book market. Any substantial migration from print to digital would compound the difficulty of achieving sufficient scale to publish printed books in Australia. On the other hand, digitisation may have a positive effect if it expands the overall market without compromising print sales.

The major parties involved in the Australian book supply chain are already engaged with digital technologies to varying degrees. They are unlikely to experience serious technological obstacles in adapting to the production and supply of electronic texts alongside printed books.

The broader process, however, should be closely monitored, as changes are occurring with uncommon speed and fundamental issues essential to establishing an orderly global market remain unresolved.

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