The Future Has Happened Already: E-books Overtake Paperback Sales in the U.S.

E-books are now the #1 selling format in the U.S.  And that’s not just in terms of volume, but in dollars too.

The Association of American Publishers (AAP) yesterday released sales figures for the month of February, and I was blown away.  E-book sales (year on year) grew over 200%.  They now comprise 29.5% of the market.  And this is only e-book data from 16 of the biggest publishers reporting versus 84 publishers reporting print data, the real number could be higher.

But the headline news was this: e-books are the top-selling format across all trade categories. More than paperback!

Wow. I would say eyebrows were raised all across Manhattan when they saw that one.

On the print side, numbers fell dramatically – combined adult trade categories were dropped a third. Overall, the increases in e-book sales did not make up for the drop in print. And one thing that might get lost in the shuffle: audiobooks increased over a third.

What does all this mean? Well, given that an author can earn 14.9% e-book royalties by going with a trade publisher or 70% by self-publishing, there will be a lot of top-selling writers (and their agents), pulling out their calculators and running the numbers.

This will go all the way down the food-chain too.  Mid-listers might have the most to gain from jumping ship, especially if they have a substantial backlog for which they control the e-rights.

And what about unpublished writers? The single biggest selling point for going with a trade publisher, their USP if you like, is their ability to get books in bricks and mortar stores. You can hire an editor, a graphic designer, a formatter, a printer, and pay them a one-off fee, and there work can be just as good, if not better than a commercially-published book (if you do it right).

But the one thing that trade publishers do, and do well, that no-one else in the business can really do on a large scale, is get print books into physical stores. And with each set of figures that comes out, that skill becomes worth less money.

To put it simply, if e-books are outselling paperbacks (and the numbers will only rise), and you can make four times as much money if you go it alone, why would you consider a trade publishing deal?

Then, when you factor in that it is going to take them 18 months to get a book to market, and you can do it in 1, and you add up the cost of the lost 17 months of sales, then even if you never sold a single paperback, you could be ahead by self-publishing.

Think what kind of audience you could grow in 17 months.

***

Here are some predictions:

1. There will be an increased scramble to get back-lists on sale in digital format.

2. Publishers and retailers are currently all over the place when it comes to reporting numbers. That’s going to have to change fast, e-books aren’t 2% of the market anymore, or we might start seeing a lot more stories like this.

3. There’s going to be an even greater push from agents and authors to increase their share of the digital pie, or to split-off e-rights.

4. There’s going to be more agents setting themselves up as publishers. Already we have Scott Waxman in the U.S. who has set up Diversion Books.  Now, some UK agents want to change their code of practice to get into the publishing game.

5. Conflict of interest is going to become a major issue. Agents will have to tread carefully.

6. By the end of the summer, a big-name author, and I mean a major international bestseller, is going to make the move to self-publishing, possibly splitting off their print rights.

***

For European publishers, it looks like figures are about 12 months behind the U.S. which gives them more time to prepare. Will they use it wisely? Not going on the comments coming out of the London Book Fair.

About David Gaughran

David Gaughran is Irish, living in Prague, and the author of Mercenary, A Storm Hits Valparaiso, Let's Get Digital, Let's Get Visible, and this here blog.
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55 Responses to The Future Has Happened Already: E-books Overtake Paperback Sales in the U.S.

  1. I couldn’t agree more – your read of the situation is spot on. I agree that the biggest winners will be mid-listers – they have SO much to gain here. As for agents – I don’t approve of Waxman’s situation that has HUGE conflict of interest implications. I think agents will move to ebook author publicists, editors, and agrugators. But they can’t do that WHILE trying to sell titles too. They’ll have to make a clean break they can’t sraddle this fence.

    Robin Sullivan | Write2Publish | Ridan Publishing

    Like

    • Hi Robin, thanks for reading. You are exactly right, and I think we could see a split amongst the agenting community here. Trident seem to be on the other side, forswearing any moves towards publishing. In the UK, Sonia Land has already gone solo with Catherine Cookson’s backlist (the most widely-read novelist in the UK of all time), while other big industry figures such as Simon Trewin are urging caution. Interesting times ahead, and great for writers.

      Like

  2. Hektor Karl says:

    Amazon also just dropped their Kindle device price in the US, which should further expand the reach of e-readers. Plus there’s the new IPad.

    Like

  3. Yep. There will be a $99 Kindle before Christmas. Just wait for that boom.

    Like

  4. Neil says:

    David,

    I agree on the backlists. That is happening as is about to go nuclear. There are multiple ‘out of print’ novels I’m looking forward to being re-released as ebooks. So many that I’ll pick on price.

    I graph the AAP numbers monthly:

    http://ebookcomments.blogspot.com/2011/04/february-2011-ebook-sales.html

    The game change has happened. As you note, only a few ebook publishers report. Small publishers and indie have a *far* larger market share in ebooks than print… so I make a few assumptions on indie/small publisher market share. We’re past 1/3rd ebook market share when other sources of ebooks are taken into account.

    Neil

    Like

  5. Tara Maya says:

    I can understand agents wanting to straddle the change, but it seems dubious to me too.

    Tara Maya
    The Unfinished Song: Initiate
    The Unfinished Song: Taboo

    Like

    • It is dubious. Picture this: you hand over your book to your agent. Your agent says, “Hey, I have this self-publishing arm.”, but you decide you would rather the exposure and backing that goes with a trade publisher. Your agent comes back three months later and says, “I couldn’t sell this book but, hey, I have this self-publishing arm.” On the other side of the fence, editors will be hopping mad because agents will have gone into competition with them. If you were an editor, and an agent was in competition with you, would you trust them to bring your offer to the writer? Or would you go direct and cut out the middleman (the agent).

      As far as I see it, an agent cannot become a publisher and remain an agent without serious conflict issues.

      Like

  6. Eoin Purcell says:

    David,

    Quick point re: figures. For sure ebook sales were the single biggest category but this reflects a problem with how those figures are compiled and collated rather than anything else. By that I mean, when you look at the aggregate print sales vs the digital figure, print winds very handily. The only reason digital wins as a single category is because it is not sub-segmented like print.

    That said, I don’t disagree with your general point, digital sales are rising really very quickly and are rapidly becoming a huge part of the US market. In term of your conclusions, I’d say many if not all of them have been true for a good time already.

    1) Has been happening for a good few years now
    2) Not so sure about this, after all much of the rich sales data is held large tech firms who KNOW the value of data
    3) Splitting off ebook rights is inevitable (see HMH’s deal re: Amazon’s print rights for Encore etc.)
    4) Yup
    5) Yup
    6) Yup, though you could argue this has happened already!

    Eoin

    Like

    • Eoin,

      You are right, of course, and no-one is viewing this as “e-book overtakes print”. It’s considered a milestone, a tipping point. At the start of 2010, e-books had a 3% market share. At the start of 2011, e-books had an 8% market share. Now it’s almost 30% (and probably above that once independent publishers report).

      With regard to how the figures are split out, I think we will see changes in this, but print is split out for good reason (hardback, paperback, mass-market etc.) – they are different products.

      Re. my predictions, if you doubt #2, read this story: http://kriswrites.com/2011/04/13/the-business-rusch-royalty-statements/

      Thanks for reading,

      Dave

      Like

    • Oh, and with regard to #6, Barry Eisler is the biggest one I know of already, and he’s pretty big. But I’m talking someone huge. Just a guess.

      Like

  7. Rowling? Now that would be something. Her name is big enough to sell e-readers all on its own. I’m sure the same thought has crossed Amazon’s mind.

    Could we see special edition Harry Potter kindles, pre-loaded with all the books (and a few exclusive extras)? Maybe that’s the future.

    Like

  8. This news is so exciting, I’m practically doing the Snoopy dance.

    After reading Joe Konrath’s blog like the Bible, I decided to give up the query-go-round (as he calls it) and self-publish. There’s never been a better time, as far as I’m concerned, and the numbers seem to prove it.

    Whereas four years ago I never saw a single eReader on the London tubes, I now see at least half a dozen on my way into the city every morning. That’s not including people reading on their iPhones. It’s a good time to be a writer!

    Like

    • It’s a great time to be a writer. I haven’t decided yet whether I will self-publish my novel or not, but I will test the digital waters with some short stories, and I am obviously leaning in that direction. The point is, writers have more options than ever before.

      Joe Konrath’s blog is great, an education from start to finish.

      Quick question: the e-readers on the tube, which ones are you seeing? In stockholm it’s all iPhones and iPads, and I heard it’s the same in Amsterdam, with not a Kindle to be seen. What about London?

      Like

  9. I still think, RIGHT NOW, if I had to choose between:

    1) $100,000 advance and some advertising, marketing, and distribution support from a New York publisher, but waiting 18 months for the book to be published and getting a smaller cut

    or

    2) no advance, no advertising, marketing, or distribution support, but I get to see the book published tomorrow and I get a bigger cut

    I would still go with #1 any day of the week. That’s basically what Joe Konrath did. He made a lot of money by selling his first books to New York, and they marketed the hell out of those books for him, and then he switched gears to self-publishing eBooks to his already established market! Very, very, very smart of him! 🙂

    I *definitely* agree that the old mid-list authors, who were finding the mid-list has pretty much been squeezed out of existence at this point, have a TON to gain by self-publishing their backlist as eBooks as fast as they can! I know plenty of authors who wrote 20 to 100 paperback originals between the 80s and 90s, so are now self-publishing those long gone titles to great results ($$$).

    Like

    • You’re spot on, the only thing I would say is HE marketed the hell out of those books for THEM. Remember those marathon book tours (what was it 500 stores in one year or something)? They only shelled out for that AFTER he did a few out of his own pocket and showed them the results.

      Like

    • That number would be very hard for any unpublished writer to walk away from (hell, most writers).

      And it’s not just about the money. You would be thinking that they are really going to get behind your book (they need to recoup that advance), market the hell out of it, and build you a serious audience. And for an unpublished writer, that’s a launchpad.

      What could make a difference is if it was a one-book deal or, say, a three-book deal. If it was a three-book deal, that advance would be split maybe 9 ways (on signing, with acceptance of each manuscript, with release of each novel and so on), and you would have to take a close look at who you were signing with, and whether they would be around when the third book came out, which would be 2015 at the earliest.

      Like

      • That’s a great point about a 3 book deal. You’re looking at nine or so payments of about $9,000 each after your agent takes his or her cut. Still nothing to sneeze at, but it sure looks a lot smaller than way.

        I think I would still take the deal and do everything I could to make sure those three books were marketed well and helped me build a real following — and then I would seriously look at jumping ship for future books and “taking” those readers with me… 😉

        Like

  10. By the way, another agent who already made the jump to being a publisher is Richard Curtis. It was QUITE the scene when he launched his own E-Reads company to publisher his authors in eBook format.

    I think it definitely creates an interesting discussion. I am not really comfortable with the idea of my agent also being my publisher. There is a distinction between those two jobs for a reason.

    Also, there have always been phony agent scams — “I just need a $1000 marketing fee and then I can sell your book!” — forever, so how long until there is a new version — “We’ll start by publishing an eBook edition, all I need is $1,000 from you, and that’ll get the New York publishers to buy the print rights!”

    Like

    • Yes, the scam issue is huge. This is why agents have a code of conduct in the first place. It wasn’t that all agents charging reading fees were scammers, it was to set themselves apart from the scammers, so everyone could tell who was who straight away.

      Like

      • Hektor Karl says:

        Hopefully the internet can provide a check on scammers. A simple Google search could save a lot of people from being scammed.

        Like

      • I cannot recommend highly enough the Absolute Write Forum in this regard. Their “Bewares & Backgrounds Check” sub-forum has been providing useful information on agents for years, as well as publicly outing the scammers. I would recommend checking every agent here that anyone ever plans to submit to. The link is on the right of the blog.

        Like

      • Absolute Write Forum is a great place in general for a new writer who wants to learn more about the business!

        Like

      • They taught me so much that if I ever get my novel published, I think it might have to have a shout-out to the AW peeps somewhere in there.

        Like

  11. Sorry to be posting again, but I thought of one more thing:

    I think self-publishing eBook is definitely the future in a lot of ways, but I also think some of the people who are promoting it as the “better option” right now are using some specious reasoning. They’ll point to a list of 20 authors who are making $1,000 a month from their self-published eBooks, but they neglect to discuss the 10,000 other authors who are making $5 a month.

    It’s like the arguments we’ve been seeing ALL the time on message boards about the vanity publishing companies. “John Grisham self-published A Time To Kill, and look where he is now!” Um, great for John, but what about the hundreds of thousands of other self-published authors who sold 10 copies to their friends… and in many cases, paid $1,000 or $5,000 or even $10,000 for the privilege?

    (Besides, John did NOT self-publish A Time to Kill. He sold it to a small press and then bought the copies they were going to remainder… and then he worked his butt off to sell those copies and launch his career!)

    Like

    • Please, comment as much as you like. It’s great to get a discussion going and hear different perspectives, sometimes all the fun is in the comments.

      I don’t think self-publishing is right for everybody. I don’t even know if it is right for myself (in terms of my novel). I haven’t decided yet. If I was a mid-lister with a solid backlist (with reverted rights), and unhappy with my publisher, I wouldn’t think twice. But I’m not, I’m an unpublished writer, and THAT is a totally different ball game. I am aware of that.

      I still have a few fulls out with agents. And in the meantime, I am testing the digital waters with some short fiction. At worst, I will learn something.

      Like

      • From what I’ve read on your blog, you seem to have the “right make-up” to self-publish if you decided to go that route. You understand a lot about how publishing and marketing works, and you’re doing the smart thing by testing the waters with some short fiction — just to get a feel for how it all works.

        In the end, there is no perfect path for everyone, but self-publishing is a good answer for a lot of authors. (Just not every author!)

        Like

      • Every time I think that, I pop along to the Kindle forum and realise how much I have left to learn. (Tagging? Who knew?!?)

        And maybe it’s not the best test in the world, given that short fiction and collections sell way less than novels in any format, but at least I will get an idea of HOW to do it.

        Like

  12. Hektor Karl says:

    The Writing Runner, your point about selection bias is a good one, but the correct comparison is with “other authors” who have produced professional-level work, not with everyone who threw something self-published up on Amazon. There probably isn’t much of a “better option” for poor work.

    Like

    • That is a really excellent point, of course. There is bad work being published by New York, and bad work being self-published, and maybe it’s all a wash in the end. I like to believe that good work, with some proper marketing, will start finding readers and those readers will help spread the word about it — and that theory can be applied to traditional and self-publishing!

      Like

      • What’s that old saying about 90% of everything being crap?

        I do think there is more dreck amongst the self-published stuff, but there is some great stuff too. Really, really top quality stuff.

        I think in the end it’s all about the readers. You can market the hell out of yourself, but all that gives you is an opportunity. Virtually everyone samples before they buy (or so it seems), so if the writing isn’t up to scratch, or you have pitched it wrong, all the marketing in the world won’t matter. It is important though, there is so much stuff out there that you will never even get to the readers in any significant numbers if people don’t know you exist.

        But, as you said, same goes if you are published by New York.

        Like

  13. Tony Slater says:

    It’s going to be a call-to-arms for all of us who are debating the virtues of self publishing… but then again, if it calls too many of us, the world will be awash in self pubb’d manuscripts, with all of our great works (!) drowning in a sea of crap. Well, I guess that’s what reviews are for. I’m getting close to launching mine by the by – just working out the cover design (and learning Adobe Photoshop as a by-product). All good fun – until the marketing begins!
    Tony

    Like

    • Tony, as Joe Konrath is fond of saying, readers will find the good books, just like they always have. There are 80,000 new titles published by trade publishing in the U.K. every year, but readers seem to be able to deal with that and find the books they like. While it might be on a bigger scale in Amazon, finding stuff you like has never been easier. Glad to hear you are enjoying the process, I am too – Dave

      Like

  14. One of the things I thought about when I was deciding whether to self-publish was the time it would take just to find an agent who would want to sell the book. Of the queries I sent out, I think only two responded. One asked for the manuscript, and then I never heard from him.

    Suppose it took a year to find an agent, another six months to make requested changes, another year to find a publisher, and then a few months to make additional changes. I’m guessing here but I imagine it would easily take 2-3 years before publication. That’s just not how I want to spend my life.

    The interesting thing is that I have read blogs and articles written by traditional agents who think all of that is ok.

    Shelia
    http://www.peelingcheek.wordpress.com

    Like

    • Hey Shelia, sorry for the delay with your comment, it was held up in spam for some bizarre reason. Anyway, yeah it’s pretty tough to find an agent. Agents are finding it harder to sell books to editors and deal with the crazy amount of queries. This means that it’s very difficult for a new writer to break in. Your timelines for publication are about right. That’s a big factor for me too. The world could be very different in three years. Some publishers could be in trouble. Some agents could be in trouble. Who knows how big e-book market share will be in 2014. Will there still be any chain bookstores? Nobody knows. It’s all about what’s right for you. Educate yourself as much as possible, then make your own decision based on your own situation. Good luck, Dave.

      Like

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  20. Seer says:

    David,
    As a dedicated ebook reader for over a year, I’ve been dying to find out what the statistics are. I agree with you that removing the in app purchase link absolutely makes buying less convenient. However, I have a negative reaction to being forced to purchase from the lackluster iBooks. The selection, price and interface is the worst of the big three. I’m waiting for someone to come up with an app that will let me see details on all published works then immediately compare prices. My “brand” loyalty is gone. Everyone is forgetting the buyer in their fight for supremacy. Can you shed some light on why understand why publishers have been so very slow to enhance content? I’ve quit buying True Crime and biographies since the grainy B/W pics aren’t even included. And I feel ripped off paying the same price as a paperback when production and distribution costs can’t possibly compare. How do you see elending affecting the fray?

    Like

    • It’s not really the publishers’ fault.

      There are limitations with the e-readers and the file formats that make enhancing e-books difficult. After formatting a non-fiction e-book myself, when I saw how horribly the Kindle would display photos and things like that, I decided to pare back the whole design of the book and move all that stuff to my blog and link it to the book.

      The formats will get better, the devices are already getting better. E-books will look a lot better in a year or two.

      Like

  21. Seer says:

    Thanks for the insight. But Reading apps on multimedia devices have been around for a while. I’ve used Kindle for about 2 years on my IPhone and then iPad. Even color pictures in that time would have been nice. If old etablshed publishing houses would have invested in digital technology and worked to present a something more in a digital title they might have a better outlook and position in the future. I don’t expect it from independent or self published authors. They are reasonably priced, available in several formats and frankly I’m just glad to get exposed to their works and see the reviews, samples, etc as I would have been otherwise unlikely to have found them. But I feel ripped off paying $8 for a 6 year old title or $16 for a new release from a more established author. Its high time for the model to change. At least release the digital version early…

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  27. Vishv B Gupta says:

    The world of book publishing is undergoing through mind boggling tremor. If e book revenue is multiplying in America by 200 percent then writing on the wall is clear.

    Like

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