Currently a debate is raging across the internet on the rate of eBook sales growth. As we reported on this blog, last year saw the first period in which Nielsen reported an absolute decline in the number of eBooks. This news was greeted by by a slew of comment articles speculating on whether eBook sales growth had reached a natural plateau as the market for digital books entered a mature phase. Certainly this looks like the case when one considers the overall publisher data gathered by the Association of American Publishers in the US and The Bookseller in the UK, which have both written extensively on this subject.
Detractors to this argument point towards the example offered by Hachette Digital, which has just announced stellar eBook sales for the second year in a row. Looking at the graph posted by Hachette’s Head of Digital, George Walkley earlier this week, it’s difficult to argue that eBook growth for this publisher at least has been anything but steady.
The problem with all macro-level analyses of the digital book trade is that currently these depend on numbers provided by publishers rather than booksellers. Kindle, Kobo, iBooks and the like all still steadfastly refuse to publish sales numbers. This means that the assessment of the size and the rate of growth of the digital book market has to be aggregated from multiple sources and misses out one essential element - self-published eBooks.
Until now, the size and value of the self-published market has been incredibly difficult to assess given that it’s even more fragmented than trade publishing. This week, however the best-selling hybrid author of the Wool trilogy, Hugh Howey launched a new website, Author Earnings, which makes a bid to change that.
A note on Author Earnings' data
The site's conclusions are based on an analysis of the sales of 50,000 best-selling titles on the Amazon Store that are categorised in the genres 'Crime/Mystery, Science Fiction/Fantasy and Romance. These are not restricted to eBooks (the data counts physical books and audio downloads too). They also cover the full spectrum of publishing, ranging from titles published by major 'Big Five' publishers, independent and small presses and self-published authors. In line with the trend among self-published authors, Howey calls self-published books and their authors 'indie published'. The data only covers Amazon sales, and makes no attempt to project what authors earn from participating in other e-reading ecosystems, nor what they make from physical book sales in bricks and mortar bookstores.
Another important note on this report is that the data has been scraped from Amazon's front-end rather than gained from its back-end systems, nor are the techniques used to examine these data disclosed. The estimates it makes about author earnings are based on information that a range of 'indie published' authors have disclosed publicly about their own incomes in the last twelve months. Its analysis of traditionally published author earnings depend on a series of generalised assumptions.
Nevertheless, even as a snapshot of only one (albeit dominant) bookselling ecosystem, the Author Earnings report makes some startling claims that challenge long-held assumptions about the publishing market.
eBooks rule the genre roost
Another caveat to add when reading Howey's analysis is that by isolating it to three key areas of genre fiction, he is examining what is widely held to be the heartland of digital book sales accounting (according to Author Earnings' data) 70% of bestselling eBooks.
Even so the numbers are surprising. Howey’s data states that best-selling self-published authors eBooks in key genres are outselling titles published by the Big Five trade to the tune of 5%.
eBooks’ contribution towards the bestsellers looked even more stark when it examined the ‘type’ of content topping Amazon’s charts. An astounding 86% of Amazon’s Top 2500 Titles were eBooks (remember, this counts both 'indie' or self-published and traditionally published), with the remaining 14% made up of physical books and audiobooks.
Assuming that Amazon accounts for the larger part of the eBook market and that the general bias towards genre fiction is replicated across other platforms, it’s therefore easy to understand the new wave of optimism sweeping through the publishing industry. Even accounting for the lower average unit price of an eBook versus its print equivalent, digital publishing can clearly be a very profitable business. Howey acknowledges as such with this next chart, which cross-references the sales performance of bestsellers against their unit price to estimate the gross revenue publishers are getting from their ePublishing operations.
As we can see, the Big Five still walk away with the majority of gross revenue - attributable to the fact that a traditionally published eBook typically commands a higher selling price than a self-published equivalent. Howey, however, is ambivalent about the long-term benefits of keeping eBook prices high - arguing instead that lower prices ultimately net higher returns, provided (naturally) you’re a self-published author.
His reasoning for that assertion is explained by the next chart. And remember, Howey's arguments aren't predicated on the assumption that self-published authors sell eBooks to keep a publishing business going, they focus entirely on selling eBooks in order to make a personal living. Until now, Howey argues, success in publishing - defined by the ability to earn a decent income from writing - has largely been isolated to outliers. Anecdotally, it certainly worked that way in traditional trade publishers, where very many authors made a little and a few highly successful authors a lot. Where self-publishing turns this on its head, however, is that it’s now possible to make a decent living from a mid-list placing.
Of the authors of the 2,500 bestselling titles examined by Howey, only a handful earned more than $1m a year just from Kindle, but almost 800 earned around $10,000 and 150+ earned in the region of $100,000. Not enough to buy a millionaire’s lifestyle, but a decent living for many nonetheless.
All very interesting, but there are a few reasons not to be wholly convinced by Author Earnings' conclusions just yet
1. Amazon isn't the only game in town - The day after Author Earnings' publication crime writer Steve Mosby wrote a challenge to the report's conclusions. Mosby, a writer whose work doesn't sell well at all on Amazon by his own admission, publicly stated that he earns in the region of £72,000 a year (roughly $120,000) from his books. This is only one example and more may yet surface, but it's possible that by focusing on Amazon only Howey may be understating what authors earn from more traditional means.
2. It focuses only on bestsellers - Howey is very careful to say that he wanted to move the conversation about author earnings away from the outliers towards the middle. There's a great deal of merit in this principle - after all, pretty much every writer's earnings will look miniscule next to J.K. Rowling's - but his analysis still concentrates on the Top 2500 titles in a catalogue whose precise size Amazon won't disclose. Even assuming its general claim of 'a million' is true (others would push that estimate up to two million) titles, Howey is making authoritative claims about the whole market on the sales behaviour of the Top 0.25%.
3. There are likely to be other measures of author earnings this year, and they may draw very different conclusions - The Authors' Licensing and Copyright Society, a UK-based body recently launched a survey in associated with the Society of Authors to assess author earnings, updating some research that it conducted in 2007. The 2007 research pre-dates the rise of eBooks and the resulting self-publishing phenomenon, but its conclusions still make sobering reading for anyone considering giving up the day job for a life of writing just yet. The report, which was based on an extensive sample of 25,000 'professional' (ie paid) authors living in the UK and Germany, suggested that the median earnings of a British author was at the very most £18,000 ($30,000).
Howey has promised to extend the research to more categories of books and to other ecosystems in future. As it stands, the Author Earnings report is a fascinating snapshot into the growing earning power of successful self-published authors, but it's still a long way from being a survey of the total possibilities and challenges of book publishing.