Continuing on the theme of change in publishing, I came across the latest report by The Publishers Association, released a few days ago. Philip Jones did a great job at going through it, explaining what one can learn from it. Although it refers specifically to the UK market, the trends are similar in the US. Please note the information below refers to traditional publishing; there is a growing number of digital-only publishers not represented in the PA data (not least Amazon Publishing) that would help broaden our understanding.
You can read below what I consider to be the highlights.
The Yearbook confirms that e-book sales have softened for most trade publishers, with sales growing just 5.3% in 2014. The impact was felt most acutely in the fiction sector, where e-book sales did not bring in enough additional revenue to cover the gap made by print’s continuing decline.
To put this in perspective, the rate of growth was 375% in 2010/11; 134% the following year; dropped to 18% from 2012 to 2013 and finally to last year’s 5%.
It is worth noting, though, that the market has not yet peaked. We won’t know for another year whether in 2015 it reaches its plateau—and there is much that might alter the trajectory over the course of a year. According to data released monthly by the Association of American Publishers (and analysed by Publishers Marketplace) e-book sales rose also by 5% in 2014, driven primarily by YA titles. However, there are occasional dips just as there are in the printed book market.
Nevertheless, the narrative of slowing e-book growth is now widely recognized. Digital sales saw yet another year of steady but decelerating growth. The evidence from the Yearbook is that fiction e-book sales, currently standing at 37% of total fiction sales by value, are still rising, but the growth trajectory is less steep than it was in 2012 and 2013. If the UK follows the pattern shown in the US, this graph may well level off completely in 2015.
For books, digital sales are now 17% of the total by value, and have increased 33% in the last two years. For some categories of book, digital now vies with physical for importance: for fiction, e-books are 37% of the total by value, and have trebled in absolute terms in three years. But, as was observed in the 2013 Yearbook, the rate of digital growth for books has leveled off overall in the last two years, and it is clear that a flexible mix of print and digital will continue to be required by consumers, with no single pattern dominating all categories.
The PA report also contains other surprises.
Export sales of fiction e-books actually fell slightly back. In this, it mimicked what happened in the physical export book market, where sales also retracted by 6%. The Global E-Book Report examined the difficulties of finding genuine digital growth in markets outside of the English-speaking world. Yet still, that sense of a growing and more easily accessible overseas community happy to read certain titles in English remains. The potential is certainly there, but realizing it can be tricky.
Non-fiction digital sales also retrenched after a few years of encouraging growth. Non-fiction e-book sales doubled in 2012, grew again in 2013, and then stalled in 2014. In fact, the overall non-fiction market fell 8.5%.
Sales of UK fiction digital sales rose 8%. And for many publishers this remains a buoyant area, if mainly confined to a certain type of fiction. The available data shows a continuing dominance of major brand names and deep discounting mechanics – in effect, a mass market retail model. Price, author recognition, competing format (i.e hardback or paperback) and genre can strongly impact sales in this sector. Some authors and genres skew more towards e-book sales than others – it is not unheard of in the paranormal romance or ‘new adult’ genres for e-books to make up 90% of all sales, whereas in some more traditional genres e-books account for under 20%.
The children’s digital market continues to show few signs of activity. Digital sales rose from £16m to £22m (and that includes audio downloads). In the UK it went up from £12m to £15m. Perhaps a new generation of children, whose digital world is increasingly all-consuming, will take to e-books. However, the latest reports highlight the continuing importance of the printed book in the lives of children, despite the ever-increasing use of the internet and technology. Rather than an explosion in accessed digital content for kids, the golden age for children’s books continues.
The Big 5
Domestic e-book sales for the five groups—Penguin Random House, Hachette, HarperCollins, Pan Macmillan—totalled 49m units in 2014, a 15.3% rise on 2013. Three of the five publishers recorded double-digits growth, with only Simon & Schuster down—albeit marginally—on 2013. This, we project, represents a year on year rise across all publishers of 18.5%. But that compares with publisher reported invoice growth up just 6.8%. If volume sales are rising ahead of value growth then we can surmise that average prices are shrinking—and that publisher margins are being squeezed. In other words growth comes at a cost.
The backdrop to this is the reintroduction of agency pricing in the US (but not yet in the UK), and one might further deduce that while publishers are continuing to experiment with pricing, they are watching the value of their e-book business like hawks—providing further opportunities for those willing to chase volume at the expense of turnover. In the UK, this will only be exacerbated by the imposition of VAT on e-books at the UK rate of 20%. What looked like a high margin business for sometime, now looks like a race for the bottom (agents take note). In fact, since the average selling price of printed books is on the rise, publishers might actually be banking on print to back up their e-book growth.
The audio download market continues to surprise. In 2014 the PA report suggests its value has increased five-fold from 2013 to 2014. Even that number looks suspiciously low; according to some, the actual increase has been even more spectacular. Publishers now talk about audio downloads in almost the same way they used to talk about e-books (growing and highly profitable).
The Academic Market
Schools market have yet to develop digitally, but the academic and professional markets are in a different country. Sales have risen consistently by a double-digit number. The journals market outstrips all of this: electronic-only revenues grew by 6%, representing a 79% share of subscription income.
What about Indies?
We still have no clear sight of the self-published digital market. Our perspective might change a lot if we did. That said, the traffic from self-published author to traditionally published author (or Amazon published) is still broadly going in one direction, suggesting that even successful indie writers are faced with the same worries traditional publishers have come up against.
In Conclusion: No one Knows Anything
With e-book growth patchy across different sectors, pricing a constant challenge, margin a worry, and new models such as subscription likely to further disarrange matters, the market’s complexity will only increase. The e-book market might grow, or it could shrink a little, the formats might shift about, the balance change, good publishing might make a difference in one year, but so might bad publishing. New players, or new devices might stimulate adoption one way or another, as will whatever happens with self-publishing.
In preparation for an uncertain future, the big publishers are either consolidating, or retrenching. Publishers are expecting their costs of doing e-book business to increase (from author royalties to retailer discounts and in the UK due to the impact of VAT) and are already responding appropriately.
Either way it is a market that is here to stay: and ever fascinating to watch.
Read Philip Jones’ original post for more information and links!
Or, if you’re in the mood for something to take your mind off all these numbers, you can always read my award-winning children’s book, Runaway Smile, for free!
Thanks for another informative post, Nicholas. I came to the same conclusion as you did before reading this. Sharing information such as this, and the results of one’s own experiments with marketing e-books, is very useful. I’ve certainly noticed an increase in price for print books, as have the customers at my bookstore. Nonetheless, there are still some who have never considered using an e-reader. Also, as D.G. Kaye mentioned, for many popular authors, the price of the e-book is sufficiently high that readers prefer to buy the paperback. I wonder if this trend of increasing prices for both the print and e-books of popular authors will lend itself to increasing awareness of self-published authors, whose e-books are priced more reasonably?
I think it’s one of the main reasons behind the explosion in Indie titles.
I’ve noticed that Amazon discourages Indies to price their book under $2.99, so I suspect that the ebook market will cluster between $2.99 and $4.99 for most titles.
One thing I’d just like to mention regrading price is that some Indie authors need rethink the importance of their book’s “blurb.”. Even if it’s being offered for free as a promotion, I won’t download a book if the blurb contains errors in punctuation and/or grammar, uses the same phrase or sentence structure too often, or doesn’t make me curious–other than in the sense of, “Who would want to read this?” I think it’d be worth it to run it by others, preferably a proofreader and/or someone who works in marketing. 🙂
Very true. The irony is that I’ve caught more mistakes in traditionally published blurbs (in one case, that included the hero’s name) than in Indie ones! 😀
Too true. I just read a terrible post about words to include in your blurb. They were all pretty hackneyed: e.g., “Fast-paced!”
“Hilarious” is my number one enemy 😀
You know me and my great leaps to conclusion regarding stats, Nicholas, but this all tells me that e-book discounting has now reached the point where we can say it’s damaging sales.
If fiction e-book sales are softening, that’s just inevitable, given previous rates of growth. Another – altogether more worrying – thing is that they’re still growing and yet no longer covering the decline in print sales. Notwithstanding the fact that I don’t know what the unit sales figures are like – it’s a money problem, isn’t it? And that doesn’t take many months to feed through to the balance sheet whether you’re an author or a publisher.
I’ve been thinking a lot lately about discounting and freebies… probably to the extent that there’s a couple of posts due on this myself. But it’s a worrying trend.
It’s basic supply and demand, I guess…
Interesting read Nicholas. I wonder if it’s because the publishing industry is ephemeral. Information, books come and go as quickly as the currents in the ocean.
Hadn’t thought of that – thanks for a great point!
Interesting share here. I’m wondering if it’s the trad publishers feeling a slower growth on their author’s ebooks. I say this because whenever I go to order a trad author’s book, I notice that the kindle price is the same price, sometimes higher than the ebook, and if I’m going to pay that much for a book, I just order the paperback version instead.
Many of them still have to catch up…
Reblogged this on Books and More.
Love the conclusion. 🙂 Surprise ending after such a helpful post.
Lol – glad you found it useful 🙂
Well, all I can say is, it’s very interesting, even if it tells us nothing.
In conclusion, no one knows anything 😉
I always feel like this is the Far West of publishing. I think things will eventually normalise, but at the moment, it’s a total mess.
Lol- the far West of publishing. I like that 😀
“In Conclusion: No one Knows Anything”
This should have been the title; would have saved me a lot of time. LOL
Lol – I’ll keep it mind for next time 😀
Interesting, no-one knows anything. 😀
Sad, but true: no-one does! 😀
Hard to tie down something that keeps moving, evolving. o_O
I found this encouraging. Go e-books!
Lol – absolutely 😀
I like your conclusion. i feel like we are on a roller coaster ride, no idea what is coming next!
Fun, huh? Hold on to your hat! 😀
No one knows anything. After reading all of this post, I had to laugh at the conclusion.
The controversy of e-book vs print is alive and well, but I think e-books definitely have the edge. They are more portable, take up less room, and can be downloaded in a blink of an eye. I know my e-book TBR is out of control.
E-books for children? I would expect those numbers to be low. Parents still want their child to hold a physical book and flip through the pages, whether a board book for a young child or a chapter book for an older child.
The figures are interesting, considering nearly every adult reader I come in contact with prefers e-books for the convenience.
I am unclear whether or not the statistics include books that are downloaded for free. What I am sure of, is that taken the wide range of pricing of e-books, no one has figured out the magic pricing of e-books yet.
Thanks, Nicholas, for getting my brain revved up this morning. This is a very thought provoking post.
So glad to hear it 🙂
The statistics don’t include free books, as they refer to traditional publishers, who don’t really use that means of promotion.
Traditional publishers send printed ARCs (advance reader’s copies) to booksellers. These are not necessarily the final edited version of the book. I wonder why they don’t consider the cheaper and more environmentally friendly option of allowing us to download the e-version for free prior to the book’s release?
I’m sure that will happen, sooner or later. As Susan once said, things move at glacial speeds sometimes… 🙂
Sobering thoughts yet something writers and everyone in the industry need to know. Thanks for sharing!
A pleasure! Thanks for reading, and welcome! 🙂
Thanks for another insightful post.
Thanks for reading! 🙂
I owe you a couple of answer to your emails; expect them shortly 🙂
I have to agree with ChristineR. The conclusion sums up the unstable nature of sales against projections. Publishers are still jittery, and physical bookshops are going ‘niche’ to weather the storm. Everyone will just have to continue to wait and see, it seems. very interesting Nicholas, as always.
Best wishes, Pete.
Thanks, Pete! 🙂
The other thing to remember is that, even if something is true right now, it could change at the drop of a hat…
Reblogged this on Have We Had Help? and commented:
More from Nicholas 🙂
Very informative, thank you for this post!
Thanks for reading! 🙂
Reblogged this on Smorgasbord – Variety is the spice of life and commented:
More publishing information from Nicholas Rossis based on data from the 2014 Publishers Association Statistics Yearbook.. I would not be surprised if the Ebook market did slow down as virtually every comment I get these days is that everyone’s TBR list of books they have downloaded are overflowing. I know that I have enough books to last me a lifetime already waiting to be read and although I am still buying specific authors work I am not sure when I will have time to read them all. This also says to me that I have to look at how I market my books and that I need to find a way to tap into a new audience of Ebook readers and target interest groups more carefully. Interesting reading. Thanks Nicholas
Thank you for this.
A pleasure! Thanks for reading 🙂
“In Conclusion: No one Knows Anything”
I reckon that is spot-on, Nicholas! Thanks for sharing the highlights.
Lol – sadly, that’s the best conclusion I could reach 😀