If everything is on sale, then the sales price doesn’t look that enticing
Some excellent perspective on holiday sales from Kristine Kathryn Rusch:
Amazon UK announced that the Kindle was their top-selling item this Christmas season. Not only that, it was the top gift-wrapped item this season—a detail I love. (How many brick-and-mortar retailers can tell you that statistic?) More than 2.1 million Kindles sold from the end of November through Christmas in the United Kingdom alone.
This is fantastic news for writers with a digital presence, whether through their traditional publisher or through their own indie publishing program. The UK has been relatively slow to adapt to e-readers, partly because of pricing barriers.
In fact, all of the European Union has pricing issues, which I’m not going to go into here. But suffice to say what it has done is slow the e-book sales in Europe, so that only the hardcore reader and/or computer user adapted to the new format.
Those pricing issues are fading, especially in England. So that, plus the low-end Kindle being offered at 89 pounds (about $138) will lead to a significant rise in e-book sales.
I already noticed it in my UK sales this morning. My US Kindle sales aren’t that different than usual, but there was a flurry of buying on the UK site on Christmas night and into the day after.
Still, I don’t expect much difference for my books in the next month or two, and neither should any other writer with books at the usual price. Right now, every traditional publisher on the planet is offering a deal to catch the new readers.
. . . .
The new readers will learn how their Kindles work. They will realize that they won’t have to buy everything they want immediately in case it goes away, like they did in a brick-and-mortar store. The new readers will learn about sampling, and they’ll learn that they can set up a wish list to keep track of titles that will remain available. And eventually, they’ll become as jaded as the rest of us.
But all this planning, all these hopes, all of these attempts to manipulate the new post-Christmas sales season will go awry.
Why?
Because everyone is doing it.
I’ve already seen some backlash. Indie authors on Christmas night wondering why they didn’t have a magical miraculous huge uptick in sales. Indie authors expected it immediately.
Traditional publishers did too. They’re going to want to know the effect of their promotions—how many new readers did the promotions bring in? And they probably won’t bring in nearly as expected. Because—think about it—if everything is on sale, then the sales price doesn’t look that enticing.
The sale isn’t special.
If everything is on sale, the reader has wandered into a virtual discount store—only this discount store isn’t full of remaindered items that couldn’t sell. This discount store is filled with stuff that everyone wants.
There’s too much, and the reader won’t even get a chance to see it all. In fact, the reader will probably quit looking at some point because she’s so overwhelmed.
So guess what’s going to happen? We’ll all see analysis in the next few months on how e-book sales weren’t as big as expected. In-house at traditional publishers, there will be an examination of the promotions, and that examination will determine that most promotions don’t work.
Of course, the sales will have improved, but everyone will be complaining because their expectations were unrealistic. Rather than seeing the improvement as a good thing, they’ll look on it with disappointment, wondering what went wrong.
Then e-book sales will plateau as the new readers actually read what’s on their devices, instead of shop on those devices. This is what happened last year. There was a huge rush of sales in the weeks after Christmas, and then the sales dropped off.
. . . .
You can’t absorb millions of new devices into a system and not have an uptick in book sales. Mark Coker discusses this in his Smashwords blog: “If the patterns we observed last year hold true again, we’ll see a massive stepping up of the sales rates across all retailers in the first few days after Christmas, followed by a week or so of moderation, and then a new normal going forward that is significantly higher than the sales rate for the weeks and months immediately preceding Christmas.”
But in this gotta-have-it now environment that traditional publishing (and some indies) have gotten themselves into, the drop off (or moderation, as Coker calls it) will look catastrophic. That catastrophe, on top of yet a larger first quarter drop off in paper book sales, will have every traditional publisher reassessing everything they do.
Because their business model won’t let them wait until the second quarter. Their business model demands a huge improvement in each quarter—and since they predicted a brilliant first quarter, and they’ll probably only get a good one, they’ll see that as a failure.
And what will happen in the second quarter? We’ll see what the actual post-Christmas growth really is. We’ll know what the new plateau is. We’ll know if we’re getting ten times more readers or twenty times or three hundred times. We’ll see how the growth is actually working.
. . . .
A directive came down from Barnes & Noble corporate in the middle of December, telling all the brick-and-mortar stores that they had to prepare for an influx of books. I don’t have a link to this: several people who work at B&N in management let me know when the directive came down, partly because it had an unintentionally funny line: Apparently, B&N corporate said to its staff, “We underestimated the interest in books,” and that was why B&N was scrambling to fill its brick-and-mortar stores with paper books.
Um, der.
This was after The New Yorker put B&N on the cover in a rather nasty way—quite shocking when you consider that B&N advertises every week in The New Yorker, and one of the cardinal rules of magazine publishing is not to piss off your advertisers in a recession. Here’s the cover:
I think B&N got the message. I hope they filled the stores with books. I didn’t get a chance to check because I got sick at that point, then Dean got sick, and then there was no leaving the house before the holidays.
Usually, however, these corporate directives do lead to action. So if B&N did increase the amount of books it stocked in the last few weeks before Christmas, then fourth quarter numbers will show that paper books sales went up more than expected. B&N is now the largest bookstore chain in America, and as such will have a large impact on book sales whenever it remembers that it’s an actual bookstore, and not a place to sell toys or games.
People will have purchased a lot of those books at B&N as gifts. No matter how the various e-reading sites try to develop a good way to help consumers give electronic books as a present, nothing is more satisfying than wrapping a book and placing it under the tree. A lot of the B&N customers who bought books for presents only go into B&N at Christmas time, so they probably didn’t even know that for a while B&N didn’t carry many books at all. These customers bought their holiday books, ticked an item off their Christmas list, and moved on to other stores without a backwards glance.
And those folks won’t return until Christmas 2012.
. . . .
If B&N’s corporate masters are that clueless, then they will expect that uptick in paper book sales to increase in the first quarter. And like all first quarters in the paper book part of the industry, paper book sales will decrease. They might even drop off precipitously, considering that the only people who went into bookstores in January, February, and March were book lovers, all of whom have, like me, developed new ways to find their paper books.
If B&N has a dramatic downturn in paper books, then the entire paper book industry will have a decrease. It won’t be as bad as the first quarter of 2011, when traditional publishers finally realized that Borders really and truly was going to go bankrupt and no one could stop it. But it won’t be pretty.
Combine that with the first-quarter plateau in e-book sales, and what will you get? Incredible doom and gloom from all of the traditional industry pundits long about the first week of April. The sky will be falling yet again, even though more books will have been published than ever, more books (of all types) will have been purchased than ever, and the industry—the overall industry (not just traditional publishing)—will be healthier than it has been in decades.
. . . .
The narrowing of taste—appealing to the editor, the sales force, the bookstore—means that only certain types of books get published. And as Emily Casey points out, those folks know only what they, their friends, and others like them will enjoy. Those buyers don’t take into account the reader in Cincinnati who wants a romance set in 1850 Ohio or the reader in Japan who wants a modern version of Sei Shonagon’s Pillow Book.
Those readers might not buy in bulk—they might not buy thousands of copies in the month of a book’s release—but they’ll buy. And then they’ll convince their friends to buy and so on.
And suddenly, books that had no hope in New York publishing will sell thousands of copies. And since the writer is not making pennies on each copy but dollars, the writer will earn a living wage (or better).
Link to the rest at Kristine Kathryn Rusch
Big Publishing, Bookstores, Kristine Kathryn Rusch, Self-Publishing
, Amazon will pay Passive Guy a small affiliate commission on any of your purchases. 
As usual, Kris has so many useful things to say in one blog post that it’s an education in several areas just to read it all. I’m particularly fond of this line:
“The narrowing of taste—appealing to the editor, the sales force, the bookstore—means that only certain types of books get published.”
And then the few of _those_ that find success inform the next round of narrowing, and on and on, until you can’t fit most good books into the cracks that remain.
For as long as there have been trade publishers, authors have heard: “This does not meet our needs at the present time.” Yes, I know that can be shorthand for “We don’t think this is very good,” but it was still the sentiment behind even the most detailed and helpful rejections I ever received, and so general as to be meaningless.
As time passed, and the publishers themselves narrowed down to half a dozen or so big groups owned by multinational stockholders, “does not meet our needs” might be defined as “isn’t close enough to the books we are absolutely certain will make us money.”
The beauty of it is that we can make money on books that trad publishers cannot. Let’s do lots of that–and have lots of fun at it–in the coming year.
I couldn’t agree more, Bridget.
“In fact, all of the European Union has pricing issues, which I’m not going to go into here. But suffice to say what it has done is slow the e-book sales in Europe, so that only the hardcore reader and/or computer user adapted to the new format.”
Actually Kris, the biggest pricing issue in Europe is Amazon’s arbitrary $2 surcharge, so your 99c ebook costs someone in Hungary or Poland $2.99 ($3.44 with the European tax).
Europeans are not particularly bothered by the VAT tax. That’s part of everyday life. Buying a book from Amazon and paying $2 extra for the privilege is not. Which is why, while many, many Europeans read ebooks, few do so through Amazon.
The surcharge disappears, miraculously, when a Kindle store opens. But Germany only opened in summer, France in fall and Spain and Italy just weeks before Christmas. Europeans have meanwhile been busy buying other e-reading devices and buying ebooks from other platforms.
They didn’t like Amazon before and aren’t too impressed now.
Imagine if a foreign company came to the US and opened a store, but only a fraction if its books were in English. All the rest were in the language of the store’s home country.
Imagine if they then said, if you live in Kindle State A then you pay 99c but if you live next door in State B where we haven’t got a store yet you pay $2 extra for the same book for no good reason (of which the author gets precisely nothing).
That’s what Amazon is doing across Europe (the surcharge remains in all countries except those with Kindle stores) and why, unlike Kindle UK with its American English back-upmarket, the newer Kindle Europe sites are stillborn.
As a fellow European, I don’t really get the complaints from Americans about VAT either. Besides, it’s not as if there isn’t a VAT in the US, only that it’s called sales tax there and that it isn’t included in the listed price but added to the purchase price afterwards, which is even worse IMO. Whenever I’m in the US, I still get a mild shock when I buy something and the cashier charges me more than what is on the price tag. I think that the fact that VAT/sales tax is added on top of the listed price in the US is actually at the root of the VAT problem with the European Amazons, because Amazon does not give you the option to set a gross price including VAT (which e.g. the much smaller XinXii does) but adds the VAT on top of whatever price you entered. This means that indie authors have to manually calculate the price they want, often unsure which VAT rate applies (so far the Luxembourg VAT of 15 percent for all e-books at all European Amazons), since it’s not exactly intuitive.
I totally agree with you on the Amazon surcharge BTW, which is also the main reason why I’m not going exclusive with Amazon. I have readers outside Amazon’s favoured zone (even some in countries where Amazon doesn’t operate at all) and I don’t want to abandon them.
You know, Cora, sales tax is a completely different thing. See, it’s levied by the states, which is a states’ rights thing, and therefore not bad at all. The VAT is a horrible awful thing levied by the _federal_ government! And that makes it totally evil.
Actually VAT is levied by individual countries not the federal government. There is no federal government in Europe as there is in the USA. We don’t pay any federal taxes, all VAT, income tax, duties on alcohol, tobacco and fuel etc. are all set by and paid to the national governments.
All attempts so far to harmonize taxes (make every government charge the same rate) have failed. So VAT here in Ireland where I live is 21%(soon to be 23%). But because Amazion sells their ebooks to me via their Luxenbourg subsidiary I am only charged 15% VAT, as that is the rate in Luxenbourg. So a $0.99 ebook costs me $1.16 (For some reason Ireland escapes the $2 surcharge for which I am grateful)
I don’t know why amazon make me buy ebooks from the US kindle store, paying in US$, but won’t let my buy from the UK where I get my paper books. And why do I have to pay in US$ when Amazon now have four Euro priced stores? Especially as Luxenbourg itself uses Euros, as we do in Ireland.
But at least the FX rate on a $0.99 ebook is not going to bankrupt me
*is happy to live in a state with no sales tax*
(We do have “Room and Meals” tax, aka “Tourist Tax.” Hotels and restaurant/prepared food get(s) taxed.)
I’ve definitely been feeling the “too much” aspect of things. Part of my regular morning routine is to check eReaderIQ for new-to-kindle and free or very cheap deals mostly from authors I haven’t read before but might be willing to try if there are freebies or very good deals. Since amazon started allowing indie authors to do the “free” thing, the number of new bargains to sort through daily has become unmanageable. I’m hoping it will slack off after the holiday season runs its course. If not I expect I’ll just quit looking, or limit myself to specific genres.
I read the article and enjoyed it. Kris always draws together a number of strands then pivots in an interesting way.
There was one stat that caught my eye. NamelyL “More than 2.1 million Kindles sold from the end of November through Christmas in the United Kingdom alone.”
The article she links to just beforehand is this one: http://finance.yahoo.com/news/More-Twice-Many-Kindles-Sold-prnews-660964602.html?x=0
Now, I’ve read Kris’ article a couple of times – and the article she links to – and I can’t see the reference. Maybe I am missing it (I did lose a few brain cells there over the last ten days), or maybe it’s from somewhere else.
Can someone point me to a source (or put a neon sign over the part of the existing sources)? I would just like to be sure of this particular stat before quoting it.
(Especially because that rate of sale of Kindles in the UK would be roughly half the rate of the US in a country with a fifth of the population.)
Aside from that… what she says.
Sadly a classic case of poor journalism on all sides with this one, Dave. This article in wallstreet-online.de is typical.
http://www.wallstreet-online.de/nachricht/4110183-more-than-twice-as-many-kindles-sold-at-amazon-co-uk-this-christmas-compared-to-the-previous-festive-season-as-amazon-s-e-reader-becomes-the-biggest-selling-product-of-christmas-2011-at-amazon-c
“Amazon´s Kindle has replicated its 2010 success to become the biggest selling product of Christmas 2011 at Amazon.co.uk. It is the second year in a row that Kindle has been the festive bestseller beating this year´s big DVD releases including The Inbetweeners Movie and Harry Potter and the Death Hallows Part 2 as well as the latest release in the ever-popular video games series, Call of Duty. Amazon.co.uk received orders for more than twice as many Kindles in the run up to Christmas this year compared to the same period in 2010.”
The report goes on:
“Amazon.co.uk took orders for more than 3 million items on its busiest day of the Christmas period – Monday 5th December -which is often termed ´Cyber Monday´. That represents a rate of around 35 items ordered every second over the 24 hour period with the number increasing significantly from the 2.3 million items ordered on the busiest day of 2010.
“At its peak, Amazon´s seven UK fulfilment centres shipped over 2.1 million units in one 24 hour period, which represents around 1124 tonnes of goods and means that on average a delivery truck was leaving an Amazon fulfilment centre once every 2 minutes and 45 seconds.”
Nowhere claims those 2.1 million “units” were Kindles.
If we have an accurate figure for December 2010 and double it we can get a fair estimate of Kindle sales in UK this past month
[...] was already a significant decline. That decline will continue for several weeks, probably, until it settles at a new plateau (which will still almost certainly be higher than anyone’s pre-Christmas [...]