Digital tipping point

Digital tipping point

Business leaders see more tipping points these days than a meandering drunk. So your sceptical guard should be up whenever a company or management consultant spots a tipping point. However, there are some genuine sweet moments when the pace of change accelerates and an entire industry is changed.

Online book retailer said on Monday that it is now selling more electronic books than hardcovers. The company called it—what else? —a tipping point, but this is one of those rare occasions when there is more reality than rhetoric in the statement. This spring and summer, Amazon sold 143 electronic books for every 100 hardcovers. Is this the beginning of the end of the Gutenberg world?

The growing popularity of electronic books is derived from the spread of digital reading devices such as the Amazon Kindle and the Apple iPad. This could potentially change an entire industry.

The most recent useful analogy is the impact that the iPod had on the music industry. Digital downloads became the favoured mode of access. There were many subterranean revolutions as well. The iPod and the digital devices it spawned ended the reign of the bundled music album that music companies sold. Consumers could choose and download single songs. The Apple iTunes store —the Amazon of the music world—became a revenue machine. Steve Jobs later did an encore with his apps store for mobile phones. Creativity got a leg-up as small labels and independent artistes got better access to consumers, a fantastic opportunity for what technology writer Chris Anderson has termed the long tail.

The growing success of the Apple stores could also explain why Amazon has less to fear from the iPad than most believe, at least till Cupertino decides to launch an online book store.

In the language of economics, the iPad and the Amazon store are complementary products. The success of one is dependent on the success of the other. More iPads sold should thus be good news for the Amazon store, if not for the Kindle. It is quite likely that e-book readers will succumb to the iron law of digital products and become cheaper by the year. The money then lies in online book sales rather than the gizmos they are downloaded into.

Paperbacks continue to be the most popular category for Amazon, but this tipping point in sales of electronic books could be a harbinger of profound change in the world of books.

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