For Those of You Questioning E-books at 25%

I had numbers of people asking where I got the 25% number of ebook sales that I used in the last post. It seemed clear to me, honestly, since it was all over the news two weeks ago. But I guess it got missed.

So let me give you some ways of finding this data. First off, it was on www.thepassivevoice.com which is a site everyone should be following every day. He linked to this study about two weeks ago.

Publisher’s Lunch, (www.publishersmarketplace.com) is also a site any writer should be subscribed to. They linked to the study by the AAP right here.

Here are a few major things they said about the AAP 2012 report. (AAP stands for the Association of American Publishers.)

First… “…reporting AAP publishers, which now numbers nearly 1,200 companies.”

Second… “eBook sales remained at their highest levels yet, at $137.6 million–though month-to-month that was only $3.6 million higher than June, and children’s ebooks went from $27.7 million in May to $17.7 million (probably due to Hunger Games). With Random House having sold 9.6 million EL James ebooks in the first three months on sale, 50 Shades is likely to have comprised on the order of $25 million of these ebook sales. Relatively speaking, ebooks stayed at about 25.5 percent of overall trade sales for the month.”

This all came from the AAP 2012 report that goes up through June.

Then in the same report, Publisher’s Marketplace made this statement from the AAP report.

Third… “eBook sales total $768 million for the first half of the year (2012), up a little more than 50 percent over last year’s adjusted six-month total of $504 million, comprising about 25 percent of trade sales.” 

More interesting data from the highlights section of the AAP site itself.

Fourth… “…

  • Despite the negative impact of Borders’ bankruptcy and closures, particularly
    on print book sales, through three quarters of 2011, the Trade market held
    up equal with 2010 revenue figures, even showing a slight increase.
  • Brick-and-mortar retail remains the #1 sales distribution channel for
    publishers in 2011, as it did in 2010. Publishers’ revenue from
    direct-to-consumer sales nearly doubled, topping $1 billion
    for the first time.”

If you want to go and buy the entire survey, you can find that and the rest of the 2012 highlights at http://publishers.org/press/74/

So let me simply say this: Of all the studies, from Bowker, different writer’s organizations, and so on, this one comes out with about the same basic summary data as the rest. And seems only slightly flawed, less so than the others and less so now that they have raised the number of publishers responding to the survey to 1,200. That’s a pretty good base.

Ebook sales are around 25% for the first half of 2012 and slowing in growth quickly.

And that was my entire point.

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14 Responses to For Those of You Questioning E-books at 25%

  1. Alan Spade says:

    “Ebook sales are around 25% for the first half of 2012 and slowing in growth quickly.”

    I wouldn’t deny this, because the growth was so outstanding in the past years the contrary would have surprised me.

    But look at this article from Digital Book World with the same data : http://www.digitalbookworld.com/2012/childrens-e-books-surge-in-first-half-of-2012-paperback-sales-sag/

    They say : “From 2007 through 2011, e-book sales doubled or more every year. Digital growth at major trade publishing companies like Random House and Hachette — bellwethers for the industry — has slowed, too. Digital publishing revenues at both companies now represent 27% of total revenues, up from about 21% the year before.”

    27% of total revenues for Random House and Hachette. These companies sell ebooks at a high price. With a lower price, they could already sell much more.

    And that study ignores indie publishing. Maybe indies represents just 1% of overall sales as you said. But that seems unclear to me, as more and more midlist writers join the indie ranks. Do all the midlist writers account for just 1% of overall sales of the industry ? Perhaps.

    But in these times, when the information and even rumors have a such strategic importance in Wall Street, I would take with great caution, either the data of the Association of American Publishers or the way they handle it.

  2. Kevin O. McLaughlin says:

    Yup, ebook growth IS slowing. AAP stats show ebook revenue tripling in 2009 to 2010, yet only increasing by 230% from 2010 to 2011. That is a significant decline in the rate of growth. Yet they’re announcing that in the first half of 2012, ebooks are ALREADY up to 25%; that’s a 66% increase in the first half of the year. Extrapolated outward, we’re probably looking at 35% by the end of 2012. If things slow down more, it could be only 32% or so. For AAP tracked publishers.

    Of course, during that same time frame, the percentage of self published ebooks in the top hundred lists roughly doubled. Today, across virtually all categories of trade ebooks, self published books (untracked by the AAP) represent 40% or more of the top hundred bestsellers. That’s consistent; been a constant since January 2012.

    Because the top ten and top twenty in a genre or category tend to sell SO many more copies than the 80-100 or 90-100 ranked books, that doesn’t equate to a perfect analysis of actual market share. But another consistent figure: about 35% of the top hundred overall bestsellers are also self published. That’s a much better metric.

    So assume for a sec that the 25% number the AAP is putting out is only underrepresenting the real data by 35%. That puts the actual current percentage at about 31%, as of the end of June, and likely to be 35-37% by the end of 2012 (depending on whether the growth for the last six months declines at the same rate or maintains the rate of the first six months).

    I think it’s still VERY early to predict where things will table off. Last year’s 230% ebook growth was huge, and we’ve already had 66% growth just in the first six months. If we end up with “only” 115% growth this year, and then “only” 60% growth next year, and “only” 30% growth in 2014, halving each year? Then by the end of 2014 ebooks would represent about 73% of all trade sales.

    Those are very modest growth rates. But even if the growth is half THOSE rates, we’re still looking at 52% by the end of 2014; that’s dropping growth to only 30% in 2013 and 15% in 2014, far lower growth than anyone in the industry is suggesting we’ll see.

    • dwsmith says:

      Kevin, tired of arguing this point. You believe the wild growth will continue for electronic books in the United States, I flat do not. (It will continue overseas.) You can make all sorts of assumptions using Kindle bestseller lists all you want and be critical of actual data all you want, but the truth of the matter is that we just don’t know and won’t until a few years from now.

      The numbers of new readers with brand new devices to come on board to even make your numbers halfway possible is gigantic. Two or three of last year’s boom Christmas season at least. It’s easy to get 600% growth when you only have a small fraction of the reading public. It’s another matter entirely to get even 10% growth year-over-year when you have a mature system. You believe the system is still in growth spurt. I do not.

      So we’ll see in a year or two.

  3. Mark says:

    I don’t see print disappearing anytime soon, but every increase in digital means a decrease in print, and that puts more and more pressure on the brick and mortar stores. Does anyone really think B&N isn’t going to close some stores in the next year or two? I think it’s inevitable.

    And the types of books that seem to be really accelerating towards digital are fiction, especially genre fiction which in the past was often published solely in mass market form.

    I just don’t see a rosy future for paper fiction and for bookstores in general. Look at the music industry and all the record stores that have vanished. Why should the book industry not follow that pattern?

    Another way to gauge it is to ask yourself if you would invest your savings in opening a bookstore. How many would?

    • dwsmith says:

      Mark, interestingly enough, I know a number who have started bookstores this last year. And I know a couple more who are talking about it and one of the people who started a store last year is expanding to a second store. And again, there are more indie bookstores every year for the last four years and I don’t see that trend stopping. So we disagree.

      And you are flat wrong that any indie book sale is a loss to print. In fact, it has been studied and shown over the last four years that readers who buy electronic books, also buy print books, and read more books than they used to read before electronic.

      Why is it that so many people are so set on the destruction of the book industry when it shows no signs of weakening at all, but is instead getting stronger. It is changing, yes, and distribution systems are changing and writers have a ton more opportunity now. But nothing is changing at the core. Publishers have always come and gone, bookstores have always come and gone, writers have always come and gone, and the only thing consistent about publishing is the fact that it will change. And remain.

      • Mercy Loomis says:

        Heck, I’ve never been so likely to buy more than one copy of a book as I am these days. I prefer to read in print, but I love the portability of ebooks, so if I really like a print book, I’ll likely buy the ebook too if it isn’t priced outragously. Or, if I buy an ebook and I like it a lot, I’ll buy the print version too, because I’m paranoid about them taking my “licenses” away at some point…

        Not to mention audio. I consume more books in audio format right now than I do in print or ebook.

  4. asotir says:

    Dean – thanks for the clarification. The update makes clear that your figures refer to gross dollar sales rather than unit sales (I had wondered which was which from the earlier post).

    Thing is, hard- and paper-bound books have much higher average unit prices than ebooks. Ebook prices have been on a decline over the past and this should continue as the agency suit is resolved. Hardbound and paperbound prices should climb as underlying, upstream costs rise. But there are limits on both ends.

    Ebooks can’t average much below $1/copy since this is the lower bound of the big ebook stores. And prices for hard- and paper-bound books can’t rise too much in a mass market when the economy is so brutal.

    My best estimate is that unit sales of ebooks will continue to climb and, as these price limits are approached, we might well achieve averages beyond the 25% mark.

    It will be interesting to watch the market develop.

    • Ebook prices have actually been going up on the average, over the last ten months. While trad pub ebook prices have declined slightly, indie ebooks selling well (appearing in the top hundred of a major genre) have increased in price significantly. Because of the large market share indie books represent, that rise has more than offset the subtle downward shift from traditional publishers.

      • dwsmith says:

        Kevin,

        Where are you getting your data??? And I wasn’t talking about pricing. I know of no surveys or studies backing up your claims at all. So some help as to where I can go find this data.

        And if you are going to give me Kindle numbers, save your breath. I’m talking about the larger world, not 50% of 25% of the market in one country. And Kindle does not release numbers, so taking numbers from bogus bestseller lists on Kindle is just flat silly.

        (A hint… WMG Publishing has four employees, not counting me and Kris helping out, and you’ll never find one WMG Book on a Kindle bestseller list of any sort. Except for one day my book, Think Like a Publisher got into the top ten on one list (someone told me) and I had sold exactly eight copies during the week. And nothing changed at all while that book was there. I sold a couple more copies is all. Maybe three. Those bestseller lists are a joke and are advertising for the books they feel like pushing at the moment. They do not represent sales in any fashion.)

        So where, what study by a reputable publishing organization, are you getting these numbers from that you quote like facts??

        • Kevin O. McLaughlin says:

          Dean, I was replying to asotir, who seemed to be expressing some concerns about ebook prices dropping. As I said, the opposite has actually been happening, with a slight upward trend in pricing of top selling ebooks being pretty clear so far this year.

          That data is the result of a LOT of hours of exhaustive data mining, most of it done by me. The stuff I’ve presented so far in long form papers has been respected enough that I got an invite (which I unfortunately had to turn down, because I’m in the process or relocating my family to Boston) to present it at DBW next year. Last year, some speaker’s comments at DBW were direct quotes from material I gave. I have hundreds of spreadsheets of data at this point, sourced from every major retailer.

          By sampling the top hundred bestselling ebooks from each category on every major retailer, you get a solid statistical sampling of top selling ebooks. Ebooks are very top heavy in sales; roughly speaking, I’d estimate the top 5% or so sell more copies each month than the other 95% put together. By sampling several thousand of the top 5%, we can acquire a idea what the overall picture looks like for ebooks sold.

          One flaw in my research: it’s very US biased, as you suggested. I weight results based on US divisions of the market by retailer, which means heavily toward Amazon and B&N. Globally, I know that Apple and Kobo have a much larger share than their single-digit US market percentages would indicate. But for now, I haven’t started breaking out the global market; the rest of the world ebook markets together are still much smaller than the US alone (no way that will last, however!), and so US publishers interested in my data are frankly most interested in US data.

          • dwsmith says:

            Even though I flat don’t agree with your methods of using Kindle and bestseller lists, I sure hope like hell you are selling this data to publishers and making some money for your time. (grin)

        • Kevin O. McLaughlin says:

          Re: your book which made a top list… You likely hit a top *popularity* list, which is based on a combination of factors, including sales, weighted by price, and then jiggled by the Amazon algorithms. Unreliable. Important for writers, since the visibility does tend to boost sales. But not reliable for data sourcing.

          However, the ranking structure is based on direct sales throughput; that’s true on all major major retail sites. On Amazon, for example, there are actually top hundred lists for each major genre and category. Those are derived from direct sales: no tweaking and jiggling going on. You can cross correlate those lists with the Kindle Ranking and verify by seeding sales of certain books and tracking ranking in real time.

          Bottom line: popularity ranking is important (on Amazon) because it’s what readers see by default when they browse. It’s unreliable for data mining. There is another set of data on the site which allows direct tracking of sales relative to other ebooks, however, which IS reliable for data mining.

          Complex stuff. Lot of math. But really fun to put it all together. ;)

  5. Conrad Goehausen says:

    I would not read too much into the lack of change in sales form June to July. Book sales follow seasonal trends, and July is probably one of the weakest months. That’s why it’s important to look at year-over-year sales trends, which wash out all the seasonal differences.

    It’s the 50% yearly increase in e-book sales that matters. Now of course that kind of growth is mathematically unsustainable. Of course it will slow. You can’t get over 100% of the market no matter how popular ebooks become. But if you are interpreting these numbers to mean that ebook sales have essentially hit a plateau and stopped growing, that would be wrong. Sales are still growing, and will continue to grow, but at declining growth rates, until some day they really will plateau, at least as a percentage of the total publishing market. Where and when that will be is hard to say, but I think it will be well past the 30% level you are suggesting. My magic tea leaves suggest it will be closer to the 60-80% level, maybe within ten years.

    But market share isn’t even that important, since the pie itself is growing. Ebooks are creating new markets for publishing sales that didn’t exist before. Some of that growth occurs as a result of taking sales away from print, but some is wholly new, the result of the ease and attractiveness of the new tablet devices and even smart phones to a new generation of readers, who will buy things on edevices they never would have bought in print in any case. It’s entirely possible that the print publishing industry will at most decline only marginally, whereas the ebook market will explode worldwide, and grab a bigger share of the total market, by increasing the size of the publishing pie.

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