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.