Digging Deeper Into Author Earnings

27 May 2015

From Phoenix Sullivan via David Gaughran:

The Author Earnings team are attempting to do something which hasn’t been done before, and their work can’t be refined and improved unless there is some intelligent criticism of their approach and findings.

Today I’ve invited Phoenix Sullivan to blog on the topic. I’ve known Phoenix for a few years now, and if there’s a smarter person in publishing, I haven’t heard of them.

KBoards regulars will already know that Phoenix understands the inner workings of the Kindle Store better than anyone outside Amazon.

. . . .

I set aside some time recently to dive into the Author Earnings raw data for the May 1, 2015 Report. The irksome thing about the scraped data is how much of the puzzle that is Amazon’s ebook sales is missing and/or open to interpretative analysis. It isn’t the data’s fault or even the fault of the collection method. It’s simply that the data made public is limited, which in turn means a lot of creative interpretation goes into even so simple a task as coming up with the number of ebooks sold in a day. While the raw data itself isn’t changeable, different tools and assumptions applied to the data can yield different results, thereby opening up the analysis to differing interpretations.

My goal was to apply a set of tools and assumptions that update and possibly correct those being used by the Author Earnings team. The environment has changed dramatically in the 15 months since the first report came out, yet the analytical tools, in my opinion, haven’t necessarily kept up with the times. That in itself does not mean the results are wrong, but without a challenge to them, we’ll never know, right?

. . . .

By far the biggest assumptive correction I’ve made is two-fold: The first part is applying a new set of sales:rank calculations to the dataset and the second part is applying calculations to maintain ranks rather than using the multipliers needed to hit a rank. Let’s be clear that these multipliers are observed only, and best guesses across a lot of observations. However, I do believe the multipliers currently being used by AE are 1) outdated, and 2) don’t reflect the actual number of sales happening for the majority of books that are maintaining rank in the store and not seeing huge rank swings on a day-to-day basis.

. . . .

Amazon’s algorithms take historical sales – among other variables, such as velocity – into consideration when calculating rank. The longer a title remains around a given rank, the fewer sales it takes to maintain that rank. Observably, anywhere from 10-50% fewer sales. That means the multipliers for hitting ranks are not good indicators of unit sales numbers for the majority of books in the dataset. Here is my observed chart for average sales to maintain rank, along with the old and new numbers for hitting rank. More work needs to be done to fill in the upper brackets on the maintain side. I used the same numbers from my Sales to Hit chart when I felt I didn’t have enough data points on the Maintain side to chart new numbers in, but the safe assertion is that the Top 500 in my own data is over-reporting by a conservative 10%.

. . . .

Integrating KU into the reporting back in July dialed the difficulty of analyzing the data up into the stratosphere. Unread – and therefore unpaid – borrows influence rank across all titles. There’s no way to know how many borrows eventually become paid reads. And there’s no way to calculate how many units moved on any given title were at full price and how many were borrows, either paid or unpaid. Self-reported numbers suggest the split of paid sales to paid borrows is about 50:50 (which still doesn’t account for the unread borrows that inflate rank), which is what the AE Reports use as well. Using the Maintain chart above, I rejiggered all the numbers. The adjusted royalties may well still be inflated, but are, I think, a closer approximation. The difference for the dataset is a statistically significant 21.4% spread in dollars (or the $400 million difference between $1.81 and $1.42 billion per year):

  • $4,957,365 – original AE result for all earnings
  • $4,848,116 – AE results with the new modeling applied
  • $3,895,691 – my adjusted estimate

and for the KU amounts specifically:

  • $167,687 – AE results for borrows with the new modeling applied
  • $144,201 – my estimate
  • 252,161 – AE estimate for total number of KU units sold/borrowed using the Maintain calculations for Indies + Uncategorized
  • 216,410 – my estimate

. . . .

Since the AE Report looks at aggregated totals over individual sales and positions itself as one factor for authors to consider when deciding which path to publishing to pursue, I decided to see what each book averaged in each publishing path. There are pie charts below, but let’s also use words to be sure the picture is clear either way it’s expressed. If we look at gross sales, we see that the Big 5 had only about 50% of the number of titles available in the dataset than indies had. Big 5 books sold about 78% of the number of books indies sold and made more than twice as much. A lot of that goes into Publisher and Amazon pockets, but what does that really mean? The charts show that indie authors in aggregate earned about 25% more than Big 5 authors. In other words, it took almost 50% more available indie books to earn their authors 25% more than Big 5 authors.

. . . .

From the above, we can say that while market share may have eroded for the Big 5, gross sales plateau’d between Jan and May. Losing market share is not the same as bleeding money. Besides, the ebook market – discrete from the general publishing market – is relatively new. The Big 5 were never part of that market until it became lucrative enough to play in, and only once indies were invited into the market did it start to burgeon. Notbecause of indies, but the timing is inseparable. Big 5 never dominated the market, and a few deviation points here and there doesn’t mean it’s losing the market. And while percentage charts are pretty to look at, they don’t always describe an accurate picture. Ebooks, for instance, have lured a certain percentage of customers away from the used-books market. The Big 5 were not in the used-book market before and their models don’t include that market now.

Link to the rest at Let’s Get Digital and thanks to SFR and several others for the tip.

Google Shutters Its Play Books Publisher Portal in Order to “Improve Its Content Management Capabilities”

26 May 2015

From Ink, Bits & Pixels:

Do you know how I’ve been harping on the rampant commercial piracy in Google Play Books (four posts in the past month)?

I think Google finally got the message. I’ve just read on Twitter, and confirmed from a second source, that Google has closed the Google Play Books Partner Center to new users.

The Partner Center is Google’s name for the place where authors and publishers upload books to sell in Google Play.

. . . .

[A] Google rep posted the text in the support forums:

We’ve temporarily closed new publisher sign ups in the Play Books Partner Center, so we can improve our content management capabilities and our user experience. We’re working to reopen this to new publishers soon. Thanks for your patience.

. . . .

The Partner Center has been locked for 5 days now while Google is doing something behind the scene. They have yet to share any details but let’s hope that includes adding ways to detect pirates.

Link to the rest at Ink, Bits & Pixels and thanks to Randall for the tip.

My personal list of what should be top-of-mind for publishers around digital change today

20 May 2015

From veteran publishing consultant Mike Shatzkin:

What are the most important digital change issues publishers face?

. . . .

1. Ebook pricing. Publishers get anywhere from 50-to-70 percent of the retail price from most ebook retailers. Unlike the print world, where price-setting must take place before the book comes out and is, because the price is printed on the book, very hard to adjust, ebook prices can be changed quickly and frequently.

Pricing variation has historically been the province of the retailer. In the physical world, markdowns were almost never shared: the retailer voluntarily gave away part of their margin to gain market share or to build customer loyalty.

In the agency world that four of the Big Five have now created (with Penguin Random House almost certain to follow on), pricing is not only mostly controlled by publishers, they are the direct beneficiaries of higher prices and lose margin if prices are lowered.

It is true — and the indie authors who like it better when Amazon is in control rather than the publishers often point this out — that publishers have almost no experience with pricing and the impact of changes. But it is also true that the retailers, who do have more experience with it, have different objectives than publishers. Retailers want a competitive advantage against other retailers and, as part of that, they want to build customer loyalty. Publishers want to maximize revenue for each SKU, build awareness of authors, and use one book by an author or in a series to sell other titles under the same brand.

Publishers are starting very near zero on knowledge. How does discounting one title in a series affect the audience’s likelihood of getting started with it and then buying other titles at higher prices? If a book is in the news, is the right strategy to raise the price (to maximize revenue) or to lower the price (to get better market penetration on the back of the news). And is the strategy the same if the story is about the book, rather than the book being about the story? Do pricing strategies need seasonality rules, and how is that different across genres or topics?

. . . .

7. Allocating effort across a large backlist. The biggest opportunity and the biggest challenge for publishers, as they have historically operated and as they are currently structured, is maximizing their opportunities across their backlists. The big houses are dealing with many tens of thousands of titles. We advocate techniques that require some human application so scale techniques have to be used to pinpoint the titles worth an effort.

Although we are developing tools to help digest the external cues that might affect where the focus should be — cues from the news and social graph — each publisher has to start with a combination of knowledge of the list, intuition, and a sense that sales can be improved to pick those titles worth reviewing for better audience understanding and descriptive copy improvement. Almost certainly, titles that are more than a couple of years old will need work for several reasons: the house knew so little about SEO when copy was written; time will have changed the search terms that matter; and reviews and awards and other things from the book’s experience in the marketplace might need to be incorporated.

Link to the rest at The Shatzkin Files

This Is What You’re Missing Out On When Using an E-Reader Instead of a Real Book

20 May 2015

From Mic.com:

An attractive stranger sits across from you on the train, hunched over and reading. As they read on, a small smirk crosses their face. What’s so funny? Maybe you and this sexy stranger share a discerning literary taste, you think.

. . . .

What we lose when covers go plastic: Since the Kindle’s 2007 debut, the number of gray and white screens in the hands of train riders and beach-goers has steadily risen. As of 2014, up to 50% of Americans over 18 owned a tablet or e-reader, according to a survey by Pew Research Center.

“Books on the subway are increasingly like birds in the jungle: colorful, hard-to-spot and of obsessive interest,” writer Ben Dolnick observed on the Awl while watching people read on the New York City subway for a week.

As more and more people opt for e-readers rather than paperbacks, the chances for people to connect over them dwindle. Not only are book readers sexy (just take the viral Instagram account Hot Dudes Reading), we also draw all sorts of flattering conclusions about people’s book choices and use those choices to connect. Books are a natural pick-up line, an easy entryway to understanding someone’s interests, passions and even biases.

. . . .

 One Tumblr user, k-auhale, blogged about the time she was once asked out via a John Green book. “Wait! there’s this quote I wanted to show you on page… 123, I think,” her crush told her. He then pointed to a sentence in Looking for Alaska that he had highlighted that read, “Do you want to be my girlfriend?” The devoted Green fan happily accepted the offer.

. . . .

Nobody is more concerned over the potential loss of book-inspired connections than Tricia Callahan, the founder of CoverSpy, who curates a blog that documents what the people of Boston, New York, Los Angeles, Toronto and other cities are reading in public — on the train, in the bar and in parks. Callahan felt the coming of the digital reader revolution in 2009 and wanted to do something about it.

“We felt it on our commutes: Kindle backs were the new book covers to stare at. Something was changing in our visual landscape, we were losing something,” Callahan told Mic. For her, creating CoverSpy was about acknowledging the kind of connection that might be lost with e-readers.

“One day I was standing on the subway reading,” said Callahan, recalling a time she was wrapped up reading about F. Scott Fitzgerald and The Great Gatsby. She looked up, and lo and behold, the woman holding the pole next to her was reading Gatsby at that very moment.

Link to the rest at Mic.com and thanks to Dave for the tip.

Yet another reason why PG is glad that he’s married.

The Bloomsbury way

19 May 2015

From FutureBook:

Bloomsbury Publishing’s full-year results, published today, show how different bits of the publishing market are transitioning to digital at different rates, and with differing results. Its trade e-book sales fell year-on-year, but digital sales at its professional and academic businesses accelerated as it was able to expand with new business models.

Bloomsbury reported that sales of digital titles in its academic and professional division grew by 35% year on year to £4.2m, more than double the overall industry growth rate in 2014. They now represent 12% of total revenues in the division (2014: 10%).

Bloomsbury noted that its digital strategy reflected the changing needs of scholars, students and librarians.

. . . .

Bloomsbury does not break out all the figures: but it notes that sales of digital titles fell by 4% to £11.7m (£12.2m in 2014), which was 12.1% of its total revenue from sales of books. But that includes sales from its academic and professional division, meaning that consumer e-book sales from its adult and children’s businesses were worth £7.5m in 2014. Last year Bloomsbury noted that digital sales from adult titles were £7.1m, representing 14% of sales: in children’s digital sales were reported to be 8% of total sales of £23.6m at £1.9m. In total therefore there was a drop in consumer e-book sales from £9m to £7.5m. Yet in its report Bloomsbury noted: “Whilst e-book sales are down year on year, also reflecting the success of Khaled Hosseini’s books last year, opportunities for growth continue in many territories and the advent of new devices and new business models such as subscriptions will continue to expand the market. We are beginning to see material sales in India, parts of Europe and the Far East.”

Bloomsbury’s trade business is, perhaps, too small to act as a barometer for the other e-book publishers, but the report again emphasises that successful commercial publishing will lead to buoyancy in an e-book market that is incredibly receptive to certain types of books and certain price points but overall shows distinct signs of maturity.

. . . .

E-books have been good business for trade book publishers, leading to margin improvement and in some cases expanding markets, but there is already a sense that this golden period may be coming to end. Witness for example, the management changes at Orion, announced yesterday, or Bloomsbury’s redundancy of respected editor Bill Swainson. The big publishers are either consolidating, or retrenching. Two senior publishers have told me recently that they are expecting their costs of doing e-book business to increase (from author royalties to retailer discounts and in the UK due to the impact of VAT) and are responding appropriately.

Link to the rest at FutureBook

Apple Releases iBooks Author Starter Kit

18 May 2015

From Ink, Bits & Pixels:

Apple’s on again, off again interest in iBooks is on again as of last week. Bradley Metrock noted on LinkedIn on Friday that Apple has released a how-to book for iBooks.

iBooks Author Starter Kit is a no-frills beginner’s guide which lays out all the steps required to produce an ebook in iBooks Author. The Starter Kit walks a user through a detailed set of step-by-step activities, and provides all of the materials required to create a basic interactive book, including an iBooks Author template, images, color palette, copy decks, videos, keynote presentation, and more.

. . . .

While I think that Apple has been generally disinterested in iBooks, this book was published only days after we learned that iOS 8.4 will enable iPhones to read ebooks produced by iBooks Author.

Link to the rest at Ink, Bits & Pixels

On Book Designing

16 May 2015

From Joe Konrath:

So let’s set the Wayback Machine back eight years. I was a newish writer with a legacy publishing contract and a blog, doing what I could to get my name out there. I was approached by a fan, Rob Siders, who noticed that I didn’t have a Wikipedia page and offered to set one up for me, free. He was into coding, liked to read and write, and was one of those forward-looking types who understood that tech forged the future whether Luddites wanted it or not.

I thanked him, and asked if I could return the favor someday. He asked me to keep him in mind if I ever needed to do any sort of computer stuff.

Two years pass, I decide to try self publishing on DTP, Amazon’s new Kindle platform, but trying to upload MS Word and make it look good on Kindle can only be achieved by going through the entire manuscript, word by word, and deleting or adding formatting marks.

It’s awful, time consuming, and I’m sure that a code jockey would know a better way of doing it.

So I contacted Rob. He was able to format my massive Newbie’s Guide to Publishing ebook, which was hundreds of thousands of worlds long and has more links and hyperlinks in it than the rest of my work combined.

Rob did it, and it looked better than any of the ebooks I’d formatted myself. So I asked him to redo the ones I’d done, and I noticed something pretty spectacular.

I’d erroneously been treating ebooks as words on a digital page, laid out according to whichever font size the reader chose. Rob showed me that ebooks, like paper books, could be designed.

. . . .

Joe: What is it a book designer does?

Rob: More than anything a book designer is a problem solver… not that the authors and publishers we work with are problems. What I mean is that all books have a logic to them, so our process always begins with trying to understand what the author is trying to say. Matching a look to that message—within the realm of what’s possible with ebooks—is sometimes the hardest work we do. Obviously, some books are straightforward so our work follows suit. But more and more we find that authors and publishers are trying to push the boundaries of what we’ve come to know an ebook to be.

Joe: What’s different about the work you do, and me just uploading my MS Word doc to KDP?

Rob: About half of the people who knock on our door these days have tried uploading a Word doc or PDF, to KDP and are frustrated because something has gone pear-shaped and they can’t fix it… the table of contents doesn’t work, or a heading or two or three is wonky, or everything after Chapter 8 is bold, or whatever it is that KDP’s autoconverter produced.

Word is a perfectly fine presentation application, but behind the presentation is a lot of complex code. The more you fiddle with the presentation, the more likely it is you’ve introduced an enormous amount of inefficiency in the code, as well. For example, the Track Changes feature—while a decent way to manage the editing process—can be brutal to the code.

We’ve developed custom tools that extract the text from the document to leave us with super-clean code. Once we have that, we can do just about anything we want with it.

. . . .

Joe: Why is it so hard to get good formatting on certain self-publishing platforms?

Rob: There are two reasons. The first reason goes back to what I mentioned before… Word is pretty good at the presentation of text, but not so good at writing well-formed, efficient code underneath.

The second reason is that the platforms themselves are designed for basic, predictable manuscript formatting. This is good because it fits the democratic, DIY punk rock ideal that fuels independent publishing and makes it so most everyone can upload their manuscript and get a functioning ebook on the other side. But what if the manuscript isn’t so basic or predictable? Or, worse, what if it is basic and it’s still not converting properly?

I’ve been a Word power user for a lot of years and I wouldn’t dream of uploading a Word doc to any of the self-publishing platforms.

Link to the rest at Joe Konrath and thanks to Stephen for the tip.

Here’s a link to Joe Konrath’s books

Kobo Offers Ebooks to Southwest Airlines Passengers

16 May 2015

From Publishing Perspectives:

Kobo and Southwest Airlines have cooperated to offer an in-flight reading platform, which launched on May 6 and includes both full books and extended previews of top titles and new releases across all genres. Participating publishers include Penguin Random House, HarperCollins Publishers LLC, Simon & Schuster, Inc., Hachette Book Group, Macmillan Publishers, Kensington Publishing Corp., ECW Press, Open Road Media, Bauer Communications and others.

. . . .

Once onboard a Southwest Airlines flight, customers can use their own Wi-Fi enabled devices to connect to the entertainment portal and access to hundreds of top-selling titles in Kobo’s library.

And if the passenger doesn’t have time to finish their book? After landing, they will receive an email from Kobo with information on how to purchase the book at their destination.

Link to the rest at Publishing Perspectives and thanks to Eric, who notes that Kobo forgot their indie authors again, for the tip.

Most Canadian Publishers Now Selling Ebooks Direct

13 May 2015

From Digital Book World:

66% of Canadian publishers are now selling ebooks directly to consumers, according to a new survey by BookNet Canada.

That share rose 24% since 2013, when 42% of Canadian publishers reported offering direct sales.

Ebook retailers remain the primary distribution channels for most publishers, BookNet Canada finds, but the sharp growth in direct-to-consumer sales methods shows widespread interest in expanding the distribution landscape and forging direct relationships with readers.

. . . .

BookNet Canada also finds that publishers’ “high level of commitment” to digital content stems from a desire to boost sales and meet customer demand. Majorities of the publishers in its sample cited both of those reasons as motivations for producing ebooks.

According to BookNet Canada, “The majority of publishers (69%) report that ebook sales make up 1–10% of their revenue, while 17% of publishers derive 11–20% of their revenue from ebook sales.”

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

Authors debate digital-first publication

11 May 2015

From The Bookseller:

Publishing digitally first can help authors to learn about the publishing process, make writers more critical of their own work and help reinvent an author. However, the author Stark Holborn warned that the format should only be used in the right context as there is “a difficulty in marketing something that has no physical presence”.

Authors who have recently had work published digitally first in serial format said there were benefits to the format for both readers and authors. Cathy Bramley published Ivy Lane with Transworld as a digital-first serial in 2014, and her second book for the publisher, Appleby Farm, is currently being released in monthly instalments of 10 chapters each, with the final section out this week.

Bramley said publishing in serial format “enabled me to raise my profile and keep my books visible for a longer period of time”.

She added: “I also enjoy a lot of interaction with readers via Twitter and Facebook who finish one part and can’t wait for the next. I think having a low price point is a huge benefit to a new author; readers can look at my Amazon page, see the positive reviews and try for themselves at a low- risk [cost] of 99p.”

Bramley’s editor at Transworld, Harriet Bourton, said the publisher’s aim “was to find a way of introducing digital-heavy readers to new authors and building a relationship with them from there”, with a digital serialisation acting as a literary equivalent to a television series.

. . . .

Holborn said she would “love there to be more of a culture of digital serials . . . I think the trick is using them for the right work. The format suited Nunslinger because it recalled serialised pulp and dime novels, like the old yellow jackets published by Hodder in the 1950s. It’s true that there is a difficulty in marketing something that has no physical presence, but in the right context that could be a strength, not a limitation. Of course, there is nothing that beats the thrill of seeing your work printed and bound as a real, honest-to-God book, but I would certainly love to explore digital serialisations further in the future.”

Link to the rest at The Bookseller

“a difficulty in marketing something that has no physical presence”

Let’s see, Amazon has no physical presence and they have terrible problems with marketing. Nobody buys insurance because it has no physical presence. Nobody watches television shows or movies because they have no physical presence. Nobody uses the Internet because it has no physical presence. Nobody buys stocks, bonds or mutual funds because they have no physical presence.


Next Page »