Author Earnings

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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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.

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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%.

. . . .

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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.

Some Thoughts on the International Market

3 December 2015

From Kristine Kathryn Rusch:

This morning, I found out through the magic of Facebook that four of my sf novellas, translated into Italian, are four of the five bestselling titles in my Italian publisher’s bookstore. As I mentioned in my blog on translation a few weeks ago, that’s not due to me. That’s because I have an excellent translator. It’s a good marriage of translator and story, because books in translation don’t receive acclaim (and sales!) if the translator is poor, no matter how well the book did in its original language.

The Italian books came about because I don’t have an agent. I know that’s counterintuitive for those of you still wedded to traditional publishing myths, but things have changed dramatically in the past twenty years. Or rather, my eyes have been opened and things have changed.

For many years, I had sold many titles for translation in other countries. Then I switched agents, went to a much larger agency, one with a dedicated foreign rights department, and the sales of my books to foreign publishers for translations decreased. I switched agents again, to an even larger and more prestigious (and older) agency, and my foreign rights sales stopped completely.

What happened? It’s very clear in hindsight.

Agent #1 embezzled from me. His preferred area of embezzlement? Foreign rights royalties. He paid the advances, although I never saw the contracts (a problem right there, because who signed them? I never gave him power of attorney). I have no idea if he skimmed off the top of those advances. I suspect he did, but I didn’t audit him.

When I realized just how shady this guy was, and believe me, it took years because he (still) has a sterling reputation in the industry, I fired him and moved to the much more prestigious and much larger boutique agency with the dedicated foreign rights agent with an office in the basement.

My sales started drying up then, because she would turn down deals if they were too small. Embezzler Boy would take those sales, because he knew he would get more in royalties, but she was (in theory) above board, and thought the deals too small.

Since Boutique Agency handled (and handles) some big New York Times bestsellers, my deals were small in comparison to those offered to the big names. And apparently, not worth the agent’s time. She turned down the offers without consulting me. Yep, she and the agent I had for my U.S. rights often turned down “too-small” offers on my behalf without consulting me.

How did I find this out? Only when I went overseas as the guest of honor at an international science fiction convention and publisher after publisher who had published my work in the past pulled me aside to ask why I had gotten so focused on money. I mentioned changing agents, thinking these publishers had simply contacted the wrong person, and the publishers told me they knew I had changed agents and as politely as possible, told me that the change prevented my books from seeing print.

. . . .

I’ve been making steady royalties off the foreign deals I’ve negotiated, without any embezzling that I’ve caught. (Another foreign agent, a partner agent to Boutique Agency’s agent, embezzled as well. It’s so easy for “trusted advisors” to put their sticky fingers into a writer’s finances, so easy it’s scary.)

The Italian deal, above, with the novellas, is one I negotiated. I’ve done plenty of others, and I know I could have even more if I simply queried the older publishers. I’m sure I will…eventually.

. . . .

One of the biggest overseas markets for my work twenty-five years ago was Great Britain. Back then, getting British books here in America or getting American books in Great Britain was a real chore. There were some booksellers, including friends of mine, who specialized in getting first edition British books into the States. That involved tariffs and taxes and expensive shipping or traveling with the books themselves. And then there was no guarantee of instant sales.

The best way for book dealers to handle British books was to deal with British writers who had become popular here. British writers like P.D. James would first publish their books in Great Britain, so the first editions in English were always British. Plus, they were released six months to a year in advance of the American edition. If you couldn’t wait for your next P.D. James fix, you either had to travel to England yourself, cultivate a British bookseller, or buy books from one of these American bookseller/brokers.

No matter what your preferred method was, you would always pay a premium for that first edition and the chance to read that book before everyone else.

Amazon started to change that when it opened its Amazon U.K. store years ago. Other online businesses sprang up that had partners in various countries, which somehow reduced the tariffs and duties. (I don’t even pretend to know all the legalities.)

But the real groundbreaker, as you all know, was Amazon’s Kindle, which led to the rapid rise of electronic books.

. . . .

My books have been in the Amazon U.K. store since Amazon made it possible to sell English-language books in the U.K., and the one thing I always noticed was that the British market lagged a few years behind the American market. (I like to say five years behind, but it’s probably closer to three.)

The arguments against e-books were the same in Great Britain as the ones against ebooks in the U.S., but Great Britain was having the arguments years after the U.S. had already settled them.

The British market remains years behind the U.S. market, and the British market added some twists to protect paper books. For example, the U.K. market charges a Value-Added Tax (VAT) on all ebooks, which it does not charge on paper books. I’m sure there are other things that I’m not aware of that are currently hindering some of the growth in the U.K. ebook market.

But the market is a viable one. For years, for my work, Amazon’s U.K. ebook sales were always second to Amazon U.S. ebook sales. That’s no longer true. A number of other retailers both here and in other countries now scoop Amazon U.K. in terms of sales for my stuff. But we all know—or should know—that anecdotal evidence isn’t really evidence at all. It’s just proof that one writer’s career works one way.

. . . .

Myth 3: The Big Five Publishers here in the U.S. can get better overseas sales for their writers.

Simply not true at all. The entire [Author Earnings UK] study that Hugh and Data Guy did points to this conclusion—and frankly it surprised them. It didn’t surprise me, because my own personal experience has been that the ebook revolution has made my own English-language sales grow exponentially.

I’ve had some other experiences though that help this detail be unsurprising for me. I’ve traveled overseas as an author a number of times, and I was the editor of The Magazine of Fantasy & Science Fiction before this ebook revolution hit.

I constantly got questions back in those days about making F&SF available for an international audience. After all, the major SF awards are mostly focused on short fiction and until the last six years or so, getting the issues of the various short fiction magazines into the hands of readers outside the U.S. has been difficult at best. Those readers had heard of all of these stories and authors, but weren’t able to sample them.

Now readers can, and can easily.

The same happened with novels. I can’t tell you how many people I met overseas who had heard of my work but had never read it. They wanted copies of the work, but couldn’t get their hands on it.

Then the ebook revolution happened, and I got email after email from some of these same readers, ecstatic that they can now get books they had only heard about before.

Some of my books that are unavailable overseas are traditionally published. In some cases, I got English-language rights reverted to me, so there are different editions for the overseas work and the U.S. work. But in others, I signed some bad contracts that took translation rights as well as World English. Those publishers have not exercised any of the overseas rights. Not a one, but they would come after me if I did so.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like an author’s post, you can show your appreciation by checking out their books.

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