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ABSTRACT
The increasing demand for e-books has led to substantial changes in the book market structure and in the demand for printed books (p-books). In the early market stage, demand side cannibalisation from e-books is potentially underestimated due to two effects: (1) early adopter profiles and (2) different usage context situations for digital and physical products. In two empirical studies, we investigate cannibalisation effects as well as drivers of the cannibalisation potential between e-books and p-books related to consumer needs in different usage situations. We focus on the (early-stage) German e-book market and analyse cannibalisation effects and sources of cannibalisation potential between e-books and p-books in two studies. We do not find empirical support for a cannibalisation of p-book demand in the early market stage of e-books in Germany, even after controlling for potential biases related to early adopter profiles. However, our results indicate a significant cannibalisation potential between e-books and p-books that relates to different consumer needs in different usage situations. Our findings imply that research on cannibalisation effects could substantially benefit from analysing substitution patterns between digital media products and their physical counterparts in early market stages. By this, cannibalisation drivers can be revealed early enough, so that managers can react accordingly. We discuss implications for the early positioning of e-books to reduce potential cannibalisation of p-books.
Disclosure statement
No potential conflict of interest was reported by the authors.
Notes
2. Compared to English language e-book markets, the German e-book market is still in the emerging stage (http://www.economist.com/news/essays/21623373-which-something-old-and-powerful-encountered-vault). The volume of the German (fiction and non-fiction) book market amounted 5% of total book market sales in 2015 with early adopters still being the main consumers (Wischenbart, Citation2015).
3. Although the marginal production costs of e-books may appear lower than for p-books, cost structures between book formats remain comparable. A typical argument from publishers is that, assuming no underlying p-book version of a book, all costs, including authors’ royalties, marketing, and a digital distribution infrastructure, have to be borne by e-book revenues, decreasing options for price reductions to compete against low-cost self-published e-books. However, in total e-books seem to have slight cost advantages compared to p-books (Rich, Citation2010).
4. Compared to market data based approaches for measuring cannibalisation, for example, by sales figures or market shares, the SIU approach focuses on individually stated preferences. Based on these preferences, the cannibalisation potential is indicated by the similarity of two or more products in a consumer’s mindset. Measurable cannibalisation effects between products would be the consequence of a high similarity.
5. At the beginning of the survey, the respondents were asked about past book purchases and borrowing behaviour. We filtered off the respondents who had not purchased or borrowed fiction books in the prior 12 months and who did not plan to do so in the near future (next 6 months). Data collection was conducted in October 2011. We note that sequential effects of e-book and p-book adoption are not captured by this approach, that is, it is unclear if p-book adoption took place after or before e-book adoption. However, for the purpose of this research we focus on the adoption decision only. Thus, sequential effects may undoubtedly deepen the understanding of consumer needs and will be part of future research on this topic.
6. People who did not buy e-books but read them were excluded from the study to avoid confounding effects from piracy and free e-books (N = 149).
7. The results are available upon request.
8. We also identify four interaction effects with marginal significance at the level p < .10 (positive effect of entertainment while eating at home and ease of use while waiting; negative effects for need to appear cool during business trips and content availability while eating at home).
Additional information
Notes on contributors
Tim Prostka
Tim Prostka is manager in the publishing industry. He holds a doctoral degree in marketing from the University of Hamburg, Germany. In his research he focuses on the influence of new technologies on media markets and marketing strategies for media products.
Edlira Shehu
Edlira Shehu is an Associate Professor at the Department of Marketing of Management of the University of Southern Denmark. Previously, she worked as Assistant Professor and research assistant at the University of Hamburg. Her research focuses on topics of marketing analytics and innovation management. Before joining the academia she worked in different management positions in the field of marketing analytics.
Michel Clement
Michel Clement is Professor for Marketing and Media at the Institute for Marketing, Hamburg Business School, University of Hamburg, Germany. Professor Clement holds a doctoral degree in marketing from the Christian-Albrechts-University at Kiel and worked three years in various management positions for Bertelsmann in the media industry. His research focus is on media management and new technologies.