Here’s a preview of the deep analysis of US E-book statistics and trends to be offered at the Publishers Launch Conference at the Frankfurt Book Fair, Monday, October 8. Get 20% off your ticket to Publishers Launch.
By Publishers Launch
One of the great ironies of the e-book era is that while digital data streams and a market concentrated among a small number of retailers should result in an easily measured, fully transparent marketplace, we are left with the opposite, since those retailers have declined to share any data.
In the US, publishing associations continue to try to improve general knowledge about e-book sales data, and at least some progress has been made. In 2011 the Association of American Publishers (AAP) and the Book Industry Study Group (BISG) joined forces to compile better sales data on the publishing business in their BookStats project. It is the most comprehensive publisher data compilation yet in the US — but all the released numbers include substantial statistical modeling, so we refer to those numbers as estimates only. In fact, actual publisher sales data comprises only 61 & of their tabulations overall (and probably less within trade).
For 2011, BookStats estimated that trade publisher e-book revenues were $1.97 billion, comprising almost 16% of trade dollars. The e-book total was $838 million in 2010, accounting for 6.7% of trade sales. It’s no surprise that adult fiction drove the e-book gains, more than doubling to $1.27 billion from $585 million in 2010, and comprising 31% of dollar sales within that category. (BookStats tabulates publisher receipts — and thus combines wholesale dollars and, for the small number of agency publishers, consumer payments after the deduction of retailer commissions).
The only readily available tabulation of actual publisher e-book revenues comes from the separate monthly and annual compilations that the AAP issues on its own, now called StatShot (to distinguish it from BookStats). As of 2012, the AAP’s pool of reporting publishers grew substantially, adding hundreds of publishing clients from nearly all the largest distributors, now incorporating source data from 1,149 publishers in all. The new AAP stats also provide e-book sales breakouts for adult and children’s/YA titles, as well as specific counts for religious and university press e-books. As the AAP reports monthly numbers for 2012 — it reported April figures in early August — it is restating historical numbers for 2011 on a month-by-month basis for comparison.
Where BookStats estimates e-book sales of $1.97 billion for 2011, the AAP originally counted $970 million in actual sales, comprising 18.6 & of all net reported trade. That AAP figure was based on 12 reporting trade publishers — including all of the Bix Six–and 14 university presses. (Other notable reporting companies in 2011 included Harlequin, Thomas Nelson, Scholastic, Wiley, and Workman.) So it describes well the trends in e-book sales among the six largest US trade publishers — Hachette Book Group, HarperCollins, Macmillan, Penguin, Random House, and Simon & Schuster — since they all do report data, and their results likely comprise as much as 80% to 90% of the monthly AAP e-book reports.
Yet, as the AAP revises its monthly 2011 e-book data to reflect the much larger pool of reporting publishers, the numbers aren’t rising all that much. Adding over 1,100 reporting publishers has only increased e-book totals by about 13% so far. To some, this suggests that the BookStats e-books estimates are too high, at least to the extent that they aim to describe the conventional e-book marketplace. The StatShot count looks to more accurately reflect the trade e-book market, and at the current pace, the “revised” AAP count for 2011 will be approximately $1.1 billion — a far cry from the BookStats estimate.
What neither BookStats nor StatShot capture at all are the burgeoning lists of self-published e-books and small-publisher e-books through etailer programs such as Amazon’s Kindle Direct Publishing and Barnes & Noble’s PubIt, and third-party distributors focused on this segment like Smashwords.
2012 Trends
StatShot indicates a healthy beginning to 2012 for the entire trade business, with combined sales of print and e-books up almost 16% compared to 2011, when the trade was first reckoning with the unwinding of Borders — the increase likely due to lower returns, rather than increased shipments.
In the first two months reported, adult e-book sales were up by what is a modest 27% compared to historical trends, at $364 million. Children’s e-book sales of $72 million have gained much more, nearly tripling from $25 million in the same period a year earlier. While a big part of that “children’s” number is the explosive sales of Suzanne Collins’ Hunger Games trilogy, it also indicates the emergence of a digital children’s market with more tablets and color readers on the market after the holiday season. Total trade e-book revenues have comprised just under 23% of sales for the first four months of 2012. With the new AAP breakouts, we can see that digital books comprised 27% of the adult trade market, and 13% of the smaller children’s market.
Our other primary reference point is quarterly and annual reports from publishers that are part of publicly held corporations. It’s tricky to align those numbers however. Some report e-book sales, and others report digital products overall (including audio, apps, etc.) Some publishers only report worldwide digital sales, with no breakouts for the US — so the effect of US sales, where the digital market has advanced the most, is diluted at varying proportions, depending on where else each particular conglomerate does business. (Lagardere, as an example, does considerable business in France, where the e-book market has yet to take off.)
Quarterly and half-year results reported by publishers so far in 2012 have been consistent with the AAP stats. Digital content comprised over 23% of worldwide sales at Simon & Schuster for the first half. At Penguin, e-books made up 19% of sales at the halfway mark, with e-books accounting for roughly 30% of US sales and 15 & of UK sales. Harlequin said worldwide digital sales comprised 20.5% of sales for the same first two quarters of the year. HarperCollins, which reports in less detail, said that digital comprised 18% of worldwide sales in the first quarter, and then put e-book-only sales at 14% of revenues in the second quarter. Hachette Book Group reported that e-books comprised 27% of US revenues and 23% of UK sales in the first half of 2012 — though worldwide, digital comprised 8.4% of all Lagardere Publishing revenues.
2011 Publisher-Reported Worldwide Digital Sales
- Harlequin: 15.5%
- Lagardere: 6%
- Penguin: 12%
- Random House: 15.5% (roughly)
- Simon & Schuster: 15.5%
In the US alone in 2011, Hachette Book Group USA was at 22% and e-book sales at Penguin USA were “more than 20%” for 2011. Even those higher &ages still mask the extent to which e-books now drive the US market for new adult releases, particularly fiction. At the same time, smaller publishers and those who focus on nonfiction continue to report smaller e-book penetration. At Wiley, for example, though e-book sales continue to grow at a strong pace, they still comprised only 9% of sales in their professional/trade division for the fiscal year ending in April 2012.
The Doubling Days Are Over
One clear trend line has emerged in recent months in the US market. While e-book purchases continue to expand, US e-book growth has declined considerably, starting in September 2011. A market that had been doubling or more year-over-year is now expected to increase by about a third in 2012. The slowdown was confirmed by multiple executives over the summer when reporting financial results, including Pearson CEO Marjorie Scardino, Simon & Schuster CEO Carolyn Reidy, and Barnes & Noble CEO William Lynch. The base has gotten much larger, so it’s logical that growth rates would come down, though some have been surprised by the rapidness of the decline. Some analysts had extrapolated from historical patterns and convinced themselves that e-books would comprise at least 50% of the market by year’s end; at current growth rates, that milestone is at least a couple of years away.
A variety of factors could be responsible; some pointed to Apple’s elimination of web purchasing from within third-party reader apps in June 2011 as a significant factor. Others have speculated that novelty of ereading adoption was wearing off, and that the market may have saturated the prime targets — frequent book readers. As Lynch noted in August, “consumers fill up their lockers and their first two to three months [after buying a new device] are vital as it relates to driving…our overall content business growth.” Fewer devices, particularly to fewer brand-new customers (rather than existing ereading fans upgrading to new machines), means less loading up of content in those early months of ownership.
Recent data has reinforced a suspicion that the exponential increase in tablet usage is also a factor. Those device owners are tempted by all kinds of media apps and appear to be using reading-capable tablets much less for book reading than dedicated e-readers.
How Many Devices?
The only data worse than e-book sales is the tally of device sales. For dedicated e-reader devices, the best estimates come from a couple of services that monitor manufacturers in China and their export shipments to customers, but they are hardly definitive — or consistently shared. (IDC provides one of those services; other periodic tallies come from IMS Research, and NPD/Display Search. Most of these full reports are sold at premium prices, so tracking their results can be difficult without regular paid access.) IDC tabulated 12.8 million e-readers shipped worldwide in 2010, and says 25.9 million e-readers were shipped in 2011.
But in just over two years, Apple has transformed the market with its line of iPads, which have sold 84 million units worldwide, moving 28.8 million units in the first half of 2012 with the introduction of iPad 3. Many other tablets have followed from reading-focused players Barnes & Noble, Amazon, and Kobo, and now also from Google and other major consumer electronics players (with Microsoft and others joining the field soon). In early 2012, tablets were estimated to be outshipping dedicated e-readers by a little more than 2-to-1, and tablets are expected to continue growing at a much faster rate than eInk devices.