BOOK SALES DOWN: A Warning for the Publishing Industry?

MOC-002 Robin Hood CartoonImage by andertoons via Flickr
You bet it is a warning, and a bad one. Time is running out on the publishing industry. Take a look at the latest figures for book sales in the UK and the US (click HERE). Note the steep drop in fiction sales: down nearly 10% in the UK and almost double - a massive 19.3% - in US sales over a year ago. These figures are for the first quarter of 2011 and they do NOT augur well for the rest of the year!

Except for a few -very few- publishers who had "bestsellers" like the paperback of  E. Donaghue's "Room" which helped Pan Macmillan bring up its sales by 3% over last year (and note it was a paperback, not a hard cover), just about everybody else saw their sales slump, particularly in the area of fiction.

So why the drop in fiction sales and why is it nearly TWICE as big in the US than in the UK?

There really is only one BIG difference between the two markets: in the US e-books have taken off and account for 25% of overall sales, while in the UK they're only one or two percent. Though there are discussions on how to interpret these statistics (and whether other numbers might mirror reality better), it is still true that e-books are all the rage in the US and have only just started in the UK. Jonathan Nowell, president of Nielsen Book, had some interesting things to say about this (reported in the he surmised that  e-book sales were the culprit, and that they "may be affecting fiction more than other genres".

Nowell pointed to the big challenges faced by US publishers who had lost miles of shelf space with Borders' collapse (Borders is the biggest bookstore chain in the US). He also mentioned the reduction in space for frontlist titles at Barnes & Noble. Both these events have not affected the UK, and "book discovery" at book stores in the UK are (at present!) unaffected. 

To all this you have to add, he said, the effect of the recession: the demand is sluggish because "consumers are keen to save money".  Last but not least, and this is important for publishers always looking for the Next Big Writer to boost their sales, there is at present a certain "lack of a publishing phenomenon", as he put it, to take the place of Stieg Larsson, Stephanie Meyer or Dan Brown. He also mentioned "time-poverty among consumers" as a factor  in print book sales' woes.

I don't know about "time-poverty". Does it mean people don't have time to read books, particularly not fiction in paper print form? That is patently untrue if one is to believe the speed with which e-book sales grow in the US (by over 100% every month if not more), and the fact that, the biggest on line library, has recently reported that its e-book sales on Kindle have for the first time outpaced its paper sales.

While e-books are the future for the fiction market, it's not likely to be the same for non-fiction. I may be wrong on that, but my intuition tells me that digital forms of non-fiction will never entirely displace paper books. Non-fiction books are used differently: they are mostly used for reference, they need to be lent out and discussed - all things that paper books are perfect for, and e-books are not.

But for fiction, nothing beats e-books: they are cheap, easy-to-access and portable. Self-published authors have been quick to realize the benefits and if you look at Kindle's top 100 bestsellers, you'll be amazed to discover that self-published authors such as Locke, Amanda Hocking and Konrath occupy (nearly) all the top slots - and indeed, there are few titles from traditional publishers in that Kindle list. Much too few and that should worry publishers.

Why are traditional publishers not present in the digital world the way they are in the physical world? How could they, with all their marketing savvy and brand name, get knocked off  the lists of e-book bestsellers? Well, "knocked off" is a big word, but you know what I mean. They are not doing as well as they could.

If I'm allowed to don my economist's hat for a moment (ugh!), I believe the answer is quite simple. Publishers have made a pricing error. That's an easy error when you try to defend your turf and maximize your returns. The digital tsunami has put them on the defensive. Rather than ride the wave and lower prices on their e-books (as indie self-published authors have done, even launching their books at the $0.99 level), they are trying to build walls against it. They talk about "models", negotiate for high e-prices with the various e-distributors, and in some cases put out e-books at higher prices than paperbacks (much to the anger of consumers)! 

But as the Japanese tragic experience with tsunamis show, no walls can withstand a sufficiently big tsunami. And this digital one is gigantic! Look at it from the fiction readers standpoint. He/she's invested in a reader and is determined to read cheap stuff to compensate for the investment. Soon he/she discovers some good stuff on line, mostly the back list of published authors - much of it is often better than the new titles put out by traditional publishers. After all, with limited time available for reading, he/she's not going to use it to read expensive paper stuff when cheap stuff is one click away. We're in a recession after all, and it's never been truer than now that time is money.

Konrath produced a graph on e-book revenue by price, on the basis of his own sales (see below). That is of course a limited basis on which to draw inferences, but it is nevertheless interesting. It is indicative of something important: he found e-book sales fall off very fast after prices are jacked up beyond the $4 level. Ok, that's a small sample, but not that small or meaningless: after all, J.A.Konrath, has sold a lot of books and is a successful mid list "genre" author with a considerable on line following of fans (500,000 hits/year on his blog). 

Konrath Data Ebook Revenue CurveImage by evilgenius via Flickr

If you're a NYT bestseller author enjoying the backing and brand of a major publisher, you may be able to sell around $9 or $10, but not more if your objective is to equal the sales level of someone like Konrath. Yet publishers regularly price their e-titles around $15-17, way too high. Hence, inevitably, the lower sales. And that's what happened to Michael Connelly (he got bashed with bad one-star e-reviews posted by angry readers, see article below).

I am quite certain that soon some savvy publishers out there will wake up, lower their e-prices and ride the e-wave (rather than be smothered under it). And those who do will beat the others!

Be prepared to watch a furious battle in the publishing industry, particularly between the Big Six, and let the best ones win!

But maybe I'm wrong...If you think so, please comment!

Enhanced by Zemanta