Otis Chandler, the Founder of Goodreads, has been very generous in sharing their reader data and did so again recently at the Digital Book World Conference. We should expect this will stop with Amazon buying Goodreads so looking at this information now is time well spent for future historical purposes.

No one truly knows where the balance between reading print and reading ebooks will be ten years from now, but two pieces of information caught my attention in the presentation he shared:

1)  The age demographic of readers on Goodreads is a very even distribution across young, middle-aged, and elderly. For you marketeers out there, this is the demographic you hope to have, although reading still skews strongly to women. As a man who loves to read, I hold out hope that the new technology of e-reading will help bring more men into the fold, less we become so dumbed down we cease to exist, which is afterall, the female’s master plan. And can you blame them?

2)  86% of tablet owners report reading at least one ebook on their tablet. It would be good to know by gender what the frequency of reading on tablets looks like or is it just a function of the newness. I have been around enough new technology over the decades dismissed by those hoping it will simply go away, to know this is not going to happen here and tablets will become widely owned and adored.

So the very good news in that high correlation between tablet ownership and e-reading is the potential tablets offer for ongoing e-reading growth. Once 75% of the population owns a tablet, which will happen faster in affluent countries than many expect, same as what happened with laptops displacing desktops, the volume of ebooks being purchased will accelerate and the overall print/ebook ratios will change from what Goodreads shows now in this analysis.

The business challenge is how best to manage the shift over time and this is why the bookstores are so important right now as his report reveals. With each B&N and indie bookstore closing, the paper book volumes that humans can touch and browse in stores will continue to be impacted. Hopefully it will be a soft landing and not a crash landing. But much as what happened with print photos, my hunch is more of those print book volumes will stay online through Amazon and other direct shippers, which is a trend that has been underway for years now. Shutterfly sells more prints direct than Walgreen’s does retail.

And this is a publisher problem because Amazon as a key distributor, while also a competing publisher, will never be a situation they like. Amazon has most hurt Barnes & Noble, and publishers and many authors are hesitant to reveal that Amazon accounts for up to 40% of a book’s print sales, which was once Barnes & Noble’s share. Not even talking about ebook share here — just print.

So the key competitive advantage Amazon enjoys that I cannot see anyone matching is the age-old one of distribution. This distribution is now online versus in-store. A logical next step for them would be to buy the B&N stores once they get down to a count, geography, and cost that will be sustainable in the new overall hardware, print book, and direct fulfillment integrated sales channels, ones only they will possess. And I mean “possess.”

I imagine some large publishers are contemplating getting into retail (remember in Australia when Angus & Robertson was both a publisher and major bookstore chain?) but this is the main advantage I see for Amazon at retail: they resell everything across all classes of goods, especially consumer electronics, in addition to just books and magazines. So should they buy those B&N’s they will also be in competition with Best Buy and Walmart, which is where they really belong. But neither of those two mega-retailers can match the online and direct selling technological fulfillment expertise of Amazon. Amazon has been and will continue to use technology as their key differentiator. Just the way MacDonald’s did with fast drive-thru service. I can envision a retail future landscape where current B&Ns are Amazons, and so are current Office Max stores and others strategically located currently selling goods better sold online.

You can view the Goodreads presentation here:

http://www.slideshare.net/GoodreadsPresentations/whats-going-on-with-readers-today-16508449

— Caleb

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