Home » Author Earnings » February 2016 Author Earnings Report: Amazon’s Ebook, Print, and Audio Sales

February 2016 Author Earnings Report: Amazon’s Ebook, Print, and Audio Sales

8 February 2016

From Author Earnings:

Two years ago, the first Author Earnings report revealed the growing market share of self-published ebooks. With data on hundreds of thousands of titles, it was suddenly possible to measure the relative sales and earnings power of ebooks according to publishing path. By sharing this data, we hoped to help authors understand the changing market in order to make sound decisions with their manuscripts. In the two years since, our quarterly snapshots have revealed emerging trends in the digital publishing world. Before we get into this month’s report, let’s look at those trends, with our new February 2016 data points included.

a1

In two short years, the market share of paid unit sales between indie and Big 5 ebooks has more than inverted. The Big 5 now account for less than a quarter of ebook purchases on Amazon, while indies are closing in on 45%.

. . . .

a2

In the purple line above, we can see the decline in share of ebook dollars earned by Big 5 publishers. Despite the greater profitability of ebooks over print books, some of these publishers have touted their shrinking ebook sales as a positive development. Meanwhile, we know from our own data (more on this later) and from Amazon’s press releases, that overall US ebook sales have actually gone up in dollar terms. The blue indie line shows where most of that increase is being funneled. Today, a quarter of all consumer dollars spent on ebooks in the US is spent purchasing indie-published ebooks.

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The most important graph for authors shows the rapidly diverging rate of ebook author income by publishing path. The Big 5 publishers are now providing less than a quarter of the dollars earned by creatives for their ebook sales. Indies are taking close to half. As detailed in previous reports, higher prices and other missteps are a likely contributor to this accelerating trend, but the reality may be that major publishers simply are finding it difficult to compete with indie authors on diversity, price, quality, and frequency of publication, as this divergence has been increasing for the last two years — well before the Big Five’s return to no-discount agency pricing. But as we can see, the transfer of market share in author earnings from Big Five to indies did steepen significantly after the Big Five’s 2015 reinstatement of agency ebook pricing.

. . . .

For this report, Author Earnings threw out all of our previous assumptions. We built a brand new rank-to-sales conversion curve from the ground up. This time we based it on raw, Amazon-reported sales data on the precise daily sales figures for hundreds of individual books from many different authors, spanning a period of many months. Our raw sales data included titles ranked in Amazon’s Overall Top 5 — titles whose KDP reports verified that they were each selling many thousands of copies a day — and it also included books ranked in the hundreds of thousands — whose KDP reports revealed were selling less than a single copy a day. We combined that mass of hard sales data with a complete daily record of Amazon Kindle sales rankings for each of those books, pulled directly from individual AuthorCentral graphs. We ended up with nearly a million distinct data points in total.

Why did we need so many data points? Because Amazon’s Overall Best Seller Rankings aren’t a simple calculation based on each book’s single-day sales — they also factor in time-decaying sales from previous days as well. To reverse-engineer Amazon’s ranking algorithms, the more raw sales and ranking data we used, the more accurate our results would get. So we fired up some powerful computers, fed them all that raw data, and let them crunch the numbers.

. . . .

Armed with our brand new, data-derived rank-to-sales conversion methodology, we were finally ready to tackle our deepest, most comprehensive look yet at Amazon’s daily book sales. We fired up AE’s web-crawling spider bot across 250 high-powered 8-core servers and walked it down each of Amazon’s thousands of best seller lists and category sub-lists. In a little over an hour, we pulled almost a terabyte of real-time data from the product pages of over 500,000 of Amazon’s best-selling titles. Here’s what we found:

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. . . .

The aggregate share of indie self-published titles on Amazon’s best seller lists, at 27%, hasn’t changed since September 2015. It is still more than double the representation of Big 5 titles. But what has changed, very significantly, is the degree to which Amazon’s overall Top 20 Best Sellers, and even the overall Top 10, have come to be dominated by self-published titles from indie authors — nearly half of which were not priced at $0.99 but rather “full-priced” sales at prices between $2.99 and $5.99.

On January 10, the date our spider ran:

  • 4 of Amazon’s overall Top 10 Best Selling ebooks were self-published indie titles
  • 10 of Amazon’s overall Top 20 Best Selling ebooks were self-published indie titles
  • 56 of Amazon’s overall Top 100 Best Selling ebooks — more than half — were self-published indie titles
  • 20 of Amazon’s overall Top 100 Best Selling ebooks were indie titles priced between $2.99 and$5.99

We’re not the only ones to observe this trend, which seems to have now become the new normal.

These top-selling indie titles encompassed a wide variety of genres. Romance and Paranormal were well represented, certainly, but Amazon’s Top 100 Best Sellers also included quite a few self-published indie Science Fiction books, indie Thrillers, indie Suspense novels, indie Urban Fiction, and even Cozy Mysteries by indies.

But best seller slots held by each type of publisher is a far less interesting metric than share of daily ebooks sold, which is where we first bring our brand new rank-to-sales curve to bear:

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Whether we use our new, scientifically-derived curve or the old original crowdsourced one to compute unit sales, the trend we see is exactly the same. When it comes to the number of ebooks sold each day, the market share of indie self-published titles has grown substantially since our September 2015 report, while traditional publishing’s collective market share has shrunk. Indie books now account for more than 42% of all ebook purchases each day on Amazon.com.

. . . .

Sometimes a change in strategy achieves the intended result… and sometimes it backfires.

The Big Five’s return to agency ebook pricing may have been just such a case.

Their ebook pricing strategy was intended, at least in part, to slow the erosion of brick-and-mortar print book sales.*(3) By preventing Amazon from discounting the Big Five’s ebooks at Amazon’s own expense, the Big Five could force the consumer prices of their ebooks artificially high — higher than what many consumers are willing to pay for digital books. The thinking among Big Five publishers was undoubtedly that this would encourage those consumers to buy fewer ebooks on Amazon, and instead buy more hardcovers and paperbacks in brick and mortar bookstores, thus preserving a legacy distribution advantage long held by the biggest traditional publishers… and one that was fading away fast as a higher and higher percentage of book purchases were being made online instead.

From November 2014 to September 2015, the Big Five publishers negotiated brand new two-year contracts with Amazon in which they fought aggressively for — and won — the right to prevent Amazon from discounting their ebooks. Prior to these contracts, Big Five ebooks were discounted steeply at Amazon’s own expense. Our data from 2014 and early 2015 revealed that Amazon was on average selling Big Five and other traditionally-published ebooks to consumers at breakeven prices and making zero or marginal gross profit from them. That’s almost no profit on traditionally published ebooks, while Amazon was earning a healthy margin on the sale of indie and Amazon-imprint ebooks. In effect, prior to the Big Five’s return to agency, Amazon was more or less selling traditionally-published ebooks at cost. They were subsidizing traditional publisher ebook profits and traditionally-published ebook author earnings by nearly 30%.

By reinstituting agency ebook pricing and forcing their own consumer ebook prices high while preventing Amazon from discounting those ebooks, the Big Five publishers put a halt to that. They willingly did financial harm to their own bottom lines and in the process also seriously damaged the sales and earnings of their own authors, in an attempt to wrest market share and control away from their largest and most profitable retailer.

Did they succeed in that goal?

According to both our data and Amazon’s own public statements, despite the Big Five’s return to agency ebook pricing, Amazon’s overall US ebook sales have continued to grow throughout 2015 in both unit terms and dollar terms. On the other hand, the Big Five’s share of those ebook sales has plunged precipitously in both dollars terms, and even more precipitously in unit terms.

That particular outcome was easily predicted — and probably inevitable. Perhaps the Big Five viewed it as a strategic sacrifice.

But at the same time, Amazon’s online print sales — driven by steeply discounted hardcovers and paperbacks, which in many cases were priced even lower than the ebook editions — ALSO went up.Significantly. In fact, our data points toward Amazon seeing even greater growth in their 2015 print sales than in their 2015 ebook sales.

As of mid-January 2016, Amazon.com’s print sales were running at a rate of 969,000 print books a day.

With the largest bookstore chains reporting 2015 book sales as flat or down, and book sales also down significantly for warehouse and club outlets, an uptick in local independent bookstore sales is a small brick-and-mortar bright spot. But it’s extremely likely that most if not all of print’s reported 2015 “resurgence” took the form of increased online print sales… at Amazon.com.

We suspect that the Big Five’s high ebook agency pricing, and Amazon’s steeper online discounting of print books, may well have had the opposite of the intended effect. It may have encouraged traditional hardcover and paperback buyers — including those who had zero interest in buying digital editions — to take advantage of those steeper discounts and purchase more of their books online, while buying fewer in brick-and-mortar bookstores.

Some very savvy analysts who cover the industry from the traditional side, and whose insights *(4) we value greatly, have pointed out that this particular outcome may not necessarily have been unanticipated by the agency publishers. But they still may have deemed it the lesser evil, if in the process they could also slow the consumer shift from buying print to “e”.

But either way, if true, it means that more print-book buyers are now shopping at a storefront where indie print books share a significant portion of shelf space alongside books from traditional publishers, and where indie print books are now fast-approaching a double-digit percentage of print sales.

Link to the rest at Author Earnings

A couple of thoughts from PG:

1.  As he has noted before, Hugh and Data Guy are conservative in the way they treat Small or Medium Publisher numbers.

Quite a number of indie authors have created their own publishing imprints and list those imprint names on Amazon. Since Author Earnings doesn’t know if XYZ Publishing is a single author or a small press that publishes 25 authors, AE conservatively groups single author publishers with Small/Medium Publishers.

PG believes that the true numbers of indie authors are much higher because of the omission of indie imprints from the indie author categories.

To be clear, this is not a criticism of AE in any way, but a suggestion that indie authors are more dominant on Amazon than AE’s excellent data demonstrate.

2. As PG considered AE’s “250 high-powered 8-core servers” and the data analytics chops behind AE’s conclusions, he believes that these stats are substantially more sophisticated than a typical traditional publisher generates for its internal purposes.

Author Earnings

40 Comments to “February 2016 Author Earnings Report: Amazon’s Ebook, Print, and Audio Sales”

  1. Just finished reading this and there were a couple of points that struck me about the figures for print sales that Author Earning did not remark on.

    1) Big5’s share of daily unit sales is more than double their share of number of titles. Indies’ share of daily unit sales is roughly a third of their share of number of titles. The Big5 are dominating the big sellers among bestsellers. I suspect this is a relatively small number of superstars.

    What really caught my eye was,
    2) The daily gross sales for both the Big5 and Indies were nearly identical to their daily unit sales. (47%/49% for Big5. 6%/7% for Indies.) Even with much higher printing costs than Big5, Indies are list price nearly identical to Big5 in paperback. The daily revenue to authors breakdown suggests Indies are not digging into their own pocket to do this. I wouldn’t think this was good news for the Big5. Indies used to not be able to provide print books at competitive prices. Now they are. What the Big5 has left is a virtual lock on brick and mortar bookstore presence.

    • Let me add, Gordon, that I publish through CreateSpace, and my prices run between $12.95 and $15.95 (at the top end a 6×9, 400-page book of obscure Holmes fanfiction).

      I’m not making much money at it, but if I didn’t have CS I couldn’t have afforded doing the work and buying a thousand copies and pricing them to sell.

      Instead of spending thousands of dollars, the actual cost of the trade paperback was $0. The ebook versions were $125.

  2. What catches -my- eye is the audiobook stats, and how it reminds me of the fact that the audiobook contract offered through Audible/ACX to indies is nowhere near as good as the one offered indies through KDP. That irks me a great deal.

    • Agreed. My cynicism whispers to me that it’s because Audible/ACX’s biggest potential competitor is actually Audble/ACX’s customer.

  3. I’d love to see the paper stats and the audiobook stats superimposed against the ebook stats. I think that more of the market needs this sort of independent research, not less.

    Questions that I have:
    – What’s the total value of the market over time for each format?
    – Is any particular format growing or shrinking in raw dollars? By how much?

  4. Thank you for this, PG, DG, and Hugh. Always fascinating though I am not naturally a numbers person, and well worth the time to bash my brain on each successive report.

  5. MAY Publishing is me, Hugh. I’m sure you and Data Guy will update the Author Earnings report for next time. 🙂

  6. Oooh! This may be my first time on the list!

    BTW, I’m Trilka Press – if anyone is taking note. We have one book out so far (ebook AND paper), and have 4 more currently in production (don’t hold your breath; we’re slow).

  7. Does anyone else’s face hurt because they are smiling so much?

    • Heh, it was making me think of an old song …

      I am Indie, hear me roar
      In numbers too big to ignore,
      And I know too much to go back an’ pretend
      ’cause I’ve heard it all before.
      And I’ve been down there on the floor
      No one’s ever gonna keep me down again.

      Oh yes I am wise,
      But it’s wisdom born of pain.
      Yes, I’ve paid the price,
      But look how much I gained.
      If I have to, I can do anything.
      I am strong (strong).
      I am invincible (invincible).
      I am Indie!

      (from I am woman -Words and Music by Helen Reddy and Ray Burton)

      Just seems to fit somehow …

    • Yes, I’m doing the happy dance.

  8. A few weeks back, I was wondering if indie titles were taking up more space on the best-sellers list.

    I found this comment on the February 2014 AE post:

    Here are the official numbers. From the Wall Street Journal article Fast-Paced Best Seller: Author Russell Blake Thrives on Volumes

    “In 2013, self-published books accounted for 32% of the 100 top selling e-books on Amazon each week, on average.”

    So three years or so later, indie books have gone from taking 32 slots on the top 100 list to 56 slots.

    That’s 24 slots whose sales are no longer being reported to Nielsen and their narrative that “ebook sales are falling.”

    • Yup. Bingo.

      • I do all my reading on the Kindle now. My bookshelves are emptying as I drop my books off at the Salvation Army.

        And no way am I spending that kind of money on an e-book, especially now that the US prices are 30 percent higher for Canadians with the drop of our dollar.

        The only downside is that if I am reading at night to relax, and I run into something like Dust.
        Trying to relax while reading something that suspenseful just doesn’t work. Thanks Hugh, for an amazing series.

  9. What this shows to me is that trad pubbed authors might be in far more trouble than they hope/believe. I’m seeing two “death” spirals occurring at the same time.

    One spiral is happening in B&M land. The more retail shelf space shrinks, the more buyers are going online. Once a buyer gets used to buying online, the less likely they are to return to a physical store. As fewer people go to B&M stores, the faster physical shelf space shrinks. (I don’t know how it is where others live, but in my area, trying to find a new release by a mid-list genre author is nearly impossible. Those books are no longer being stocked by grocery stores, Walmart or the remaining Barnes & Noble. For readers like me, online shopping is my only option.)

    The other is a testament to the power of Amazon’s also-bots and recommends. Amazon’s recommends (that pop up on my Kindles or arrive in my email) have zero concern for source (publisher) and everything to do with my browsing/buying history. I can’t tell who has published the offering until I look at the actual listing and by then I don’t care. The more I buy from Amazon, the better the recommends. It’s to the point now where I have my own personal bookstore filled with offerings that suit my taste AND price range. For me, this is heaven — my own reading concierge. For individual authors this is not so great. The better the recommends, the less I need to randomly browse. What’s really bad for the trad pubbed authors is that Amazon knows I’m not going to spend twelve or fifteen bucks on an ebook, so they don’t bother showing them to me. Every once in a while a new release from an author I’ve bought before will pop up with a high price, but I don’t get the high-priced ebooks UNLESS I’ve purchased that author before. Has anyone else noticed that? If so, if that price-awareness is affecting millions of buyers, then this is terrible news for trad pubbed mid-listers whose publishers are tacking on high prices.

  10. “The thinking among Big Five publishers was undoubtedly that this would encourage those consumers to…buy more hardcovers and paperbacks in brick and mortar bookstores”

    The myopic arrogance of the Big 5 just floors me. They truly believed that a reader feeling outraged about an over-priced ebook would, of course, be inclined to get in her car, drive to a store, and pay for a print copy of that book.

    Sorry, boys. That angry reader is much more likely to stay put in her comfy chair and buy a reasonably-priced game, app, movie — or, horrors — indie ebook instead. By over-pricing your ebooks, you’ve not only lost the ebook sale, you’ve lost the customer.

    The Big 5 don’t seem to possess even the most rudimentary understanding of customer service. Of course, they still don’t realize that readers ARE their customers, so why bother trying to make readers happy?

    • Or, if they are “True Fans” and absolutely positively have to have it, they will go look for the best price on the print edition. Which will be online and most likely will be Amazon. As I’ve pointed out before: somebody outraged at ebook prices at Apple/Kobo/Google driven to print is a total loss to them but just an e- to p- shift and B&N and Amazon, both of which have online pbook sales.

      Makes me wonder if those guys were really trying to reduce their dependence on Amazon or just trying to reduce their profit margins. 🙂

      • [I]f they are “True Fans” and absolutely positively have to have it, they will go look for the best price on the print edition.

        Nah. I will go to Half Price Books, ’cause it is a good bet I can find it there cheap, cheap, cheap.

        • This.

          When I look at an interesting book, and both print and ebook are priced too high for my liking, I click on Amazon’s offer of “new and used books”. Very often, that’s where I find my comfort spot for buying it, even if it’s in print. Yes, they even ship it from the US to Germany for 3 Euro.

          I know this hurts the author. But it was their choice to sign a contract with a publishing house.

        • I’ve had great luck with thriftbooks.com for insanely low prices on print books, almost always cheaper than the ebook versions.

          (And I suspect a thriftbooks / Amazon connection, but I haven’t cared enough to dig.)

        • Or they might watch for a book by their favorite author to hit the bargain shelves at a B&N. (Like I do…I’m about 6 books behind on Child, and more than that on Deaver and Connelly.)

    • The other issue is that many of the said “outraged readers” no longer HAVE a bookstore upon which to exercise their wrath within a reasonable driving distance.

      No, they are simply clicking onward to the next, more reasonably priced, offering.

    • The new pricing has merely made me tweak my approach to ebooks rather than switch back to print: I click over to my local-library site, put a hold on an ebook company, and find something else to read in the meantime.

      If such a practice becomes popular enough to make it onto the trad-pub radar—and even if it becomes popular, that doesn’t mean they’ll notice—I predict they’ll either gouge libraries harder in order to throttle the supply, institute windowing, or some other such customer-hostile thing.

      • “If such a practice makes it onto the trad-pub radar, I predict they’ll either gouge libraries harder in order to throttle the supply, institute windowing, or some other such customer-hostile thing.”

        Which just means they’ll make it even harder to find/read their books — which will cause readers to go find something else to read (indie/self-pub maybe?). The readers will find new things to read and forget about what’s too hard/overpriced to get and that old author will suffer for having signed a trad-pub contract.

        And trad-pub will add another bullet to the gun they use to shoot their feet off with (both knees are gone, working their way up the thighs — boy will they be surprised when their next shot clips a testicle!)

  11. There’s additional death-spirals too.

    Lost sales to used books : When I do a topic search on my niche interest — Arthurian Literary Criticism — Amazon shows me all the obscure academic press books both in print and relatively recently out if print in that topic. Listed are their print and e-book prices which are outrageous ($57 for an ebook, $115 print, the book is 140 pages). Amazon also shows me the used prices; let’s me make a wish-list and watch for a used copy to turn up in my price range ($15).

    For the less niche interests I am seeing used books priced below the new ebook price. I’d prefer an ebook because of space and the ability to use text-to-speech, but I usually don’t prefer an ebook *that* much in a lot of cases.

    So, The Big 5 have driven me, the consumer, into buying more used books.

    Back to the Academic Press — which is even more reprehensible than Big 5, because they are actively keeping knowledge away from readers, knowledge generated on the tax-payer’s dime in some cases — well, they’ve driven me to get a library card and use inter library loan to borrow from college libraries in addition to buying books used. Again, priced themselves out of sales.

    Additional brand love to Amazon: Every time I as a consumer have a positive experience with Amazon I love and trust them. I return. I recommend them to friends. I buy more categories of stuff. I use their devices. Whereas my limited interaction with a Big 5 Book Publisher is in only two dimensions : price and selection. Not only am I no longer their customer, they’ve mishandled Price and Selection *so badly* that they are making me actively angry as a consumer. (Which is only worsened when I find out how they abuse authors, the justice system, the press, etc.)

    Maybe I’m getting old and cheap but my response to paying over $15 for a nicely formatted text file with a few photographs is no longer not just “no” but “hell no.”

    Shelly posted as I was composing this — a kindred spirit! I’m not losing my mind! It’s not just me.

  12. “We fired up AE’s web-crawling spider bot across 250 high-powered 8-core servers and walked it down each of Amazon’s thousands of best seller lists and category sub-lists. In a little over an hour, we pulled almost a terabyte of real-time data from the product pages of over 500,000 of Amazon’s best-selling titles.”

    Okay the IT geek in me just… geeked. I wonder if Amazon’s IT guys noticed the traffic or not. 🙂

    • Me too. But it’s not just the nifty data center that wowed me:
      They Clean Room reverse engineered Amazon’s rank algorithms!
      So cool.

    • From the beginning Author Earnings has been effectively “stealing” the data. Amazon knows AE is collecting the data and how they are doing it. They will have noticed bot activity on that level. (Heck, some sites flag me for bot activity just for clicking fast.) They don’t seem to have taken any steps to impede the bots, nor have they made any public complaint. I suspect they are quite happy for AE and the public in general to have this information. It hardly makes Amazon look bad. And it doesn’t hurt Amazon to have more authors go through KDP rather than Big5.

      • It’s not stealing data Amazon makes available.

        Currently it makes Amazon look good to

        Analysts
        Shareholders
        Resellers
        customers
        authors

        And shows strength to the Big 5 when it comes time to renegotiate contracts. As long as Big 5 and competitors show no sign of actually using this information in any way Amazon might as well bask in the good publicity. I’m not sure there’s anything they could do suppress collecting and collating this information anyway, it’s like counting cars in the WalMart parking lot as market research.

      • I would hope they noticed, however – Amazon likely gets hourly traffic the likes of which we have never imagined at our own jobs. In a way it was probably a drop in the bucket. Done at certain times of day during certain times of year… a lot would depend on what kind of monitoring they do. 🙂

    • Amazon notice? My guess is AWS is *hosting* this little CPU-intensive project! 250 8 core virtual servers can be spun up there for just as long as they are needed. Real ones fill up the garage 😉

  13. The trend line for the Big 5 looks like something out of a New Yorker cartoon.

  14. So what is the NY Times going to do about all these facts that are completely counter to the narrative that they’re putting out?

    They can’t pretend that this isn’t news.

    They can’t pretend that it’s not an important subject, since they have been falsely reporting breathlessly about the decline of ebooks.

    They can’t pretend that these facts aren’t more accurate than the information they’ve been passing on.

    After all, given that they are supposed to be the paper of record, aren’t they obligated to publicize this new information and admit they were wrong?

    They can’t pretend that their readers wouldn’t be much more interested in a story about how indies are triumphing against established interests.

    Oh… oops. I forgot. It’s the NYTimes.

  15. Here’s an interesting question that Data Guy might be able to answer (if not now, soon).

    Are Amazon’s print sales seasonal?

    Ebook sales aren’t seasonal. Print sales at bricks and mortar stores are very seasonal. The question is whether that is demand driven or supply driven. If print sales are moving online and online print sales act more like ebook sales, that has massive implications for the legacy industry.

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