e-books

September E-Book Sales Stats: $39.9M

Posted by Always Write at 12:18 AM Tagged with: ,
Nov 112010

September 2010 E-Book Sales Stay Strong at $39.9M

The September industry e-book sales statistics are in, and sales have remained strong, coming in very close to July and August’s strong figures. Sales increased a bit from the previous month, hitting $39,900,000 in September 2010. This is down slightly from the record $40.8M sales of July 2010, but well above the pace from the first two quarters of this year.

These numbers constitute a 158.1% increase over last September, and year-to-date e-book sales are up 188.4%. This, amidst print book sales declining 12.1% from last year.

For review, the monthly sales figures so far this year:

  • Jan 2010: $31.9 M
  • Feb 2010: $28.9 M
  • Mar 2010: $28.5 M
  • Apr 2010: $27.4 M
  • May 2010: $29.3 M
  • June 2010: $29.8 M
  • July 2010: $40.8 M
  • Aug 2010: $39.0 M
  • Sep 2010: $39.9 M

Q3 2010 Sales Up 38.4% Over Q2 2010, Up 157.4% over Q3 2009

After averaging $28,833,333 in sales for April, May, and June, e-book sales have now averaged $39,900,000 for July, August, and September, a 38.4% increase in just 3 months’ time. The $119,700,000 Q3 2010 total easily surpasses the previous record of $89,300,000 in Q1 2010, and it puts e-books on pace to be nearly a half-a-billion-dollar per year industry.

Of note: Q2 2010 marked the only decrease in quarterly e-book sales in at least the past 3 years. Back then, I wondered if the Q2 dip was caused by agency model pricing, and predicted it would be merely a “one-time dip” on an overall upward trajectory. My predictions were confirmed, and then re-confirmed by Amazon. Will it be enough data to convince publishers to abandon the agency model? Or are they hoping to slow the ascension of e-books to protect the printed book as long as they can?

Look at all the colors.

One aspect of e-books that can be confusing is the question of which e-books can be read on which e-reader device. E-books from Amazon, B&N, and other vendors can come in different file formats, and Kindles, Nooks, Sony Readers, Kobos, and other e-readers may each read certain e-book formats and not others. It’s a mess that’s similar to where digital music was 5 or 10 years ago, with various confusing file formats (thankfully, music has pretty much standardized on the MP3 file format now).

There are three major e-book formats: PDF, ePub, and MOBI, along with a host of minor ones.

PDF is a file format you may already be familiar with; it’s not specific to e-books, but was designed by Adobe as a “Portable Document Format” that retains formatting and can be read on many different kinds of computers or other devices. It’s useful because PDFs can be read on almost any computer or e-book reader, and because the formatting and any pictures or charts should be well preserved. However, it’s not an ideal format for e-books because it doesn’t normally allow for re-flowable text: a PDF is like a photograph of a printed book page, so you can’t adjust the font size or style.

ePub is the closest we have to an industry standard e-book format, as it’s used by Barnes & Noble, Sony, Kobo, Apple, and others — pretty much everyone other than Amazon. ePub is based on HTML, and allows for re-flowable text (so you can increase or decrease the font size, which is an important feature for e-book readers) and other e-book features.

MOBI is the other big e-book file format, and may be the most popular of all since it’s the format used by Amazon and read by the Kindle — the most popular e-book platform. MOBI, also called PRC, is quite similar to ePub, as it’s also based on HTML and has many of the same features, like re-flowable text. (There’s really no advantage or disadvantage to ePub vs. MOBI, they’re essentially the same.)

There are a few other minor formats, like LRF (the old Sony Readers used this), PDB (Palm Pilot format), and regular old TXT (plain text) or RTF (rich text) formats — like you might see on your computer.

While all of that sounds confusing, the part most people don’t realize is that the format doesn’t really matter. There are plenty of free computer programs that will quickly and easily convert one file format to another (my e-book file format conversion / organization program of choice is called Calibre, and it’s free). So, if you can convert ePubs to MOBI and PDFs to LRFs, what’s the problem? (Sure, it’s an extra step and a bit of a hassle, but really not that big of a deal.)

The problem lies in another acronym altogether: DRM. DRM stands for Digital Rights Management, and it’s a type of copy protection that many publishers and retailers add to e-books in order to prevent piracy (unauthorized copying and distribution). DRM has plenty of plusses and minuses I’ve discussed before and won’t get into right now, but publishers are pretty enamored with it for the moment, so the fact is that most best-selling e-books from most retailers have DRM attached.

When DRM is added to an e-book, it prevents that e-book from being converted from one file format to another. So, if it has DRM, you’d be blocked from converting a MOBI e-book you bought from Amazon to the ePub format to read on a Nook (and vice versa).

Even worse, it also prevents e-books from being read on a different e-book reader — even one that reads the same format! So, while Nooks and Sony eReaders both read the ePub file format, an e-book bought from B&N that has DRM attached can not be read on the Sony eReaders! There are a few exceptions (I believe Sony e-books can currently be read on Nooks but not vice versa), but generally e-books with DRM attached that are bought from one retailer can only be read by that retailer’s corresponding e-book device:

  • Amazon.com e-book store: Kindle e-reader
  • BarnesandNoble.com e-book store: Nook e-reader
  • Sony eReader Store: Sony eReaders
  • Kobo.com e-book store (also Borders.com): Kobo e-reader
  • Apple iBook Store (currently only available through iDevices): Apple iPad, iPhone, & iPod

Wait, it gets even better. You can’t read a DRMed, ePub-formatted e-book purchased from B&N on your Sony e-reader … even though both e-readers (the Nook and Sony) both read ePub files … and both use the same type of DRM by Adobe. But B&N uses a newer version of the Adobe DRM that the Kobo doesn’t support, so you’re out of luck. It’s madness.

Now, I’ve probably made clear my stance on DRM (if it’s this confusing and restrictive for legitimate, paying customers, I can’t be a huge fan of it), but one important thing I hope you get from this article is that it turns out the e-book format isn’t really important: it’s easy to convert any e-book format to any other e-book format with the right free software. But books with DRM attached — no matter what format and no matter where you buy them — can cause issues if you try to read them on a different device than they were originally intended for. That means, for most e-books sold by large publishers, you’re stuck in one e-book “ecosystem.”*

* Note: Amazon, B&N, and Kobo each make e-reading apps that allow you to read their e-books on various devices, including Macs, PCs, Android phones, and iDevices, so this alleviates the problem somewhat.

There is some good news here. As I said, most best-sellers from large publishers have DRM attached. But there are literally millions of e-books out there without DRM attached — which means that, no matter what format you find them in, you can easily convert them to any format you need, even years later if you get a new e-book reader. (Of course, since it’s so easy, most DRM-free e-books will already come in multiple formats, and you can just pick the one you need anyway.) So, where can you find DRM-free e-books?

  1. Project Gutenberg. They have hundreds of thousands of public domain titles — books that were written before 1923 and are no longer under copyright. This includes many of the greatest works of literature of all time, including Pride & Prejudice, Sherlock Holmes, The Odyssey, The Count of Monte Cristo, all of Shakespeare’s works, and many more.
  2. Smashwords. Looking for something a bit more modern? Notice how I said earlier that most books from large publishers have DRM attached. Many smaller publishers and independent authors decide not to attach DRM to their e-books. Smashwords specializes in inexpensive, DRM-free e-books (in multiple formats) from independent authors.
  3. Amazon and B&N allow independent authors to upload their own e-books for sale — and they give us the option to use DRM or not. I’ve chosen to release my books in both places without DRM, so you can buy my e-books from Amazon and convert them to read on your Nook or wherever you want. (Hint: if the e-book says “Simultaneous Device Usage: Unlimited” on Amazon.com, it’s DRM-free.)
  4. Directly from authors. I, and several other independent authors, will sell e-books directly through our own websites in multiple formats, with no DRM attached. (A Google search of your favorite indie author’s name should pull up their website.) With books bought directly from me, I’ll not only send you whatever format you need, but you can always email me down the road if you end up needing another format and don’t want to fuss with converting it yourself. 😉

There are many other places to find legal, DRM-free e-books (both free public domain books and paid newer releases), these are just a few to get you started. Of course, if you’re sure you’re going to stick with one e-book / e-reader “ecosystem” (maybe you love Amazon and your Kindle and plan to stay with them forever), then DRM might not matter to you. But hopefully you’re now more aware of the interaction between e-book file formats and DRM, and what you can and can’t do with the e-books you purchase.

Kindle To Add E-Book Lending

Posted by Always Write at 3:25 PM Tagged with: , ,
Oct 222010

Amazon matches B&N's Nook, brings e-book lending to the Kindle

Amazon announced today that they will bring lending to Kindle e-books “later this year.” This is a feature that many users had been clamoring for: after all, they reason, you can lend printed books to whomever you want for as long as you want. With e-books, the process can theoretically be even simpler: instead of arranging to physically meet up with someone (or mail the book back and forth, which might cost more than the book!) or worry about getting your book back, you can just input a user’s email address and zip the e-book to them wherever they are. Even better, you could set a time for that e-book to “expire” and it would automatically come back to you — I’m sure we all have paper books we’ve lent out and never gotten back!

This is also an important move by Amazon, as it matches the Nook’s existing “Lend Me” feature, which enables e-book lending for some Nook titles (if approved by the publisher).

Of course, publishers aren’t generally too keen on the idea of unlimited lending, so there are understandably some limitations (which happen to be identical on both the Kindle and Nook): first, once you lend an e-book, you can’t read it while it’s lent out — so only one person can read the book at a time. Second, each e-book can only be lent one time, period. Third, the lending period is exactly 14 days, no more, no less.

Even with these limitations (which seem a bit too stringent for my tastes, but some limitations are perfectly understandable), it’s a cool and useful feature, and one that negates a previous Nook advantage. One of the reasons I am a fan of all e-book readers (not just my beloved Kindle 2) is that advances in one e-reader’s hardware or software capabilities generally trickle down to all e-readers soon enough. So far, the existence of the Nook has at least motivated Amazon to lower Kindle prices and add this lending feature, so that’s a win in my book.

One other note on lending: with Amazon’s Kindle, you have the option of registering multiple devices to a single account, including multiple Kindles or Kindle DXs, the Kindle for iPad/iPhone app, or Kindle for Mac/PC apps. Most Amazon e-books allow you to read them on up to 6 devices simultaneously (look for the part on the e-book product page where it says “Simultaneous Device Usage,” and there will either be a number or “Unlimited”). That means that you can register multiple devices to your Amazon account (including devices used by your family members or friends you trust to be on your account), and e-books you purchase can be read at the same time on your Kindle 3, your wife’s Kindle 2, your son’s Kindle for Mac program, and your daughter’s Kindle for iPhone app (as one example). Even better, the 6-device limit is only a simultaneous limit and is per e-book, so you can read an e-book on your Kindle, and then de-authorize it from that device and authorize it on your 7th device and read it there too. For certain families or close friends, this system is far better than any lending feature, and allows for multiple people to easily share the same e-book purchases, even if they live in different parts of the world. Try doing that with a single copy of a printed book!

Amazon UK today made an announcement on its UK forums, apologizing to customers for higher prices by some publishers, who have insisted upon an “agency” pricing model. Under the agency model (described in further detail here), publishers set the final sale price of an e-book, and the retailer (like Amazon, B&N, or Apple) collects a cut, usually 30%. Under the retail model, which print books are all sold under and some e-books are still sold under, the publisher sets a “list price,” charges the retailer some percentage of that price (usually around 50%), and the retailer is then free to sell the book for the price they choose: at the list price, at some discount, even at a loss if they want.

When switching to the agency model, publishers almost universally raised prices on e-books across the board: Amazon had sold new releases at $9.99 (often taking a loss, paying publishers about $13 for e-books with a $26 “list price”), and backlist (older) titles around $6.39. Those prices have increased to about $12.99 and $7.99, respectively, increases of around 30%. (Note: 5 of the 6 largest publishers in the U.S., with the exception of Random House, embraced the agency model when Apple’s iBook Store opened in April as a way to break Amazon’s dominance of the e-book market).

Was this just a business decision to maximize revenue? A campaign to humble Amazon, as publishers were fearful it was gaining too much power in the book-selling (especially the e-book-selling) world? Or a way to slow down the adoption of e-books and keep people buying printed books, which is, after all, what large print publishers are best at? I’ll let you decide.

In any event, how did the agency model work out for publishers? According to Amazon, not so well:

Unsurprisingly, when prices went up on agency-priced books, sales immediately shifted away from agency publishers and towards the rest of our store. In fact, since agency prices went into effect on some e-books in the US, unit sales of books priced under the agency model have slowed to nearly half the rate of growth of the rest of Kindle book sales. This is a significant difference, as the growth of the total Kindle business has been substantial – up to the end of September, we’ve sold more than three times as many Kindle books in 2010 as we did up to the end of September in 2009. And in the US, Kindle editions now outsell hardcover editions, even while our hardcover business is growing.

So, the growth of agency model books are less than half the growth of non-agency-model books. (Since e-books are growing so rapidly, an outright decrease in sales would be a true disaster — imagine two boats on a fast-moving river, one going with the current, and the other fighting it and being dragged more slowly along.) While some have hypothesized that publishers are intentionally shifting those sales away from Amazon and to Apple, I have serious doubts that many Kindle users are willing to buy a $499 iPad and change their reading preferences if they consider a book overpriced on Amazon — just to read the book for the same price on the iPad’s eyestrain-inducing LCD screen. No, I think they just find another book to buy instead. And, as the most recent sales figures show, e-book sales took a dip when the agency model was announced, but continue to show strong growth since then. So Amazon Kindle readers are buying e-books, just not as many e-books from agency model publishers as they used to.

Will this mean the upcoming end of the agency model? Do large print publishers even care if their e-book sales decrease, or only what happens to their print sales, which are still 91% of their total sales? (Note: August 2010 hardcover print sales are down 24.4% from August 2009, trade paperback sales are down 18.3%, and mass-market paperback sales are down 21.9%; so much for “protecting print sales.”) I think what publishers miss is that, once a reader switches to an e-book reader, they prefer the e-reading experience strongly enough to pretty much stop buying printed books (I know I’ve stopped buying print books, and a quick perusal of the Amazon forums will assure you I’m not alone). Further, they’re pretty much only going to buy e-books from the e-book store associated with their device — it’s just too convenient to get Amazon e-books on a Kindle in 60 seconds, not have to break DRM or convert files, have your e-books backed up for you, Amazon syncs your place in your books across reading devices, and Amazon already has Kindle users’ credit card info. Once a user buys a Kindle, the vast majority would never even consider the iBook Store, or any other e-book retailer. Why, when Amazon has the largest selection, all the benefits I described above, and the agency model ironically guarantees that, while Amazon can’t beat other retailers on price, neither can anyone else offer e-books cheaper anywhere else?

August 2010 E-Book Sales: $39M

Posted by Always Write at 4:53 PM Tagged with: ,
Oct 152010

August 2010 E-Book Sales Still Strong, Cool Slightly to $39M

The latest e-book sales figures are in (see previous posts and analysis here), and e-book sales have pretty much continued their strong performance from July. They cooled off just slightly, totaling $39.0 million in revenue in August 2010, compared to the record $40.8M in July. That performance still puts e-book sales well above their pace from the first half of the year, and considerably above last year’s figures. For comparison, e-book sales for the first 8 months of 2010 total $263M,* compared to $165.8M for all of 2009, or $89.8M for the first 8 months of 2009 only — an increase of 193% year-to-date. August 2010’s numbers are an increase of 172.4% from August 2009.

* The AAP’s numbers don’t quite add up, as I’ve been tracking them each month (see below), and their monthly totals only add up to $255.6M. Perhaps they’re now including some late-reported sales stats or something. (Sorry, I like for math to add up precisely!)

Another interesting stat: e-book sales now constitute just over 9.0% of all consumer book sales: $263M for 2010 year-to-date, compared to $2.91 billion in trade printed book sales. This is up slightly from May of this year, when the AAP reported that e-books comprised nearly 8.5% of total consumer book sales. And it’s up dramatically from 2009, when e-books were at about 3.3%.

E-Books' percentage of the overall book market increased from a small fraction, to 1.19% in 2008, 3.31% in 2009, and 9.03% in 2010. It has more than doubled now for 3 years in a row.

One last tidbit: August’s $39.0M figure for e-book sales is over 71% as large as the $54.9M of mass-market paperbacks for the month. E-books are up 172.4% from last August, while mass-market paperbacks are down 21.9% from August of last year. Any guesses which figure will be larger in August of 2011? Or maybe even by December of this year?

For review, the monthly sales figures so far this year:

  • Jan 2010: $31.9 M
  • Feb 2010: $28.9 M
  • Mar 2010: $28.5 M
  • Apr 2010: $27.4 M
  • May 2010: $29.3 M
  • June 2010: $29.8 M
  • July 2010: $40.8 M
  • Aug 2010: $39.0 M

After a great start in January, but little growth for the first half of the year, Q3 2010 is on pace to jump a staggering 38.4% over Q2 2010’s numbers (38.4% quarterly growth over 4 quarters would equate to 267% yearly growth). I am tempted to attribute the strong August numbers to the debut of Amazon’s Kindle 3, but it wasn’t announced until July 28 and didn’t ship until August, so I didn’t see how it could account for July’s strong numbers. But something seems to have given e-books a huge shot in the arm this summer, and the strong sales numbers have continued for a second straight month…

Oct 142010

Enchanced E-Books Combine Print and Video

A hot-button topic in the e-book world is the idea of enhanced e-books, books that combine text with pictures, hyperlinks, and videos. Certainly, this would be similar to the Internet, where people routinely read articles with a video embedded at the top, photos in the middle, and hyperlinks throughout to other articles or information. But is that what readers want in a book?

I think there are certain areas where enhanced e-books might make sense: educational reference books or textbooks, with diagrams or videos of the subject matter; cookbooks, with videos showing how to cook the dish and links to buy ingredients or cookware; or history books that include photos or videos of famous events. But what about for fiction?

Publishers seem interested in bringing “enhancements” to fiction books, by adding videos of author interviews, links to online content, photos, or other “bonus material.” I think publishers are seeking to create “special edition” e-books that they can sell for more money to replace their hardcover business model.

But is that what readers want in their fiction e-books? I, for one, am not really interested, especially if those bonus features (which will cost something to create) are used to justify hardcover-like e-book prices of $20 to $25. I read books for their words, and don’t want videos interrupting my reading. If I liked an author enough to want to see extra content and interviews, I’d just hop over to their website, where I’d expect to find photos and that sort of thing for free.

It reminds me of the “CD-ROM” craze of the 1990s, when publishers spent a lot of effort and money trying to bring enhanced versions of books and bring bonus video and features to games, music, and other products. It turned out that customers didn’t really want those enhancements, at least not enough to pay extra for them.

This discussion also highlights the current state of technology in e-book readers and highlights the differences between black and white e-Ink (that’s easy on the eyes) and color LCD screens (that can show video and such), and the difference between a Kindle and a tablet computer like the iPad. Kindles are really just focused on displaying text: they can’t show color photos or videos, and, while they can connect to the Internet, it’s not a great experience. The iPad, on the other hand, seems designed for interactive, enhanced e-books, as it can play video, show color photos, and easily link to the Internet. For enhanced e-books, something like the iPad would be the way to go. But is that what we need for the majority of fiction novels?

I suppose I can see some places where “enhancements” might arguably be useful. A nice photo of a map in a fantasy novel, for example (although Kindles handle black-and-white photos just fine). Links back to the author’s website or Amazon to buy the next book in a series (which the Kindle also handles OK). What about links peppered throughout the book? What if a character’s name were hyperlinked to a web page about them, with photos, a description, maybe even other short stories about them? What if that info wasn’t online, but was embedded directly in the book (maybe a new window pops up, and you go back to your book when you’re done)? Would that be useful, or just distracting?

Certainly, I don’t want to fall into the trap of thinking that just because books exist a certain way today, that’s the best possible way for them to exist. Those enhancements didn’t exist before because technology didn’t permit them, not necessarily because they were a bad idea or unwanted by readers. For example, we didn’t have e-books before, but I enjoy their added convenience, cost savings, and features. Would the same be true of videos and links and other e-book enhancements?

I tend to think not. The difference is that e-books still allow readers to immerse themselves in the author’s words, which, to me, is the essential part of the book-reading experience. I was never swayed by the argument that the physical object is what’s important, and I never “missed” the smell of glue or the “feel” of paper. My Kindle gives me the same words, but in any font size I want, with a built-in dictionary, and I can get new books in 60 seconds, save money, and carry an entire library with me. And there aren’t any extraneous distractions like movies, animations, or Facebook alerts. Enhanced e-books would interrupt the reading experience that I enjoy — the act of getting lost in a world of imagination based only on words — and that’s not something I’m interested in.

But what do you think? Are you interested in seeing videos and links in your fiction e-books? Do you want extra “bonus features,” even realizing that they’re not free and would increase the cost of e-books? Would you find an embedded video or link to extra content useful, or distracting? Please let me know your thoughts in the comments, below….

Sep 222010

July 2010 E-Book Sales Surge To $40.8M

The latest industry e-book sales figures are in (see previous months’ reports here), and July was a record month for e-book sales. The AAP and IDPF are reporting July e-book sales are a whopping $40,800,000, almost a 37% increase from June’s numbers, and a 150.2% increase (well over double) compared to July 2009’s numbers. E-book sales are up 191% year-to-date (for one point of comparison, the entire second quarter of 2009 was only $37.6 M).

I’ve spent more time analyzing these trends in my last few posts, but July’s very strong numbers seem to confirm the continuation of the strong upward long-term trend and prove April’s weak numbers to be an aberration (which is looking more and more like the fault of publishers raising e-book prices through the agency model). It also blows away the previous high: January 2010, an outlier I believe is due to e-book shopping driven by e-book readers received as Xmas gifts, and the cold weather keeping people indoors and downloading new books to read wirelessly. For convenience, here are all of this year’s monthly figures again:

  • Jan 2010: $31.9 M
  • Feb 2010: $28.9 M
  • Mar 2010: $28.5 M
  • Apr 2010: $27.4 M
  • May 2010: $29.3 M
  • June 2010: $29.8 M
  • July 2010: $40.8 M

As you can see, July’s figures are a huge jump for e-books after a relatively sluggish (mostly flat) first six months of the year. I wonder if the enormous jump from the prior month has anything to do with Amazon raising royalty rates on self-published works to 70% on June 30. Perhaps that attracted some small publishers that are being counted in these sales figures to release more Kindle books. I know most self-published authors saw increased revenue when raising their prices from 99 cents into Amazon’s $2.99 to $9.99 range to qualify for the higher royalties (I, for one, sold half the books at three times the price and six times the royalty), but we aren’t included in these sales numbers — the AAP never asks me for my sales info. =)

I suppose the bump could be due to summer reading, but that large a jump seems like it should have a more tangible explanation — and it’s probably not the Kindle 3, which was only made available for pre-order July 28 (and started shipping in August). I’ll keep an eye out for possible causes, and it will be interesting to see if August sales match July’s torrid pace.

In any event, monthly sales of over $40 million demonstrates e-book sales creeping ever-closer into print book territory: for comparison, adult mass-market paperback sales were $60.6 M (and are down 13.1% year-to-date, so e-books are definitely closing the gap). Adult trade paperback sales are still a hefty $111.1 M (but down 8.6% for the year), and adult hardcover sales are $74.1 M. E-books still have a ways to go to reach the combined $245.8 M of adult print book sales (e-book sales are about 1/6th of that number), let alone the $1.5 billion per month of the entire book industry (which includes children’s books, professional books, and educational textbooks). The big question is whether e-books will continue to accelerate at their rapid pace (doubling or tripling each year) — and, if so, how long before they overtake print book sales.

Just to follow up on a couple of posts from earlier this month:

Barnes & Noble has around 20% of e-book market share.

As I estimated in my post on market share on August 2, Amazon probably has about 75% of the e-book market, and B&N has most of the rest: I pegged the figure around 18-20%. Today, B&N confirmed (without giving exact specifics, of course!) that their e-book market share is now “higher” than their print market share, which is 17%. Sounds like 18-20% to me!

Explaining the slight dip in Q2 e-book sales.

Last week, I took a look at June’s e-book sales figures and the Q2 2010 numbers, which were slightly below Q1 2010. (While they were still double last year’s numbers, any dip is unusual, as e-book sales have been consistently increasing at a rapid pace.) I looked at a few possible explanations for the dip, including:

  1. Lots of people receiving e-readers for Xmas 2009 and buying lots of e-books for their new toys in January 2010.
  2. Publishers insisted on agency model (read: higher) pricing starting in Q2, and raising new release e-book prices from $9.99 to $12.99 and $14.99 shockingly decreased revenue (who could have ever seen that coming?).
  3. The industry e-book sales figures don’t include sales from independent authors (like yours truly), who are probably earning a larger slice of the pie.

Well, today I see a pair of articles analyzing the dip in Q2 e-book sales and attributing it to: post-Xmas buying and agency model pricing, and that indie author retailers like Smashwords weren’t being included in the data.

Sorry for the “I told you so” post, but it was nice to see affirmation from several different sources of e-book trends I’ve been predicting on this blog for months. 🙂

Aug 192010

June 2010 E-Book Sales Rise Slightly

I’ve been tracking e-book sales statistics here for a while, following the rise of e-books from less than 1% of the market, to about 1% in 2008, 3% in 2009, and over 8% so far this year. The latest figures are in for June 2010 (and the second quarter of 2010), and they represent a slight increase from the past couple of months. Retail e-book sales clocked in at $29.8 million dollars for June 2010, and $88.7 million for Q2, 2010 (April, May, and June). The June sales are an increase of 118.9% over last June’s numbers, and sales year-to-date are 204.2% higher than the first two quarters of 2009.

I should point out that the monthly and quarterly figures don’t seem to correlate exactly — it seems the IDPF (which releases quarterly figures) adds something to the monthly figures that come from the Association of American Publishers. Please keep in mind that e-book sales figures are only an estimate, and an incomplete one at that. They don’t get their data from e-book retailers (like Amazon, B&N, and Apple), which are notoriously secretive about their e-book sales, they get it from publishers. But they only include figures from certain large publishers, and ignore sales of e-books through smaller channels, such as small presses and independent publishers. For example, I’m just an unknown indie author, but I’ve sold over 6,000 e-book copies in the first 6 months of this year, and they aren’t counted in the numbers above. So it’s safe to say these numbers are inexact and underrepresented.

Those caveats aside, the monthly sales totals so far this year are:

  • Jan 2010: $31.9 M
  • Feb 2010: $28.9 M
  • Mar 2010: $28.5 M
  • Apr 2010: $27.4 M
  • May 2010: $29.3 M
  • June 2010: $29.8 M

And the quarterly figures given by the IDPF, with the totals of the monthly numbers above in parenthesis for comparison:

  • Q1, 2010: $91.0 M  ($89.3 M)
  • Q2, 2010: $88.7 M  ($86.5 M)

On a positive note, June sales continued to increase over May, which itself increased over the low point in April. On the down side, the strong May and June sales weren’t enough to overtake the Q1 numbers, which were mostly buoyed by huge numbers in January. There are a few possible explanations and observations I draw from this data:

  1. Millions of e-readers were sold over the holiday season at the end of 2009, and all those new Kindle and Nook owners needed something to read, and may have bought a lot of e-books in January.
  2. The combination of new e-reader owners stocking up on e-books and terrible winter weather may have accounted for very strong e-book sales in the early part of the year, which cooled off as the weather warmed up and more people ventured outside (doing non-reading activities or visiting physical bookstores).
  3. Publishers’ insistence upon the agency model (where they forced retailers to raise e-book prices) at the start of April seems to have caused a dip in e-book sales, which are now recovering and possibly continuing their upward trend.
  4. The introduction of the iPad (in April) didn’t seem to help e-book sales much, and may instead have hurt them, as some people debating between a dedicated e-book reader and a multi-function device chose the iPad, and then ended up playing more games, watching movies, and spending time on Facebook instead of buying and reading e-books.
  5. The trend in May and June is positive, and sales in those two months are higher than any other month except January, which may have been a post-holiday / winter weather spike.
  6. On the other hand, Q2 sales are down (or at best roughly flat) from Q1, and e-book sales certainly don’t seem to be increasing at the blistering pace they showed for the past several years (where they doubled or tripled each year). Is it just a temporary dip (due to the agency model and the iPad), or the sign of a leveling off of e-book market share?

To expand a bit on the last point, e-book sales have been increasing so rapidly, that the first 6 months of 2010 have already exceeded all of 2009 ($175.8M vs. $165.8M). And 2009’s sales are over triple 2008’s ($165.8M vs. $53.5M). This is the first quarter where sales have declined in the past three years, but they have bounced around a bit and then continued their upward momentum before, so I think it’s too soon to say that e-book sales have plateaued. Looking at the chart below, it looks more like Q1 2010 was abnormally high than that Q2 2010 was abnormally low. Most estimates still have e-books steadily increasing their market share, and most industry insiders expect e-books to account for 25% of book sales within the next 2-4 years.

Q2 2010 E-Book Sales Cool Slightly From Q1 Pace

I think it’s encouraging to see June’s sales continue the upward trend from May, and hopefully April will just prove to be a one-time dip, caused by agency model pricing. One stat I’d love to get my hands on: what percentage of e-book sales are independent authors responsible for, and how quickly is that number increasing? Maybe the book sales of traditional publishers are flat, but that doesn’t mean overall e-book sales are flat as well. 😉

UPDATE: A few industry analysts confirm my explanations for the dip in Q2 sales.

Aug 022010

The new, smaller K3 next to the K2. This pic would be better for my previous post, but I really like it.

Apple claims they could have up to 22% of the e-book market. Barnes & Noble claims a similar share. And what about Sony, or Kobo? And what does that leave Amazon, presumably still the largest e-book seller?

Despite all the numbers being tossed around, I’ve known for a while that Amazon had the lion’s share of e-book sales. Well, today I saw official confirmation from Amazon, which announced that it owns 70% to 80% of the e-book market. When asked about Apple’s 22% claim and B&N’s 20% claim, Ian Freed (Amazon VP in charge of the Kindle) essentially said that he wasn’t calling anyone a liar, but he’s sure of Amazon’s numbers. Well, how can Amazon have 75%, and Apple and B&N both claim about 20%? Freed says that “something doesn’t add up,” but that Amazon is pretty sure the 75% is right. Now, he’s not gonna say who’s wrong, just that (a) Amazon’s numbers are accurate and (b) therefore someone else’s aren’t.

It’s pretty clear to me the exaggerating culprit is Apple. I won’t go so far as to call their figures lies (what’s the saying about “figures don’t lie, but liars figure”?), but their “5 million e-book downloads” number and their “22% of e-books sold” number deserve a second look. First of all, they didn’t specify whether that 5 million figure included free e-book downloads, so it probably did. Maybe they only sold 1/10th that amount. (Which would amount to 500,000 sales across 2 million iPads over two months … or only 1.5 e-books per iPad per year.) As for the 22%? The consensus is that Apple was referring only to sales from Penguin for the month of April … which is coincidentally when Penguin was negotiating new terms with Amazon and their titles were not available on Amazon. Hardly a representative figure for the overall e-book market.

So what are the real numbers? Let’s work from what we know.

Amazon announced last month that it sold 867,881 out of James Patterson’s 1.4 million e-book sales (Patterson is the #1 e-book bestseller). That equates to 76%. Combine that with Amazon’s recent “70 to 80 percent” statement, and I think it’s safe to say that Amazon owns about 75% of the overall e-book market.

As a second data point, I can tell you about my own e-book sales. Now, I’m not James Patterson, but I have sold several thousand copies of my e-books this year, and they are available at Amazon, B&N, Kobo, and Apple (also Sony, but too recently for me to have reliable sales data). And my figures back up Amazon’s; in fact, I sell more than 75% of my e-books through Amazon. Here are my percentages, for the most recent month (June 2010) and quarter (Q2, including April, May, and June):

  • Amazon: June (84.7%), Q2 (87.3%)
  • B&N: June (13.4%), Q2 (11.2%)
  • Kobo: June (1.4%), Q2 (0.9%)
  • Apple: June (0.5%), Q2 (0.7%)

I think it’s safe to say that Amazon is still comfortably on top, and that Apple might be exaggerating just a tad, since they don’t even account for 1% of my e-book sales, and my books were on the iBook Store from day one (April 3).

Of course, my numbers won’t match up to industry totals exactly: some places (Amazon) are more friendly to indie e-books and their stores make it easier to find our works than others (*cough* Apple *cough*). And the percentages for Kobo and B&N are generally increasing. B&N in particular surprised me with very strong numbers: in June, I sold almost 1/6th as many books through B&N as I did through Amazon, and my books have been up on Amazon longer (and thus have more reviews, etc.).

Taken together, it’s clear to me that Amazon has the dominant share of e-book sales: about 75%. I believe B&N when they say they’re close to 20% of the market — probably somewhere around 18%. That leaves Kobo, Sony, and Apple fighting over the last 7% or so. And my guess is that Apple is in no better than 5th place right now.

Another interesting tidbit from Ian Freed: 80% of Amazon’s e-book sales are to customers who own Kindles. So much for those “Sure, Amazon is selling e-books, but mostly to people who read on their iPads” articles. Maybe finally people can stop pretending the iPad is an e-reader and start considering it as a tablet computer that’s cool to play games on?

Finally, Freed commented on the agency model and how several large publishers forced Amazon to raise e-book prices from $9.99 to $12.99. According to Freed: “Since some of the publishers have decided to price their e-book above $9.99, we’ve definitely seen a shift of customers going to e-books that are $9.99 or less.” And, I might add, e-books that are just $2.99 as well. =)

UPDATE: B&N released confirmation that their e-book share just surpassed its print share, which is 17%. Sounds like 18-20% to me!

© 2010 David Derrico