Music did it. Movies did it. Television is doing it. Even the newspapers are reluctantly doing it. The book publishing industry now stands as the last major media format to make the leap from traditional publishing to digital. The leap is large. The leap is scary. This is the largest change to the printing of books since Gutenberg. It’s going to require not only different marketing mindset, but a complete understanding of what digital content is.

There is, however, a key. To succeed in digital, publishers need to look at the following analogy and observe some lessons that other media industries have learned the hardway.

“The MP3 is to music as X is to books.”

What is X?

The easy, almost obvious answer is that X is the seemingly elusive eBook, a technology which has been promised to us for years. However, that answer is incorrect. Why? Because the eBook is a family of file formats, whereas the MP3 is a specific file format. This might seem like an argument based on semantics, but for the publishing industry, the devil is truly in the details.

What made the MP3 successful?

The MP3 existed for years before the portable MP3 player. The file format, MP3 was invented in 1994 – making it older than the public internet, and certainly before the iPod. As the computer and the CD-ROM grew in popularity, the MP3 became the perfect compromise when dealing with digital music. It had better-than-decent sound quality paired with a file size that was drastically smaller than other technologies of the day. Beyond that, it was portable – any computer with Windows 98 or an updated Windows 95 could play the file. To put it another way, the MP3 was universal and portable – like a book.

Again, what is X?

This is an answer that the publishers desperately need to decide for themselves. The MP3 was made the de facto digital publishing choice not by the record labels, but by computer owners. The revolution was carried out at the desktop, not in a corporate memo. The publishing industry has a position that I’m sure the recording industry wishes they had: there are numerous technologies currently available to create eBooks, yet none of them have become the standard.

The First Step is the Decision

Though there are numerous choices for the publishing industry to format future eBooks in, the importance isn’t so much on a specific format, but rather the specific format. In order to capitalize on the opportunity, the plethora of current formats, the path to success lies in publishers as an industry, or a significant share of publishers deciding on a single format. The public needs a single file format which it can recognize as an eBook. Developers need a single format to build for. Publishers need a single format to sell.

The Brave New World

There are still lessons to be learned from the way that both the music and film industries have grown moderately successful in the world of digital content. Lessons like pricing, availability, and portability. These are not easy lessons, and they often chaff against what is considered the acceptable standard. But they exist for a reason – digital content is vastly different than physical.

Control and Scarcity

Perhaps the most alluring aspect of digital publishing is the lack of resources required to produce and maintain a product. When a book is electronically published, there is no limit to how many copies can be sold. This is a wonderful thing, it means that more books can be published in a year. It means the end of a 10,000 book run. It means that anyone who wants to buy a book, can, as long as they have access to the internet.

However, consumers are well aware of this, and expect a digital version to cost less than the physical variety. Considerably so. Customers want that savings passed on to them. Why? Because they are opting out of a great deal of comfort. They cannot hold their digital purchase. An accident can easily render it lost or unusable. The ease of purchase lends itself to the phrase – easy come, easy go. And the customer doesn’t want to be the only one financially shouldering that risk.

Or, to put it more bluntly – to succeed in electronic publishing, book publishers must relinquish scarcity pricing, and scarcity marketing. Prices must be low, drastically so. Publishers must embrace a digital marketing mindset.

The Upside of the Digital Marketing Mindset

Of course, there is an upside to this. The lower the price, the lower the resistance stopping someone from making an electronic purchase. That is, the lower the price, the greater that chance someone will buy an eBook. This allows for popularity explosions, the viral phenomenon, which can’t be easily replicated in a printed book.

Digital publishing also allows for what Wired’s Chris Anderson calls “The Long Tail.” Removing the scarcity mentality allows for books to be published on a time scale that comes a lot closer to infinity and in which purchases can always be made. Long tail economics means that a property can continue to collect revenue long after it’s initially published, something that can’t be done amidst the continual turnover of a brick-and-mortar book store.

Get Centralized

Apple’s iTunes Music Store became the largest music retailer, not just online but in the United States, through a combination of branding and player. However, the success of the store draws not from that, but from the fact that it is centralized and easy. Apple didn’t secure the rights to sell music from one or two of the major record labels, but from all four of them. This made Apple the place to go for all your musical desires. The moment the switch was flipped on at the iTunes Music Store, it became an instant competitor to the largest and most established music stores in the world.

Granted, there are more than four major publishing houses, but they would each be wise to come to some agreement on a centralized, universally acceptable method for selling eBooks.

The Player

The other reason for the success of iTunes Music Store was it’s tight integration with Apple’s iPod – a device already reaching near-ubiquity when the store launched in 2003. For the publishing industry, the obvious conclusion to draw here is that Amazon is the new iTunes Store, and the Kindle is the literary world’s answer to the iPod.

Again, the obvious answer is wrong.

Why not the Kindle?

The Kindle is certainly a fine piece of technology, leveraging a cellular network and epaper to produce a reader that does a fairly good job of simulating paper. But, for all the wonderous and smart technology involved in the device, it is a perfect example of good intentions, bad idea. Or, perhaps, just bad timing.

The Kindle, which routinely sells out at Amazon, has racked up an impressive 250,000 to 500,000 units sold since it was first introduced in 2007. Beyond that, the Kindle average one book per unit per month. A quite acceptable haul with the understanding that outliers are probably skewing that number in both directions. The problem with the Kindles that there aren’t enough to truly take advantage of the digital revolution. Why? According to a report by Citibank, Amazon is only looking to sell another half million or so Kindles this year, and two million in 2010, which would put the installed base at around 3 million users.

We Already Have eBook Readers

Though this number sounds juicy enough, it falls flat when compared to this statistic: in the first month it was available for sale, the iPhone 3g sold 3 million units. It took Apple one month to put a perfectly acceptable eBook reader in the pockets of as many people as Amazon hopes to push the Kindle on in more than 3 years.

And the iPhone isn’t alone. Every one of the cell phone companies has a large touch screen device currently on the market. Every one of the of the cell phone companies has some method for distributing content like ring tones and wall papers across the cellular network.

When you branch out into the greater smart phone population, the numbers start to get truly staggering. The iPhone, however, provides a wonderful place to start. It’s a huge installed base filled with people who are already accustomed to purchasing applications and media wirelessly.

Apply the Lessons

Making the change from a physical product to a digital distribution method is a scary concept. But it is one that is unavoidable. Just as the internet lowered the perceived value of music and movies, it is also providing numerous new avenues and means for people to read.

It seems only logical that sooner, rather than later, that the book will be ported into the electronic realm. The task currently set before publishers is not to see digital publishing as a threat, a means to cannibalize print publishing, but rather as a means to make print more profitable. Selling more books at a lower price can lead to higher profits, especially long tail economics are taken into account.

The goal then, is to establish the online marketplace as the publisher, rather than to allow the free market to establish it for you. But to do that, you have to understand online publishing, and you have to do it right.

If anyone would like further information on this, including optimal technologies to use and pricing policies, feel free to contact me by email or leave a comment below.

For a more personal anecdote on the future of eBooks, check here.

Also, don’t forget to pitch me on a book to buy.