Monday, October 25, 2010

Ebooks outsell Pbooks on

Amazon must be gaining book market share. Obviously in ebooks, but taking a moment to consider the numbers, they must also be gaining in the overall book market. In other words, ebook sales are not just lost pbook sales for Amazon, but there is some cannibalization.

Amazon's press release is generating a bit of attention. I've heard Kindle fanboi and naysayers are both making statements out of perspective.

I will agree that Amazon customers are far more likely to buy a Kindle than non-previous Amazon customers. But...

I would point out a few things:
1. Amazon is about 15% of the pbook market.
2. Amazon is somewhere between 60% to 80% of the ebook market.
3. Ebooks back in August were 10% of the market (9% is for YTD.)

In other words, if it took until October for ebook sales to outsell pbooks at then it implies Amazon is growing market share. For if Amazon's pbook customers just switched to e-books, this milestone would have been announced back in January! (see August sales post).

But looking at the graphs from my previous post and the August sales... We can do a little more than guess.

1. Everytime after major e-reader sales, we see a spike in ebook sales.
2. Don't forget it was Septempber that brought the Kindle3 wifi price down to $139. Look at the July/August ebook sales spike off the Kindle2 at $189.

Signs of success:
Amazon is hiring for long term investment in the Kindle:
Ireaderreview on Kindle job openings

I still do not believe we are yet at the tipping point for the whole book market. But we're getting there genre by genre.

Romance and SciFi are already past the tipping point.

October is the start of the Christmas buying season. So I wonder how many Kindles are being shipped for later delivery. Amazon had better work on gifting books ASAP.

The rumored color Nook sounds exciting for Kids. If there is a ruggedized ereader by Christmas, our kids will find one under the tree. Kiddie books are a natural to go digital.

Any which way, I see see this as significant market share growth in books for Amazon. Those that love pbooks will try to diminish this press release. But lets not forget that Amazon is the 800 pound gorilla of online pbook sales. We should expect a nice upside surprise in ebook share as we review book sales data over the next six months.

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Friday, October 22, 2010

Ebook Trend on Kindle

I believe it is a 'push me/pull me' scenario between how many books are available on Kindle and how many Kindles are sold. The more readers, the more books will be offered. The more books offered, the easier it is to convince readers to buy a Kindle.

At first there were 90,000 books on Kindle and a mere 8,300 more per month were being added. Then the slope changed after June 2008. The slope almost doubled to 14,800 books per month. In 2010 there is another 'step change.' The rate books have been added to the Kindle more than doubled the 'mid' rate to 35,450 books per month!

The publishers should worry. I suspect the 14,800 books per month was the quantity of books the publishers wanted released to Kindle. The quantity of books being offered looks to be ready to prove the 'long tail' theory.

The variety of books being offered will pull readers to ereaders. By mid-2011 we should expect to have over a million books for sale on Kindle (plus the 1.8 million+ public domain books already available). Anyone who doubts the growth of ebook market share needs to ponder the impact of having such a quantity of books less than a minute away...

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PS (late edit)
We should see another doubling in mid-2011. How? I expect it to be amateur authors putting their novels out. Or maybe it won't be books but rather an effective doubling of offered text via Amazon's 'singles.' I'm not a writer so I can be the 3rd party observer just wondering what more will be offered for my enjoyment.

Monday, October 18, 2010

August Ebook Sales

My conclusions on the August ebook sales numbers are very different than before I looked into the data. Basically, we see the normal July to August dip in ebook sales (gee... even readers will enjoy the outside...). I also do not see why the drama with trade book sales. We're within the noise of normal seasonal sales.

First August ebook sales. We have a small dip versus July. If you jump ahead to the last graph, it is visually obvious that this is just a seasonal dip.

Notice how available ebooks have broken away from the previous trend? I think we will have a positive feedback loop! More readers will help ebook sales. Having more books available will persuade more readers to go to ebooks.

I've plotted ebook sales versus my calculation of trade pbook sales. Note: my numbers are off by 1% by the published aap numbers for year to date. I suspect they 'correct' numbers after the fact and do not update the previously posted numbers.

Notice how noisy the pbook sales data is? The Christmas spike is huge! Since there is so much noise in the data, I wouldn't make much out of August 2010 sales being below August 2009. Ok, the drop could be explained by ebook sales; but notice that if the monthly sales volume (in $) is plotted on the same axis that ebook are obviously a market just starting to grow.

Market share tells a slightly different story. Ebook market share grew very quickly at the start of 2010. Then we had the whole 'publishers vs. Amazon' tiff. That tiff blunted ebook growth. Now we have ebooks growing again. I suspect Indie authors are helping the trend. Recall, we're talking market share in $.

My numbers are again a little off of the AAP's numbers. It looks like the 'corrections' on ebook sales might be a bit more important than those on pbook sales. Since I do not have access to the corrected data, I will post graphs on the released data and accept there is some error.

If we extrapolate this graph and do some averaging, we see that 2010 is on track for ebook market to be 10% to 12% of 'trade books'. But the share will grow quickly. Doing a 4th order polynomial fit on market share, I see 2011 market share ending in the 20% to 25% range.

Note: I did my 'market share' as ebooks/trade books and not =ebooks/(tradebooks+ebooks) as the AAP publishes. This is not a proper way to do market share. I will correct in the future as ebook market share is becoming large enough that the difference in calculation will be meaningfull.

Oh well... in 2012 ebooks will end at a third of the trade market. Sometime in 2013, we're on track to see ebooks half of the market.

My last chart is a reprint where I do each year's monthly ebook sales by month to show the seasonal trends. I switched to the above formats as an experiment. But I will post the alternate formats for those readers who were visually 'tuned in' to the older formats. I personally do not like a transition without some previous style graphs as how one graphs the data impacts the conclusions.

Since I analyze data for a living... I know a dozen plus ways to chart it. ;)

I use the AAP press releases for monthly book sales to create these graphs. I couldn't find a single source on the web of anyone plotting the data, so that inspired me to do so.

Comment on Indie authors:
I do not have any links to quantitative market share of indie authors on ebooks. I know before 2007 that going indie for an author was the end of a carrier unless they were big enough to launch their own publisher. Now one can look at most generas and see 25% to 35% of the authors are indie in the top 100. So I speculate that some of the ebook recovery is due to indie authors.

But how much is it do to customers accepting high ebook pricing?

Ebooks are back to gaining market share. The publisher/Amazon tiff did its damage but now ebook growth is back on track. I wonder if some of the ebook gains in dollar market share are due to readers accepting high ebook prices? Or is it do to Indie authors taking off? Either way, by mid-2013 we should expect ebooks to be half the book market.

For this reader, that means more variety. I also expect by mid-2013 that ebooks will be far enough along that I'll start a new blog on a new topic. Until then... we'll have fun tracking ebook growth.

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Thursday, October 14, 2010

Tipping point for E-books

Not yet.

I'm writing this post to clarify what I consider the tipping point. Why now? I think we are past that point for some sub-groups. It is only going to spread...

What is a tipping point?:

Wikipedia describes an... 'old example' of how on to many creates a sudden shift. I'm referring to as the 'ebook tipping point' as to when there will be a sudden shift out of p-books sales to e-books sales.

When? (time):

The discussions were originally in 2012. OK, last year At the Frankfurt book fair it was proposed to be 2018. Obviously it will happen before then. ;) But that doesn't narrow down when there is a shift from p-books to e-books.

The Publisher/Amazon tiff certainly delayed that tipping point. Probably by six months. In the long run, it will just result in more ebook piracy". Higher prices always slow adoption. In the digital world they also provide incentive to find 'free alternatives.' Didn't mp3s teach the publishers anything? Sigh...

Thankfully, indie authors have filled the gap. I'm trying to find a quantifiable metric to blog the shift to indie authors. Any suggestions for something that wouldn't take more than 15 minutes to collect each month's data?

When? (trigger event):

Some of speculated that it will occur with as little as 10% market share. I've been adamant that it is 20% market share. But what if it is 20% by genre or other sub-group? That is almost certainly the case!

We've briefly discussed on JA's blog" how in certain genres an 'old guard' was limiting the variety of sci-fi available. (: If you didn't click on the genre link, please do so. There is a huge variety that readers desire.
long tail theory" definitely applies to Sci-fi, Romance, mystery, and basically every novel genre has an 'old guard' keeping out too much of the variety.

When the readers from those genres go e-book, they'll pull their friends. For some it has already happened.

I'm one of those readers that once I fully went ebook, I'm done buying p-books. I have a bookcase and two boxes with about 200 unread p-books. (Mostly 'finds' at the local library used book sale or gifts.) While a few ebook readers truly prefer pbooks, most of the reader I know make the switch and do not look back.

A big sub-group that has made the switch are those that travel. Pbooks are just too bulky. However, Amazon must do a better job of 'converging' devices. e.g., I'd love to see an 'Android' cell phone with an LCD screen on one side and e-ink on the other.

The types of books that the 'I love turning pages' crowd love will be available at independent book stores or the checkout isle of Walmart/Costco. I really see little space for the current style chain bookstore.

I see a huge potential for POD coffeeshops. It might be another business where the POD is not a huge profit center but rather something to attract customers. Please expand LAX and put a few of these POD coffee shops into the airport! :) I'd actually buy a pbook just for the experience...

But as far as I can tell, Scifi&Fantasy and Romance are past the tipping point. 'Road warriors' are at the cusp. Mass transit commuters are there in some cities, but not in others. So in some ways, this will be blogging a 'rolling tipping point.' That will be fun! :)

I personally think Google editions" will rock the market. While it might (or might not) reach significant market presence, I expect the media attention directed to e-books due to Google editions to shift the book market.

I know of quite a few people worried about Kindle and ePub... With multiple ePub applications under development, one will work. Probably one developed by Google. ;) (I see no advantage for Google developing their own hardware a la the Android where they had to.)

Some book covers generate snide comments from the 70% of the population who doesn't read much. Those snide comments are pushing those readers to ebooks.

I'd love to know the true fraction of ebooks being read on smartphones. Among my friends it is about 10% to 20% and growing. Mostly among the "20 books a year crowd." The 100+ books a year crowd have mostly gone all Kindle.

Out of curiosity, do you know a significant number of friends or relatives who still read 100+ books a year in pbooks? 50% of those I know are Kindle readers. 10% other ebook readers. 10% to the IPad/Laptop. All of the above groups have a fraction that use smartphones 'here and there' to read. Only about 20% of those I know refuse to go digital. But I tend to travel in 'tech friendly' crowds. Note: The missing 10% are 'tech friendly types' trying to 'read through' their pbook library before going to an e-reader.

E-readers are now at an ideal gift giving price point. Judging by the large spike in ebooks sales volume at the start of 2010, we could hit the tipping point post Christmas due to the generosity of readers' friends.

Smartphones will also grow tremendously at Christmas. I still expect smartphones to be the primary 'gateway device' to ereaders. I do not consider them competition, but rather 'augmentation' (the cell phone is there to read) or to give readers a tast of ebooks. :)

Conclusion and Prediction:
Some people will not convert. I see a bright future for POD and used book stores. In some cities, independent book stores catering to a literature crowd will thrive. But not in most cities. :( Perhaps 20% of the pbook market will survive a la vinyl records in specialty stores for connoisseurs.

But for SciFi and Fantasy readers... the old guard kept out too much as well as snide comments from the techno-phobic. I think that market is past the tipping point. Same with Romance for similar but slightly different reasons. Please let me know if you've seen any other genres make the switch.

We're in the rolling tipping point for ebooks. Enjoy. :) By January 2013, I expect 50%+ of the trade book market (including mmpb) to be ebooks. Text books will lag, but not for very long.

Got Popcorn?

Sunday, October 10, 2010

Why an e-reader

This week, I asked people who were intense readers why they went to e-readers or kept with print books. I put the pros in order the group discussed their preferences, not my preferences:

Why to use an ereader:
1. Ease of acquiring books.
2. Size of the portable library in hand.
3. Adjustable font size (reading for poor vision)
4. Economics for those 'intense readers'
5. Lack of eye-strain (mostly vs. mmpb)
6. Ability to switch to text to speech.
7. Ebooks do not take up physical space.

Why not to use an e-reader
1. Pleasure of the p-book experience
2. Economics for those who 'read little'
3. Lack of eye-strain reading hardcovers
4. Books can be disposable.
5. Ease of book borrowing/sharing

One group was at a kiddie birthday party, so for all, the ease of acquiring books was paramount. Everyone agreed that they just do not have the time (nor hands) to browse a bookstore. Time with the kids is precious, so book buying must be done during the child's nap/sleep or other times that do not require a dedicated trip. The same was true of disposing of books. So parents of young kids are gravitating to e-readers for convenience.

I find it interesting how fast some of my friends are losing visual acuity. :( For those having this happen at a younger age, they simply cannot find large type books that are of interest. For them e-readers are a blessing.

Of interest was how good the android 'text to speech' readers have become. The father that 'hacks everything' had his android equipped with a variety of voices. To be blunt, Amazon had better match this technology or I might switch e-readers!

There really was a line drawn between those who mostly read hardcovers and those that mostly read mass market paperbacks (mmpb). Most mmpb readers had gone e-reader; perhaps 2/3rds of them. Most of the holdouts will borrow a Kindle and/or a Sony e-reader to see if they want to switch.

Most intense readers had to give up space previously used to store p-books. Let's say I wasn't the only one who made the switch to cut out the clutter.

For some hardcover lovers, the preference was visual acuity (ease of reading). They switched to hardcovers due to the higher quality paper. Two are going to borrow a Kindle to try it out.

The other hardcover lovers 'retreat to books' as a break from the modern 'fast paced tech society.' For them, a p-book is like an old piece of furniture; it isn't there for its practical worth, the p-book is to take the reader away to a better place that doesn't have blackberries or screens with Microsoft project deadlines.

Overall, a few more will try e-readers. But I finally found a reason I can understand why tech savy individuals might resist e-readers; the relaxation aspect of retreating into a favorite reading location that is in a 'tech free zone.' So now I understand why some intense readers want the piles of books, inconvenience or procurement/disposal, and cost of Hardcover p-books. It is the retreat from tech. (All love & work tech, but that isn't the same as not wanting a break.)

I've argued p-books will survive with better than 20% market share. After this discussion, I could see stabilization at 40% market share (at most). Used book stores will be around as long as the acid in the paper allows them to trade.

Note: among those I polled, we had very different experiences in how older mmpb's held up. Hardcovers definitely have less acid in the paper, judging the durability of the books.

The other points didn't seem worth taking your time discussing. If you would like to know more, feel free to ask questions in the comments.

For me, my retreat is getting into the book's story and having the reading medium disappear. For me, e-books provide the better experience. But I finally had a group of people able to explain the reasons behind 'loving the page turning experience' for reasons that didn't seem either contrived or a resistance to change.

Let's face it, this is healthier 'escapism' than drinking, over-eating, or smoking.

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