Author Earnings has released a new report:
AAP Reports Own Shrinking Market Share, Mistakes It for Flat US Ebook Market
In the 18 months between February 2014 and September 2015, the AAP’s 1200 reporting traditional publishers — which include the “Big Five”: Penguin Random House, HarperCollins, Simon & Schuster, Macmillan, and Hachette — have seen their collective share of the US ebook market collapse:
- from 45% of all Kindle books sold down to 32%
- from 64% of Kindle publisher gross $ revenue down to 50%
- from 48% of all Kindle author net $ earnings down to 32%
The American Association of Publishers (AAP) releases monthly reports on the total sales of 1200 participating publishers, of whom the “Big Five” collectively account for roughly 80% of AAP-reported sales.
So far in 2015, the AAP’s monthly StatShot reports have charted a progressive decline in both ebook sales and overall revenue for the AAP’s 1200 publishers.
During that same period in 2015, Amazon’s overall ebook sales have continued to grow in both unit and dollar terms, fueled by a strong shift in consumer ebook purchasing behavior away from traditionally-published ebooks and toward indie-published- and Amazon-imprint-published ebooks.
These “non-traditionally-published” books now make up nearly 60% of all ebooks purchased in the US, and take in 40% of all consumer dollars spent on ebooks.
The AAP is still reporting on May 2015 right now; they haven’t seen the latest 5% drop in their collective market share, measured by Author Earnings in early September 2015 (after Penguin Random House’s return to agency pricing).
. . . .
In 2014, one of the pervasive memes in publishing was that the industry was stabilizing. Many publishing observers opined then that the disruption effected by ebooks and the ease of digital self-publishing had largely run its course. The largest traditional publishers have generally cheered the leveling off of their ebook sales — in one case, even characterizing a sharp decline in their ebook revenue as “great news.” Over the past 18 months, they’ve responded to these shrinking ebook sales with progressive ebook price hikes. Now both their ebook revenue and their overall dollar revenues — including print revenue — are declining.
The widely-heralded “flattening” of the US ebook market has gotten plenty of press over the last 18 months, due primarily to these reports of declining ebook sales from the AAP, Nielsen, and in the released quarterly financials of the largest traditional publishers.
Traditional publishers, industry pundits, and are all claiming that the ebook market has flattened, or is now even shrinking.
But at the same time, the largest ebook store in world is telling the Wall Street Journal the exact opposite is happening:
“Amazon says e-book sales in its Kindle store—which encompasses a host of titles that aren’t published by the five major houses—are up in 2015 in both units and revenue.”
So which is it?
Is the broader US ebook market really flattening or declining? Or is it simply that vast numbers of readers are now abandoning traditionally-published ebooks and buying non-traditionally-published ones instead?
The AAP, Nielsen Bookscan, and Nielsen Pubtrack all claim to capture roughly 80% of all trade book sales — both for ebooks and for print. Amazon sells the lion’s share of those ebooks, accounting for67% of all traditionally-published ebook sales by most accounts. And at AE, we have built a comprehensive database of quarterly snapshots, each of which captures between 45% and 60% of Amazon’s daily sales.
So we were in a great position to put the AAP’s claim they represent “80% of the US trade ebook market” to the test.
. . . .
We charted the AAP’s true share of the US Kindle ebook market over the last 18 months and seven AE data sets. Here’s what we found.
The first thing that jumps out at us when we look at the leftmost four bars of the above chart, which correspond to 2014, is this:
Kindle ebook sales by the AAP’s 1200 reporting publishers made up less than 45% of all Kindle books purchased in the US in 2014.
Nielsen Pubtrack’s ebook market statistics, based on self-reported data from the top 30 US publishers, are even more overstated in their claimed coverage. In actuality, Pubtrack captures only 40% of true US Kindle sales.
The AAP’s “80%”-of-the-market claim seems to hold roughly true if one considers only traditionally-published ebooks, however…
Traditionally published ebooks as a whole only made up 55% of all Kindle ebooks purchased in the US in 2014.
So where did the other 45% of the ebooks purchased by consumers in 2014 come from? The data answers that very clearly.
They were published by Amazon imprints and self-published by indie authors.
Now let’s look at that seven-quarter market share chart again, and this time let’s focus on the longer-term trends.
Let’s look at how each publishing segment has fared over the last 18 months in the largest ebook store in the world. We’ll work our way upward, market sector by market sector, from the bottom of the chart to the top.
The AAP’s 1200 participating publishers:
At the bottom, we have (in purple) the AAP’s 1200 participating publishers, which comprise their monthly StatShot reports and are dominated by the Big 5. As we move from left to right, from February 2014 to September 2015, we can see the AAP’s share of all ebooks sold progressively dropping.
The AAP’s share of Kindle ebooks purchased by consumers has fallen from 45% of all Kindle ebooks sold in February 2014 to less than 32% of all Kindle ebooks selling in September 2015.
Smaller, non-AAP-reporting traditional publishers:
Right above the AAP’s share, we see (in red) how non-AAP-reporting traditional publishers have fared. These are generally smaller publishers and micropresses who are not part of the AAP’s 1200 reporting participants.
Up through May 2015, the market share of non-AAP-reporting traditional publishers has been declining right alongside the AAP’s.
But in September, those smaller, non-AAP-reporting traditional publishers appear to have picked up some of the AAP’s lost market share. One data point does not a trend make . . . but perhaps, as the AAP publishers have begun to price themselves out of the ebook market, they’ve also given their smaller traditional publisher brethren some breathing room. We shall see in the coming months.
Amazon’s own publishing imprints:
Above the purple AAP and red non-AAP traditional publishers, we have Amazon’s own publishing imprints (shown here in pale green). There are no more than a few thousand books published by these imprints — Montlake, Thomas & Mercer, 47North, Skyscape, and the like — but they punch well above their weight, unsurprisingly, being uniquely positioned to sell well in Amazon’s own store.
Over the past 18 months, Amazon imprints have nearly doubled their market share, from 7% of all Amazon ebook purchases in February 2014 to 13% of all Amazon ebook purchases now.
Indie self-published books:
And then at the top of the graph, in various shades of blue, we have indie self-published books. For simplicity, in this series of charts, I’ve included uncategorized single-author-publishers (who are basically all unconfirmed, low-selling indies) in the indie category.
In 2015, we began tracking in our reports which indie books had ISBNs. And which didn’t — and therefore were part of the no-ISBN publishing “shadow industry,” a burgeoning market sector that remains completely invisible to Nielsen, Bowker, the AAP, or any of the other traditional providers of publishing-industry statistics.
The 2015 market share of “shadow industry” indie ebooks is shown in midnight blue at the top of the latter 3 bars of the chart, while the ISBN-bearing indie ebooks are shown in a lighter shade of blue right beneath. Together, they reveal a jaw-dropping fact.
Indie ebooks without ISBNs have grown from 30% of all Kindle ebooks purchased in January 2015 to now account for 37% of all Kindle ebooks being purchased in September.
When indie ebooks that have ISBNs are included, then indie self-published books, which made up 36% of all Kindle ebooks purchased in February 2014, now make up 42% of all Kindle ebooks being purchased on Amazon right now.
Unfortunately, we didn’t also go back and retroactively check each book in the 4 earlier (2014) datasets to see if they had ISBNs. Had we done so, it would have beautifully charted the rapid rise of the untracked ebook “shadow industry,” right alongside the rapid decline in market share held by traditionally-published ebooks.
As of September 2015:
- “Nontraditionally-published” ebooks from indie self-publishers and Amazon publishing imprints make up 58% of all ebooks purchased in the US.
- Traditionally-published ebooks make up 42% of ebooks purchased in the US.
- When the AAP reports “declining ebook sales”, they are describing the shrinking portion of the US ebook market held by their 1200 participating traditional publishers, whose share of the broader US ebook market has fallen in the last 18 months from 46% of all Kindle ebook purchases to less than 32%.
. . . .
18-Month Market Share Trend : Author $ Earnings from Kindle Ebooks
When we first started analyzing Kindle sales in February 2014, traditionally-published authors were taking home nearly 60% of the ebook royalties earned in the largest bookstore in the world.
Today, traditionally-published authors are barely earning 40% of those ebook royalties, while self-published indie authors and those published by Amazon’s imprints are taking home almost 60%.
From an author-earnings perspective, in 18 short months, the US ebook market has flipped upside down.
But change in publishing isn’t limited to the ebook market.
Link to the rest at Author Earnings