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VOLUME 26 • NUMBER 4 • July/August 2002
Electronic Books: 
Reports of Their Death Have Been Exaggerated
by Donald T. Hawkins
Further Resources

Because the e-books field tends to be marked by rapid changes, keeping current with the events and the literature can be difficult. Fortunately, some excellent resources are available to help. Of particular importance are Clifford Lynch's outstanding article ("The Battle to Define the Future of the Book in the Digital World," First Monday, June 2001) [
issue6_6/lynch/index.html], which, if you can read only one article on e-books, is the one to select, and Walt Crawford's monthly newsletter Cites & Insights: Crawford At Large [CICAL,], which does an excellent job at reviewing current literature and developments in e-books (as well as other technological areas). A recent issue of Library Hi Tech (Volume 19, Number 4, 2001) contains a "Special Section on E-Books"; some of the articles contain updates on the issues discussed here.

The complete bibliography for this article and some other resources can be found at the ONLINE magazine Web site for this issue [].

ONLY 2 YEARS AGO, I characterized electronic books as "A New Publishing Revolution" (ONLINE, July/August 2000, pp. 14-28 and September/October 2000, pp. 18-36). In 2000, the e-book market was awash with a sense of optimism. Rosy predictions were widespread, a plethora of companies had started, and a "Gold Rush" mentality abounded. It seemed reading e-books would soon be as simple and routine as using a PC to read e-mail. Kelly Franklin, writing in a special e-book issue of Against the Grain (December 2001-January 2002, pp. 20-22), characterized e-books as the "shot heard around the publishing world," forcing publishers to reevaluate their products and services and determine if and when they should enter this new electronic marketplace.

 A little over a year ago, some astonishing e-book growth rates were predicted by market research firms. Jupiter Research predicted that there would be 1.9 million users of e-books by 2005. IDC said that the U.S. e-book market would grow from $9 million in 2000 to $414 million in 2004, and Forrester Research predicted a revenue increase from $383 million in 2000 to $7.8 billion (!) in 2005. These are large numbers indeed, and the three market research firms companies making them are well known in their field. But in this case, the firms missed the mark. To be fair, these numbers may apply to print-on-demand as well as e-books.

It is now apparent that the e-book shot missed its mark, and the e-book revolution has fizzled. Indeed, it never really got off the ground. The marketplace did not develop as originally predicted. Many players fell by the wayside, and others are now under the control of new owners. Attendance at the fall 2001 National Institute for Standards and Technology (NIST) e-book conference was down by 50 percent. In these respects, e-books are representative of the recent collapse of the dot-com market.
But despite all the gloom and doom surrounding them, e-books are not dead. Indeed, some e-book market segments appear to be stirring to life. A few e-book companies are growing and achieving profitability. The e-book picture has become clear enough that it might even be possible now to draw some reasonably accurate predictions about the future.

When e-books first appeared, they seemed to be the fulfillment of an old dream—read your favorite book anytime, anywhere. Optimism quickly grew, and there was a rush to develop reading devices for them. (Other platforms also were introduced, but the lion's share of the attention was focused on the dedicated devices.) The result, often seen as new technologies emerge, was that too much emphasis was placed on the technology. Some people even began characterizing the dedicated reading devices as e-books, confusing them with the content accessible via the devices, as Clifford Lynch points out ("Electrifying the Book, Library Journal Supplement, October 15, 1999, pp. 3-6; January 2000, pp. 24-27).

The emphasis on the devices spurred further intense and costly development efforts, and there was a rush to bring the products to market, accompanied by unrealistic market expectations. Many of those early devices had very poor image quality and monochrome displays. E-books meant for reading on PCs or hand-held devices were also limited by the quality of the screen. Little thought was given to the user interface, which books might be appropriate to digitize, and the appropriate markets where e-books would have the best chance of success. Most people don't like to read from a screen, and it will be extremely difficult to change that perception

Other events contributed to the demise of the e-book market. Pricing varied widely. Finding and downloading e-books was time-consuming. Many e-books require a reader to access them. But the critical mass of content was not available, resulting in little justification to acquire a reader. Many of these issues mirror the development of online databases in the early 1970s.

The e-book market is littered with the wreckage of failed ventures, and with some justification, one might think that it is approaching total collapse. Walt Crawford ("Tracking the Ebook Vendors," EContent, August 2001, pp. 50-51) revisited the list of
17 organizations and products in the e-book market that I compiled the previous year and tabulated the status of each company as it was then. According to his count, two companies never got started; two were absorbed by other companies; four appeared to be alive and growing; and the other nine were little more than Web sites with no evidence of activity. Clearly, this is not the sign of a healthy industry!

netLibrary was one of the highest-flying and most active players in the e-book marketplace. Mimicking the circulation model of a library, it sold its product to libraries. Users could "check out" an e-book, access a host server, and read it on their PC. After the "circulation period" expired, the server no longer allowed the user to access the book, and it became available to be accessed ("checked out") to other library users.

Initially, netLibrary appeared to be well on the road to success. It was scanning and adding thousands of books a month. It had even begun the first steps toward an IPO. When the dot-com market collapsed, netLibrary's fortunes went into free-fall. The IPO was cancelled, many employees were laid off, checks to publishers and suppliers began bouncing, bankruptcy was declared, and a skeleton staff was retained at unemployment-benefit wage levels. Libraries that had invested significant amounts in prepaid access fees became extremely anxious that they would lose not only the service, but also all of their investments.

Fortunately, OCLC stepped in, purchased the assets of netLibrary, and provided an infusion of funding. The library community breathed a large, collective sigh of relief, and, given the stability and deep pockets of OCLC, it now appears that the netLibrary service will continue. The netLibrary acquisition moves OCLC more strongly into the business of content acquisition and distribution and helps broaden its service offerings. It will be interesting to see what changes OCLC makes to netLibrary's business model and how it leverages this acquisition in the marketplace. (One of the first moves OCLC made after finalizing the purchase was to raise the fees for hosting and maintaining libraries' collections.)

Questia [] claims to be "the first online library that provides 24/7 access to world's largest online collection of books and journal articles in the humanities and social sciences." Targeted at students, its service offers access to over 45,000 books from over 235 publishers as well as 25,000 journal articles. Users must read the works on the screen and cannot print more than one page at a time, a restriction that helps prevent piracy.

Even at its modest subscription fee of $19.95 per month (or $149 for unlimited annual access), Questia has found it difficult to attract enough paying customers to become profitable. Its future is uncertain; recently Questia laid off about half of its remaining staff (the company had already gone through several previous downsizings and are now down to only about 2 dozen staff members, from a peak of about 300) and is looking for additional funding. Its lack of material on business or the sciences is a serious limitation, particularly for upper-division and graduate students. Many Questia users have complained that the information on the system is outdated and does not have much depth.

MightyWords was a self-publishing unit of Fatbrain, before its purchase by Barnes & Noble. Mighty Words authors set their own prices for their works, paid a monthly hosting fee, and received a 50 percent royalty on sales. At its height, MightyWords had about 30,000 titles and 50,000 downloads a month, but the work receiving the most downloads brought in no revenue (it was a free compilation of essays on the Bill of Rights). Faced with few real sales and a lack of consumer demand, MightyWords shut down in January 2002.

Major Publishers and Booksellers
Some major publishers have departed the e-books market, such as notable players like AOL Time Warner and Random House. And Borders, a large mega-bookstore with outlets worldwide, tried to enter the e-book market and was unsuccessful. Borders has therefore outsourced its e-book activities to

Yes, there is—but only if development proceeds carefully and with appropriate consideration being given to the appropriate markets for e-books, the works needed by people working in those areas, and the right market entrance strategy. E-books differ from many failed products of the era, having significant potential in some niche markets. Recent market events demonstrate the e-book market is alive if not thriving.

  • Yahoo! entered the e-book market and began to sell directly to users. Yahoo! offers trade books from a variety of major publishers. With its large customer base, Yahoo!'s entrance into e-books will be a significant market force.

  • Ironically, e-books are now listed in Books In Print. Maybe the publisher will soon change the title to something like Books In Print and Online!

  • A few colleges are experimenting with giving e-book readers to their students and allowing them to download course materials. The University of Phoenix, a virtual university, has taken a lead in this area.

  • The Open eBook (OEB) Forum has begun a publicity campaign to promote the use of e-books and has developed a standard that is coming into wider use.

  • At the 2001 Frankfurt Book Fair, one of the exhibit halls had exhibits by a number of e-book device producers, including several European ones.

  • Some e-book sites have experienced significant growth spurts recently.

  • The Military Download Library [, for information, not books] offers a selection of e-books to personnel deployed in Operation Enduring Freedom. Authors and publishers donate the books.
Students are an attractive market for e-books. Especially in some technical fields like medicine, science, and law, textbooks are large and expensive, so e-books make a lot of sense, as Mick O'Leary notes ("Ebook Scenarios," ONLINE, January/February, 2001, pp. 62-64). This market is attractive because the demand is large and continuous year by year. A survey taken on college campuses by now-bankrupt Versaware, Inc. found that 62 percent of students would prefer using their textbooks in electronic form, to save carrying a load of heavy books with them (a frequent cause of back problems in the student population) and to enjoy the enhanced functionality of e-books (bookmarking, note-taking, searching). At the University of Strathclyde, the EBONI (Electronic Books ON-screen Interface) project [] is seeking to "develop a set of recommendations for publishing educational works [for academic markets] on the Web" by evaluating existing e-book products. So far, EBONI has developed its evaluation methodology and has compiled a set of useful links to e-books.

Aside from the student market, there are other appropriate e-book markets:

  • Because of the ease of publication, authors on the "mid-list" who must use small publishers will find it easier to get their works published.

  • Travelers are candidates for e-books because several full-length books can be carried conveniently and easily in a lightweight device.

  • Users with special needs can benefit from the use of e-books installed on dedicated reading devices. The devices are capable of enlarging the image so that it can be more easily read by persons with poor vision. These devices do not need to be held open, and pushing a button turns pages, so users with limited manual dexterity find the devices easier to use than conventional books.
It is important to stress that the market where e-books are not appropriate yet is consumers. Because early development was focused on the consumer market, e-books appeared to be generally unsuccessful


In ebrary's [] interesting business model, once a library pays a subscription fee to the service, accessing, searching, and viewing of the content is free, and only when a user decides to download or print something is a charge incurred. It's a "Web-based photocopier" model—"read, then pay," rather than "pay then read." Hoping that costs for smaller bundles of content will be similar to charges for photocopying—in the 15-25 cents per page range, ebrary has recently launched software tools with advanced searching and retrieval features for libraries and publishers that enhance access to the content. It has also made several alliances with major publishers.

Major Publishers
Even though consumer demand for e-books is weak and some publishers have closed their e-bookstores, a number of publishers continue to make them available.

  • Simon & Schuster is the latest entrant into the market. It recently announced the opening of, an e-bookstore with 1,000 titles for sale as of mid-March 2002.

  • Baker & Taylor (B&T) has entered into e-book distribution agreements with a number of publishers and is developing an eContent Distribution (eD) operation, which will deliver e-books to libraries and manage the collections of them. Availability of eD has been announced for mid-2002; it will launch with a sizeable number of titles from major publishers.

  • John Wiley is committed to offering its entire list of professional and trade titles as well as many of its scientific and technical books in e-book format.
Books24x7 took a sensible approach to the e-book market, concentrating on aggregating high-value business and technical books from leading publishers, building a collection of 1,700 e-books from over 65 publishers. Recently, SkillSoft, an e-learning company offering services to large organizations, acquired Books24x7. This acquisition is a good fit for SkillSoft, allowing it to offer a complete solution, including content, to its customers.

knovel Corporation [], a subsidiary of William Andrew Publishing Co., provides a collection of more than 300 technical reference e-books, handbooks, and databases, including highly respected sources like the Handbook of Chemistry and Physics, all searchable through a Web-based interface and available by subscription. knovel's collection currently comprises 150,000 pages and is growing at 15,000 pages per month. A unique feature is the ability to search not only the text, but also the tables, graphs, and equations. Numeric range searching, the ability to export data to spreadsheets or other analysis tools, and multi-source searching show that knovel has designed its system to accommodate the needs of its users.

knovel is a good example of an e-book provider that identified a niche market (engineers and physical scientists) and developed products especially attractive to that niche. Indications of knovel's success in the market are its ability to attract funding and its appeal to major companies such as 3M, General Electric, Hewlett-Packard, and General Motors. knovel understands the need to take a broad approach to several areas in an organization and to include the library, training, production, and marketing departments in structuring an integrated product appealing to a wide variety of end users. This strategy has evidently been successful, because knovel is profitable.

Safari Books Online
Safari [], a joint venture of O'Reilly Publishing and Pearson Technology Group, offers subscriptions to titles from such major publishers and imprints as O'Reilly, Addison-Wesley, Que, Peachpit, and Cisco Press. Safari recognized that a promising segment of the e-book market is reference works in technology. Safari's system allows full-text searching, so that users can home in on their topic of interest quickly and easily. Safari builds customized "reference collections" from the nearly 600 e-book titles it currently has available for technology professionals. Safari mainly sells to corporations, libraries, and other enterprises, although individual subscriptions are available through O'Reilly and InformIT. For enterprise access, the price of access depends on the number of books subscribed to and the number of users accessing them. For individual users, the price of access can be as low as $10 per month.

Safari's business model meets the needs of both publishers and users. For users, it represents a serious effort by major publishers with staying power in the market and it offers access to high-quality content via a model that users understand—subscriptions. For publishers, Safari leverages existing distribution systems and maintains their place in the value chain. Authors are willing to have their works included in the Safari collection because the system can track usage and ensure that they receive the compensation due to them.

Medical Economics
Medical Economics is the publisher of the Physician's Desk Reference (PDR) [], a 3,000-page pharmaceutical compendium distributed free to some 500,000 physicians. PDR contains the full text of the FDA-approved product labeling for some 2,000 prescription drugs. Each entry is divided into 15 standard topics.

Recognizing that physicians are a highly mobile community, Medical Economicshas developed mobilePDR, an electronic version of PDR to be downloaded toprescribers' hand-held (Palm OS and Pocket PC) devices. This productprovides coverage of the 1,500 most widely used pharmaceuticals (over 95 percent ofthe drugs dispensed). The drug entries in mobilePDR are based on the sameFDA-approved prescribing information found in PDR itself. You can arguethat mobilePDR is not a true e-book because it includes only a portion of PDR; nevertheless, it is agood example of an electronic product developed specifically for a mobilepopulation. The medical profession is frequently mentioned as an appropriatemarket for e-books, and mobilePDR is one of the first e-book products developed forthis discipline.

Project Gutenberg
Project Gutenberg continues to scan classics and books in the public domain, making them freely available. According to its weekly newsletter issued March 8, 2002, the 5,000th book, The Notebooks of Leonardo da Vinci, was added to its site. The pace of additions has greatly increased; it is averaging 200 books per month.

Ruth Wilson [] traces the history of dedicated e-book reading devices. Two of the first entrants into this market, Rocket e-Book and Softbook, were purchased by Gemstar and merged. Their device technology was used to develop two new reading devices, the REB1100 and REB1200, that are now sold under the RCA brand. Other device makers have dropped out of the business. Dedicated devices have more than their share of problems, including usability issues and high prices.

Franklin Electronic Publishers
Franklin offers three models of its eBookMan reader [] that have the interesting capability of being able to read e-books aloud (providing the user installs a $50 add-on package). The ebookman functions as a typical hand-held device, but it has the attractive feature of a larger screen than most handhelds. Franklin's devices, however, are not selling well in the market; in a recent quarter, the number of them returned to dealers exceeded the number sold in the previous quarter.

One of the more interesting devices on the market is the goReader [], designed especially for students. Essentially a pocket PC enhanced with e-book reading features such as a touch screen with enhanced resolution, special e-book software (Microsoft's Clear Type and Adobe's Reader), and a large storage capability, the goReader is expensive (list price is $1,150). The goReader will never appeal to the general consumer market as long as its price remains at its present level, but students (or their parents!) may well be willing to purchase it because of its added functionality over a conventional PC.

Organizations outside the education market, such as government and the military, have approached the producer. These organizations see its potential for disseminating technical and training manuals and for controlling sensitive information

Non-U.S. Countries
In Europe, the e-book market has developed more slowly than in the U.S.. A few companies offer e-book readers manufactured either by themselves or under distribution agreements, and some of them exhibited at the 2001 Frankfurt Book Fair. Among these were the French company Cytale [—the Web site is in French] with its CyBook, and the Italian IPM-NET [], which has partnered with Microsoft to distribute e-books in Italy using Microsoft's Reader software installed on a reading device called Myfriend.

Korea ebook Inc. has introduced the hiebook—a reading device with features such as audio storage and playback (as well as special music and MP3 capabilities), note taking, e-book creation software, and image storage and display []. Integration of these features represents a significant advance over the early e-book readers and is an attempt to add more value to the devices, making them attractive to a wider market.

PCs and PDAs can be used for reading e-books. Not surprisingly, the two major developers of software for this purpose are Microsoft and Adobe.

Although not directly in the e-book publishing business, Microsoft is a force to be reckoned with in the e-book market. Microsoft does not manufacture e-book reading devices, but it provides its Reader software with ClearType fonts for a variety of platforms, including PCs, laptops, and hand-held devices.

Adobe became a player in e-books and a competitor to Microsoft by purchasing the Glassbook software and transforming it into the Adobe E-book Reader. The Adobe e-book reading software has become a second standard platform for reading e-books on a PC or PDA device. Adobe's software, of course, is adapted to its popular PDF format, which is widely used in the publishing industry.

Public libraries were early adopters of e-books—over 1,900 public libraries purchased readers, loaded a variety of e-books on them, and made them available for general circulation. There have been some success stories: The Maroochy, Australia, library, for example, reported that their six e-book readers were in constant use, and 90 percent of the users said they would continue to read e-books. The Rochester, New York, public library found that 67 percent of its e-book users read one or more complete titles, enjoyed the experience, and reported no eyestrain problems.

On the other hand, the Manatee County, Florida, library obtained access to 20,000 titles through netLibrary, but in the first 3 months, only 52 titles were used. The library cancelled its contract. The Chicago Public Library (3 million cardholders) had 72 e-book uses in a recent period, and the Denver Public Library (460,000 cardholders) had 212 uses. The best public library usage of e-books seems to have been the Los Angeles Public Library (1.3 million cardholders), which reported about 1,800 e-book uses per month in a recent period.

Clearly, the jury is still very much out on the question of e-book use in public libraries. There are several reasons why their acceptance has been low.

  • Titles must be purchased for a specific device.

  • Generally, the library staff selects the titles to be loaded on the device, and there is no capability for users to make their own decisions on what titles they would like to read.

  • Incompatibilities among readers and publishers' copyright restrictions mean that books loaded on one reader cannot be transferred to another one.

  • Only a limited selection of books is available.

  • Downloads can be difficult and slow.

  • Users are reluctant to assume responsibility for the reader. (One library user said, "Please don't give my child a $599 reader!")

  • Both the book and reader must be cataloged. James Rettig, university librarian at the University of Richmond, showed some data at the 2002 Computers in Libraries conference on the increase in usage after e-books were added to an OPAC. His data strongly showed that cataloging is vital for the acceptance of e-books in a library.
In contrast to public libraries, some academic libraries have found good acceptance of e-books. Texas A&M University reported that about 70 percent of its netLibrary titles were used,Texas A&M, North Carolina State University, and Nylink (a consortium of libraries in New York State) were all in agreement that the most popular e-book subjects were computer science, business, and economics. A California Digital Library study concluded that all the elements for a viable e-book market are not yet in place and that the market needs standards to ensure e-books are not software- or hardware dependent [].

Judging by the very restrictive provisions in the terms of use set by many publishers and vendors of e-book platforms, it appears they view libraries as their antagonists. Instead, they should view them as allies and an avenue into a huge, untapped market of readers.

Legal issues continue to bedevil the e-book market. Publishers resist distributing their products in electronic form because of the potential for piracy. Publishers have been active in attempting to develop encryption technologies that will thwart would-be pirates, with varying measures of success. Some encryption schemes have been cracked almost as soon as they appeared. Dmitri Sklyarov, a Russian programmer who developed software that could read Adobe's proprietary PDF format, presented a paper on his work at a conference in Las Vegas and was quickly arrested and jailed under the Digital Millennium Copyright Act (DMCA). His case, the first criminal lawsuit under the DMCA, raised a major storm of issues, and his supporters even developed a Web site urging his release []. Sklyarov has now been released and permitted to return to Russia, but he must return to the U.S. for a trial.

Random House vs. Rosetta raises the question of the definition of a "book." The point of contention is whether Random House's contracts with authors (some of which are over 20 years old) extend to e-books. In a preliminary hearing, Random House argued that the rights to the e-books are implicit in the contracts, but the judge sided with Rosetta, quoting the Random House Dictionary's definition of a book as "sheets of paper bound between covers." Even though Random House has recently closed its e-book program, it is continuing to appeal the case, and on March 11, 2002, its second appeal was rejected "on procedural grounds." Rosetta is continuing to acquire and publish electronic versions of classic books.

Envisional [] searched the Web and found 7,500 freely available copies of pirated e-books. Authors included many best-selling authors such as John Grisham, Stephen King, and J.K. Rowling. Most of the sites contain either hacked copies of e-book files or illegally scanned copies of the text. In many cases, authors of works illegally distributed on the Internet are completely unaware of it and only find out serendipitously.

Legal issues worry e-book users as well as publishers. Users feel that fair use should apply to e-books just as it does with printed books. An owner of a printed book is free to give it away, lend, or sell it at any time. Many e-book licenses forbid such activities. E-book vendors, customers think, using the DMCA as their justification, have effectively hijacked fair use. Howard Falk ("What Is Fair Use of E-Books?" The Electronic Library, 2001, pp. 349-351) calls such security measures "Reader Restriction Software." E-books actually work in opposition to the basic raison d'être of libraries, which exist to make content available and share it freely.

In his keynote address at the 2002 Computers in Libraries conference, NIST's Victor McCrary (who heads the OEB Forum) noted that a major key
to the survival of e-books will be a dramatic improvement in the reading experience.

Although a shakeout is occurring in the e-book market, Mark Twain's famous quote, "Reports of my death have been greatly exaggerated," well describes the current situation. E-books will survive, but not in the consumer market—at least not until reading devices become much cheaper and much better in quality (which is not likely to happen soon). Library Journal's review of major events of the year 2001 noted that two requirements for the success of e-books were development of a sustainable business model and development of better reading devices.

The e-book revolution has therefore become more of an evolution. We can look forward to further developments and advances in the future.

Donald T. Hawkins [] is editor-in-chief for Information Today, Inc.'s Information Science Abstracts and Fulltext Sources Online.

Comments? E-mail letters to the editor to

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