What’s Really Going On in Publishing

If you keep up with the publishing “news,” you may be confused by recent contradictory indicators. Some sources claim that eBook sales are declining, but any popular-fiction authors who’ve looked at their royalty statements lately sees a different story. The NYTimes consistently suggests that Amazon is the Antichrist and destroying literature, but a growing number of independent authors credit Amazon for the ability to work without a corporate overlord. Who’s right?

Good numbers are hard to come by in the book world, because the Big Five  play their cards close and Amazon won’t release sales figures at all. As I’ve mentioned before, I believe the statistics coming from AuthorEarnings.com are, while perhaps not perfect, the most reliable statistics we have. Why? Because by using computer data-gathering bugs to collect sales information, they take into account Amazon sales, which is currently more than 50% of all books sold in the US and about 75% of all eBooks. Those articles about eBook sales declining are based upon data from the AAP or Neilsen–so they include the Big Five but not Amazon. EBook sales are declining at the Big Five, because they’ve raised their prices, which you’ll recall they fought hard for the right to do. At Amazon, the far bigger share of the pie, eBook sales and independent authors are increasing.

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So gross unit sales are rising, but…

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…the books that are selling are increasingly those from independent authors, not the Big Five. The Big Five have (somewhat) larger gross profits, due to the higher prices, but of course most of that money does not end up in the hands of authors:

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As a group, independent authors are taking home more money than Big Five authors. Remember, an independent author can claim a 70% royalty at Amazon, whereas a traditionally published author will get somewhere between 4-15%. So you can sell far fewer books but still take home more money.

I urge you to visit AuthorEarnings.com, read the report, and draw your own conclusions. Read May 2016 Author Earnings Report: the Definitive Million-Title Study of US Author Earnings.

 

Is Everything We Thought We Knew About Publishing a Lie?

Conspiracy theories may be common with Mulder and Scully, aliens, the Illuminati, and Bigfoot, but we don’t often get them in the erudite world of books and publishing. This week, however, we did.

As you are probably aware, in 2014-2015, Amazon engaged in a negotiation showdown with Traditional Publishing, most prominently Hachette. The common view was that the Big 5 wanted the right to set prices for their products when sold on Amazon–agency pricing. Everyone thought the outcome was that the Big 5 won the right, increased their prices, and made more money.

This week, several stories broke suggesting that everything we thought we knew was wrong.

Mike Shatzkin is a prominent publishing analyst who writes the Idea Logical blog. Based on conversations with publishing executives and even a source at the Department of Justice, Shatzkin claimed that although the Big 5 publishers wanted agency pricing in 2010, by 2015 they realized it was not to their advantage but were forced to accept it–by Amazon.          “[T]he big publishers had no choice about sticking with agency. Amazon insisted that they stick with agency.” Amazon also wanted and got a more favorable split of revenues.

Another analyst, Phillip Jones, agrees. Quoting other industry sources, Jones says that since Amazon dominates the eBook market, allowing publishers to overprice their books was a smart strategy that shifted sales from Big 5 eBooks to Amazon eBooks, allowing Amazon to rapidly grow its self-publishers and Kindle Unlimited market. Conversely, another blog, The Passive Voice, says this “revelation” is just propaganda designed to smooth over an imminent publisher reversal on agency pricing.

Perhaps even more startling is Shatzkin’s claim that the articles claiming “print sales rising in the US” last year was simply based on the fad for adult coloring books–which some people wouldn’t even consider books.

I will admit that Shatzkin’s “revelation” makes sense to me. I expected Amazon to fight to the death for what they wanted and to have the clout to win. Instead Amazon seemed to grant agency pricing to any publisher that wanted it. The story makes more sense if Amazon wanted the Big 5 to set their prices (higher) and focused instead on revenue stream. In any case, one thing seems clear–the agency pricing that seemed like such a must-have before looks like an albatross now.

What do you think?

See the debate continue at Idea Logical: http://www.idealog.com

Nate Hoffelder: http://ow.ly/Z7XRh

Philip Jones: http://ow.ly/Z7XNe