November 2015 – the UK report: Author Earnings on Amazon.co.uk
Up until now, Author Earnings has focused on the US ebook market, and mostly on Amazon.com, the dominant US retailer. There’s a reason for that. According to the International Publishers Association, the United States makes up 30% of the global book publishing market. In other words, $3 out of every $10 (or perhaps more appropriately, £3 out of every £10) spent on books of any format anywhere in the world, is spent in the US. And more than half of that $3 is spent online — two thirds of it in Amazon.com’s US bookstore — where, notably, for the last several years, most of the books purchased have been ebooks.
But now, it’s time to broaden our horizons a bit. The barriers that once made it difficult for an author to make their books available in other countries have now fallen. It’s time for all authors to start thinking globally — there’s a whole wide world of readers out there.
According to the IPA, after the US, the next four countries — China, Germany, Japan, and the UK — in combination comprise another 30% of the global publishing market: China has 10%, Germany 9%, Japan 7%, and the UK roughly 4%. The remainder of the global publishing Top 10 — France with 4%, Italy 3%, Spain 3%, Brazil 2%, and India 2% — between them add up to another 15%. Thus 10 countries make up 75% of global sales of books of all formats, with the US alone just about equal to the the next 4 combined.
But when it comes to digital book adoption rates, most of those countries significantly lag the United States, for a variety of reasons. As a result, the US now makes up a far larger portion of the world’s digital book market than print — well over half of it, in fact. The United Kingdom is the only other country whose ebook adoption rates even come close. The ebook markets of China, Germany, Japan, where print book sales are larger than the UK’s — and of France and Italy, whose print book sales are close to the UK’s — are still relatively nascent. Those countries still sell far fewer ebooks than the UK does.
Which makes the United Kingdom currently the world’s second largest market for digital books.
With our October report, we filled in the remainder of US ebook market by looking at the top 4 non-Amazon ebook retailers — Apple, Barnes & Noble, Kobo, and Google, so now it’s time to move our sights across the pond. Perhaps we should have done it sooner. Although the UK ebook market is less than a fifth of the size of the US market in unit sales or revenue terms — Amazon.co.uk still sells more ebooks than any of the non-Amazon US retailers do in the US. More than the US Apple iBookstore or Barnes & Noble Nook store… and several times as many as Kobo US and GooglePlay US combined.
Simply put, Amazon.co.uk is the second largest retailer of English-language ebooks in the world.
For authors of English-language books, this is exciting news, because nowadays there are no significant barriers to international ebook sales. The UK applies a 20% VAT charge to digital editions — a tax that print books are exempted from — which imposes an unfortunate additional cost upon readers and authors. But other than that, the UK ebook market works just like the US one. For authors who own the rights to their books, there are no legacy distribution bottlenecks to navigate before reaching international readers. At the click of a button, any author selling ebooks in the UK or the US can start selling their books across the pond as well. Which makes ebook sales at Amazon.co.uk of interest to authors everywhere.
In this report, which is our first look at the UK ebook market, we were curious about several things:
1) Market share by publisher type. How well are self-published indie authors doing in the UK store, relative to their traditionally-published peers? Are the growing indie ebook sales and author earnings we see in the US market a phenomenon limited to that country only? Or have indie authors gained a significant foothold in the world’s second-largest ebook market as well?
2) Ebook pricing. How are ebooks priced in the UK, relative to the US? Do the pricing strategies of Big Five publishers, Small/Medium publishers, and indies vary on different sides of the Atlantic? If so, does it have a noticeable impact on their market share?
3) Ebooks without ISBNs. In the US market, over a third of all ebook purchases lack trackable ISBNs — the International Standard Book Numbers sold to US publishers by Bowker. As of September 2015, 37% of all ebook purchases each day on Amazon.com did not have an associated ISBN. Traditional market statistics from Nielsen, Bowker, and the AAP are completely blind to this rapidly growing non-traditionally published segment of the US market, which has led to a flurry of mistaken media coverage about “the US ebook market” flattening or shrinking. (The broader US ebook market is actually growing year on year, rather than shrinking, according to a Wall Street Journal quote from Amazon, who can measure the sales of both non-ISBN and ISBN-bearing books and thus is far better position to actually know.) But what about the UK? Do untracked ebooks without ISBNs similarly make up a significant portion of ebook sales there?Or are no-ISBN ebook sales in the UK far less prevalent than in the US?
4) International sales of domestic best sellers. Between the UK and US market, how much sales overlap is there for particular titles? After all, being able to make a title available for purchase in another country isn’t the same thing as being able to sell well there. Are Big Five publishers significantly better than Small or Medium publishers at marketing their books internationally? At the other extreme, how handicapped are self-published indie authors, who lack the marketing backing of a traditional publisher, when it comes to achieving visibility and making sales outside of their home country?
To find the answers, we educated our data-gathering web spider on the difference between dollars and pounds sterling. And then we sent it across the pond to take a look…
The UK report: Author Earnings on Amazon.co.uk
First, a quick glance at the distribution of 115,000 of the best selling titles by publisher category, collected en masse from Amazon.co.uk’s bestseller lists. As always, we started from the overall Top 100 bestsellers, and then worked our way down. We collected data from literal thousands of best seller lists, for all the various categories and subcategories of fiction and non-fiction, from titles selling many hundreds of copies a day down to titles which were selling far less than a single copy a day. We didn’t discriminate. If our spider could see it, we grabbed it. Instead of cherry-picking ebook data from a limited number of publishers only, as the most-often cited industry studies do, we picked the whole tree clean. Here’s what found:
Number of Ebooks on Best Seller Lists by Publisher Category
Compared to our recent look at Amazon.com in the US, the distribution of publisher types is almost identical — it’s so close that we almost couldn’t tell them apart. The breakdown of best seller slots held by every type of publisher lies within 1-2% of what we saw for that type of publisher in the US.
But the relative number of titles holding positions on best-seller lists is far less meaningful than the relative difference in unit sales by each publisher category. So let’s look at that next.
Market Share of Unit Sales by Publisher Category
Here, we see our first significant difference between the UK and the US markets. Ebooks by indie authors make up more than 26% of all ebooks sold on Amazon.co.uk. But even so, the indie share of all books sold on Amazon.co.uk is far smaller than in the US, where indies sell well over 38% of the ebooks sold on Amazon.com.
That discrepancy isn’t due to a difference in Kindle Unlimited participation between the US and UK, either. 66% of the best selling indie books on Amazon.co.uk were KU titles, which is very close to the 68% we found in the US. But before we examine relative pricing on different sides of the Atlantic, let’s look at the other publishing categories.
Small/Medium Publishers are doing somewhat better in the UK than in the US, it seems. These smaller, non-conglomerate-owned traditional publishers make up nearly a quarter of the unit sales in the UK, compared to the 19% they command across the pond. Medium-sized imprints like Scholastic, Corvus, Bookouture, Faber & Faber, and Head of Zeus seem to be holding their own far more effectively in the UK than their equivalents in the US store. Collectively, Small/Medium Publishers aren’t selling as many books in either store as their larger Big Five brethren or their more nimble indie competition are. But in the UK, the performance gap is closer than in the US.
Amazon’s publishing imprints, despite having relatively few titles compared to the other categories of publisher, make up 15% of all unit sales. Unsurprisingly, Amazon imprints are doing roughly the same in the UK as in the US. (At least half of the difference between the 15% shown here for the UK and the 13% found in the US is attributable to the fact that we happened to take our UK sample on the first of the month, when November’s 6 heavily-Amazon-promoted Kindle First titles held all 5 of the overall Top 5 best seller slots, and 6 of the Top 7).
But how about the Big Five Publishers — Penguin Random House, Hachette, HarperCollins, Macmillan, and Simon & Schuster? Collectively, they make up significantly more of the market in the UK than the US. These five publishers still account for 31% of all ebooks sold on Amazon.co.uk, compared to their 26% US market share on Amazon.com. Which we find very interesting. These are the same publishers, after all, and their top best-sellers in each store are mostly the same books. But they seem to be achieving vastly different outcomes in the two stores, which raises the question why.
Correlation does not equal causation, but a look at average ebook prices in each market is certainly instructive. Especially when we compare the average US and UK selling prices in each country for each type of publisher.
Using the November 1, 2015 exchange rate of $1.00 US = £0.65 UK, here’s that comparison shown in pounds sterling:
And for the US audience, the same comparison in US dollars:
Given the above, perhaps its not surprising that the Big Five’s share of ebooks sold in the US has plunged so much. In the UK, Big Five ebooks on average sell for prices that are only 50% more than Small/Medium publisher UK ebooks, and just slightly over double what UK indie ebooks are selling for. But in the US, under the new Agency contracts, the Big Five publishers are pricing their ebooks far higher in the US than they are actually able to sell them for in the UK — fully twice the average selling price of US Small/Medium publisher ebooks, and almost four times what US indie authors are charging.
As we’ve shown in previous reports, media stories about a “flattening US ebook market” are greatly exaggerated. They misinterpret the shrinking market share of the AAP’s 1,200 traditional publishers, 80% of whose sales are made up by the Big Five. And in the US, driven by higher agency prices, those five publishers are selling far fewer ebooks, their sales rapidly being supplanted by non-traditional publishers and indies. Today, more than half of all ebooks being purchased in the US are now non-traditionally published. And most of those sales are indie ebooks without ISBNs — a vast and growing sector of the publishing industry that remarkably remains uncounted in the industry’s official, ISBN-based statistics.
Which brings us to our second big question about the UK market: what proportion of Amazon.co.uk’s ebooks sales are no-ISBN indie ebooks. So we checked.
Just over 25% of the ebooks sold each day through Amazon.co.uk lack ISBN identifiers. Again, significantly less than the 37% we see in the US. But still, indicative that the number of ebooks sold in the UK is at least one-third-again larger than traditional, ISBN-based statistics are measuring.
In gross pound (or dollar) sales terms instead of unit sales terms, we see that nearly 16% of UK consumer ebook dollars are going to ebooks without ISBNs:
It turns out that one out of every 4 ebooks purchased by UK consumers is an untracked ebook without an ISBN — and nearly £1 out of every £6 spent in the UK on ebooks is currently going to untracked ebooks without ISBNs.
Surprising? Not really. Not after what we’ve already seen in the US.
But now let’s shift gears from unit sales to consumer ebook dollars. How do sales at Amazon.com.uk break down by publisher type, in consumer £ spending terms?
Market Share of Gross Consumer £ Ebook Sales by Publisher Type
Just as in the US, books by the Big Five capture around 45% of consumer ebook spending. But in addition to representing far more book sales at reasonable prices, the UK share also means proportionately more revenue for the Big Five publishers than the same percentage does in the US. Why? Because of the terms of the Big Five’s new agency agreements with Amazon. In the US, Amazon.com must sell ebooks for exactly the Big Five-set list price, and Amazon is prohibited from discounting Big Five US ebooks at Amazon’s own expense. In the US, prior to the new agency contracts, Amazon discounting on Big Five books averaged very close to the full 30%. Therefore, in the UK the Big Five and their authors might well be getting close to 100% of that purple wedge, rather than the 70% of it that they currently get in the US.
So let’s move on to the most important chart of all, where authors are concerned — a breakdown of actual ebook author earnings from Amazon.co.uk.
Market Share of Ebook £ Author Earnings by Publisher Type
Unlike the US, where collective indie ebook earnings long ago surpassed that of all Big Five authors combined, in the UK indie-published authors and Big Five published authors are still earning neck to neck. As this is our first look at the UK market, it remains to be seen which direction this is trending over time. But even today, it’s easy to see that indie sales on Amazon.co.uk are healthy indeed, which leads us to the final question we were wondering about: How much overlap is there between the best-selling titles in each market? And how much does it vary by publisher type?
A common argument for choosing the traditional publishing route is that it give an author greater access to international sales. We were curious to see how much of a visibility advantage traditional publishers were able to provide to their authors, when it comes to reaching audiences outside their home country. So we dug deep into the data to find out.
International Best Sellers: Comparing same-title sales in the US and UK
Roughly 27,750 of the 115,000 ebooks appearing on the Amazon.co.uk UK best seller lists also appeared on the Amazon.com US best seller lists, and vice versa — for a nearly 25% overlap between all category/subcategory best sellers in the two stores. The best selling books in each country also tend to have better visibility outside that country and more international sales than their lower-selling peers:
|All Listed Amazon.co.uk Best Sellers:||24% also appeared in Amazon.com’s US Best Seller Lists|
|Overall Top 100,000 in the UK:||29% also appeared in Amazon.com’s US Best Seller Lists|
|Overall Top 10,000 in the UK:||36% also appeared in Amazon.com’s US Best Seller Lists|
|Overall Top 1,000 in the UK:||42% also appeared in Amazon.com’s US Best Seller Lists|
|Overall Top 100 in the UK:||43% also appeared in Amazon.com’s US Best Seller Lists|
Nothing terribly surprising here — a high-selling book is likelier to be an international best seller.
But what is truly surprising is what we found when we looked at how differently that international best seller reach breaks down by publisher type.
First, a look at Amazon’s own publishing imprints: Montlake, Thomas & Mercer, Skyscape, etc. It’s no coincidence that the better-selling Amazon-published titles in the UK also sell well in Amazon’s US ebook store — after all, Amazon is in an ideal position to market their own imprints to overseas customers, too. Consequently, we see much greater consistency between the US and UK sales of Amazon-published best sellers than for other types of publishers — roughly twice as much overlap between bestselling US and UK Amazon-imprint books, on average, than for traditionally-published ones.
But we expected to see that. The far more interesting finding is what we see when we compare the other categories of publishers.
With nearly every report, we discover something new, unexpected, and fascinating about the ebook market… and this report is no exception.
The below graph shows, for each type of publisher, the percentage of Top 100,000 UK ebook best sellers that also were international best sellers that appeared on the best seller lists at Amazon.com as well:
What the above chart shows, we found so counter-intuitive that our first reaction was to disbelieve our data. We had to double check our numbers, and then re-check them, and even visually scan the best seller lists in both countries to confirm, before we were ready to believe what we were seeing.
The height of each bar tells the whole story.
An indie ebook best seller in the UK is almost twice as likely to also be a US best seller than its UK-best-selling traditionally published peers. Even more surprising, the Big Five’s UK ebook best sellers — other than a handful of mega-selling titles by their most recognizable authors — are less likely to sell well internationally as are best sellers by Small/Medium publishers, and only half as likely to sell well internationally as best sellers by self-published indie authors.
Figuring it was a fluke of the UK market, we checked international sales going in the other direction as well. We found the same thing. Indie US best sellers were far more likely to also be UK best sellers as their traditionally-published counterparts, and nearly twice as likely as their best selling Big Five-published ebook peers.
So we took a step back. Perhaps we were casting too wide a net in our comparison — after all, many of those subcategory “best sellers” we were including, particularly the ones from obscure nonfiction categories, were selling less than a book a day in the UK. Perhaps traditional publishers are better at gaining international visibility for their ebooks with a significant number of daily sales. So we looked only at books ranked in the overall UK Top 10,000, which are books selling at least 2 or 3 copies a day:
If anything, for books with significant sales, the gap in international reach widens. It seems that the vast majority of Big Five ebooks that sell reasonably well only do so in their home market. Fewer than 25% of them also sell well internationally. By contrast, more than 50% of the indies that sell decently in the UK also sell comparably well in the US, and vice versa.
Let’s limit our scope further, to only the overall UK Top 1,000 — or ebooks that are selling at least 15-20 copies a day in the UK alone.
The international performance gap is even more extreme at these elevated sales levels. More than 75% of indies selling in the overall UK Top 1,000 also appear in the US Top 1,000, compared to fewer than 25% of the Top 1,000 Big Five titles.
Finally, let’s look at just the Top 100 UK best sellers — or ebooks that are selling 150-200 copies each day just in the UK.
More than two thirds of the indie ebooks appearing in the UK’s overall Top 100 are also US best sellers. A third of them hold equivalent or higher US sales ranks than their UK rankings — which means that they are selling more than 5 times as many books in the US as they are in the UK. By contrast, fewer than one in three Big Five UK ebook best sellers were making significant sales in the US market. The small handful of Big Five authors with Top-100 UK ebooks who were also selling well in the US were names that would surprise no one: Robert Galbraith, Lee Child, E L James, Michael Connelly, Harlan Coben, Andy Weir, Jojo Moyes, and Paula Hawkins. But other than those few megastars, the majority of the Big Five’s Top-100 UK ebook best sellers were all but invisible overseas.
We’re not quite sure what to make of this — it seems to fly in the face of one oft-repeated argument for going with a traditional publisher: that publishing traditionally gives an author better access to international sales.
When it comes to ebooks, at least, the exact opposite seems to be true.
Other than a handful of megabestselling author names, the vast majority of traditionally-published ebook best sellers are regionally limited in their success, and only achieve significant sales in their home country. This is in marked contrast to the performance of their indie and Amazon-published peers, who are selling far better internationally, as well.
Which is certainly not at all what we expected to find. We can’t explain it — but nonetheless, there it is.
In this first Author Earnings report on the UK ebook market, we’ve seen that sweeping change in the publishing industry extends across international borders — it’s a global phenomenon, rather than one limited to the US market. Previously unquestioned truisms, about the best way for an author to publish their work and reach readers all around the world, now bear careful re-examination in that light.
What once might have been true about publishing, no longer is.
While no one knows what tomorrow will bring, we believe that for authors the current trends are extremely positive. We think the future of global literature is very bright. Despite the doom and gloom pronouncements from legacy publishing organizations who are having difficulty navigating these changes, the broader picture is this: today more authors are able to reach readers and earn a living selling their art than ever before.
It’s hard to see much downside in that.