Author Earnings is a (free) web site run by best-selling writer Hugh Howey and the anonymous data analyst known only as Data Guy. For the last few years, they have spidered Amazon’s online bestseller lists, as well as other sites, on a quarterly basis. Basically, using some pretty advanced data collection and analysis techniques, they’ve assembled the best look at what is really going on in terms of sales of books in the United States.
Last week, Data Guy was invited to do a keynote presentation at the Digital Book World conference, which is now online for everybody to view. I have taken some time to digest his presentation, which includes some startling findings. Especially in light of the fact that the October 2016 Earnings Report showed a slight, but unexplained, downturn in ebook sales.
The best graphic from the presentation was this one, which illustrates what Amazon did to traditional publishers in 2016:
For easier discussion, I’ve divided my takeaways into distinct categories…
The traditional publishers have virtually no understanding of the size of the book market in US. And the data vendors they depend on are only slightly better. Data Guy’s collection/analysis techniques are not rocket science, but the principles they’re using are alien to organizations like Bookscan, Nielsen and others that the traditional publishers relay on to make business decisions.
- Even 15% of traditional publisher sales are not being recorded at the point of sale.
- For traditional publishers, 49% of their sales are digital, but their pricing strategies are designed to preserve the profitability of their print products. Despite the fact that they make more money per sale off ebooks. So they’re using a more profitable format to bolster up the sales of a less profitable format.
- Overall, Adult Fiction is 42% non-traditional. And 70% of Adult Fiction sold is digital. For the record, digital formats aren’t sold in brick & mortar stores, so this means that 70% of the action is online. As an author, do you even have to be in bookstores to be successful? Especially if you’re a debut author or a mid-list author?
- In 2016, 14% of all ebook sales were Kindle Unlimited (KU) full-read equivalents. KU is Amazon’s subscription service for online books. Nobody else has tracked this area of the market except Data Guy.
Print is Back
- In 2016, US print sales grew 3.3%. BUT all channels declined except for Amazon. So “Print is Back” really translates into “Amazon is eating the lunch of Traditional Publishers and Brick & Mortar Retailers.”
- Ebook sales are not shrinking. They only stopped growing for traditional publishers because of stupid pricing ($14.99 for an ebook!) and Amazon print discounts.In actuality, Amazon’s ebook sales grew 4% in 2016. Traditional publishers are losing market share to indie published writers and Amazon imprints./li>
- Print sales ticked up in 2016 because of Amazon. Unable to discount ebook prices thanks to publisher-enforced contract terms, Amazon discounted ebooks so they were often lower than the (ridiculously high) ebook prices set by traditional publishers. This caused publishers to sell more print books…instead of more profitable ebooks, which in turn affected their overall earnings.
- 43% of all print sales occur online, with the majority going to Amazon.
Should Authors Go Traditional or Indie?
- Print-book customers are migrating away from venues where indie authors cannot compete effectively toward venues where indies can compete effectively, with less risk, with digital upsells, better pricing and outlearn traditional authors on every sale.
- Overall, Adult Fiction is 42% non-traditional. And 70% of Adult Fiction sold is digital. For the record, digital formats aren’t sold in brick & mortar stores, so this means that 70% of the action is online. As an author, do you even have to be in bookstores to be successful? Especially if you’re a debut author or a mid list author?
Where Did the Coloring Books Go?
Coloring Books emerged as a major new profit area for traditional publishers. Then it disappeared almost overnight. Where did it go? Data Guy has the answer…
Well, it went indie. It seems that indie authors and artists can produce coloring books faster, cheaper and more effectively than traditional publishers.
If you’re a debut author, it’s probably better to start indie, build an audience and go hybrid if a publisher provides a sufficiently lucrative contract (this includes potentially being picked up by an Amazon imprint).
If you’re an indie author, the market has gotten both better and tougher at the same time. The bad news is that, in order to be competitive, indie products must be comparable…or better…than products from traditional publishers. The good news is that most sales are happening online, and in digital formats, so authors with traditional publisher support getting into bookstores are increasingly on a level playing field with indie authors.