In May, the ebook prices of the Big Five’s most-heavily-promoted frontlist launches were still largely in the $12.99$14.99 range. But once you move past that visible tip of the iceberg, a broader look at the prices of all 157,000 Big Five ebooks in our May dataset revealed a significant shift.

The average price of a Big Five ebook had dropped from $10.31 in January 2016 to $8.67 in May 2016. This definitely caught our eye.

One of the key points we made in our recent DBW presentation was that higher ebook prices end up hurting newer debut authors far more than they hurt long-established authors, who already have existing fanbases and sustainable writing careers — especially those perennial bestsellers who have managed to become household names. We could see in our data clear indications that, between 2014 and 2016, higher prices had progressively damaged the earnings of new Big Five debuts, and even more crucially, crippled their *discoverability* — that all-important key to establishing the brand-new readership and fanbase necessary to establishing a long-term writing career. The triptych of slides below make that case with glaring starkness: in them, we can see Big Five debut authors dropping from 22% of ebook sales by debut authors in early 2014, down to barely 9% of those vital, career-launching initial sales in early 2016.

Slide52 Slide53 Slide54

Naturally, when we noticed that Big Five ebook prices were on average more than $1.00 lower in May 2016 than they had been in January, our first question was: “are Big Five debuts now getting more competitively priced?”

So we took a deeper look. Here’s what we found:

 Author Tenure  Title Recency May 2016 Title Count  January 2016 Average Kindle Price May 2016 Average Kindle Price
Recent Big Five Debut Authors
(whose first title was published within the last 2 years)
 Frontlist Titles
(titles published within the last year)
1,989 $11.57 $9.81
 Recent Big Five Debut Authors
(whose first title was published within the last 2 years)
Recent Backlist
(titles published between a year ago and 2 years ago)
1,675  $10.78 $11.44
Established Big Five Authors
(whose first title was published more than two years ago)
Frontlist Titles
(titles published within the last year)
7,185 $10.59 $8.55
Established Big Five Authors
(whose first title was published more than two years ago)
Recent Backlist
(titles published between a year ago and 2 years ago)
7,975 $9.58 $8.21
Established Big Five Authors
(whose first title was published more than two years ago)
Older Backlist
(titles published more than 2 years ago)
77,550 $9.96 $8.97

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For recent Big Five debut authors, it appears that the price of their frontlist ebook titles has indeed on average come down. For those hoping to build a readership and grow their writing income, that’s good news. Unfortunately, their prices haven’t come down quite as much as frontlist titles by the Big Five’s more established authors, which were already priced $1.00 less than those of more-recent Big Five debuts to begin with. Now they are priced $1.25 less, on average, than those of Big Five debuts.

But even more bizarrely, for recent Big Five debuts, the prices of frontlist releases from last year — which now make up those authors’ backlists — have on average gone up by $0.66, making them far less attractive to book-browsers than the same-vintage backlist titles of longer-established Big Five authors, which have instead gone down by $0.99 on average, and now cost on average $2.50 less than those of debuts.

The prices vary a little from Big Five publisher to publisher, but the pattern remains identical: higher prices for last year’s releases from their recently debuted authors, lower prices for last year’s releases from their more-established authors. We don’t know what interpretation to place on that. Perhaps we’re missing some complex seasonal aspect of the Big Five’s pricing strategy, one that differentiates which authors receive this more attractive ebook pricing when, based on each author’s tenure. Or it could be that the more established authors and their influential agents have been able to exert pressure on the Big Five to lower those authors’ ebook prices, whereas the ebook prices of newer authors, who are less well-positioned to advocate for themselves, remain high. We don’t know.

How have these asymmetrical price changes affected the incomes of Big Five authors?

Let’s start with an observation that we found interesting. Our data shows the highest-earning Big Five authors now making the lion’s share of their Amazon income — more than half of it — from ebooks and downloadable audiobooks:

big-five-format-split-by-taxbracket

For Big Five authors earning a million-dollar annual Amazon run rate or higher, 46% of that Amazon income is from their Kindle sales alone. Less than 45% of their Amazon income is coming from hardcover and paperback sales. But as we move down through various different “tax brackets,” from those making $500K down to those making $10K, the Big Five authors in each subsequent lower-earning tax bracket are seeing smaller and smaller shares of their Amazon income come from ebooks and audio.

Which at first seems counterintuitive — if anything, we would expect to find the reverse.

So let’s look at how income by format varies among authors of different tenure:

big-five-format-split-by-tenure

Once again, it appears to be the very longest-established Big Five authors who are now seeing the highest share of their Amazon income come from ebooks and audio. The more recently a Big Five author debuted, the smaller the share of ebook pie they are getting right now.

We think the January-to-May increase in average backlist ebook prices for newer Big Five authors just might have something to do with that.

It also seems that these more-recent Big Five debuts are not making up that shortfall in added hardcover and paperback sales… at least not on Amazon. Even with all Big Five Amazon print sales included, our data shows a net transfer of Big Five income away from recently-debuted Big Five authors — to the tune of 10% of what those authors were earning in January — and that income has now instead shifted over to those Big Five authors with the longest tenure: in other words, the very same cohort of authors who received the steepest January-to-May ebook price reduction, and who are now rocking the very lowest Big Five ebook prices.

At the macro scale, we mainly see missed opportunity here — for both Big Five publishers and their newest authors alike. Each of those new authors represents a significant publisher investment. Lower ebook prices would give those authors an opportunity to find their audiences, allowing some of them to grow into tomorrow’s best sellers. This can provide a healthy pipeline of organic future revenue to replace today’s Big Five best sellers as they age out. The alternative is an ever-increasing Big Five reliance on properties originating outside the traditional publishing industry: celebrities and YouTube stars, high-profile indie author acquisitions and movie tie-ins — all of which will become more and more expensive to acquire as publisher reliance on such external IP increases.

 


One Response to “A May 2016 look at Big Five ebook pricing”

  1. The reasons for new writers to wait for those traditional contracts are getting worse and worse. Too bad most of them won’t read this report.

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