Publishing: Not In Such Bad Shape After All?

The long-awaited BookStats report has been released, leading some to immediately conclude that publishing is actually in pretty good shape – despite the doom-mongering from certain quarters (such as, I suppose, from me).

In case you don’t know, BookStats is the most comprehensive survey of the US publishing industry to date, produced jointly by the Book Industry Study Group and the American Association of Publishers (AAP) – collating data from nearly 2,000 publishers, large and small.

I’m not going to go into too much detail on its findings, as I haven’t actually read the report (it costs $600) and I am only working from the public summaries.

(And if anyone spots any detailed analysis out there by someone who has purchased the report, I would be very grateful.)

However, I do want to mention some reasons why people should be cautious before automatically assuming that this means that everything is rosy in the garden of Big Publishing.

On the surface, all appears well. The size of the total US publishing industry (measured by net sales revenue) grew from $26.5bn in 2008 to $27.9bn in 2010. By my reckoning, that would give the US roughly a third of the global book trade, which seems about right.

You should note that this doesn’t include Trade numbers alone (children’s, adult, fiction, non-fiction, religious, print, digital, and audio), but all other segments too (K-12, Higher Education, Professional, and Scholarly). And, obviously, it doesn’t include self-publishers.

Even still, the industry appears to be in reasonable health. Despite a global economic crisis that hit the US particularly hard, and which has resulted in severe and continuing unemployment and a lowering of discretionary spending all round, the industry has grown a respectable 5.6% from 2008 to 2010. Similar growth levels were recorded for net unit sales.

Breaking out the Trade category, which is what we are most interested in, we can see that it accounts for virtually half of all net sales revenue in the industry – $13.944bn in 2010, a growth rate of 5.8% on 2008.

We can also see that Adult Fiction looks robust, with net sales revenue growth of 9.7% growth on 2008, Adult Non-Fiction grew 3.5%, and Juvenile (children’s, teen, YA) seems resilient with a 7.1% increase.

Everything is looking pretty good, right? Not so fast.

This report was a tremendous undertaking, giving us a truly comprehensive picture of the publishing industry (with the exception of self-publishing). Naturally, it took time to assemble. It was released just over a week ago, but only covers up to the end of 2010.

And, as anyone involved in e-publishing knows, there was a huge explosion in e-book sales that begin in November 2010, and carried right through to February 2011 and beyond.

We can see the seeds of this when we look at the report summary of sales broken down by format. Trade Hardcover net sales revenue only grew 0.9% from 2008 to 2010. Trade Softcover (the larger, more expensive paperback) grew 1.2%. And Trade Mass Market Paperback (the smaller, cheaper one) fell 13.8%.

E-books picked up the slack, and then some. Net sales revenue grew an astonishing 1,274.1% from 2008 to 2010. In 2008, e-books had a Trade market share of 0.6%. By 2010, this figure had jumped to 6.4%.

As has been widely speculated, Adult Fiction is leading the way, with e-books capturing 13.6%.

However, as indicated above, these figures mask a boom that only began in the final two months of the three year report.

According to a survey from Pew, between November 2010 and May 2011, dedicated e-reader ownership jumped from an estimated 6% of the US population to 12%. It doubled.

All those new e-reader owners went on a buying spree to load up their devices leading to a dramatic jump in e-book market share, topping out in February, when e-books became the #1 selling format for the very first time.

In fact, collating the latest available AAP figures (the first five months of 2011), we see that the phenomenal growth has held up, while print is seeing dramatic falls. As I said in my blog post last month:

Print is being hammered. Adult hardback is down 23.4% from the same period in 2010. Adult trade paperback is down 17.9%. Adult mass-market paperback is down 30.1%. Children’s/YA hardback is down 6.3%. Children’s YA/Paperback is down 15.1%.

The only category showing growth in this time-frame – aside from religious books and audiobooks – is e-books, which grew a stunning 160.1%.

By my estimation, the e-book market has at least tripled in size from the figures in the BookStats report, which should give anyone pause before drawing conclusions about where the industry is headed based solely on its figures.

I would like to draw out something else from the report summary. While chains and independents have seen drops, Online Retail has seen phenomenal growth. This isn’t just down to e-books, more and more customers seem to be shopping online for print books – leading to growth of 55.2% from 2008 to 2009.

Mike Shatzkin estimates Amazon’s share of the online print book trade at 80% to 90% and 50% to 60% of the e-book market. It’s fair to say that this shift to online is only strengthening Amazon’s grip on the overall US book market – even before accounting for their overwhelming share of self-publishers’ reported sales.

And, as was widely reported, since April, Amazon has been selling more e-books than all print categories combined. Those figures include self-publishers (Amazon doesn’t mind counting our money), and they refer to units sold rather than dollar amounts.

Even still, Amazon are an indicator of where the market is headed. This is backed up by the monthly AAP reports, the very tail-end of the BookStats report, and is also confirmed by the huge drops in print sales recorded by Nielsen BookScan for the first six months of 2011 – down 10% overall, and down over 25% for Adult fiction.

Of course, there was also one major development in 2011 that the BookStats report doesn’t cover: the collapse of Borders. The liquidation of the second-largest chain in the US will only hasten the switch to online, the switch to e-books, and the general strengthening of Amazon.

Barnes & Noble – and some independents – will capture extra market share too, but not before they take a massive hit from their customers taking advantage of the fire-sale of all that Borders stock.

Moving online, all those new Amazon customers will be exposed to self-published work for the first time, especially those that make the switch to e-books. On top of that, all the new devices from manufacturers, and reduced prices of existing models, are expected to spur another huge period of e-book growth which could mirror last year’s.

As noted above, the BookStats report doesn’t cover self-publishing at all. And as I have mentioned before, we have no real idea of the size of the self-publishing market.

However, Amazon’s new Indie Store may give us some clues. For the first time, they have broken out an Indie Bestseller’s list. If we drill down to the last spot in the Top 100 we find Atlantis by Bob Mayer, which is ranked #430 in the overall Kindle Store.

That means that indies have 100 of the Top 430 items in the Kindle Store. In other words, indie writers are responsible for roughly a quarter of the top-selling items. If we discount all the non-book items in the Kindle Store (such as games, magazines, and newspapers), that could rise to, perhaps, a third.

In case you think this methodology is unsound, the spread seems consistent. Carol Grace’s Welcome To Paradise is #75 on the Indie list, and #326 in the Kindle Store. John Locke’s Vegas Moon is #50 in the Indie list and #225 in the Kindle Store. And Traci Hohenstein’s Burn Out is #25 in the Indie list and #121 in the Kindle Store.

(Remember that the Kindle Store includes all those non-book items.)

It will be interesting to track this list over time to see if self-publishers capture an even greater share of the top-selling e-books on Amazon. It has remained pretty consistent over the last week or so, but that’s a very short time-frame in a slow month for publishing.

But for now, we can say this. E-books continue to grow at a phenomenal rate. Print is in freefall. And indies have captured a substantial share of the top-selling e-books at the retailer that controls well over 50% of the market.

If defenders of the status quo want to seek solace in the BookStats report, there is some in there to comfort them. But relying on that alone to paint a robust picture of trade publishing ignores the huge changes that have taken place since November 2010 right up to today.

The future is digital, and indies have already captured a significant share.

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time spent outside. He writes novels under another name, has helped thousands of authors build a readership with his books, blogs, workshops, and courses, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.

63 Replies to “Publishing: Not In Such Bad Shape After All?”

  1. Hey David! One thing that leaves me a little confused when you post something like this, declaring that the growth of eBooks = the New York publishers are doomed… If they’re all publishing eBooks now, which they are, and their production costs are going WAY DOWN as more and more of their sales are shifting to those eBooks (which they are), wouldn’t that mean they’re getting into BETTER financial territory? Or are you saying that you see a future where every author just says, “I’m self-publishing!” and *that* is why the New York publishers are doomed? Thanks!

    1. @Writing Runner : While their sales are shifting to ebooks, I’m not sure their production costs are going down as fast as necessary to compensate : readers expect lesser prices for ebooks while authors expect greater royalties. And their expertise is not to sell ebooks to customers but to print, sell (to physical retailers) and distribute Paper. I think they’ll try and hold that historical “paper supremacy” (and the fixed costs attached), which will also weight on the balance.
      They may not be doomed, but I think they will need to shed a lot of weight to be able to survive, and I’m not sure the stock-holders will agree to massive reorganizations.

      1. Some good points there too. The marketing aspect is crucial. The large publishers are geared towards selling to their customers: booksellers. Not readers.

        Also, each shift from print to digital is a shift away from a distribution system where they have an effective monopoly to one where they face competition from a horde of tiny, fast-moving competitors who will always beat them on price.

        I actually don’t think they are doomed. But I can see a radical downsizing for some major publishers, and perhaps one or two going under in the next five years, or some further consolidation.

    2. I don’t think I said that New York publishers are doomed anywhere in the above. What I was trying to say is that relying on the BookStats report exclusively to say that everything is rosy would be a mistake.

      I think the dominance of e-books is inevitable. I also think that as e-books capture a greater share of the market that more and more writers will self-publish, or move to publishers with more equitable rates. Larger publishers have two choices – as I see it – raise the royalty rates for their authors, or lose more writers to self-publishing, Amazon’s imprints, or smaller publishers that pay better rates. Whether they pay their authors better, or lose them to elsewhere, either outcome will adversely affect their bottom line.

      1. Most of the New York publishers will find a way to keep on trucking as print fades away, even if it means changing their business model — as hard as that may be for some people to believe. Those publishers that don’t adapt fast enough will be bought by the ones that do because of the value of their backlist. They’re already making many millions of dollars from the eBook editions of their old titles, after all. All of the work has already been done for those books so that’s “like” free money.

        The big six may not adapt to the market as quickly as everyone thinks they should, but they will adapt because they’re not just going to wake up one day and say, “well, let’s shut down our billion dollar business, I don’t understand these new fangled eBook thing at all!”

        Of course, that doesn’t mean self-published authors and smaller presses shouldn’t be taking advantage of that slowness to build their own businesses! 🙂

        1. I agree – to an extent. Remember they don’t own ALL that backlist. Many of those titles have reverted to the authors. And, the initial signs are that they aren’t learning THAT fast. I hear lots of reports of poorly scanned backlist books going for ridiculous prices like $7.99. Not good enough.

          If I was a large publisher, I would use that backlist to hammer indies. I would price them at $2.99 and $4.99 and experiment with limited time sales of some titles at $0.99 during slow periods. But that is too logical. So it probably won’t happen!

  2. My sales plummeted. Bad year, bad year for me. 😀

    It’s great that it’s going well in the publishing world. I’m happy for them, means in time it will be greater for the self published. I may have a rise in sales again one day.

    Actually I’m just posting to say thanks for a great blog post.

      1. Hey David, you’re reminding me of all kinds of general questions I’ve had lately… ha!

        So what is an author who doesn’t crank out 12 books a year like Dean Wesley Smith — or even 2 — supposed to do if they decide to self-publish?

        It seems like there’s a real emphasis on pumping the marketplace with new content as fast as possible to keep readers buying, etc… but what if you have a regular, 12 hour a day job and don’t have the time to write 6 new books next year, but only one?

        1. I think you are far better off writing 1 good book than 12 mediocre ones. But if you are looking for a way to keep your name fresh with readers, and you have an extended time period between novel releases (for whatever reason), you might want to consider releasing something shorter inbetween – a story or a novella (or two) – to keep your name out there. They won’t make you any real money, but they won’t cost as much to produce either. You could even considering giving them away free for a period to keep interest up in your work before you are ready to release something else.

          Not all the success stories had loads of novels out. Mel Comley had two, Lexi Revellian had two, Victorine Lieske had one, Mark Edwards & Louise Voss had two, Saffina Desforges had one – there are plenty of examples of writers without a huge list of titles doing well. Of course, more titles help, but its not a prerequisite for success.

      2. I had two out early this year, however I’ve been slacking a lot lately. I should have finished a novel and a novelette this month, but a little time vampire sucked the little time I had out of my body.

        I guess I should ask my wife to whip me whenever I stop typing words that becomes a story. The stories I’ve got pending I want to have finished before November, I want to try my hand at NaNoWriMo.

        I suspected my inactivity could have been the cause of my sales disappearing 😀

  3. No matter which way it’s sliced, ebooks are here to stay and will eventually be the controlling aspect of market share. I just wonder what the powers that be will come up with to reign in that power and the massive potential and how it will affect indie-authors and what they can do to preserve their own business.

    1. I think indies need to keep doing what they are doing: keep writing better books and more of them; keep finding new ways to connect with readers and deepen those connections; keep leveraging social media to find readers, communicate with them, and retain them as fans; and keep seeking out novel ways to promote and distribute their work, hone their processes, and hold themselves to higher and higher publishing standards.

  4. “That means that indies have 100 of the Top 430 items in the Kindle Store. In other words, indie writers are responsible for roughly a quarter of the top-selling items.”

    Do you think some of this is due to the free downloads many self-published authors are choosing to boost their ranking?

    1. Yes and no.

      When you switch from free to paid, your ranking doesn’t carry over. However, you do retain your position in those all-important “Customer Also Bought” and similar lists which can be huge drivers of sales. So, the position of those indies in those lists are all on the back of paid sales, but some may have used “free” as part of their overall marketing strategy – whether for that title or another – to increase readership and/or visibility.

    2. If you mean does the Indie Top 100 list contain free books, then no. Amazon broke out free vs. non-free books last year and ranks them and tracks them differently in their system. The Indie Top 100 would only contain books that actually cost money.

      Now, that cost is often as low as $0.99, so that sort of changes the game. Amazon’s ranks are based almost entirely on units sold, and a book that is $0.99 is going to sell A LOT more copies than a traditionally-published book at $14.99. That is not always the case with well-known writers, but my stats definitely show more books under a buck at the top.

      Alternatively, if you mean are self-published authors throwing out free books to boost the sales of their non-free books, then yes, I absolutely think that is happening. And I think it’s a good strategy for them in a lot of ways. 0-]

      1. One of the reasons the publishing industry pushed back on Amazon’s announcement that it is selling more digital than print was because they (rightly) argued that it was units sold and not dollar amounts and that it included many cheap e-books.

        However, this matters little to a self-publisher. A $2.99 e-book still nets them over $2 in royalties which is more than they would get from any format through a large publisher at any regular price, excepting hardback.

  5. Some encouraging stuff there, Dave.

    It’s hard to imagine the big publishers being taken out by the transition – they have the financial muscle to invest in the new digital options and most clearly are doing so. I was told by an authorative NY agent yesterday that one of the big publishers had recently given over a whole floor solely to digital and taken on new staff to run the show.

    Their weakness is in not having the monopoly on distribution, and not having the expertise to market direct to readers. But they can buy the latter, and no doubt will come to arrangements with the e-book outlets to overcome the former.

    But whatever happens, readers and writers will benefit.

    1. They are certainly working on squeezing the visibility of indies at places like Apple and Barnes & Noble, but so far Amazon have resisted that play (and I am convinced they will continue to do so).

      But the transition to digital exposes larger publishers to a level of competition they have never experienced before. The endless sea of self-publishing is filled with thousands of smart, hungry piranhas who are eating into their market share. The savvy self-publisher has a level of connection with their readers that the marketing departments of publishers can only dream of.

      But no, I don’t predict the end of large publishers, or the end of trade publishing, or anything like that. But I think the bigger fish will get smaller and the smaller fish will get bigger. There are plenty of smaller, independent publishers who embraced the digital future quite some time ago, while the majors are still turning the ship around. Some of them – like Ridan – are posting phenomenal numbers. I think a lot of the prizes in the future will go to the swift and the nimble, rather than those with the deepest pockets. We are already seeing the restriction of bandwidth of the larger publishers. Those who are querying or were recently will know all about that. But we won’t see the effects of that on the bookshelves and on the bottom line of the publishers for another year or so.

  6. No one (and everyone) likes anecdotal evidence, but here goes. Everyone I know who owns an e-reader has not bought a single print book since. I bought one print book in the last year because I’m collecting a series in hardback, and I was so annoyed after I started reading it that I actually spent $10 to buy it on my Kindle as well.

    I won’t go back to print books. Most of the people I’ve seen who’ve made the shift would agree.

    1. I haven’t had the same experience, exactly, because I know a lot of people who collect certain authors in hardcover and still do so they’re still buying a lot of print books even though they own an e-reader… but everyone I know with an e-reader does most of their actual READING on there! 🙂

      1. Exactly. And I’m still collecting a few. It actually hesitated for a long time with my finger over the Buy button because it just felt really stupid paying $10 for a book I had sitting right in front of me!

        Ultimately, I just really didn’t like reading the print book anymore. Reading on my Kindle / iPhone was more convenient and just gave me more pleasure, which is pretty much why I read to begin with. 0-]

  7. Great answer to all the doom and gloom-sayers. The truth is ebooks have resulted in more people buying books than ever–and it’s win/win for authors. I like what you said to Mark: “The big fishes will get smaller and the small fishes will get bigger.” Kind of the opposite of what’s happening in the world economy as a whole.

    I’ve broken down the new options this has opened up for writers (and given your book a shout-out) in my blogpost “The Way We Publish Now”

    I’ve also gathered some fun speculations on the bookstore of the future in the post What Will Publishing Look Like in 2021? (Kristin Lamb wants to see a B & N with a wine bar and a kiosk to print custom paper books while you wait.)

      1. Thanks for stopping by, David. I think I’ll be quoting you in next week’s post, too. You’ve got a lot of very smart things to say that new writers need to hear. So many are still thinking in terms of the old paradigm.

  8. Still, though I totally agree with you about epub, my daughter bought Miss Peregrine’s Home for Peculiar Children and it is such a beautiful book, the paper, the colophons, the binding, the chapter headings. And, tho marked $18, it was $12 at Wal Mart. So I think there will always be a market for the unique. I frankly cannot understand how he could put out such a lovely book and charge so little.

  9. Nice work, David. We shouldn’t write off the big corporate publishers yet. They are in business to remain in business in order to earn a return on capital. The essence of their talent at the very top is not literary or even publishing, but the same adaptability one finds in every other management. Just don’t expect such behemoths to be nimble. What we’ve seen so far is the inertia of overly large organizations. Once they start rolling, they are likely to do the job at least half-right.

    However, it seems to me that a large chunk of their business is already in Amazon’s hands, with the indies simply being an extension of Amazon policy and empire. That will be very hard to pull back, very likely impossible. Greed is a powerful motivator for individuals exactly as it is for corporations!

  10. And it is for analysis like this that I like coming here. Not for a rah-rah indie moment, but the full scope of your research. It makes what I’m doing here not feel like such a shot in the dark. Thanks for all you do.

  11. “Currently, the Kindle sells much better on Amazon than all books combined.”

    In money value terms perhaps. But that’s logical at this stage. With 99c e-books Amazon has to sell well over 1000 units to bring in the same dollars as ten KIndles. But once those ten Kindle buyers receive their devices they won’t buy another until the next model comes out, if at all. They will continue buying ebooks for much longer.

    Amazon has to compete with Apple on hardware because a Kindle that only e-reads cannot compete long term with Apple devices that do the same thing better.

    Amazon’s move into publishing and retaining authors seems to suggest they are serious about writers, to the extent that they realise writers can make them more money. They have something now that publishers and agents could only dream of – an ever-growing slushpile that makes them money with no great effort on their part, and gives them the pick of the best to promote as part of the Amazon imprints.

    No-one should for one second presume Amazon are some sort of writers’ charity. This is a commercial enterprise through and through. But Amazon are about much more than hardware sales.

    1. “They will continue buying ebooks for much longer.”
      Given the short history of e-books and the lack of such detailed data, how do you know?

      “Amazon’s move into publishing and retaining authors seems to suggest they are serious about writers”
      I’d say that Amazon is doing with their imprint what any successful publishing house has done in the past decades–cherry pick the small handful of authors with pre-existing success and promote them heavily. Like the “old” days, that handful will remain…a handful.

      Here’s a prediction: within a few years, a large percentage of self-publishing authors will be giving their work away for free, hoping to acquire readership that will pay for future work. It’s already happening, but I think it’ll become the norm. Now imagine:

      Guess what will happen when publishers start doing the same thing?

      1. “They will continue buying ebooks for much longer.”
        Given the short history of e-books and the lack of such detailed data, how do you know?

        Because the book stores are closing and the shelf-space for books in those that survive is diminishing. Readers will buy more e-books because they will soon have no choice, unless they only buy the mega-seller names that will be sold Walmart and such.

        The more bookshops decline in number or shelf-space the more the economics of paper publishing shift in favour of digital.

  12. I’ll add a bit of anecdotal info I have. Take it for what it’s worth.

    Dave, your post mentions a shift in November of 2010, in the last two months of the study. I spoke to a major agent in early 2011. This agent indicated several things during our conversation:

    In this person’s 30 years of experience, the state of the industry has never been worse.

    The publishing houses were taking an incredibly long time (even by slow industry standards) getting contracts and payments back to agents.

    Unless the genre was paranormal romance, the agency was having a hard time selling, especially in my subgenre (urban fantasy). I mentioned this on another forum, and an established writer whose agent had just sold three of his urban fantasy series said he thought it must just be an inept agent (though I doubt he would have suggested this had I dropped the name). It occurs to me that I didn’t ask the agent if it was only harder to sell debut and maybe midlist. As the agency has probably THE top name in the genre right now, I never assumed they were having trouble placing the work of their bestselling authors. Wish I could get some time for follow-up questions with the agent now.

    I’m also put off by the number of writer friends I have with highly respected agents but still no contracts. I do keep in mind, however, that many books take months and months to sell. But with the time they’ve been waiting, I’m starting to worry for them.

    1. That might be an anecdote, but I’m hearing the same story everywhere. I don’t know how everything can be rosy in publishing on one hand, while you have agents moving into self-publishing because of falling advances and an increasingly difficult climate in which to sell books on the other. Every agent’s blog out there seems to be saying its getting harder and harder to place books. I don’t think the numbers of agents have increased exponentially in the last five years, the cause appears to be publishers restricting their bandwidth.

      1. Another anecdote. I was in our local Barnes and Noble today for the first time in several months. I was looking for a June 21 release of an Anne Stuart romance. I didn’t want to buy it for my Kindle because I have the other three books in the series in paperback. The store didn’t have the book, didn’t have anything by Stuart, and had noticeably decreased the amount of shelving given to romances. I used to be able to count on this store for moderate amounts of backlist genre fiction. They were still in the process of reorganizing sections of the store.

        (This store is across the road from a Borders that is going out of business. I had stopped ever going there because they never put stuff out on the release date.)

    2. Everywhere I read how authors are getting stalled by the big6. How can the industry be rosy when that was happening back when Indie authors had less market share than today?

      If the publishers are not buying, authors will self-publish. As many have noted on JA Konrath’s blog, writers write because that is just what they have to do.

      Per the AAP number print+ebook wholesale ‘trade’ was good for publishers in 2010 (revenue growth). In 2011, revenue is down about 5%. Not horrid for the big6, but not great. Looks like I’ll have to add another chart to my monthly summary…


  13. Several points:
    * Amazon is one of those “big corporate publishers”, and more so every day.
    * Watch Amazon’s “Indie Store” closely, because it’s a first step in Amazon’s changing the rules and narrowing the entry gate. Amazon chooses who to promote in that store based on *ratings*, not sales. Guess what one of Amazon’s most manipulated features is?
    * Traditional publishers are a key player in selling the e-books that appear on Amazon.
    * I’m still not clear how you’re able to find evidence of “print is in freefall” in that report, but I agree that print is not doing well.
    * Amazon’s primary interest (and profit) in e-books is selling hardware, not 99-cent to $2.99 e-books. They’ve said so. Infrastructure is expensive, and cheap e-books are still an Amazon loss-leader.

    Most of all, I’m reluctant to pronounce e-books the Future of Publishing based on a year or two of sales figures.

    Big picture, the feeling I get is that self-publishers like you and me are enjoying a “honeymoon” period as this new market model gets shaped and owned by “big corporate publishers” and technology companies. I think writers will have more options available to them for reaching readers, but it’ll be strongly influenced (and designed) by those providing the “pipes” to the readers.

    1. Hi James:

      * Amazon certainly is, but they have a radically different business model, allied to a peerless retail machine that really makes them in a category all on their own. And, most importantly for us writers, they have some of the most author-friendly publishing contracts in the business.
      * I don’t see the Indie Store as a negative development. It’s extra visibility for certain indies – that’s it. I’m not crazy about them showcasing books based on reviews which are, as you pointed out, very easily manipulated, but that’s not the only criteria for selection. The bestsellers list is purely on sales ranking. You can view a “highest rated” list, but I don’t think that will get as many eyeballs. The selections on the main page are said to be a combination of sales, and a little curation by Amazon – although their criteria are unknown. It’s vastly different to other e-stores (like Sony) which just have an Indie ghetto – it’s not like indie books are being pulled from the standard listings, and I can’t imagine that ever happening.
      * Traditional publishers are doing very, very well from the e-books they are selling on Amazon. But my argument is that as e-book market share increases, more writers will jump ship to avail of the higher royalty rates being offered by smaller publishers, or they will self-publish. The USP of a trade deal is print distribution. With each drop in print market share, that USP becomes less valuable.
      * The evidence for print being in freefall does not come from the BookStats report – as that only covers up until the end of 2010. As I think I have shown, the market has shifted dramatically since November 2010. Since January 2011, print sales are way, way done. More info here:
      * I don’t think e-books are a loss leader for Amazon. I agree that they don’t make much off a 99c title, but the costs per title are low too. And not all books are 99c or $2.99 for that matter.

      Your skepticism re. e-books being the future of publishing is fair. It’s still early days. However, I can only see things heading in one direction.

      Regarding the “honeymoon period”, that’s fair too. Business conditions for indies right now are extremely favorable. They may not be in the future. There are too many variables right now to make a confident judgement on how this will all play out. Having said that, I think things look pretty good in the immediate short-term, although that could change.

      1. “* I don’t think e-books are a loss leader for Amazon. I agree that they don’t make much off a 99c title, but the costs per title are low too.”

        I think that’s a common misconception, and leaves out the cost of the infrastructure needed to deliver the e-book. No, that’s not a “build and forget” scenario–it requires massive, ongoing expenditure. That’s why Amazon’s profit (not sales, profit) continues a steep decline over the past two years.

        1. You have a point. However, the main reason for the poor profit performance in relation to sales is a continuation of Amazon’s philosophy since their inception: aggressively pursuing market share over profit. The infrastructure costs you are seeing are not just maintenance costs on existing systems, or necessary upgrades in existing markets, they are also for the huge international roll-out that has only just begun, paying the bills today for fulfillment centers in India and Kindle development teams in Europe and Asia, that are going to bring in the profits tomorrow.

          It’s something that Barnes & Noble, for example, are not doing, for which they will ultimately pay.

          Amazon is a behemoth. Books are only one small part of all the products they sell. I’m not making any claims to the contrary. And right now, the Kindle may generate more revenue, and more profit, for the company. But once all this international infrastructure is in place, it will require far less investment to maintain it. Whereas the profits from content will continue to grow as more and more people enter the market. There is so much room for the market to grow in the US. Books are a $27bn business, and only a small percentage of that has gone digital. Adult fiction is leading the way, so we see greater effects in our circles. But the same will happen with kids books, non-fiction books, school books, scholarly texts, and university books. The potential is huge.

          On top of that, globally, books is an $80bn to $90bn business. It’s huge. Massive. And e-books haven’t even gotten started yet globally. Content will generate enormous profit in the future. What Amazon are doing is ploughing back all the profit into making sure they have a large slice of the global digital pie.

  14. @James “* Amazon’s primary interest (and profit) in e-books is selling hardware, not 99-cent to $2.99 e-books. They’ve said so. Infrastructure is expensive, and cheap e-books are still an Amazon loss-leader.”

    Amazon (and I believe Google too) want to control information. Not so much content, just how it is stored, how it is passed from one person to the next, and how people access it. The hardware may make a profit, but it is the control over the flow of information on this planet that they are after. My guess is their marketplace (goods) sees most of the fluctuation in the world market economies ups and downs, but information is hot and in vogue 24/7/365. The ebooks aren’t a loss leader the way you are presenting it — the ebooks are the point.

    1. You might be right. But, Amazon’s primary business is not books, e-version or otherwise. I recently wrote on my blog:

      “Today, the Kindle accounts for about 10% of Amazon’s gross income. Books, CDs, and DVDs combined account for about a third of its gross income. That means the majority of Amazon’s business–like Apple, by the way–has nothing to do with e-books or print books. That trend looks likely to continue.”

      Currently, the Kindle sells much better on Amazon than all books combined. I think that’s important to note. And, Amazon’s spending on infrastructure is focused on delivering hard goods (electronics, Kindles, etc.) and network services (like Amazon S3).

      Does Amazon know that e-book sales equal Kindle sales? Yes. Does Amazon know that tablet makers like Apple are a direct threat to the Kindle? Yes. Neither Apple nor Amazon want to control information, I don’t think–they want to sell hardware and services. Content (like e-books) is a means to that end.

      1. Control of Internet info is a hot button issue right now. I believe there is pending legislation in the US Congress specifically trying to limit Google’s access to info. It all boils down to the ‘big brother is watching you’ issue. I just want to have something interesting to read while he watches.

      2. Most of Amazon’s costs are to build the ‘fulfillment centers.’ Amazon is going on a rampage to pull customers into their ‘ecosystem.’ Once they have a customer on prime, it really is tough to justify buying at any other website or most brick and mortal stores.

        I expect the Kindle tablet to tie in with video on demand. There are costs with the Kindle (R&D, servers, etc.) But seriously, if Apple can make a fortune selling $0.99 songs (and they make a profit doing it), Amazon will easily make a profit off of $0.99 books.

        Right now Amazon isn’t making much on the hardware. It is setting itself up for marketshare. The old IBM rule of marketing was ‘first marketshare, then profits’ and that worked very profitably for them for a long time. Diapers, toys, books, electronic devices (Kindle) and downloads are all business Amazon is going after.

        The servers do not cost that much. Not for books. If the servers really cost *that* much, then Netflix would be out of business. Also, it only costs about 2.5X to sell 10X books/movies/whatever digital. Amazon hasn’t yet hit ‘economy of scale’ in digital sales. They will. Just not yet…


  15. “Content (like e-books) is a means to that end.” I think in my clumsy way that is what I was getting at. Unlike other loss leaders where it can be an entry point to profit, the information whether music, photos, people chit chatting, ect. I believe that they want to sell the hardware and build the networks and sell the means by which we receive it. So the info what ever it is is the yolk in their egg? Ugg. Sucky analogy I’m getting tired. I hope that is clear. I don’t think we’re so far apart.

    1. That makes sense. I think I got much too wordy and cautionary, but there it is. I’m actually quite positive about the future for e-books, but I’m keeping a weather eye on Amazon.

  16. I put out two books in 2011… and have just put them out in Kindle too. Sales were okay, but I expected more. I keep marketing.

    Thanks for this post. I’ve tweeted it to others.

    1. It usually takes time to build, for the target audience to find the books and spread the word, so I don’t necessarily think less-than-expected is a major concern with less than a year on kindle. I told myself I’d give self-publishing five years of effort, though I’ve almost abandoned it a couple of times for a variety of reasons. It’s been especially surprising to me that the people who talked me into staying the course were some of the people who had the most concern about me trying it out in the first place.

    1. My spam filter caught that one 🙂

      I don’t have a strict rule on signatures/links to books. Personally, I prefer links to be relevant to the discussion, but I don’t mind signatures or whatnot. I’ve experimented myself with having a blog/book signature link when I comment on other blogs, and to be honest, I found I got more traffic without the signature. People can click on your URL or pic if they want to check out your stuff. I don’t have strong feelings either way on book/blog signature links, but I think they are a turn-off for some people.

  17. EBooks help both trade publishing and self-publishing. I can’t imagine the commercial publishers completely folding, and this study was great news for a worried industry. Unfortunately, some of them may take this as a “whew, we’re out of the worst part” and try to stick with old models.

    But customers are going to dictate the market from now on. The bestsellers will continue to dominate the purchases, and many commercial publishers will snag these superstars and reap amazing profits, as always. But keeping the midlist and debut authors happy is going to be a struggle for the industry until the commercial publishers figure out how to deal with or harness the self-publishing movement.

    We’ve seen agents directly contacting successful self-publishers after watching the bestseller lists and requesting contacts through the Kindleboards. Is this going to be the new model for commercial publishing to search for the next superstars or supportable midlist? I think it’s certainly a model that will work, but only time will tell how the industry reconciles the old models with reality of the publishing industry for midlist, debut, and non-superstar authors.

  18. You can never write off the big corporations. People say the same things about record labels and movie studios. Some indie artists in all mediums love to spread that message, that the corporations are getting destroyed by the internet. And meanwhile the movie studios, record labels, and publishers keep churning out the biggest money makers.

    This should be clear to anyone who advocates David’s method of keeping your eyes open, questioning your beliefs etc.

  19. Most of what is happening and most of what is being forecast was predicted by my small publisher to me more than 36 months ago. They have been abreast, if not ahead, of the digital eclipse for years. My titles (which have always been available as ebooks, as early as 2005) started selling much more in eBook than paperback in October 2010, and I see no reversal of that in sight – nor do I want to really, although I love paperbacks. Ebooks are more affordable, easier to purchase and lighter on the wrists.

  20. Thanks for letting it by. But you are right. Nothing seems to help. I am opting for patience but don’t have much of that. Am hurrying to get other up as you and many others say that helps. And I just remembered it was you that commented on Jessica Faust’s blog about the agent/publisher dilemma.

    1. More titles should help, but don’t hurry anything. Make it the best book you can possibly write. I keep having to tell myself the same thing. I want to release my next book NOW, but it’s not ready, and I catch myself speeding through the rewrite, and then forcing myself to go back to the start as punishment!

  21. Seriously. If you don’t love your own work, how can you expect someone else to. After publishing I thought “Oh, I shouldn’t have left that in. It’s kinda gross.” I’m in review anyway for adding tags so I thought I’d go in and change it, and I read it and decided to leave it. I’ve gone to so many of those suggested sites and follow blogs and am even doing Twitter now which for some reason makes me feel like a total whore, and I am getting no feedback. I am personally pretty well read so I find it hard to believe I am that far off the mark. But I am a little nuts. It is great that someone with your huge following bothers to answer. Thanks.

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