From David Vinjamuri on Forbes Blogs:
A flood of self-published books washes ashore. Bestseller prices are down significantly. Bad grammar speeds through the ether at a faster pace than ever before. This should be a dreadful year for publishers. Only it’s not.
Instead, Random House handed out $5,000 bonus checks from windfall profits. Simon & Schuster signed a critically acclaimed author whose #1 bestselling book was self-published. And despite Amazon reporting that more than a quarter of its bestsellers were self-published last year, revenue from traditionally published books held up.
Self-publishing is a huge and disruptive force in the publishing industry, but contrary to popular belief, it’s largely benefiting publishers.
. . . .
.L. James single-handedly changed the industry’s view of self-publishing. Her astronomically successful books (which have sold over 70 million copies worldwide) came from a place no publisher would ever look: online fan fiction. After James, publishers could not afford to ignore self-publishing lest they miss the next commercial phenomenon.
James’ timing was fortuitous. Publishers were unhappy with self-publishing because readers were drowning in cheap, unedited books:
BOOKS IN PRINT® 2007 2011 2012 Total USA Self-Pub* 74,997 246,912 391,768 *ISBN Data courtesy of Bowker
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Trend #2 – Indie Authors Settled On Bestseller Lists
The New York Times bestseller list last week included three books in its top ten which were currently or originally self-published: The Mill River Recluse by Darcy Chan, Fifty Shades of Grey by E.L. James and Out Of Line by Jen McLaughlin. Indie authors regularly capture 20-30% of bestseller lists and an ever-growing share of Amazon sales.
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Trend #4 – Big 5 Publishers Discover Pricing
The average price of eBook bestsellers plummeted – down to $6.33 in August. Amazon sold these titles for $9.99 before Apple introduced the agency pricing model that raised prices and resulted in a Justice Department Lawsuit and publisher settlements.
In the meantime, indie authors reaching Amazon bestseller lists frequently priced titles at $0.99 to maximize sales volume. Amazon Daily Deals also launched backlist titles onto bestseller lists with significant discounts, while publishers became more aggressive in price-promoting books.
The fear was a repeat of the 1980s, when superstores discounted bestsellers to the detriment of other titles. But publishers used pricing more cleverly this time: deep discounts are reserved for series where a single book can lead to multiple purchases. Backlist prices have been adjusted downward so that new books still command a premium overall.
There’s reason to believe that lower pricing has not hurt publisher profits, either. Variable costs are low for books and authors are paid a percentage of book revenue. The real costs for the industry are either sunk (the advance and marketing costs that are spent before the book publishes) or fixed (overhead costs and the advance and marketing cost for unprofitable books). So increased volume at lower prices is a good play for publishers.
Link to the rest at Forbes Blogs