Monday, February 7, 2011

Print Book Market share

I find this is one of the more abused concepts out there. How can book market share be so uncertain? Working in just rough numbers

Indie bookstores 10% pbook market share

B&N at 16% print book market share.

Borders is down to 5%

Wait, where did the 10% market share go that I've read before?!? Has Borders been collapsing that quickly or is there that much rounding in print book market share? No one expected them to hold prior market share, but that is pretty small market share...

What about Amazon? While the market share
estimated 20% to 25% of pbooks.
Now, I've read that at the end of 2009 Amazon was 15% of the book market, so this is tremendous market share growth.

Now we have 17%+5%+20% (to 25%)+ 10%= 52%. This ties in with what I've heard about big box retailers holding one third to one half book market share.

Borders 13% market share in 2006, Amazon 10% back then. B&N at 17%

Amusing link promising 70% print market share through 2020. By 2013 that prediction will be proven false.

Why does this matter on an ebook blog? Mostly the impending Borders bankruptcy. If the rumors are true of 150 out of 650 Borders stores closing than we would expect customers to distribute as per existing book market share. But how likely are these customers to go to ebook? Some will have little choice as the nearest book store is too inconvenient and if one is to go internet books, why not go all the way? Some will transfer to another print source.

So in the attempt to constantly refine my prediction, I expect Borders closing 150 stores to push about 10% of their customers to ebooks. That is 0.5% market share growth for ebooks. Before you yawn at ebooks growing another ~5%, realize this is additional 'push' market share growth above and beyond other trend lines.

I also consider Borders the #1 US retail source of 'variety' in print books. IMHO, the most valuable ebook customer is the 'variety' book buyer. Those customers tend to buy books in quantity (30+) and are willing to try new authors. My calculations estimate those buyers at 35% of the total book market. (Top 10% are 70% of the book market and I estimate half of those customers are the 'variety' customers.)

There will be a 'tipping point' at some time that "pushes" a rush of customers to ebooks. Let me be clear, we are not near the tipping point. That has traditionally happened at 20% market share for a technology. The shift from 20% to 60% market share has historically been the 'run away' growth for any technology (Examples: DVD, mp3, ps2 or Wii, etc.)

The current print distribution system is not set up to handle a 20% cut in volume. There will be a reverse 'economy of scale' effect as the costs of shutting down warehousese eventually adds up. We can 'hand wave away' the current slowdown, but eventually it will drive up unit costs. It is incredibly tough to cut unit costs with declining volume.

You might think I'm too fixated on the '20% market share' number. That's ok. Pick your own number. At some point there will be a 'push rush' to ebooks.

In my opinion, 80% of today's ebook growth is 'pull growth.' Pull growth is when customers switch technologies due to the advantage/convenience of the technology. 'Push growth' is when a new 'inconvenience' forces them too. Note: I include deteriorating vision in 'push growth'. Its not just book store closings.

Got Popcorn?

No comments:

Post a Comment