The Shatzkin Files

Stats are often hard to interpret in our business

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Stats are often hard to interpret in our business. The reported data comes, of course, after the fact (you can’t report things before they happen) and is often aggregated in ways that don’t tell us what we really need to know. So I tried an exercise last week of asking a few agents for their impressions of the evolving ebook marketplace. I wanted to get a handle on two things: where we are now in terms of books sold in stores versus books sold other ways and whether the transition from print to digital consumption is slowing down.

The picture I got from nine smart and well-informed agents seems to confirm that:

* sales of ebooks for fiction more often than not top 50% of the total sales, in both the hardcover life and the paperback;

* sales of ebooks for immersive non-fiction are at something like half the percentage of fiction;

* illustrated books do a lot less in their digital editions, which usually struggle to reach 10% of the sale;

* while the marketplace data seems unambiguous, the agents have not formed a consensus that the print-to-ebook switchover is slowing down.

Perhaps we can attribute that to the fact that the data presentation which most shapes the agents’ impressions is provided in royalty reports. This past year, and especially this past season, have not yet been delivered in the data they study most intensively. But it was still useful to check with them, if only to confirm that fiction ebook penetration is double non-fiction and that illustrated books lag far behind.

If 50% of fiction is selling now as ebooks, it is likely that only about 35% of it is selling as print in stores (because 25-30 percent of the print sale is online). Considering that number was more like 90% ten years ago and 80% five years ago, that’s all the explanation anybody needs to understand the reduction of shelf space we’ve seen. Every year when stores are interviewed about traffic and sales, they cite the presence (or absence) of “big books” as a key driver. The “big books” are most often big fiction. This year, the Fifty Shades family of titles may have provided that lift, which may be why stores (other than B&N) are anecdotally reporting a strong Christmas.

But what the industry should be most interested in, which will be reflected in the next round of royalty statements agents see, is that ebook sales growth appears to have damn near stopped. As Michael Cader pointed out on Lunch, Random House UK indicated a 13% increase this year over last, which mirrors Barnes & Noble’s reported rise of 13% in ebook sales in December.

Thirteen percent is a big increase in a stable marketplace.

But if you consider the heavy activity in the device field — the new iPad mini, Kobo devices being sold by independent stores, and B&N turning progressively their stores into NOOK showrooms (and not to mention the always-growing ebook title base, still adding backlist and formerly out-of-print books and small press and self-published books) — the rise in ebook sales seems like no rise at all. So perhaps we really have hit the point of resistance from print readers and a new stability in division of sales across channels.

The consequences of only about a third of fiction being bought in stores — and not all in bookstores — are still to play out. If it is true that independents did better than B&N this past Christmas, could part of the reason (as I speculated in a prior piece) be B&N’s prior success selling their customers NOOKs? Is the indie store customer somewhat less likely to have bought a Kindle or NOOK previously and therefore disproportionately in the marketplace for printed books?

It is quite possible that the disappointing B&N results could be a more accurate indication of the world we’re now living in than the reported success of the indies.

Under the heading of data being ambiguous, note that the reported big rise in sales by independents in 2012 appears to have taken place in the first part of the year so that sales at Christmastime might not have been as much better than B&N’s as first impressions on the data could lead us to believe. (Once again, thanks to Cader for doing some in-depth analysis of the raw data to lead us to see that possibility.)

And at the same time that we’re seeing an increase in ebook sales of about 13%, PW reports that BookScan US numbers show print unit sales having declined by 9%. What is interesting there, though, is that deeper PW reporting about BookScan says that non-fiction declined by 13% while fiction fell only by 11% in unit sales. Since we think we know that ebook penetration for fiction is much greater than for non-fiction, perhaps the reported decline in non-fiction units reflects lower sales of illustrated books, not because they’re being cannibalized by ebooks, but because of the store traffic decline B&N reported.And that’s exactly what I’d be worrying about if I were an illustrated book publisher. Their business isn’t transitioning to digital as fast as novels, but it is possible their sales were more interdependent on novels and their power to bring traffic into the bookstores that sell the illustrated books than they might ever have thought.

The data reported by PW also says that mass-market paperbacks have suffered by far the biggest decline among the book formats. The ebook sales by independents (self-published) are apparently underreported. Could the very cheapest ebooks, which are largely the indies, be cutting into the sales of the cheapest print books. It would stand to reason, wouldn’t it?

Both our sold-out (really and truly, we will have to turn people away if they show up trying to buy a ticket at the door) Children’s Books Go Digital conference on this Tuesday (Jan 15) and Digital Book World on Wednesday and Thursday (Jan 16 and 17) feature as much worthy original data presentation and analysis as we could find.

On Tuesday, we have Carl Kulo and Kristin McLean presenting data from Bowker’s survey of the kids book market, Peter Hildick-Smith of Codex with fresh information about children’s book discovery, and both our case study of middle-grade marketing from Simon & Schuster and a presentation from Random House about driving word of mouth with a YA audience will undoubtedly deliver some objective information that will help other publishers make sound marketing decisions.

We have always featured original data presentations at Digital Book World. This year is no exception. We will kick off the event with Forrester’s snapshot based on interviewing executives; we’ll feature academic research from Carnegie-Mellon on the true impact of piracy; and Dan Lubart and Jeremy Greenfield will deliver a report based on close study of ebook bestseller data. That’s just on the first morning. We also will have insights from a survey F+W Media did to which more than five thousand authors responded; data about discovery in the general trade marketplace from Hildick-Smith; and a report from Bowker about book buyers and BISG about ebook buyers, based on regular surveying that has taken place over the past couple of years. Children’s Books Go Digital is sold out, but there are still tickets available for Digital Book World. 

I’m really proud of what we’ve put together for both events and I hope to see you there. If you can’t make it because of geographical separation, though, DBW is making live streaming available this year for the plenary sessions and some of the breakouts. If the plane won’t get you to New York on time, you should check that out.

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  • Matthew


    Great to finally start to see some figures for ebook sales across the industry. BUT – I can’t help thinking these are the wrong figures. What we really need to see are the revenue splits – particularly if we’re going to judge the viability of various different sectors and business models.

    Here in the UK, The Bookseller has just started a bestseller chart combining print and ebook sales and in an accompaying article, has raised the question about whether charts should now be on revenues generated rather than sales made. It is an interesting question.

    • Somewhere among all my writing on this site I said the same thing at least a couple of years ago, but for a different reason. I was making the point then that *ebook bestseller lists* would be “unfair” because the publishers’ books were several *times* the retail price of the self-published books (aside from promotion). When we do print lists, we tier them by format, which in effect also tiers by price. We don’t do that for ebooks.

      So your point is well taken, but it isn’t just about the difference in price between print and ebook editions, but also within the ebook universe.

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  • “The ebook sales by independents (self-published) are apparently underreported.”

    One problem for the publishing industry (and likely a much larger problem than anyone guesses, at the moment) is that lack of hard numbers from the indie publishing crowd. The numbers out of the AAP are widely reported, yet they don’t include the indie publishers.

    Why would this be a problem? Well, I see two big reasons. First, it provides an inaccurate size of the ebook market. Indies are assuming it’s larger, while more traditional publishers are thinking it’s smaller. Neither are probably correct. (And here I am not just talking about Amazon. Don’t forget about Smashwords, AllRomanceEbooks, DreamSpinners and others.)

    Also, (and I think this is the more important thing) publishers are losing trend data to Amazon and other retailers. Who’s going to predict the “next big thing”? Amazon. Who know which direction the long tail is wagging? Amazon. More traditional publishers are more and more likely to zig when they should zag due to a lack a good data, and that will be quite devastating to their business.

    • Two observations.

      1. DBW does do a bestseller list that is built on store rankings and that can include indie published books exclusively available on Amazon. In general, the established houses swamp those lists in titles. But, more important, their books are two or three or four times the PRICE of the indie books, so they OVERWHELM the indie books in revenue. Indie publishing is substantial, but that means single digit percentage substantial, not some huge market being missed. Measured in dollars.

      2. When indie authors make it, big publishers that can do more for them by selling and marketing them better sign them up. There certainly have been more cases of that in the past couple of years than the other way around. Amazon signs authors too, of course, but they’re weakened because they can’t reach what is half the market for some books: what is sold in stores.
      And since Amazon does publish its rankings, I’m not sure what it would know about what sells in general that isn’t available to others to know. Where they might have an advantage is in the *marketing*, knowing exactly what people to pitch a book to. But , for now, I’m not sure they really do that effectively and, if they do, whether it makes up for all the print in stores they can’t reach. What works in Amazon’s favor is that the percentage of the market that doesn’t buy the books online gets smaller every day.


      • I completely agree with both your points, however, consider the following:

        Ranking does not equal absolute quantity, only relative. We could guess that the number 1 book sold far more than than the 100th, but was it only barely outselling #2? Did it sell more than 101 though 1,000 combined? How about 10,000? 100,000? 1 million? And when you look at that long tail how soon will it be so filled with indie books, that overall they are the dominant force. There certainly are more indies than traditional publishers.

        Sure “Big Publishing” caught 50 Shades this year, but most of the 50-a-likes were indies. And did they just get lucky or did they know that erotica has been doing quite well for some time (and mostly not on Amazon)?

        Right now big publishers can “create” a hit, through windowing and marketing but how long will this be true? At what point will the dilution effect (not just in the sheer number of products, but in the loss of sales data) of indie publishers harm the more traditional publishers’ knowledge of the market place. Will more traditional publishers be in such a minority that they are completely unaware of serious market trends? Are they already heading down that path?

        I also wonder how long there will be a price difference between indie and more traditional publishers, at least in ebooks. Already many are looking at 4.99 and up even as the price of a “Big Published” book falls. “Big Publishers” will have the printing/infrastructure advantage for the foreseeable future, of course. Yet they are “BIG Publishers”, as indies get more secure and knowledgeable will they be better able to handle the changing price structure of publishing?

      • You mention 50 Shades. It’s the strongest argument there is in favor of the establishment. You think that book would have done what it has done all over the world without Random House? I don’t.

        There’s a place for indie publishing, and it offers real opportunities to some people, but it ain’t the big leagues. And it won’t be anytime soon enough to be worth thinking about and planning on.


      • I agree, to be “50 Shades big” you need to hire world wide marketing and distribution. I do, however, think that book was going to be big in whichever medium she chose.

        I don’t think you can reliably say that indie isn’t “the big leagues” (unless you are defining “big leagues” as the extremely rarefied air of James, Meyer and Rowling, and that no one can plan on). You just don’t have the numbers to accurately define the size and shape of indie publishing. You could point to bestsellers lists, but those only show a snapshot in time and don’t represent actual earnings across multiple retailers, across multiple media, over time. No one has that complete picture, though that would be very valuable.

        Outside the James, Meyer, Rowling crowd, the “Big Leagues” aren’t in text publishing. Non-fiction continues to move to apps, and that isn’t a game that “Big Publishers” have played well, historically.

      • You can interpret paltry evidence the way you want to. I interpret it to mean that indie publishing is, from a revenue perspective, a single-digit percentage phenomenon. And it does better in fiction that it does in non-fiction. It does best of all in *genre* fiction.


      • James, Meyer, Rowling … *Publishing* does best in genre fiction.

        And ask yourself which would most people prefer, a self-help book or an app that helps you live the life the self-help book promises? The 15 minute meal cookbook or the app that tells me which 15 minute meal I will enjoy the best, based on what’s in my fridge and my preferences. Then ask if “Big Publishing” is best prepared to make that app.

        I am not saying that indie is all sunshine and light, rainbows and puppies. But rather, the data is largely misunderstood and that poses a huge risk to “Big Publishing”. A risk that, if my livelihood depended on “Big Publishing”, would keep me up at night.

      • There are serious risks to Big Publishing. But at this moment, I don’t think not having good enough data about what is happening to indies makes the Top 50.


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  • I think it would be safer to say that ‘ebook sales growth appears to have paused’. People are still learning about eReaders and tablets. As in any learning curve you are likely to find steep rises followed by plateaus. But when many things are changing there are many things to learn – and plateaus are likely to be followed by steep rises.

    • We’ll never see the kind of rises we saw from 2008-2011 again. We can’t. Takeup was doubling and tripling each year.


      • True re the percentage incerases but the number of extra eBooks sold in 2013 will surely be greater than the number of extra eBooks sold in 2008. The percentage increase in the numbers of digital cameras sold has also dropped, without this being good news for Kodak.

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