Author Earnings

Big, Bad, Wide & International Report: covering Amazon, Apple, B&N, and Kobo ebook sales in the US, UK, Canada, Australia, and New Zealand

6 March 2017

From Author Earnings:

Print bookselling remains artificially silo’d by country even today, for variety of legacy historical and logistical reasons. But by contrast, the global ebook marketplace is a seamlessly international one.

For authors, selling an ebook to a reader in a different country is just as easy as selling to a reader in your home country. Barriers to reaching an international audience no longer exist.

Today, with the click of a button, any author can start selling any title they wish simultaneously in 12 country-specific Amazon stores, 36 country-specific Kobo ebook stores, and over 40 country-specific Apple ebook stores.

As of yet, most of these non-English-language ebook markets are still fairly early-stage. But that’s not true of the four other major English-language markets outside the US. In those markets, too, as we’ll see, a substantial share of all new-book purchases has already gone digital. And, as we’ll also see, untracked, non-traditional suppliers make up a high percentage of ebook sales in those countries as well. Which means that these other digital markets have also been consistently underestimated and under-reported by traditional publishing-industry statistics.

. . . .

So this time, we rolled up our sleeves and basically went for the whole enchilada:

  • The top five English-language countries
  • The fifteen largest ebook stores
  • 750,000 top-selling ebook titles, in all genres and categories.
  • All of it calibrated against 700,000 points of raw, unfiltered daily sales data, from over 20,000 distinct ebook titles across all 15 stores.

When we were done, we were looking at the most comprehensive international picture of English-language ebook sales available anywhere.

. . . .

Population Reported
Print Book Sales
(annual units)
Ebook Sales
(annual units)
Ebooks as
% of
all book sales
  U.S.A.   325,700,000  675,000,000  487,298,000  42%
  U.K.     65,400,000 187,500,000  95,623,000  34%
  Canada     36,500,000  50,500,000  26,017,000  34%
  Australia     24,500,000  56,400,000  22,463,000  28%
  New Zealand       4,600,000  5,300,000  *1,306,000  20%*
  5-Country Total:  456,700,000  974,700,000  632,707,000  39%

. . . .

Amazon Apple
iBooks
Kobo Barnes&Noble
Nook
  U.S.A.   406,000,000  44,041,000  1,246,000  19,395,000
  U.K.   84,029,000 7,201,000  1,132,000  –
  Canada     14,892,000  3,760,000  6,479,000  –
  Australia     13,604,000  6,694,000  1,399,000  –
  New Zealand       *  831,000  416,000  –
  5-Country Total:  518,526,000  62,527,000  10,672,000  19,395,000
  % of Total:  82%  10%  2%  3%
  • Unsurprisingly, Amazon is the majority retailer in just about every market.
  • But in Canada and Australia, Amazon is a lot less dominant than in the US and the UK.
  • Taken all together, Amazon accounts for more than 80% of English-language ebook purchases, Apple another 10%, Kobo 2% and Nook 3%
  • The remaining 3%–ascribed to GooglePlay and all remaining channels–is most likely overly optimistic. Their true share might well be even lower.

. . . .

  • Self-published indie authors are verifiably capturing at least 24% – 34% of all ebook sales in each of the five English-language markets; it’s not just a US-only phenomenon. When you also include the uncategorized authors, the vast majority of whom are also self-published, the true indie share in each market lies somewhere between 30% – 40%.
  • Indies are competing particularly well in the Canadian and Australian ebook markets, nearly approaching the level of dominance they currently hold in the US.
  • The Big Five, on the other hand, are letting themselves progressively get squeezed out of nearly every English-Language ebook market. They make up only 38% of Canadian ebook purchases, and that’s the country where they are holding their ground best; in the US, the Big Five now account for barely 26% of all ebook sales.
  • Amazon Imprints have made the most market headway in the US. Despite being single-retailer exclusive to Amazon Kindle, the dozen or so Amazon “house” publishing imprints between them account for 14% of all US ebook sales, 10% of all UK ebook sales, and 8% of Australian ebook sales. In Canada, the Amazon Imprint footprint is a much more modest 3% of all ebook sales, largely due to the substantial shares of the overall Candian ebook market held by Kobo (25%) and Apple (14%).

Link to the rest at Author Earnings

DBW Interview with Data Guy, Co-Founder, Author Earnings

23 February 2017

From Digital Book World:

In the past two years, Data Guy’s Author Earnings reports have become an increasingly popular resource for authors, shedding light on aspects of the publishing industry that were going previously unreported.

But the reports have also spurred a great deal of controversy. While some within the industry think they are vital tools for authors everywhere, there are others who criticize the data and think the conclusions resulting from them are worthless. There are of course many in the middle who believe the reports are admittedly far from perfect, but necessary nonetheless.

. . . .

Why do you choose to keep your identity anonymous, and is there anything that you’re willing to divulge personally?

I think the anonymity kind of goes back to where I was at when we started. Much by happenstance I discovered there are some advantages to staying anonymous. Back when I first pulled the data, it was really for my own information. I had just been approached by one of the top imprints in my genre, and they were making an offer on one of my books. It had done really well as an indie published release, and they could see it was selling well, ranking high on Barnes & Noble, Amazon, featured on devices, racking up reviews, etc. So they approached me, and I was negotiating with them and I was pretty excited. But, you know, I’m a numbers guy by my other career—my non-writing career—and I was looking for data to help me make my decisions. And there really wasn’t any data out there on what I needed. The official industry stats were kind of blind to half of the story. They didn’t cover indie publishing at all. And so I’m in the middle of negotiating with that publisher, when I pulled this data, and I look at it. I share it with Hugh, and we decide to publish it. But I didn’t want my involvement with Author Earnings to interfere with the discussion that I was having with the publishers.

. . . .

So based on all the research that you’ve done into ebook sales and where the money is going, is there one piece of strategic advice that you’d offer to Big Five publishers to do things differently than they do now?

There definitely is, and I think that DBW may be an opportunity to dig into some of these trends in more detail. In general, my observation is not something that Hugh and I alone are saying. High ebook prices don’t really hurt mega-selling authors with long established careers in all of the airport book stores and Walmart, but what they do that is not good is they damage the discoverability and also earnings of mid-list authors. And particularly the vast majority of debut authors who are brand new. No one knows who they are. They need to first find their own audience and fanbase among avid readers before their publisher will put a significant amount of marketing and funding behind pushing them to a more casual, broader audience. The industry’s changed, and the dynamics are not the same as they were when today’s traditionally published mega-sellers first came up a decade or more ago.

Most avid readers today read digitally. When you look at who’s reading 50 books a year, 100 books a year, those are the folks who are giving new authors a shot. I’m not talking about the seven-figure advance, Pulitzer Prize, one-of-them-a-year mega-debut author; I’m talking about the vast majority of traditionally-published debut authors who are trying to build a name for themselves. And the digital readers, these avid readers, are basically bypassing those authors, because they don’t recognize the names, and the price is off-putting to them.

. . . .

This is a bit of a long-winded question, but it’s the one that I’m most curious about. Your feelings or anyone’s feelings toward the Big Five publishers aside, how do you personally think the rise of self-publishing has affected our literary culture as a whole? Not too long ago, we had gatekeepers who let only a minority of potential authors past. Now with self-publishing and further avenues to get a book out there to an audience, literally anyone can be an author, and as a result, the number of books published per year has, frankly, exploded. For individual authors, this is great news: they can now achieve their dreams and publish a book. But taking a step back, with the gatekeepers not holding all the power, and a surge in books published, how do you feel this has changed the culture surrounding books? To put it another way, is the value of a book at all watered down now that anyone can be an author?

This is a question that I’m not going to be particularly good at answering. After all, I’m known as “Data Guy,” not “Literary Subjective Opinion Guy.” [Laughs] But with that said, first off, I have no particular feelings about the Big Five publishers, positive or negative. And I think this makes me a little different than a lot of the folks we hear from on various author groups. I’m a brand new author and a new entrant into this industry. I’ve never submitted a query to anyone. I hear a lot of this angst, and there seems to be bad blood one way or another. It’s just lost on me. I don’t get it. I get that some people in this industry feel very strongly about the things that have happened in the past, but for me it’s just a brand new, wide-open field. Let’s see what there is to learn.

With that said, I do think that today’s wide-open, democratic world of publishing is a good thing. It’s been a tremendous boon for literary culture and freedom of expression. The gatekeepers were an economic necessity in the past. It wasn’t so much about quality, although these two concepts tend to get tangled a lot, because nobody wants to think of themselves as just serving an economic function alone when working in the arts. It was more about choosing which manuscripts were worth taking a financial risk on. Well, today that risk is largely mediated by the fact that you don’t have to take a big risk to get a book out there in the public eye. At the end of the day, the only gatekeepers that matter are readers.

Link to the rest at Digital Book World

What REALLY Sold in 2016?

9 February 2017

From SFWA:

Finishing the book can seem like such a step forward!  Pop the champagne!

But then the author sits down to contemplate publishing.  Oh, the thorny questions!  Try for a commercial publisher?  Do the self publishing route?  Bring it out as an ebook only?  Pay for print layout and an ISBN and bring it out as print?

So many questions!

It can raise anyone’s blood pressure!

The latest on authorearnings.com, a good source of ‘who’s making what’ information, is that the times they are a’changin’ for today’s authors.  Maybe that stubborn determination to find an agent and get picked up by a NY publisher so that your book ends up in Barnes and Noble isn’t really worth the (huge) effort.

. . . .

Every genre has its own print-versus-ebook profile. Some genres are populated by big ebook readers while others have readers who still go for print. So there is no single answer for that question. There can be a difference even within a genre, depending on the age and gender of your readers. That’s always something I consider when I’m evaluating a book — who is the readership and what do they read?

. . . .

Print books used to be purchased pretty exclusively in brick and mortar bookstores.  It is nearly impossible for small commercial publishers and self published authors to get books onto those bookstore shelves, and authors sometimes come out losing money when they do because of bookstore ‘return’ requirements.

But now?

In 2016, 43% of all traditionally published books were purchased online.  Now, THAT is a reason to break out the champagne!  Why?  Because most readers pay little to no attention to the publisher.  As long as the small press or self published book looks professional and has a professional looking cover,  it’s competitive with books from the ‘bookstore’ publishers.  If your ebook or print book includes those 5 critical elements for success and looks like the other professionally published books out there, readers don’t care who published it.  They’ll look at price.

. . . .

In 2016, 21,800,000 self published print books were sold, mostly published through Create Space. The average price was $10.34. Amazon imprints sold another 959,000 copies.

Link to the rest at SFWA

Despite What You Heard, The E-Book Market Never Stopped Growing

19 January 2017

From Observer.com:

Over the last year, we’ve been talking to writers like A.G. Riddle who have been making a more than comfortable living selling e-books directly to readers on Amazon. That’s why it’s always seemed a bit strange to see media accounts reporting on the shrinking market for e-books.

News outlets like The New York Times report that e-book sales continue to slip, which is true if the data only covers part of the market. Reports from the Association of American Publishers has data from 1,200 publishers. They are the largest publishers, but they are also losing market share.

E-book sales never declined, according to a presentation yesterday at Digital Book World in New York City. In fact, if anything, we don’t yet have an adequate way to estimate how much the market segment has grown.

In back-to-back presentations from from the data site Author Earnings and publishing tech firm Overdrive, it became clear that “unit sales” may not be the best way to measure the size of the book market. In more and more ways it’s becoming clear that there are additional ways for writers to earn money than by readers buying whole books or even buying books at all.

 

. . . .

E-books, Data Guy told the crowd, “Never stopped growing.”

It looks as though sales stuttered because traditional publishers have been losing market share to indie authors who publish directly through online platforms. Amazon is by far the largest of these platforms.

. . . .

Reports on the e-book market tend to ignore Kindle Unlimited, Amazon’s Netflix for ebooks. Amazon splits up each month’s Kindle Unlimited revenue among participating authors based on how many pages members read.

Science-fiction author Hugh Howey said that being part of the program increased his revenue so much that it was worth pulling his books from all other platforms, such as Kobo and iBooks.

Data Guy acknowledged that some industry watchers might argue that a Kindle Unlimited download isn’t really a sale, but Author Earnings takes the position that any money in a writer’s pocket counts.

. . . .

 

Local book stores saw a 5 percent growth in sales last year, but every other channel (such as big stores, Walmart and etc) saw a 5 percent decline. Those channels were so much larger that local stores’ growth was more than made up for by the declines everywhere else. “Perhaps 10 fold,” Data Guy said.

Let’s hear it for your favorite local shop, but the truth is that Amazon has been the one closing those new print sales.

 

Link to the rest at Observer.com and thanks to Nirmala for the tip.

The latest marketplace data would seem to say publishers are as strong as ever

19 October 2016

From veteran publishing consultant Mike Shatzkin:

This post began being written a couple of weeks ago when I recalled some specific misplaced expectations I had for the self-publishing revolution and started to ponder why things happened the way they did in recent years. It turns out a big part of the answer I was looking for provides clarity that extends far beyond my original question.

For a period of a few years that probably ended two or three years ago, we saw individual authors regularly crashing bestseller lists with self-published works. Some, like Amanda Hocking, parlayed their bootstrap efforts into significant publishing contracts. Others, like Hugh Howey, focused on building their own little enterprise and tried to use the publishing establishment for what it could do that a self-publisher couldn’t. (In what was certainly a very rare arrangement of this kind with a major indie author, Howey made a print-only deal for his bestseller, “Wool”, with Simon & Schuster. And he made foreign territory and language deals and Hollywood deals as well.) And we know that there were, and are, a slew of indie authors who self-publish through Amazon and don’t even bother to buy ISBN numbers to get universal distribution under a single title identifier, effectively keeping them out of bookstores.

All of this was enabled by three big changes to the historical book publishing and distribution ecosystem. One was the rise of ebooks, which simplified the challenge of putting book content into distributable form and getting it into the hands of consumers. The second was the near-perfection of print on demand technology, which enabled even print books to be offered with neither a significant investment in inventory nor the need for a warehouse to store it. And the third was the increased concentration of sales at a single retailer, Amazon.Between print and digital editions, Amazon sells half or more of the units on many titles and, indeed, may be approaching half the retail sales overall for the US industry.

. . . .

What the rush of indie bestsellers told us a few years ago was that things had changed to the point that a single person with a computer could achieve sales numbers that would please a big corporation going after sales with the tools provided by tons of overhead: careful curation and development, sophisticated production capabilities, teams of marketers and publicists, legions of sales people, and acres of warehouse space. This had not been possible before ebooks. And the market reach of the amateur publisher was extended even further asAmazon’s share of print sales surged as a direct result of retail shelf space declining with Borders’s passing and Barnes & Noble’s shrinkage.

For a period of time that was relatively brief and which now has passed, agents and publishers worried that self-publishing could be appealing to authors they’d want in their ecosystem. The author’s share of the consumer dollar is much higher through self-publishing. And the idea of “control” is very appealing, even if the responsibility that goes with it is real and sometimes onerous.

. . . .

I’d suggest that the biggest reason this activity was so feverish 2-to-4 years ago and isn’t so much now was revealed first in a vitally important post by hybrid author and helper-of-indies Bob Mayer and then reiterated by the latest report from the Author Earnings website.

Mayer built an impressive business for himself by reissuing titles of his that had previously been successfully published and gone out of print. He spells out clearly what has changed since the days of big indie success and the plethora of entity-based publishing initiatives.

The marketplace has been flooded. An industry that used to produce one or two hundred thousand titles a year now produces over a million. Nothing ages out of availability anymore. Even without POD keeping books in print, ebooks and used books make sure that almost nothing ever disappears completely. And Mayer’s sales across a wide range of titles — his and other authors whom he has helped — reflect the mushrooming competition. They’re down sharply, as are the sales of just about everybody he knows.

What Mayer wrote tended to confirm that the breakthrough indie authors happened far more frequently before the market was flooded. Authors who struck it rich in 2010 and 2011 (like Hugh Howey) were lucky to get in before the glut. Recommending that somebody try to do the same thing in 2013 or 2014 was telling them to swim in a pool with water of a completely different temperature.

On the heels of Mayer’s piece, Author Earnings made discoveries that seemed to startle even them. For those who don’t know, AE is a data collection and analysis operation put together by indie author Hugh Howey teamed with the anonymous analyst “Data Guy”. The AE emphasis is on what the author gets, (“a site for authors by authors” is what they call themselves) with less interest in what publishers want to know: how topline ebook revenues are shifting.

According to the industry’s best analyst, Michael Cader, the most recent AE report shows, for the first time since they’ve been tracking it, a reduction in earnings for indie authors and an increase for published authors. (Cader may have a paywall; here’s another report from Publishing Perspectives.) But even more startling is the shift in revenue. Publishers have booked 65% of Kindle revenues and Amazon Publishing has 10%. They put self-published authors at 20%, which is down from 25% previously.

. . . .

What this is telling us is that, whatever deficiencies there are in the way publishers are organized for publishing today, they clearly are able to marshal their resources more effectively for book after book than indies can.

Link to the rest at The Shatzkin Files

PG says it’s interesting that Mike and others associated with Big Publishing debunked Author Earnings for its methodology (which, in PG’s distressingly humble opinion, they took way, way too long to understand) and its results.

Beginning in October 2014, as AE released report after report showing indie authors capturing a larger and larger share of the ebook market, the same criticisms continued.

Now, when the latest AE report shows an interruption in this trend, AE has suddenly become a reliable basis for saying this self-publishing thing is just a fad and Big Publishing will be fine after all.

While he doesn’t have any inside information or amazing predictive powers, PG says market data, particularly sales data, flucutuate.

While AE is a brilliant idea, it is a snapshot based on one day’s sales ranks on Amazon. A series of eight AE reports from October 2014 to May 2016 showed that indie authors were capturing a larger and larger portion of ebook sales. With each report after the first, a trend emerged and its reliability strengthened. The first AE snapshot was not a fluke, created by a single day’s fluctuation. Neither was the second, etc.

While PG was as surprised as anyone that the latest AE report showed a reversal of the previous trend, sales data fluctuate. We’ll have to see several more AE snapshots to understand what, if anything, is changing.

However, the economics and technology that underlie indie authors and their success with self-publishing haven’t changed.

  • Large numbers of people who become more and more accustomed to spending their days and nights reading emails, texts, news, etc., etc., etc. from their phones and tablets are unlikely to suddenly decide they really want to read a physical book.
  • The aggressive pricing of ebooks practiced by indie authors is not going to lose its power to attract new readers and retain existing ones.
  • We are not going to see a larger number of physical bookstores opening than are closing. A bookstore is a lousy financial proposition.
  • It’s not going to become easier for traditional authors to support expensive traditional publishers operating in high-cost cities.
  • As time goes by, readers will continue to discover that indie authors produce books that equal or exceed the quality of those created by legacy publishing. Once that discovery is made, it is not forgotten.

After two and a half years of quarter-over-quarter growth, Indie eBook market share shrinks significantly

12 October 2016

From Author Earnings:

Two and a half years. Ten quarterly Author Earnings reports. With each one of them, we learned something new and unexpected about our rapidly changing industry.

But this October surprise flat-out blindsided us…

After two and a half years of quarter-over-quarter growth, Indie eBook market share shrinks significantly

  • Indie ebook market share drops all the way back to early 2015 levels.
  • Traditional publishers regain a little lost ebook ground.
  • Amazon publishing imprints grow a lot.

To help put this sudden reversal into context, let’s look at the 32-month market share trendlines.

In unit sales terms, we have:

a1

During the five short months since May, it seems that indies have somehow lost their market share gains of the preceding 18 months. This has been counterbalanced to a limited extent by a slight uptick in traditionally-published unit sales: both Big Five and Small/Medium Traditional Publishers have each gained roughly 1% in market share. But most of the lost indie market share seems to have instead gone to Amazon Imprints, who have gained a whopping 4% in market share.

A couple caveats apply when it comes to measuring the market share of Amazon Imprints (*1):

Due to their relatively small number of titles, Amazon Publishing’s sales are generally the most volatile from report to report. And this data snapshot was collected early in the month, when Amazon’s six KindleFirst titles held all 5 of the top 5 overall best-seller slots, and 6 of the top 7. But still, the KF titles made up only 2% of overall Amazon Kindle sales, or half of the increase we see in Amazon Imprint market share. The balance came from growing sales in the rest of their catalog.

Let’s next look at the 32-month trends in gross consumer dollar ebook spending:

a1

In consumer spending terms, the May-to-October drop in indie title dollar market share parallels the drop in their share of unit sales. For the first time since Q1 2015, readers are spending more money on ebooks by Small/Medium Publishers than they are spending on indie ebooks. Despite the Big Five’s slight uptick in unit-sales market share, their share of consumer ebook dollars has continued to drop–albeit less steeply than in previous quarters.

a1

The share of overall Kindle author earnings going to the Big Five has finally gone up a little. Although at 23% it still remains below its January 2016 level, Big Five authors have regained a little of the ground they lost between January and May. But the biggest recent winners seem to be the Small/Medium publisher authors, whose share of total Kindle author earnings has surpassed 20% for the first time.

Amazingly, when it comes to author earnings, Small/Medium Publisher authors as a cohort are now running neck-to-neck with the Big Five. Even a year or two ago, such a thing would have been unthinkable: back in early 2014, Big Five authors were outearning Small/Medium Publisher authors by a factor of more than 2.5x, and only a year ago–in September 2015–total Big Five author earnings in the Kindle store were still 2x those of all Small/Medium publisher authors.

But for us, it’s the drop in indie author earnings that triggers the most questions.

In May 2016, verified self-published indie authors were taking home nearly 50% of all US Kindle author earnings. Now, as of early October 2016, the indie share has fallen below 40%. What happened?

. . . .

[PG note: the following is much farther into the AE report]

In 2015, more than 40% of Nielsen Bookscan’s 652 million total reported annual US print sales–and the majority of Nielsen’s Retail & Club sector–were online print sales from Amazon.com, rather than brick-and-mortar bookstore sales. 

The fact that Nielsen Bookscan reports only 5% growth in the “Retail & Club” sector, when Amazon’s half of those “Retail & Club” numbers is up 18%, can only mean one thing:

The other half of the Bookscan Retail & Club sector, US physical bookstore sales, must be down by at least 8%.

The math is inescapable.

For traditionally-published authors, especially those whose books are not receiving front-table co-op in bookstores and airport outlets, Amazon is not only the source of most of their digital sales, it accounts for an increasing percentage of their print sales, too. In most cases, Amazon will make up the majority of them. And as we’ve seen in the data for newer traditionally-published authors, high ebook prices mean those authors are far less likely to find an audience and build a word-of-mouth fanbase. Which is probably why newer traditionally-published debuts, saddled with those sky-high ebook prices, nowadays aren’t really selling all that many print books, either.

Link to the rest at Author Earnings

New Report States the Obvious: Indie Authors a Threat to Legacy Publishers

2 June 2016

From The Digital Reader:

Indie authors, as well as outside pundits like Data Guy, have been saying for years now that self-published authors are a threat to the livelihood of the legacy publishing industry.

The Bookseller has a story this morning on a new report from Enders Analysis which basically repeats some of the facts uncovered by the Author Earnings Report over the past few years.

To date, self-publishing has become a fairly large presence in the e-book sector, but the impact on the publishing industry as a whole has been more limited. Self-publishing represents a significant but separate books market, with low prices, focused on series within genre categories. Readers are more sensitive to price than reputation and read in high volumes. In March, we analysed the 100 top-selling e-books on Amazon US, and found that 40 were self-published. These had an average sales price of $2.41, compared to $6.23 for all other books (and $9.10 for e-books from the “Big Five” publishers). Sixty-five per cent of the self-published titles we examined were romance or erotica, with a further 22% falling under sci-fi or fantasy, usually with a strong romance theme as well.

. . . .

The report then goes on to say that self-pub would be a serious threat to legacy publishers if it could break out of the ebook market and conquer print, and that’s mostly true. Print is still the majority of the trade market and it’s dominated by legacy publishers.

But the report’s conclusion is also wrong. Authors are finding that they can make more money even trapped in the ebook market than they could if they signed with a legacy publisher.

And almost as importantly, there’s also the perception that authors can make more on their own. That buzz, whether it’s true or not, is keeping authors from signing with publishers.

And that’s the real threat, the one which Enders Analysis doesn’t see coming. It doesn’t matter if there’s more money in print if legacy publishers can’t recruit the authors to write the books to sell in the print market.

And from what Data Guy told me at DBW 2016, legacy publishers aren’t signing authors like they used. He said that the Big Five are still getting on the best-seller lists, but they’re not adding new names to that list nearly as fast as the indie part of the market.

Link to the rest at The Digital Reader and thanks to Fiona and others for the tip.

How Apple and Big Publishers Pushed E-Books Toward Failure

8 March 2016

From Bloomberg Business:

Apple suffered a final defeat in its legal fight with the Justice Department over e-books Monday, when the Supreme Court refused to hear the company’s appeal. When the case was filed in April 2012 it was seen as a fight over the future of the digital book industry, with Apple Inc. and the five biggest publishers aligned against Amazon.com Inc. While Apple and its allies lost in court, their vision for the industry won out. It hasn’t been good for e-books.

The Apple case centered on whether publishers or online retailers  would determine the prices for e-books. At the time, Amazon was selling e-books at a loss, buying a book for, say, $14.99 but then charging Kindle users just $9.99. Publishers worried that tactic would train customers to expect books to come cheap forever.

. . . .

While Apple fought through the courts, the publishers all settled with the Justice Department. Meanwhile, Amazon decided that letting publishers set their own prices wasn’t such a bad idea, after all. Its newest deals with the big publishers allow them to do so. If Apple hoped to gain an advantage over a rival, it failed. Amazon controls about three-quarters of the U.S. e-book market, according to Good e-Reader, a website that follows the industry. In 2010 it made up 54 percent of the market.

Once Amazon gave up on its goal of setting a $10 standard price for e-books, the prices began to rise. Today, three of the top five best-selling books on the New York Times list for fiction cost at least $12. It’s not unusual to be able to buy a paperback book for less than the cost of the digital version.

There’s a widespread assumption that digital media always wins out over physical media. But even the Internet isn’t immune to the basic laws of economics. E-book sales declined 12.3 percent over the first 10 months of 2015, compared with the previous year, according to the American Association of Publishers, which compiles data from 1,200 companies.

. . . .

“It’s a fascinating question and clearly what it shows is that purchasers make a decision based on price,” said Robert Thomson, the chief executive officer of News Corp., which owns Harper Collins, in a recent call with investors. “They are valuing a print book versus an e-book.”

Thomson said he still expects e-books to grow as a percentage of the company’s overall book business, but acknowledged that people have lots of choices on their devices, and won’t necessarily choose books over other forms of entertainment.

Link to the rest at Bloomberg Business

DBW’s Wide-Ranging Interview with Data Guy

24 February 2016

From Digital Book World:

Who exactly is Data Guy?

We know he’s the numbers wizard behind Author Earnings—a collaboration between himself and self-published mega-author Hugh Howey. And we know that he’s anonymous. But that’s pretty much it.

In the past two years, Data Guy’s Author Earnings reports have become an increasingly popular resource for authors, shedding light on aspects of the publishing industry that were going previously unreported.

But the reports have also spurred a great deal of controversy.

. . . .

So based on all the research that you’ve done into ebook sales and where the money is going, is there one piece of strategic advice that you’d offer to Big Five publishers to do things differently than they do now?

There definitely is, and I think that DBW may be an opportunity to dig into some of these trends in more detail. In general, my observation is not something that Hugh and I alone are saying. High ebook prices don’t really hurt mega-selling authors with long established careers in all of the airport book stores and Walmart, but what they do that is not good is they damage the discoverability and also earnings of mid-list authors. And particularly the vast majority of debut authors who are brand new. No one knows who they are. They need to first find their own audience and fanbase among avid readers before their publisher will put a significant amount of marketing and funding behind pushing them to a more casual, broader audience. The industry’s changed, and the dynamics are not the same as they were when today’s traditionally published mega-sellers first came up a decade or more ago.

Most avid readers today read digitally. When you look at who’s reading 50 books a year, 100 books a year, those are the folks who are giving new authors a shot. I’m not talking about the seven-figure advance, Pulitzer Prize, one-of-them-a-year mega-debut author; I’m talking about the vast majority of traditionally-published debut authors who are trying to build a name for themselves. And the digital readers, these avid readers, are basically bypassing those authors, because they don’t recognize the names, and the price is off-putting to them.

Strategically, if you’re a Big Five publisher, supporting those authors now with lower ebook pricing, would mean you’re building a healthy, sustainable pipeline of intrinsic revenue streams you control down the road. But by not doing so, instead you become increasingly reliant on being able to make opportunistic acquisitions of these big blockbuster properties that originate outside of the traditional publishing industry. You have to do that quarter after quarter, year after year, without fail. It just doesn’t seem like a sustainable strategy long-term. So that’s the piece of strategic advice that I’d offer.

. . . .

Do you feel that with every new iteration of this report you guys are getting more and more accurate and getting closer to the actual truth, if there is one?

Absolutely. In fact, one of the biggest jumps in accuracy was—our rank-to-sales conversion method had gotten a bit long in the tooth. And as we headed into the end of last year, we were looking at it and I go, “You know what? This is out of date and it’s going to be too conservative.” And because we mostly avoided making statements about absolute sales that Amazon is doing and instead saying, “Hey, looking at relative measures of sales, this is how the pie breaks down.” That kind of accuracy doesn’t have to be precise, but at the same time I wanted to upgrade our methods so that we could look at quarter to quarter sales and say, “What’s happening to the size of the pie? Is it growing? Is it shrinking? How fast?” And so with the February report that we did, we upgraded our approach significantly.

Now it’s based on real sales data—raw sales data—from exactly that time period provided by about a dozen authors, and an increasing number every day. And these include very high-selling authors, as well as authors who aren’t selling well. And so we pretty much have real-time data points up and down all the different sales-ranks, from one or two of the absolute top-selling books on Amazon down to books that are hardly selling at all. Hundreds of books. So we factor that in.

. . . .

This is a bit of a long-winded question, but it’s the one that I’m most curious about. Your feelings or anyone’s feelings toward the Big Five publishers aside, how do you personally think the rise of self-publishing has affected our literary culture as a whole? Not too long ago, we had gatekeepers who let only minorities of potential authors past. Now with self-publishing and further avenues to get a book out there to an audience, literally anyone can be an author, and as a result, the number of books published per year has, frankly, exploded. For individual authors, this is great news: they can now achieve their dreams and publish a book. But taking a step back, with the gatekeepers not holding all the power, and a surge in books published, how do you feel this has changed the culture surrounding books? To put it another way, is the value of a book at all watered down now that anyone can be an author?

This is a question that I’m not going to be particularly good at answering. After all, I’m known as “Data Guy,” not “Literary Subjective Opinion Guy.” [Laughs] But with that said, first off, I have no particular feelings about the Big Five publishers, positive or negative. And I think this makes me a little different than a lot of the folks we hear from on various author groups. I’m a brand new author and a new entrant into this industry. I’ve never submitted a query to anyone. I hear a lot of this angst, and there seems to be bad blood one way or another. It’s just lost on me. I don’t get it. I get that some people in this industry feel very strongly about the things that have happened in the past, but for me it’s just a brand new, wide-open field. Let’s see what there is to learn.

With that said, I do think that today’s wide-open, democratic world of publishing is a good thing. It’s been a tremendous boon for literary culture and freedom of expression. The gatekeepers were an economic necessity in the past. It wasn’t so much about quality, although these two concepts tend to get tangled a lot, because nobody wants to think of themselves as just serving an economic function alone when working in the arts. It was more about choosing which manuscripts were worth taking a financial risk on. Well, today that risk is largely mediated by the fact that you don’t have to take a big risk to get a book out there in the public eye. At the end of the day, the only gatekeepers that matter are readers.

If they like what’s out there, the books will tend to do well, gain visibility, spread through word of mouth. And if they don’t, essentially it’s irrelevant in the market, and yet it may not be an irrelevance for that author. That author may have achieved their dreams, and they have finally been able to put their book out, and the three people who read it will be the ones who shared that experience. Maybe that’s all that matters to them.

So I think on the whole it’s a positive thing. Readers benefiting from a far greater wealth and diversity of high quality books and ideas. Making it all available to them, and more importantly now affordable to them. Democratization, greater diversity, and more feelings expressed—it’s kind of hard to see any downside. Not that I have any strong opinions about this or anything. [Laughs]

Link to the rest at Digital Book World and thanks to Jan for the tip.

Digital Arachnid: What Does Author Earnings Say to the Industry?

9 February 2016

From Publishing Perspectives:

In the new February Author Earnings report, released Monday (February 8), things continue to look rosy for self-publishing authors and dire for the trade. But there are also announcements of changes in the approach—not entirely clear changes, mind you but in some ways promising. We’ll look at a bit of that later in this article.

To grasp the industry-political context here, we must remember that many who are skeptical of the efficacy of the Author Earnings effort point to the fact that it is an agenda-driven exercise.

Frustrated with what they said was a skewed and pro-industry picture presented at the Digital Book World in 2014’s “What Authors Want” survey, Mssrs. Howey and Guy set out to find a way to demonstrate that self-publishing is a viable route to earnings potential for authors. The result is the Author Earnings assessments, which many in the self-publishing community have defended as proof that their pathway to publication can be as good or better, financially, as the standard trade publishing route. Those fans, again, will be chuffed.

. . . .

Here’s the news: Author Earnings asserts that on Amazon’s bestseller lists, indie self-published titles account for more than twice the number of Big Five titles.

“What has changed,” the report tells us, “is the degree to which Amazon’s overall Top 20 bestsellers, 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.”

. . . .

The most interesting question for us at this juncture is just what the trade publishing management attending DBW will make of this. Can it be that the “legacy” industry is being outclassed so substantially by “indie published” authors—the self-published sector?

. . . .

This is the language of self-publishing as what some of its champions call the “shadow industry,” a creative corps that cares nothing for the customs and concerns of the industry, and yet seems never to tire of carping at the establishment. It’s always worth noting that even some of the most-honored self-publishing bestsellers have taken contracts when offered.

And as anyone familiar with negotiating basics knows, by framing its results in ways that call out “the other side”—in this case, traditional publishing—Author Earnings repeatedly has hobbled its own efforts to widen the discussion. Rather than simply present an interpretation of the market and let that interpretation speak for itself, the material is served on a bed of right and wrong. Eyes glaze over, chips remain on shoulders, collegial exchange seems hard to come by.

. . . .

On the way out the door, Data Guy stops to pop publishing with a towel for agency pricing, of course, which gives us those out-sized prices on trade ebooks and Amazon’s “This price set by the publisher” notes on the pertinent sales pages. It may well be true that the publishers are shooting themselves in the feet with agency pricing on ebooks, perhaps contributing to the slowing of growth in digital reading on some level.

. . . .

Some of the most highly placed operatives in the trade will privately tell you (they’ve told me) that they’ve spent two years scratching their heads over Author Earnings’ digital derring-do. It’s reputed to have several parts:

  1. Sales reported by authors are compared to rankings of various titles on Amazon.com;
  2. A “crawling” of Amazonian sales pages is accomplished (our spider man or woman at work) to “scrape data” on a single day for each report (January 10 in the newest one)—spider goes out, spider comes back with the scrapings;
  3. An extrapolation of the results is made from that date; and
  4. Inevitably, a web of upbeat news for fans of self-publishing is spun from the results.

It might all be searingly accurate, spot on, perfectly right. But we can’t tell that.

And, as I mentioned in some commentary on the last report of 2015 at The FutureBook, what’s probably needed is a full analysis by a completely independent, reputable, capable firm, a unit of Nielsen or Forrester or PWC, KPMG, Deloitte, somebody, anybody. Please!

. . . .

What I’m being told is that a group of more than a dozen authors now makes available to Author Earnings, in some form, its actual royalty statements. The approach thus takes out the second-hand nature of reported sales. This takes us, Data Guy says, past the realm of “volunteered data points” collected and on to more precise observations made “during the precise same time period.” Significantly, Data Guy says that rather than using single-day sales, “this model incorporates sales history and matches Amazon’s true algorithm far better.”

And that’s the crux of the change: it involves the formula Data Guy uses to infer what a sales ranking means, based on what he tells us is now better-sourced actual data on sales provided by authors.

Link to the rest at Publishing Perspectives and thanks to Dana for the tip.

So, we need an audit of Author Earnings by KPMG or some other extremely expensive auditing firm.

PG wonders how often KPMG audits Nielsen Bookscan. Nielsen claims to record 75% of all retail sales of books in the US and is the bible of Big Publishing, controlling the careers of 98% of all traditionally-published authors. How do we know that Nielsen’s numbers are accurate? How do we know that all the retailers are providing Nielsen with accurate numbers?

Author Earnings makes its data publicly available in downloadable form with each new report. Here’s a link to all the data backing up the latest report. It’s a spreadsheet that runs almost 200,000 lines.

All the quote marks surrounding “crawling,” “scraping data” and “spiders” in the OP are breath-taking admissions of technical ignorance. Crawling and scraping data is what Google and Yahoo and Bing and a zillion other web search engines have been doing approximately forever.

To spell it out for the English majors in Manhattan, millions of Google spiders crawl the web 24/7, scraping data about the content of websites around the world. Google started doing this in 1998. But, of course, Big Publishing takes the long view and 1998 won’t happen there for a few more years.

As far as the methodology that Author Earnings uses, in PG’s view, it’s brilliant. He immediately understood it when it was described in the the first Author Earnings report. It’s a version of what Google does applied to book rankings on Amazon. Spidering, crawling and scraping are involved in case you had any doubts.

If Big Publishing employed anyone who knew more about computers than Spell-Check, it could have done the same thing that Data Guy and Hugh Howey did with Author Earnings.

Since Big Publishing has much more detailed information about Amazon sales of the ebooks of many, many tradpub authors, it could have extrapolated a lot more information about ebook sales than Author Earnings did.

But that would have taken more effort than lobbying the Department of Justice to make Amazon stop doing bad.

Unsolicited advice to Data Guy for his presentation at Digital Book World:

  1. Don’t forget a trigger warning for Arithmophobes before you begin.
  2. Include a map on your first slide showing the location of the closest safe space with no numbers. You may want to show the map periodically during your presentation.
  3. No more than three numbers on any Powerpoint slide.
  4. No decimal points.
  5. Don’t forget to mention Excel for Dummies.

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