sales – Page 3 – DAVID DERRICO

December 2010 E-Book Sales: $49.5M

Posted by Always Write at 5:22 PM Tagged with: e-books, sales

Feb 172011

Dec 2010 e-book sales: $49.5M

As I predicted last month, December 2010 e-book sales set another record, at $49.5M for the month, up from a then-record $46.6M in November, and $18.7M in Dec 2009. Year-over-year, Dec 2010 sales are up 164.8% from Dec 2009 numbers.

Here is a rundown of the monthly totals:

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
Oct 2010: $40.7 M
Nov 2010: $46.6 M
Dec 2010: $49.5 M

Q4, 2010 e-book sales: $136.8M

That puts the Q4 2010 total at a record $136.8M, up from $119.7M in Q3 2010 and $55.9M in Q4 2009. The 2010 year-end total is reported as $441.3M (which differs slightly from the $432.3M I get from summing the monthly totals, but maybe they include some extra sales figures that trickle in for their year-end calculation). Either way, it’s well above the 2009 year-end total of $166.9M, an increase of 164.4%, in fact.

Monthly e-book sales ($49.5M) haven’t quite caught mass market paperback sales ($57.1M) yet, but they’re getting ever closer as e-book sales increase dramatically and print book sales decline from 2009 levels. Mass market paperback sales were $60.2M in October 2010, and $673.5M for 2010 in total, a decrease of 6.3% from 2009 figures ($718.9M). Back in March 2010, I was amazed that e-book sales were 53% of mass-market paperback sales; in December, they were up to 86.7%. Considering how we saw a surge in e-book sales in January 2010 (after millions of people received Kindles in late December for Christmas) and a decline in print book sales (due to snow and poor winter weather), I’m still predicting e-book sales to catch or overtake mass market print sales as soon as January 2011 (which means it would have already happened, we just haven’t gotten the statistics to confirm or deny it yet). UPDATE: January results are in, with e-books easily overtaking MMP sales.

E-books continue to increase dramatically as a percentage of total book sales.

Looking at the overall picture, e-book sales constituted 3.2% of trade book sales in 2009, and that number nearly tripled, up to 8.32% in 2010. This number has more than doubled (and nearly tripled) for 3 years in a row. Of course, that kind of explosive growth can’t last forever, but what percentage of all book sales will e-books constitute in 2011? 15%? 20%? 25%? I wouldn’t bet on a number lower than 12-15%.

Are E-Books Sold or Licensed?

Posted by Always Write at 3:23 AM Tagged with: DRM, e-books, licensing, publishing, sales

Feb 132011

It may surprise you to know that when you buy an e-book from Amazon, B&N, or pretty much any other e-book retailer, you’re not really buying the e-book in the same sense that you’d buy a printed book or, say, a tomato. You’re actually paying for a license to do certain things with the e-book, such as download it to a certain device, read it, lend it one time for 14 days, perhaps listen to it with text-to-speech (or perhaps not), etc. But it’s quite confusing for a couple of reasons: first, it feels like a sale (not a license) because you pay money, then download the e-book, then it sits on your e-reader or computer and it certainly seems like you own it. Second, neither the publishers nor the retailers have really gone out of their way to explain or market these transactions as mere licenses instead of sales, since they know people are unwilling to pay as much for a license as for full ownership of something (note that the button on Amazon says “Buy Now,” not “Rent Now” or “Lease Now” or “Click Here to Enter into a Complicated Licensing Arrangement”).

But this ambiguity leads to certain problems and misunderstandings. For example, the infamous case of Amazon removing the book 1984 from people’s Kindles — which was actually pretty reasonable when you understand that those e-books were licensed, and not sold. (You know those 50 pages of legal crap you skip over when you create an Amazon account or update your iTunes or iPhone software? It’s in there somewhere … I think — I didn’t read it.) Since Amazon was merely licensing those e-books to you, under their own license from a publisher (who only licensed the right to distribute the book — and did not buy the copyright — from the author), once Amazon realized that one of those licenses was invalid (in this case, the publisher did not properly license the right to distribute the work), the subsequent licenses down the chain became invalid. And since it was a license, not a sale, you never legally owned that copy of 1984, so Amazon did what they thought was right at the time, and removed it.

In the physical book world, you’ve probably heard about the “first sale doctrine.” That means that, once you lawfully purchase or acquire a printed book, you can then lend or re-sell it as you see fit. (You can not make additional copies, but you can sell the one copy you have.) But this is where the confusion comes in — people understand they have those rights with a physical book, even if they’ve never heard of the first sale doctrine. They still know they can lend the book to their sister. And they expect the same with an e-book, because they assume they bought the e-book and didn’t just rent or license it. Of course, to be reasonable, lending or selling a physical book means you lose access to it, and the same is not true of a digital file (which you can keep and email to a friend), so perhaps it’s not fair for the same rules to apply.

Where it gets confusing is that, while no one is going out of their way to point out that you just plunked down $12.99 to only license that new e-book, Amazon is going out of their way to assure customers that they will never remove purchased e-books from customers’ Kindles again. When you buy an e-book from Amazon, you can download it to your Kindle, and it will stay there, whether you’re connected to Amazon or not, whether Amazon even continues to exist or not. You don’t have to log in or authenticate or anything to keep reading it. You can even download a copy of the e-book to your computer and back it up with the rest of your computer data. And if Amazon disappeared tomorrow, you’d keep right on reading whatever e-books you had already downloaded. In short, it sure feels like you bought and own the e-book.

Even those of us who understand that e-books we buy are actually licensed are generally OK with the situation, because of all the safeguards I’ve described above. I own the file, it sits on my Kindle, on my computer, and backed up on an external hard drive, and there’s no way for Amazon to reach into my computer and remove it or stop it from working. I can turn my Kindle’s wireless off and they can’t touch that either. So I’m OK with paying for an e-book under the current system. But I don’t think readers will accept full-on e-book licenses — not without certain guarantees that make those “licenses” act more like traditional sales. For the same reasons, I don’t think customers will accept reading “in the cloud” — e-books you read only while connected to the Internet and don’t download anywhere — since we understand our access to those titles could be cut off at any time.

I know readers are willing to give up owning a physical object, and I even think they’re willing to give up the traditional “first sale” print rights of lending and resale, so long as the e-book prices are lower than physical. This is a key point: whether it’s called a license or a sale, readers do understand that they don’t get all the rights they get with print books, and don’t think they should pay the full print price (also, of course, we understand e-books cost less to produce). But I don’t think readers are willing to give up ownership of the digital file (at least not now or anytime soon). People want to build digital libraries and own those files forever — they don’t want to re-buy them in some other format for some new e-reader / tablet / smartphone / laptop device 5 years from now, and they don’t want to somehow lose access to them. So, call it a license, call it a sale, call it whatever you want, so long as I can download the file to my computer and back it up and keep reading it even if Amazon disappeared from the face of the Earth or wanted to stop all Kindle operations tomorrow.

Of course, publishers would like nothing more than to sell you an e-book today, and in 5 years, when some new e-book format magically appears, sell you that same e-book again in that new format. After all, it worked for the music and movie industries, which made you buy cassette tapes, then CDs, then MP3s (and VHS tapes, then DVDs, then Blu-Ray DVDs). Will they get away with it? I don’t think so. The file is already digital, and there’s no issue of higher quality or resolution — words are words are words. (Of course, “enhanced” e-books, with video and such, would be a different story if anyone wanted to buy such things.) And, there’s no reason why the Kindle 8 or iPad generation 17 can’t read MOBI or ePub e-book files — and even if they can’t, software will exist to convert them into the new file formats. Of course, this is where DRM comes in, and where things get messy. This is why a lot of people are so strongly against DRM, and where the issue of ownership comes to a head: we understand publishers want to prevent copying, but if I own the e-book file, I should be able to convert it and read it on some new device 5 or 10 years from now. And, if I can’t, if this isn’t an e-book sale, but just a strictly-controlled rental that will expire in a few years, then forget $9.99 — people aren’t going to be willing to pay anywhere near print book prices for e-books, nor should they, if they’ll just have to keep re-buying them every few years. And I think the publishers are intentionally refusing to clarify the issue, because they don’t want customers to think about that possibility. But what I think they overlook is that, if they try to get us to re-purchase the same e-books in a different format, people will start removing the DRM from their legally purchased e-books and wonder why they’re paying for them in the first place. Yes, readers have the ultimate trump card here, so long as we are able to download the files.

So I think we need a little more clarity from the publishers and retailers on the licensing vs. ownership thing. We give them our $9.99, and they can do whatever they want with it. It’s theirs. What do we get in return? What rights do we have? What do we own, if anything? And what can we do with it 5 years from now? And if readers don’t like the answers they get, I don’t think publishers will like the readers’ response.

So, how about a new e-book sale/licensing doctrine, one to replace the first sale doctrine from the print book world? OK, we can give up lending and re-selling, so long as we own the digital files and have the right to convert them into whatever formats we need, now or in the future. No copying, no pirating, just me reading the e-book I bought today 10 years from now. Sound fair?

E-Books Outselling Paperbacks at Amazon

Posted by Always Write at 7:45 PM Tagged with: Amazon, e-books, sales

Jan 272011

The behemoth known as Amazon

Six months ago, Amazon announced that e-books were outselling hardcovers at the world’s largest bookseller; now, Amazon announced that e-books are outselling paperbacks (for Amazon U.S. sales). From the press release:

Amazon.com is now selling more Kindle books than paperback books. Since the beginning of the year, for every 100 paperback books Amazon has sold, the Company has sold 115 Kindle books. Additionally, during this same time period the Company has sold three times as many Kindle books as hardcover books. This is across Amazon.com’s entire U.S. book business and includes sales of books where there is no Kindle edition. Free Kindle books are excluded and if included would make the numbers even higher.
The Company sold millions of third-generation Kindle devices with the new advanced paper-like Pearl e-ink display in the fourth quarter and the third-generation Kindle eclipsed “Harry Potter and the Deathly Hallows” as the bestselling product in Amazon’s history.
The U.S. Kindle Store now has more than 810,000 books including New Releases and 107 of 112 New York Times Bestsellers. Over 670,000 of these books are $9.99 or less, including 74 New York Times Bestsellers. Millions of free, out-of-copyright, pre-1923 books are also available to read on Kindle.

Wow, for every 100 paperbacks sold, Amazon is selling 115 Kindle e-books. Playing with the numbers a little more, for every 100 Kindle e-books, Amazon is selling 87 paperbacks and 33 hardcovers. So, for Amazon’s U.S. sales:

E-Books: 45.5%
Paperbacks: 39.5%
Hardcovers: 15.0%

Very impressive, especially since Amazon makes clear that it does not count free e-book downloads and does count printed books without e-book equivalents. I suppose the next milestone will be when e-books overtake combined print (paperback + hardcover) sales, which can’t be too far away now.

November 2010 E-Book Sales: $46.6M

Posted by Always Write at 4:51 PM Tagged with: e-books, sales

Jan 142011

November 2010 E-Book sales: $46.6M

Another month, another record for e-book sales, as November 2010 e-book sales clock in at $46.6M, above October’s $40.7M and July’s record $40.8M. Sales in November are up 129.7% from last November, slightly less than the overall year-to-year increase of 165.6%, but ahead of October’s 112.4%.

The post from Publishers Weekly goes on to say that sales for the first 11 months of 2010 total $391.9M, which is slightly higher than the total of the monthly numbers they’ve provided (listed below, which add up to $382.2M). Either way, it’s well above 2009’s year-end total of $165.8M, and that doesn’t even include the numbers from December, which I’d expect to be a new record, based on reports of several million people unwrapping new e-readers this holiday season.

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
Oct 2010: $40.7 M
Nov 2010: $46.6 M

I haven’t seen the numbers yet for mass-market paperback sales for November (the post merely said they were decreasing the fastest of all categories, at -14%), but they were $60.2M in October. Could we see $60M monthly e-book sales in December 2010? If not, how about Jan 2011 (when the effect of all those new e-readers may really be felt)? I don’t think it will be long before e-book sales catch or overtake mass-market.

UPDATE: The full numbers are in, and mass-market paperback sales for November are down 9.5% for the month and 14.0% year-to-date, at only $47.7M, just a couple percent higher than e-book sales for the month.

2010 Year In Review

Posted by Always Write at 7:33 PM Tagged with: e-books, e-readers, iPad, Kindle 3, publishing, sales, self-publishing, writing

Dec 312010

As 2010 comes to a close, it’s a good time to take a moment to reflect on everything that’s happened this year with e-books, e-readers, the publishing industry, and writing. I’ve included plenty of links to posts with more detail on individual topics you may be particularly interested in.

E-Books

In 2010, e-book sales roughly tripled, increasing from about 3% of total book sales to about 9% — a figure that finally seems to have the publishing world sitting up and taking notice. As we transition from paper books to a paper + digital world (and perhaps eventually to a primarily digital book world), we’ll see many changes in the centuries-old print publishing industry: bookstores will close, publishers will struggle, and new companies will step in and pick up the slack. In the digital world, in 2010 we’ve seen a proliferation of available e-book titles (the Amazon store roughly doubled its catalogue to over 750,000 e-books), e-books starting a global expansion (including the launch of the Amazon UK Kindle Store), and we’ve even seen e-book sales on Amazon overtake hardcovers and overtake all print books for best-selling titles.

We’ve also seen a battle over e-book features — with publishers generally fighting some of the very things that make e-books so useful and convenient for many of us. Publishers lined up to block text-to-speech functionality (which lets your Kindle read e-books aloud to you); add restrictive, annoying, and mostly ineffectual DRM copy protection; provide many e-books as poorly-formatted, non-proofread scans of print books; and we’re still stuck in an era where readers in many countries can’t buy the e-books they want to pay good money for, as geographic legal restrictions serve to partially negate the huge e-book advantage of instant, inexpensive, global distribution.

In 2011, I predict e-book sales to continue to increase (perhaps continuing the trend of doubling or tripling each year for another year or two), especially considering the technological advances in e-readers (and lower price points) and how many people probably just unwrapped new e-readers last week. I’d expect slow improvement in worldwide e-book availability and improved formatting of e-books, as publishers realize that they’re losing money and start to take e-books more seriously. But I’d expect large publishers to continue fighting certain e-book features, as they’re still in the mode of protecting print book sales, not fully embracing e-books yet. However, the pressure will continue to increase on them next year.

E-Readers

2010 brought us the introduction of Apple’s iPad, Amazon’s new Kindle 3, a new round of Sony E-Readers, and the Nook Color, among others. We’ve seen improvements in technology, including the new e-Ink Pearl screen with better contrast, and a battle between tablet computers with LCD screens (like the iPad) and dedicated e-readers with easy-on-the-eyes e-Ink screens (like the Kindle); at the same time, we’ve seen prices come down from $259 for the Kindle 2 to only $139 for the Kindle 3 Wi-Fi. This has combined to make e-readers much more affordable and a better value for more and more people. Estimates put e-reader sales from about 5 million in 2009, to 12 million in 2010, and predict 27 million in 2011.

Personally, I’ve tried the iPad, and found it better suited for Internet surfing, movie watching, and game-playing than for reading. I also recently upgraded from a Kindle 2 to a Kindle 3, and I am very, very pleased with the Kindle 3 — I think it’s the best device available for e-book reading, and I am finding it considerably better than the already-quite-good Kindle 2. I especially appreciate the increased contrast (much darker blacks and slightly lighter background) of the e-Ink Pearl screen, which is why I wouldn’t recommend either an LCD-based device (which has short battery life and is harder on the eyes), or an older-generation technology like the e-Ink screen in Barnes & Noble’s Nook. I’ve written a Holiday E-Reader Buying Guide here that compares and contrasts the options available, if you’re still trying to decide which one is right for you.

Next year, we can expect to see (a) more tablet computers being introduced, and many of them will masquerade as “e-readers,” although they are really Jacks-of-all-trades that are better suited for other tasks, (b) continued improvements and refinements in e-readers, and (c) perhaps even lower prices, as we’re approaching the $99 price point for e-readers — remarkable when the Kindle 1 debuted just 3 years ago for $399.

Publishing

As I mentioned above, the continued rise of e-books will have a profound effect on the publishing industry. First, print book sales declined in 2010, being replaced by e-book sales. This shift has strained the margins of publishers and bookstores, who are finding it difficult to adapt to an online e-book-selling world. Publishers have long-entrenched ideas, facilities, processes, and business models that can’t turn on a dime, and they’re seeing increased competition from online retailers (like Amazon and B&N) and smaller publishers, who don’t need the huge economies of scale and financial capital that the print book business requires. Predictably, these businesses have responded by trying to fight e-book adoption, trying to protect their print book business for as long as they can, and squeeze out a few more profitable quarters. They, so far, don’t appear to be interested in making the tough changes and painful downsizing required to succeed an an e-book world, and they (rightfully) fear that their spot at the top will be jeopardized during the upheaval, as newer, leaner, more forward-thinking companies replace some of the “Big 6” publishers at the top of the heap.

To that end, publishers, fearful of Amazon’s e-book dominance, in April embraced the agency model, which stopped Amazon from selling best-selling e-books for $9.99 and allowed publishers to retain control of e-book pricing (most best-selling e-books then increased to about $12.99). This caused a temporary dip in e-book sales, which have since recovered. Publishers complained that low e-book prices “devalued e-books” and were unsustainable, while many independent authors (like myself) argued that selling more units at a lower price was a win-win scenario.

2010 will also be remembered as the year of the rise of self-published authors, with a couple I know of in particular (Joe Konrath and Amanda Hocking) selling over 100,000 e-books and earning a very nice living — without traditional publishers. Several other indie authors joined Amazon’s “Encore” publishing program, competing directly with large publishers. In 2010, we saw e-book royalties for self-published authors (through Amazon, B&N, Apple, and most other outlets) increase from 35% to 70%, which compares quite favorably to the 8% authors used to get from publishers for paperback sales, or the 17.5% (net) they normally pay for e-book royalties.

As large publishers continue to decrease the amount of advances paid, hold the line on e-book royalties, overprice their e-books, block features, and reduce marketing services, my question to best-selling authors in 2011 is: why give 90%+ of the profits to a large publisher, when you can hire someone to do your covers and formatting for you, and keep 70% for yourself? I think we’ll see more and more big authors strike off on their own — and do very, very well. After all, when you buy a Stephen King or J.K. Rowling or Dan Brown book, you’re buying the book for the author, not the publisher (quick: who can even name the publishers for those 3 authors without looking it up?).

Writing

2010 was a milestone year for me personally, as I finished writing and editing my third novel, The Twiller, and released it for sale in June. Of course, being independent, I was also responsible for doing my own formatting and creating my own cover, along with doing my own marketing, which can take more time than actually writing the book! I was very pleased by the launch of The Twiller, which had the following results:

Ranked #1 on Amazon’s “Movers & Shakers” List.
Ranked in the Top 5 in both “Humor” and “Science Fiction” in the entire Kindle Store.
Ranked #188 overall in the Amazon Kindle Store.

My other novels also exploded in sales in 2010 (I only made them available through Amazon for the Kindle in late 2009). I ended the year with several new sales records, selling several thousand copies and earning several thousands of dollars from my writing for the first time — not yet enough to make a living, but certainly a nice start. More importantly, I reached thousands of readers, received dozens of positive reviews, and interacted with many great and passionate readers by email, through my Facebook Fan Page, and more. I sincerely do appreciate all the readers who have read my book, taken the time to contact me, written a review (they really do help!), and generally been supportive in my writing endeavors this year.

For my first novel, Right Ascension, I had the following encouraging and exciting milestones:

Sold over 5,000 copies this year.
Ranked #1 on Amazon’s “Technothrillers” best-seller list.
Ranked #414 overall in the Amazon Kindle Store.

The sequel, Declination, also showed encouraging signs:

Sold over 3,000 copies this year — so more than 60% of the people who bought Right Ascension went on to purchase the sequel as well.
Both Right Ascension and Declination were on the Top 25 best-seller list for “Science Fiction” at the same time.
Ranked #827 overall in the Amazon Kindle Store.

As for this blog, its popularity has steadily increased since I launched it in April, with over 18,000 visitors. Average hits per day increased from about 40, to 60 in August, 90 in October, and over 100 a day in November and December. My most popular blog posts from 2010 were:

E-Ink vs. LCD: What’s The Difference? (2,075 views)
E-Book Market Share: Amazon At 75% (760 views)
Kindle 3 Announced: 3G for $189, Wi-Fi for $139 (675 views)
Kindle 3: Hands-On First Impressions (607 views)
E-Book Sales Continue Rapid Growth (483 views)

Thank you again to everyone who visited my blog, left a comment, bought or read one of my books (available in the right nav bar or through Amazon here), became a Facebook fan, or shared some encouraging words this year. I’ve definitely excited to see what unfolds in 2011, and discuss it with all of you. Happy New Year!

Oct 2010 E-Book Sales Stats: $40.7 M

Posted by Always Write at 5:25 PM Tagged with: e-books, sales

Dec 092010

October 2010 e-book sales: $40.7 M

Continuing last quarter’s trend, e-book sales in October 2010 reached $40,700,000, just below the record $40,800,00 in July, but trending upward from the last couple of months. This figure represents a 112.4% increase over October 2009, when sales were $19.2 M. year to date, January – October 2010 e-book sales ($345.3 M) increased 171.3% over the same period in 2009 ($127.3 M).

In comparison, print book sales were down across the board. Adult hardcover sales were down 6.5% to $242.9 M (down 7.7% year-to-date), adult paperback sales were down 11.8% to $115 M (no change year-to-date), and adult mass market paperback sales were down 1.1% to $60.2 M (down 14.3% year-to-date).

Of note, e-book sales for October were more than 2/3rds as much (67.6%) as mass market paperback sales ($40.7 M compared to $60.2 M).

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
Oct 2010: $40.7 M

E-book sales so far in 2010 are 8.7% of trade book sales

So far this year, e-book sales figures are 8.7% that of printed trade book sales ($345.3 M compared to $3,969.7 M). This number is down slightly from a couple of months ago, when year-to-date e-book sales were 9.03% of print’s figures, but is still up dramatically from previous years (0.58% in 2007, 1.19% in 2008, and 3.31% in 2009).

It will be interesting to see the holiday sales in December 2010, and maybe even more so, the post-holiday sales in January 2011, when millions of people unwrap their Kindles and other e-readers and go looking for new e-books to buy.

September E-Book Sales Stats: $39.9M

Posted by Always Write at 12:18 AM Tagged with: e-books, sales

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?

Amazon Says Agency Pricing Costing Publishers Sales

Posted by Always Write at 6:16 PM Tagged with: agency model, Amazon, e-books, sales

Oct 152010

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: e-books, sales

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…

July 2010 E-Book Sales Figures: $40.8M

Posted by Always Write at 3:33 AM Tagged with: e-books, sales

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.

Page 3 of 4 1 2 3 4