January 2010 US ebook sales up 261.2%

[Ben Thornton]

I labelled it as such - the retail figures should be higher. I don't understand what point you're making.

[GeoffC]

the point I was making was that wholesale figures don't necessary equate with retail to customer figures.

[Ben Thornton]

Originally Posted by GeoffC

the point I was making was that wholesale figures don't necessary equate with retail to customer figures.

That's certainly true - they suggest that the retail might be twice the wholesale number. But it should follow the same pattern, and if ebooks move from 1% to 4% of wholesale, I'd expect a similar shift in retail. The point of the chart is that ebook sales are taking off sharply, in a market where on-line sales are beginning to dominate.

[Kali Yuga]

OK peoples, pay attention. I explicitly said that I expect ebook sales to rise faster moving forward than they did in 2009.

The critical point is that despite the massive hype through most of 2009, ebook sales are still very small compared to the market as a whole.

Secondarily, this is likely to be the case for many years to come. So when you insist that the publishers are Luddites who ought to toss out their old business models, just keep in mind that over 95% of their revenues are still coming from paper.

Originally Posted by RSE

If they went up another 261% from 2009 to 2010, they would increase their market share from 4% to 10.5%. One more year at 261% growth would put e-books at 27.5% of the market.

Sorry, but this is a silly assertion.

If you follow this logic of "consistent 260% increases", ebooks would reach 100% market share by mid 2013. Revenues would go from a theoretical projection of $32m in 2009, to $80m in 2010, to $213m in 2011, to $556m in 2012. No one would consider that even remotely likely, let alone 50% market share by 2011.

I'm fairly confident that even with the structural advantages tilting towards ebook adoption, it is much harder to increase revenues by $350m in a single year than by $20m.

It's very common for a new format or product to have huge percentages of increases early on -- and obviously "260%!" grabs more attention than "$20 million out of $900 million." If Ben's chart is remotely accurate, for example, you'd have seen 100%+ increases in 2004 and 2005 -- followed by shrinking sales for a time -- and consistent $3-5m increases for most of 2008, and consistent $10m increases since Q4 2008. If that trend continues, annual ebook growth would go from 260% in 2009, down to 100% in 2010, then down to 50% in 2011. In this example, the "growth percentage" statistic would misrepresent a steady growth of ebooks.

And of course, let's not forget that there is huge pressure to reduce the price of ebooks, and that many ebooks are cheap or free. Things would look very different if we were looking at unit volumes instead of revenues.

In other words: Measuring the percentage of growth practically useless until the market, format or item has matured; and expecting consistent explosive growth is, to put it mildly, excessively optimistic.

Originally Posted by Ben Thornton

But the growth isn't linear, as has been pointed out. What is happenening is made clear by some pictures: Amazon vs. bricks and mortar

Sorry, this chart doesn't prove anything.

It's not specific to ebooks; heck it isn't even specific to books, as these retailers sell books, movies, music and other media. All it shows is that Amazon's online sales are growing -- in a linear fashion since 2006 by the way -- while two brick & mortar stores are stalling.

Originally Posted by Ben Thorton

eBook wholesale sales....

Again, I'm not seeing this as exponential growth. In fact, the growth looks largely linear dating back to late 2008. See for yourself -- growth in each quarter going back to Q4 2008 is about $10 million per quarter. (Prior to that, it was around $5m per quarter for over a year.) Healthy, but definitely closer to linear than exponential.

Charts are handy, but they can obscure trends just as easily as illuminate them.

[Ben Thornton]

Originally Posted by Kali Yuga

All it shows is that Amazon's online sales are growing -- in a linear fashion since 2006 by the way -- while two brick & mortar stores are stalling.

Which was my point - people are moving to on-line purchasing of paper books which, in my view, will make the switch to ebook purchase easier and more natural. I'm suggesting that a shift away from bricks-and-mortar stores to on-line sales prepares the way for ebook adoption.

Again, I'm not seeing this as exponential growth. In fact, the growth looks largely linear dating back to late 2008. See for yourself -- growth in each quarter going back to Q4 2008 is about $10 million per quarter. (Prior to that, it was around $5m per quarter for over a year.) Healthy, but definitely closer to linear than exponential.

You used an illustration where the increase since last January was applied linearly, which I think is unlikely.

I think that it's right to counsel caution about where this might go, because it could sharply continue to 6% and then plateau for 5 years, just as it could move to be market dominant in 3 years. Still, it looks likely to me that ebooks are set to become a significant slice of the pie for the first time very soon.

I'm not convinced that publishers are moving nearly fast enough to react to this. Making back-catalogues available at the current quality would be easy and cheap, and provide a dominant position in the ebook space for the publishers who were prepared to do it.

[HorridRedDog]

Originally Posted by Ben Thornton

I think that it's right to counsel caution about where this might go, because it could sharply continue to 6% and then plateau for 5 years, just as it could move to be market dominant in 3 years. Still, it looks likely to me that ebooks are set to become a significant slice of the pie for the first time very soon.

I'm not convinced that publishers are moving nearly fast enough to react to this. Making back-catalogues available at the current quality would be easy and cheap, and provide a dominant position in the ebook space for the publishers who were prepared to do it.

Great analysis and speculation, thank you.

And now for my much smaller contribution.

I've seen over and over, here on MR, where people say how many ebooks they have bought and/or downloaded (free ebook as opposed to pirated).

I now have more ebooks on my reader than I can read in a year. I helped to increase those numbers!

But now I'm not buying much more. What about the rest of you?

And insofar as to the "loss" of sales to pirated ebooks? How many were downloaded just because they could? How many of those will even be read?

I've seen where people are saying things like "Boy! When I put 15,000 books on my reader it really slows it down!"

Will they be reading those in the next few months? And then buying another 10,000 - 15,000? Don't think so.

[ChrisC333]

Here's a couple more ideas to throw in the pot:

1. The price of ebooks is less than pbooks, so trend comparisons ideally should be in units rather than $$.

2. There has been a massive migration to reading electronically in the last decade, but most of it is not in the form of 'books' as such. It's news sites, emails, blogs, facebook, myspace, forums, reference sites and so on. This overall trend won't stop any time soon, and books will follow it. The devices we use now will look crude in 5 or 10 years time. Almost everybody sneered at mobile phones when they came out, now they're everywhere.

3. Pbooks probably won't die out. After all, many of us still use a pen and paper, and some folks still play harpsichords and other acoustic instruments. But as the E-way of doing things continues the older ways will diminish in market share, and probably change their form as well. There are still blacksmiths who can make you a wrought iron gate, or even a horseshoe - but they're a lot harder to find than when I was a kid, and what they sell to clients has changed.

Cheers,

Chris

[Greg Anos]

Originally Posted by Kali Yuga

OK peoples, pay attention. I explicitly said that I expect ebook sales to rise faster moving forward than they did in 2009.

The critical point is that despite the massive hype through most of 2009, ebook sales are still very small compared to the market as a whole.

Secondarily, this is likely to be the case for many years to come. So when you insist that the publishers are Luddites who ought to toss out their old business models, just keep in mind that over 95% of their revenues are still coming from paper.



Sorry, but this is a silly assertion.

If you follow this logic of "consistent 260% increases", ebooks would reach 100% market share by mid 2013. Revenues would go from a theoretical projection of $32m in 2009, to $80m in 2010, to $213m in 2011, to $556m in 2012. No one would consider that even remotely likely, let alone 50% market share by 2011.

I'm fairly confident that even with the structural advantages tilting towards ebook adoption, it is much harder to increase revenues by $350m in a single year than by $20m.

It's very common for a new format or product to have huge percentages of increases early on -- and obviously "260%!" grabs more attention than "$20 million out of $900 million." If Ben's chart is remotely accurate, for example, you'd have seen 100%+ increases in 2004 and 2005 -- followed by shrinking sales for a time -- and consistent $3-5m increases for most of 2008, and consistent $10m increases since Q4 2008. If that trend continues, annual ebook growth would go from 260% in 2009, down to 100% in 2010, then down to 50% in 2011. In this example, the "growth percentage" statistic would misrepresent a steady growth of ebooks.

And of course, let's not forget that there is huge pressure to reduce the price of ebooks, and that many ebooks are cheap or free. Things would look very different if we were looking at unit volumes instead of revenues.

In other words: Measuring the percentage of growth practically useless until the market, format or item has matured; and expecting consistent explosive growth is, to put it mildly, excessively optimistic.



Sorry, this chart doesn't prove anything.

It's not specific to ebooks; heck it isn't even specific to books, as these retailers sell books, movies, music and other media. All it shows is that Amazon's online sales are growing -- in a linear fashion since 2006 by the way -- while two brick & mortar stores are stalling.



Again, I'm not seeing this as exponential growth. In fact, the growth looks largely linear dating back to late 2008. See for yourself -- growth in each quarter going back to Q4 2008 is about $10 million per quarter. (Prior to that, it was around $5m per quarter for over a year.) Healthy, but definitely closer to linear than exponential.

Charts are handy, but they can obscure trends just as easily as illuminate them.

Make up your mind. If you "expect ebook sales to rise faster moving forward than they did in 2009." Then that implies that at least they'll grow more than the 2.6% absolute growth of 2009. Even 2 years of absolute growth of, say 3%, puts the absolute level of e-books as 10% of the entire market. And 10% percent of any market, anywhere that is growing rapidly against the backdrop of stagnant competing sales is enough to cause a major sea change what is made. Any product, any time.

But that is assuming that the E-book market is already starting to S-curve. I don't see the signs of S-Curving yet. If it doesn't S-curve for a year, you'll be at the 10% level in a year.

Check back in a year. The numbers should prove interesting.

(Don't forget the Ipad coming out. It won't get a lot of the heavy readers, but it will get a lot of the 1 to 2 book a year readers, because they bought the Ipad to watch movies and listen to music with, and since they have the "reader" already.....)

[dsvick]

Another point...

January of this year should in no way be considered typical or even indicative of what will happen with eBooks, in the near or long term. If as many eReaders were sold as many of the news sites and retailers would have us believe then, even if everyone that received one purchased one eBook instead of a pBook, that would account for millions of books difference between the two.

What will be interesting to see is if the trend continues after the first couple of months. I'm sure there will be some people that absolutely hate it while for others it may bring them right back into the fold.

[Kali Yuga]

Originally Posted by Ralph Sir Edward

Make up your mind. If you "expect ebook sales to rise faster moving forward than they did in 2009."

Correct, that's pretty much my position.

Similar to Ben, I expect high growth for a few years, then slower growth as the market matures.

Again, most of my purpose in this thread is to put the "zomg 260%!" into better perspective.

Originally Posted by RSE

And 10% percent of any market, anywhere that is growing rapidly against the backdrop of stagnant competing sales is enough to cause a major sea change what is made. Any product, any time.

By that logic, I presume that the market should focus laser-like attention on the Zune and Amazon's MP3 downloads, right? Gotcha.

In case you failed to notice it, the industry is reacting to the situation. Publishers got extremely lucky and were offered the opportunity by Apple to radically alter the way their products are priced, and were smart enough to capitalize on that opportunity. Macmillan, at least, also claims they will put out all new books in electronic form the same day as paper is released. They're reviewing contracts to determine electronic rights. They may not be doing everything perfect, but almost no one has a 100% track record when dealing with disruptive technologies -- including high tech firms. (e.g. IBM vs Microsoft in the early days; Sun vs Linux; Myspace vs Facebook etc)

Retailers, including ones who are potentially cannibalizing their own businesses, are obviously pouring lots of resources into ebooks. Amazon is pouring money into developing Kindle devices and software, and subsidizing ebooks to gain market share. Both Amazon and B&N are leaping into a field that's new to them (manufacturing hardware). Apple has even granted book publishers far more control over pricing than the record labels ever got.

It's screamingly obvious that the industry is reacting to ebooks, and trying to deal with an extremely fluid situation without ripping their existing profit margins to shreds.

Not everything is perfect, particularly in terms of proofreading quality. But the idea that publishers are a bunch of Luddites who are trying to stop the juggernaut of ebooks is not a rational conclusion based on facts. It's prejudicial whinging by people who fail to realize that ebooks are still in an "early adopter" phase, still only make up 5% of the total market, may or may not threaten margins etc. -- yet they still demand all the services and attention as though ebooks make up 25% or 50% of the market.

Naturally it's easy to lose sight of this, if (like me) most of your book purchases are electronic. Couple that with an isolated and decontextualized statistic, and of course you assume that a multi-billion dollar market ought to revolve around your needs and cater to your whims.

Thus, and yet again, while it's a good thing that ebooks are making big gains, we ought to keep things in perspective, to wit:

• Ebooks are still a nascent market.
• It's still going to be years before the ebook segment matures.
• Ebooks will not dominate the market overnight.
• There are numerous other statistics to consider -- e.g. revenues, margins, volume, market segments, device adoption rates etc -- in order to form a more comprehensive understanding of the changes.

[JSWolf]

And come April, all this is going straight to hell.

[Blue Tyson]

Heh. Should we run a pool as to which publisher will complain about the sales drop first?

[JSWolf]

Originally Posted by Blue Tyson

Heh. Should we run a pool as to which publisher will complain about the sales drop first?

To be honest, I think they'd see it as a good thing that would get slumping hardcover sales back up.

[Blue Tyson]

Except there's no reason that hardcover sales would go up because people buy fewer ebooks because ebooks are more expensive...

It is entirely possible that hardcover sales will continue to decline because people just don't think they are as good a value anymore.

[JSWolf]

Originally Posted by Blue Tyson

Except there's no reason that hardcover sales would go up because people buy fewer ebooks because ebooks are more expensive...

It is entirely possible that hardcover sales will continue to decline because people just don't think they are as good a value anymore.

If these publishers has a brain, they'd realize that raising the price of eBooks because the pBook is in hardcover is not going to generate more sales on new books. It's just going to see a decline in these books sold.