Gutenberg 3.1 Report: Analyzing the Misconceptions Behind eBook Piracy Surge Claims

At this year’s Frankfurt Book Fair, the spotlight seems to be on eBook piracy: In March 2011, the study Gutenberg 3.0 by Lisheennageeha Consulting was published. It examined the eBook market and the effects of illegal download offerings on it. Now, there is an update to the study that wants to show a massive worsening of the situation over the past six months. However, we’re not entirely convinced this is the case, because when you take a closer look at the examined numbers, the situation appears different.

For example, the hit statistics of a topic in a forum about (illegal) data exchange are used to infer the growth of the user base. However, since this number continuously grows anyway, i.e., with every click, it’s not actually possible to draw conclusions about the growth of eBook piracy from it. You also can’t control where the users come from who take advantage of these offerings.

Furthermore, the total visitor numbers and page views of the download portal are compared with those of legal offerings. Using the Alexa Traffic Rank, it is visualized that this particular illegal offering has far more visitors than, for example, libri.de. What’s not mentioned, however, is the fact that the eBook offerings only account for 1.7 to 3.9 percent (depending on the starting point) of the total site activity. When you factor this into the equation, you must acknowledge that far fewer individuals use this illegal download platform compared to the legal eBook offerings being compared.

Instead of the implied growth of 40-79 percent in the area of illegal eBook offerings on the examined download platform, the actual membership has only grown by about 23 percent (from around 1.18 million to 1.45 million). When you connect this with the share of the eBook offerings in the overall forum activity, it equates to a user base growth of less than one percent in the eBook area. This is far from the figures given in the Gutenberg 3.1 Report. You also have to question what could have changed so dramatically in the eBook market over the last six months for the user numbers to have exploded accordingly. The answer is: Nothing. No new eBook readers have been introduced during this period, and the structures in the tablet market have hardly changed. In 2011, only 232,000 eBook readers are expected to be sold in Germany, and the majority certainly didn’t fly off the shelves in the first half of the year.

The study also addresses the revenue declines in the book market. It mentions that retail bookstore sales fell by 3.2 percent in the first half of the year and blames illegal downloads for the significant drops of around 30 percent in the top 30 of the Spiegel bestseller list. To put it mildly: assuming a 30 percent decline in bestseller sales due to supposedly rapid growth is very risky. As previously shown, the actual user numbers for the eBook area on the surveyed platform have barely grown.

Unfortunately, there is hardly any publicly accessible data on book sales figures in the overall book market, so some back calculations must be made. Therefore, the following numbers should be taken with caution. Nevertheless, to elaborate: The total revenue of the German book market in 2010 was 9.7 billion euros. With an average book price of 14.55 euros that year, about 667 million books were sold in Germany. Comparing this with the sales figures for the USA in 2005, where 3.1 billion books were sold with a market volume of 34.6 billion US dollars and a population about 3.8 times larger, the calculated figures for Germany seem to be heading in the right direction.

To get to the point: It is highly unlikely that the previously mentioned slight increase in absolute users of the illegal download offer would lead to such a significant revenue drop in a sales volume of 667 million books, as implied by the Gutenberg 3.1 Report. Instead, perhaps a closer look at global book markets, which almost all face declining revenues that may be linked to the generally poor economic situation, would have been in order? Even with the still low distribution of eBook readers locally, but with Amazon’s introduction of a comprehensive eBook offering on the German market at the same time, such growth in eBook piracy and the purportedly resultant damage to the overall book market would be extraordinarily surprising. The numbers tell quite a different story, indeed. Even if one assumed that 40 percent of all eBook downloads were illegal (as is allegedly the case in France), this would only correspond to 0.4 percent of the German overall book market. Such a small size doesn’t even factor into the sales statistics of many publishers for eBook sales.

But of course, this doesn’t mean the book market shouldn’t address the issue. As examples in the music industry show, existing offerings should be significantly expanded and current eBook distribution structures revised and rethought. It’s difficult for many consumers to understand why they should pay the same price for an eBook as for a paper book while also facing substantial restrictions on resale and lending. So instead of using warnings, prohibitions, and sanctions, one should adapt to the changed market situation. At least here, we agree with the Gutenberg 3.1 Report:

There is a fundamental misunderstanding in the industry: It’s simply not true that consumers want everything for free. They want convenience and no artificially delayed delivery of cultural goods. They pay, for example, for premium access at file hosts or at kino.to or its successors. This is essentially a kind of flat rate. If you want to watch a movie with your partner in the evening, you don’t want to wait for the download, deal with buffering images, or a film that suddenly cuts off. The customer wants direct access and options, and they’re willing to pay for that. If pirates on the Internet can make money, why shouldn’t legal platforms be able to do the same? The successes of Spotify and iTunes show the way: You must cater to the demand for convenience and offer the appropriate models.