Thursday, December 30, 2010

Borders misses payment

Borders 'delaying' paying vendors at yahoo finance

Borders delays paying vendors at WSJ subscription required.

I'm sure there are dozens more links by now...
From the WSJ (fair use): "In an ominous turn of events for the book business, Borders Group Inc. said Thursday it is delaying payments to some publishers, a sign that its financial troubles are worsening."

My take:
With their dire need to raise cash... I do not give them good odds. My two favorite local bookstores are Borders. But for every pbook (mostly kids books with a few gifts) we buy at Borders, we've bought: two at Costco, three at discount stores, and four to five on Amazon.

Does anyone know what share of the pbook market Borders now holds? All the reference I could find were 'obviously out of date.'

For the market share Borders holds (held?) determines the impact of this serious financial action that is generally a sign of bankruptcy. I believe Borders customers will go to alternate sources pretty much in line with their book market share (plus or minus clever marketing). In other words, if ebooks are say 15% of the book market, than expect 15% of Borders customers dollars to transfer immediately to ebook vendors.

Note: I expect Borders ebook store to keep operating post bankruptcy.

This is actually really sad for me as I used to happily spend 4+ hours in the local Borders. Then again that store killed off my favorite Crown books which killed off my favorite Indie bookstore... So 'sad' is relative. Perhaps 'sad at seeing the final stage of the transition.'


ps 12/31/2010
Forbes Video "Losing money for years and getting worse."

Everyone is speculating *if* publishers will continue to ship books to Borders. They're news timing is perfect (the announcement is likely to get lost in tonight's merry making).

Wednesday, December 29, 2010

5.3 million K3's sold in 2010 (to date)

Please read my previous post on how I came to an estimate of 14 to 15 million ereaders sold in 2010.

I used to follow this guy in digitimes (it helped my investing):

1.6 million Kindles per month

5.3 million K3's (per the link). That is in line with the estimate of a total of 8 million Kindles in 2010. (Or only 2.7 million K2, DX, 'new DX' in 2010... plausible.)

Digitimes (including Kuo, the quoted journalist) is pretty good at 'counting chips' and thus estimating units produced/sold. Since 'chips in' = 'chips out', it produces good production volume estimates. (In particular if they have excellent intelligence on one or two key chips in a device. Intelligence this journalist always seemed to have...)

So my confidence in 14 to 15 million e-readers sold is strengthening. I remain impressed with the large quantity of ePub readers sold (Sony and Kobo) as well as Color Nooks.

Let us put it in perspective... I guessed about 10 million ereaders in 2010. My error in estimate matches ereaders sold in 2009 and half of 2008!

Let's rephrase that. I'm a pro e-book blogger and I underestimated market growth by almost the market as of December 27th 2009. :) I can live with that error.

Did anyone estimate that ereaders would sell this well? Seriously, I'm not aware of any link that was this optimistic.

Got Popcorn?

ps: 9:17pm on 12/29/2010:
Another link for 8 million Kinles . I like these links as maybe the 'I watch TV journalists' will finally get it that there is a crowd that wants to read and will buy devices for reading. Yes... I realize there are more dollars in TV, movies, and video games. Yawn.

My estimates for ereader sales in 2010:
Kindle: 8 million
Nook: 4 million
Sony: 2 million
Kobo: 1/2 million

Error bars make the estimate 14 to 15 million for the year.

Note: Q12011 estimated Kindle sales are 4.5 million per some 'optimistic' links:
Same Kuo link, different information

Since the Chinese new year occurs in early February... We in effect have a 2nd holiday season coming. I can see $139 K3s for birthdays, Chinese new year, etc. I also see 'Ipod touch' being another gateway to ebooks. Android/Iphone will be a HUGE gateway, and of course tablets.

I'm sticking with prior predictions of 50% of the book dollars in ebooks by January 2013 (I hate changing predictions mid-stream), but I wonder... Is the book market changing much faster than I thought? Innovation happens slow than fast.

We won't know until we pass it. I do not think so (yet). But I'd love to be proven wrong. But I think my original post in this blog is still on the mark. We'll see the tipping point in 2012. Now I'm leaning towards Early 2012 (almost Christmas 2011...) :) Ugh... I wish November data was already available (with Indie and small publisher sales too.)

Monday, December 27, 2010

ereader sales 2010

There are no hard numbers on ereader sales from any vendor.

I'll start with the smaller, but known e-readers:
several hundred thousand Kobo's activated daily starting 12/24/2010.

Then some positive rumors on Sony:
Rumors that Sonly sold 2 million ereaders in 2010

Which gives credence to the 8 million Kindles sold this year. It also puts Nook sales at 3 to 4 million for 2010. Time for B&N to upgrade the servers. ;) I personally didn't think the Nook color would do as well as it did. Kudos to those who anticipated the market. :)

Assuming "hundreds of thousands activated each day" for Kobo probably translates to 500,000 for Christmas... 12/28 Update: They've claimed a million activations. We're looking at 14 to 15 million e-readers sold in 2010. Most of the sales would have been for the holiday season. So we shouldn't have seen any uptick in sales before mid-November. Chanukah was December 2nd through 9th, so there should have been a nice 'spike' right after that.

I've very curious what the 12/24/2010 through today (12/27/2010) Amazon ebook sales.
I hope some of the authors noted sales by day and blog that information. Any links are appreciated.

The ebook revolution set its tap root this year. The growth from now through 2013 should be excellent. Good luck to all the authors. Only now do we have enough 'e-readers in the wild' to launch the market. Kudos to the pathfinders.

Got Popcorn?

Thursday, December 23, 2010

Ebook Trends

Merry Christmas,

I'm curious if it will be this year or in the future that Christmas becomes the #1 book sales day of 2010.

Ebook growth is a great thing for readers; mostly due to the variety of new material to read. Instead of a laundry list of backlist or new titles making its way onto the Kindle, I recommend you Google your favorite genre. Be prepared to be knocked backwards with the flood of offerings if you Google "Romance Backlist."

I'm still sad at how much variety was kept out by the 'old guard' of Sci-fi & Fantasy. :( (My favorite genre.) Look how many of the top 12 are indie! Two thirds and +/- 1 that has been true since October (when I first started looking). Obviously I wasn't the only reader craving more variety.

Random House book Sales up 250% In my estimation, Random house has benefited by avoiding the beginning of the year e-book 'tiff.'

But indie authors had only a tiny market presence before e-books. Before ebook readers, the "Tyranny of shelf" space provided power to the publishers, if you will 'guilds' that controlled access. Now that 'journeymen' can get there works out, there will be a greater diversity. No longer are the publishers required for 'validation.'

Kindle sales exceed analyst predictions by 60% . That is extensive growth in ereaders. Every year ereader growth exceeds the predictions. Sadly, the news will continue to be filled with articles on their imminent demise. Unlikely... While I expect most ereading to be on other devices in 2011, I think ebook readers are a niche that is here to stay. Unless someone invents a tablet that works in the sun and is far easier on the eyes than an LCD.

Book publishing and selling is undergoing a tremendous change. I still think the major changes will happen in 2012 and 2013. We are witnessing the groundwork being laid. It is a 'push me' and 'pull me' situation. At first, readers bought e-readers for convenience. Now it is variety 'pulling' readers to ereaders. No longer do books have a 4 to 12 week shelf life.

My point is that the market has changed for reasons those in the industry didn't care about:
1. Shelf life no longer rules marketing (Now self life will only be limited by evolutions in language.)
2. Variety. Readers demand this. Those that do not want variety watch TV. ;)

In his snarky way, JA Konrath is letting people know there is a change.

And another link:
link text/image

Merry Christmas. No longer is it a question of when the change in ereaders will come. It is here. Ereaders are established. It is only a question of when ereading is half the book dollars. I'll stick with my prediction of January 2013; even though the trend is for earlier. ;)

Got Popcorn?

Saturday, December 18, 2010

Observations while shopping

I did a bit of shopping in the last week (yea... who hasn't) and I had a few observations:

1. Barnes and Noble: Packed front of the store. The coffee shop was happening. Plenty of moms and daughters in the toy section actually buying toys (no boys...). There was quite the line up to talk to the in-store tech support on the Nook. (Judging from the overheard questions, this should be taken as nook success in selling to less tech literate than an issue with the nook.) The CD/DVD section was a ghost town; not one customer. Book sales were ok, but *far* less than prior years.

2. Best Buy. They were not pushing the Kindle. In fact, the sales people were avoiding talking it with customers. Apple sales were brisk (including an Ipad to yours truly for the misses) and for laptops. In my opinion, the mini 'store within a store' for Apple was working at Best Buy. TVs were moving. But the media section (CD/DVD) was barren of customers. Video game consoles were sitting in large untouched piles. Seriously, I must have watched $8k of Apple products moved, $3k to $4k of laptops, Similar sales of TVs, and not seen one video game sale or CD/DVD sale.

3. Target: Mad house. I have no idea if there were Kindles as with two kids in tow, we had to attend to business.

4. Costco and Sams Club: Interesting... due to 'negotiations with Apple,' all Apple products were pulled from Costco! Photos, TVs, and Kids toys were moving. But books were 'reduced in floor space' from November in both chain stores. A dramatic reduction in book shelf space.

What does this have to do with e-books? From what I can see, only a few hot items are selling. Retailers are definitely cutting back book shelf space which is not going to help p-books. In fact, shelf space is gravitating towards higher margin items.

I cannot state definitively how these anecdotal observations will impact p-book sales, but it is a headwind trend. More electronic devices to read ebooks is the positive trend. The negative trend is less retail attention to books. This all points to a transition year in 2011 for books. r.


Friday, December 10, 2010

October e-book sales

First, JA Konrathe makes a great point. Only 14 publishers are being counted in ebook sales. E-book dependence in romance is biased towards smaller (uncounted by AAP) publishers and indie authors.

So what fraction is the uncounted? Hundreds! That article indicates ~400 publishers have e-books out, plus indie authors, but only 14 publishers count.

Considering the large '2nd wave' of new ebook adoption I'm seeing, there must be a significant rise in e-book sales. A whole new crowd at work just bought Kindles! I know a dozen people buying loved ones a Kindle for Christmas. So there is a 'missing link.' Well, that is uncounted e-book sales. :)

Now to the charts:

On of my favorite ways to plot e-book sales (from the 14 publishers who report) is by year. This style of plot show the year to year growth in e-book sales. October didn't stick out as much as I thought it would after the Kindle 3 launch.

But that is only from the 14 reporting publishers. What if the typically high e-book prices of the reporting 14 have driven customers to the alternatives? It is possible that 15% to 50% more sales are occurring than are being reported by now.... Even without the uncounted sales, the market is growing quickly. :)

Mass market paperback (MMPB) sales were weak. Beyond weak... We finally see a clear drop in sales that points out the weakness of the category. Most likely next year e-book sales will exceed MMPB. Not too much of a surprise as all the indications are that Romance and SF&F are the two genres whose readership is embracing ebooks. And yes, both have dozens of sub-genres (the variety is part of what makes books great!).

Adult Hardcover, the profit center of the publishers, was exceptionally weak too. Without the 'unique 2009 September boost in sales' there is no hand waving away the weak sales.

Adult Paperback did ok in October. But with Weak September sales, it is more of the same trend. Someone is not ordering books; I suspect as part of Borders attempt to reduce inventory and debt.

Overall, my summation of 'trade books' just ads up to one thing. Someone is not ordering this year.

Christmas Day could be the #1 sales day of the year. If that is indeed the case (if only for Amazon), then we will see the fast shift. Or maybe it will be Borders.

I do not want to dance on any graves, but if Borders does not gain a new management and strategy, they are done as early as the 1st quarter of next year. If they dissolve, I expect their customers to go to:
1. Big Box retails (Costco, Walmart, Walgreens, Target): ~30% of Borders customers
2. Indie book stores: ~30% of customers (there are 2,200 of them out there!)
3. Indie book stores: ~20% of the customers
4. Amazon (online and Kindle) 20%

The trend is towards ebooks. Now if only we had the complete data. I cannot wait to see Christmas sales.

But how can the AAP only count 14 out of 400 publishers on e-books? Not to mention skipping indie authors.

Got Popcorn?