September 2015 Author Earnings Report

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AAP Reports Own Shrinking Market Share, Media Mistakes It for Flat US Ebook Market

  • In the 18 months between February 2014 and September 2015, the Association of American Publishers (AAP), whose 1200 members include the “Big Five”: Penguin Random House, HarperCollins, Simon & Schuster, Macmillan, and Hachette — have seen their collective share of the US ebook market collapse:
    • from 45% of all Kindle books sold down to 32%
    • from 64% of Kindle publisher gross $ revenue down to 50%
    • from 48% of all Kindle author net $ earnings down to 32%
  • The AAP releases monthly StatShot reports on the total dollar sales of their 1200 participating publishers, of which the “Big Five” collectively account for roughly 80%.
  • So far in 2015, the AAP’s reports have charted a progressive decline in both ebook sales and overall revenue for the AAP’s member publishers.
  • During that same period in 2015, Amazon’s overall ebook sales have continued to grow in both unit and dollar termsfueled by a strong shift in consumer ebook purchasing behavior away from traditionally-published ebooks and toward indie-published- and Amazon-imprint-published ebooks. 
  • These “non-traditionally-published” books now make up nearly 60% of all Kindle ebooks purchased in the US, and take in 40% of all consumer dollars spent on those ebooks.
  • The AAP is still reporting on May 2015 right now; they haven’t seen the latest 5% drop in their collective market share, measured by Author Earnings in early September 2015 (after Penguin Random House’s return to agency pricing).
  • Is the broader US ebook market shrinking or growing? Let’s find out.

For details, charts, and data, dive in to…

The September 2015 Author Earnings Report

In 2014, one of the pervasive memes in publishing was that, after several years of tumultuous change, the industry was finally stabilizing. Many industry observers opined that the disruption caused by the rise of ebooks and the ease of digital self-publishing had run its course. The largest traditional publishers generally cheered the recent leveling off of their ebook sales — in one case, characterizing a sharp decline in their own ebook revenue as “great news.” Over the past 18 months, they’ve responded to shrinking ebook sales with progressive and continual ebook price hikes. But now, in 2015, the largest traditional publishers are seeing both their ebook revenue and their overall dollar revenues — including print revenue — declining.

The widely-heralded “plateauing” of the US ebook market has gotten plenty of press over the last 18 months, fueled primarily by these reports of declining ebook sales from the AAP, from Nielsen, and in the released quarterly financials of the Big Five.

Traditional publishers and publishing industry pundits are claiming that the broader US ebook market has now flattened, or is even shrinking.

But at the same time, the largest ebook store in world is telling the Wall Street Journal that the exact opposite is happening:

“Amazon says e-book sales in its Kindle store—which encompasses a host of titles that aren’t published by the five major houses—are up in 2015 in both units and revenue.”

So which is it?

A lot of the confusion stems from this: in nearly all media coverage of the AAP’s declining ebook revenue, their sales — the sales of just 1,200 traditional publishers — are being conflated with the overall sales of the entire US ebook market. The substitution is so automatic, that most of the journalists breathlessly repeating stories about a “shrinking US ebook market” are completely oblivious to the difference.

The confusion is worsened by Nielsen’s misleading claims about their new PubTrack data products, which sell statistics about the US ebook market. PubTrack collects ebook unit-sales data from “a panel of over thirty US publishers,” according to Nielsen, who then sells that data back to the publishing industry at large. The fact that those Nielsen ebook sales numbers come from only 30 publishers, however, doesn’t stop Nielsen from claiming that their PubTrack numbers represent “85% of the nation’s eBook sales” and drawing broad and unsubstantiated conclusions from them.

Most publishing journalists and industry observers simply parrot these groundless conclusions without any fact-checking. After all, those numbers are coming from industry “data experts…”

But is the broader US ebook market truly flattening or declining? Or does the decline in the AAP’s and Nielsen’s 2015 numbers simply indicate that vast numbers of readers are now abandoning traditionally-published books and buying non-traditionally-published ones instead?

Let’s find out.

Here at AE, over the last seven quarters we have steadily built up a comprehensive database of quarterly cross-sectional snapshots of the Kindle store, each of which captures between 45% and 60% of Amazon’s daily ebook sales. And while Amazon’s Kindle store alone doesn’t comprise the entire US ebook market, it does account for 67% of all traditionally-published ebook sales by most accounts.

So we were in an ideal position to measure what percentage of the broader US ebook market the AAP’s 1200 reporting publishers truly account for. And far more importantly, we could measure how well the AAP’s widely publicized decline in ebook sales reflects the direction of the broader US ebook market over the last seven quarters.

But first we had to do some homework.

One by one, we went through through the thousands of publishers and publishing imprints appearing in each of our seven quarterly AE datasets. We looked up each book’s publisher against the list of 1200 AAP-reporting participants. To make sure we got it right, we received off-the-record help from some of the savviest experts reporting on the traditional side of the industry. By the time we were finished, every book in each AE dataset, and all of its sales, had been tagged as either AAP-reported . . . or not.

So now, finally, Author Earnings could do a true apples-to-apples comparison with the AAP’s numbers.

We charted the AAP’s true share of the US Kindle ebook market over the last 18 months, in each of our seven AE data sets.

Here’s what we found.

 18-Month Market Share Trend : ebook Unit Sales

aap-unit-sales

Note that the colors(*) used here mean slightly-different things than in previous reports, and in the “standard” AE pie charts and graphs presented at the end of this one. This chart diagrams how the relative market share of all US Kindle ebooks sold has trended — approximately quarter by quarter — over the past 18 months.

When we look at the first four bars, which correspond to 2014, the first thing that jumps out at us is this:

  • In 2014, Kindle ebook sales by the AAP’s 1200 reporting publishers (shown in purple) made up less than 45% of all Kindle books purchased in the US.
  • Nielsen Pubtrack’s ebook market statistics, based on self-reported unit sales data from only 30 of those 1200 publishers,  account for an even smaller share — less than half of the “85% of the nation’s Ebook sales” that Nielsen boldly claims.

The second thing that jumps out at us from the chart is this:

  • Traditionally published ebooks as a whole only made up 55% of all Kindle ebooks purchased in the US in 2014.

So where did the other 45% of the ebooks purchased by consumers in 2014 come from? The data also answers that very clearly.

They were published by Amazon imprints and self-published by indie authors.

Again, while the remaining 33% of traditionally-published ebook sales occurred outside of Amazon’s Kindle store, our previous Author Earnings analyses of sales at these other ebook stores — such as this AE look at the Barnes & Noble Nook store — have painted a very similar picture of the ebook market breakdown there, too. While Amazon imprint books are conspicuously absent in those other stores, indie ebooks held a roughly similar market share — or even a greater one — than in Amazon’s store.

Now let’s take another look at that seven-quarter market share chart again, and this time let’s focus on the longer-term trends.

18-Month Market Share Trend : ebook Unit Sales

aap-unit-sales

Let’s see how each publishing segment has fared over the last 18 months in the largest ebook store in the world. We’ll work our way upward, market sector by market sector, from the bottom of the chart to the top.

The AAP’s 1200 participating publishers:

At the bottom, we have (in purple) the AAP’s 1200 participating publishers, whose sales — 80% of which are from the Big 5 — get reported in the AAP’s monthly StatShot reports. As we move from left to right, comparing the heights of the purple bars from February 2014 to September 2015, we can see the AAP’s share of all ebooks sold progressively dropping.

The AAP’s share of Kindle ebooks purchased by consumers has fallen from 45% of all Kindle ebooks sold in February 2014 to less than 32% of all Kindle ebooks selling in September 2015.

Smaller, non-AAP-reporting traditional publishers:

Right above the AAP’s share, we see (in red) how non-AAP-reporting traditional publishers have fared. These are generally smaller publishers and micropresses who are not part of the AAP’s 1200 reporting participants.

Up through May 2015, the market share of non-AAP-reporting traditional publishers has been declining right alongside the AAP’s.

But in September, we see those smaller, non-AAP-reporting traditional publishers picking up some of the AAP’s lost market share. A single data point does not a trend make . . . but perhaps, as the AAP publishers have begun to price themselves out of the ebook market, they’ve also given their smaller traditional-publisher brethren some breathing room. We shall see in the coming months.

Amazon’s own publishing imprints:

Above the purple AAP and red non-AAP traditional publishers, we have Amazon’s own publishing imprints (shown here in pale green). There are no more than a few thousand books published by these imprints — Montlake, Thomas & Mercer, 47North, Skyscape, and the like — but unsurprisingly they punch well above their weight, being uniquely positioned to sell well in Amazon’s own Kindle store.

Over the past 18 months, Amazon imprints have nearly doubled their market share, from 7% of all Amazon ebook purchases in February 2014 to 13% of all Amazon ebook purchases now.

Indie self-published books:

And then at the top of the graph, in various shades of blue, we have indie self-published books. For simplicity, in this series of charts, we’ve included uncategorized single-author-publishers (who are basically all unconfirmed, low-selling indies) in the indie category.

In 2015, we began tracking in our reports which indie books had ISBNs. And which didn’t — and therefore were part of the no-ISBN publishing “shadow industry,” a burgeoning market sector that remains completely invisible to Nielsen, Bowker, the AAP, or any of the other traditional providers of publishing-industry statistics.

The 2015 market share of “shadow industry” indie ebooks is shown in midnight blue at the top of the latter 3 bars of the chart, while ISBN-bearing indie ebooks are shown in a lighter shade of blue right beneath. Together, they reveal a jaw-dropping fact.

Indie ebooks without ISBNs have grown from 30% of all Kindle ebooks purchased in January 2015 to now account for 37% of all Kindle ebooks being purchased in September.

When indie ebooks that do have ISBNs are included, then indie self-published books, which made up 36% of all Kindle ebooks purchased in February 2014, now make up 42% of all Kindle ebooks being purchased on Amazon right now.

Unfortunately, we didn’t also go back and retroactively check each book in the 4 earlier 2014 datasets to see which of them had ISBNs. Had we done so, it would have beautifully charted the rapid rise of the untracked ebook “shadow industry,” right alongside the rapid decline in market share held by traditionally-published ebooks.

But right now, as of September 2015:

  • “Nontraditionally-published” ebooks from indie self-publishers and Amazon publishing imprints make up 58% of all Kindle ebooks purchased in the US.
  • Traditionally-published ebooks make up 42% of Kindle ebooks purchased in the US.
  • When the AAP reports “declining ebook sales”, they are describing the shrinking portion of the US ebook market held by their 1200 participating traditional publishers, whose share of the broader US ebook market has fallen in the last 18 months from 46% of all Kindle ebook purchases to less than 32%.

This dramatic market share shift has not gone entirely unnoticed in traditional-publishing circles. In July, influential industry veteran Mike Shatzkin observed that:

Ebook sales for big publishers may be declining but they’re being replaced by indie sales at lower prices (their USP) at Amazon.”

Still… publishers bank dollars not unit sales.

And the monthly AAP StatShots report only the gross dollar revenue of their 1200 participating publishers, not their unit sales.

So to see how the AAP’s dollar sales have trended relative to those of the broader US ebook market, let’s look at publisher gross dollar revenue next…

18-Month Market Share Trend : Publisher Gross $ Revenue from Kindle Ebooks

aap-publisher-gross

We can see from the above that the market-share shift in unit sales, away from traditional publishers and toward indie ebooks and Amazon imprints, has been mirrored by a similar shift in publisher gross $ revenue. Today, indie self-publishers are taking home 24% of the gross $ publisher revenue coming out of the Amazon ebook store. Amazon-imprints and their authors are taking home another 13%. The AAP’s 1200 publishers account for no more than 50% of publisher ebook dollar revenue.

Traditional publishing’s May 2015 to September 2015 fall in ebook dollar market share is the steepest quarter-over-quarter drop we’ve seen so far, since AE first began tracking ebook sales in the Amazon kindle store in early 2014. (This latest drop has also as of yet not been reported by the AAP, who have just recently released their May 2015 report.)

The most recent fall in traditional-publishing’s share of the US ebook market may very well be due to Penguin Random House’s return to agency pricing in early September. Penguin Random House, the largest of the Big Five publishers, accounts for roughly a third of the AAP’s total reported revenue. And almost overnight, the average sales price of a PRH Kindle ebook jumped from $9.06 to $10.79, with easily predictable results: both PRH’s unit sales and their overall ebook revenue are down, just like the rest of the Big Five.

But why did the traditional publishing industry’s biggest publishers remain unaware for so long about how quickly their ebook market share was eroding? And why did those publishers believe that enforcing higher ebook prices wouldn’t negatively impact their revenue?

The most cogent and thoughtful explanation we’ve seen yet comes from publishing industry veterans Mike Shatzkin and Michael Cader, who are able to put this seeming paradox very neatly into an understandable context for us. In a recent August idealog.com post, Mike said:

“What we’re seeing and hearing is that publishers might have boxed themselves in with their return to agency pricing. We’re hearing widespread but totally unofficial reports that big publisher ebook sales are dropping noticeably when their new higher agency prices are activated. When publishers first “raised prices” by instituting agency pricing for ebooks in 2010, they saw no reduction in ebook sales, which continued to grow. Michael Cader’s analysis … was that publishers may have misread the real impact of price increases because they raised them in a growing market. The number of ebook readers was increasing every day, so those who were put off by the high prices were outnumbered by the new entrants …”

In other words, in 2010 the overall ebook market was growing so fast that it masked the shrinking ebook market share held by traditional publishers. For every consumer abandoning high-priced traditionally-published ebooks for reasonably-priced indie ebooks, two or three more new ones would take their place.

In 2015, the US ebook market is still growing… but not quite as fast as it was in 2010.

And that now-slower growth is still cushioning the collapse in Big Five/AAP traditionally-published ebook revenues. While finally noticeable, these drops in publisher revenue are still quite a bit gentler than the steeper drops we are seeing in the relative market share of these publishers, who are losing ground to competing non-traditional publishers at a rate that is far faster than the overall ebook market is growing.

Another key factor undoubtedly contributing to the shift in publishing market share away from traditional publishers, and toward indie authors, is the rise of Kindle Unlimited. While KU launched in mid-2014, the 2015 acceleration of traditional publishing’s decline in market share seems to correlate more closely with the Big Five’s return to (higher) agency ebook pricing. But still, we would be remiss to ignore the growing impact of KU as a contributing factor as well.

Today, 34% of indie author earnings from the Amazon store — over a third of indie Kindle revenue — takes the form of KU payments for pages read: in July, KU accounted for 2 billion pages (KENP) and $11.5 million dollars in direct author compensation.

And here at authorearnings.com, author compensation is our raison d’être.

So let’s now take a look at that all-important graph of author earnings.

18-Month Market Share Trend : Author $ Earnings from Kindle Ebooks

aap-author-earnings

When we first started analyzing Kindle sales in February 2014, traditionally-published authors were taking home nearly 60% of the ebook royalties earned in the largest bookstore in the world.

Not anymore.

Today, traditionally-published authors are barely earning 40% of all Kindle ebook royalties paid, while self-published indie authors and those published by Amazon’s imprints are taking home almost 60%.

From an author-earnings perspective, in 18 short months, the US ebook market has flipped upside down.

But change in publishing isn’t limited to the ebook market.

Last month, a self-published indie PRINT children’s book — a trade paperback — was one of the Top five print bestsellers in the US for over two weeks, selling over 29,000 print copies in its first week and hitting #6 on USA Today’s combined Best Seller List. (An oddly-timed rule change that same week by the New York Times Best Seller List kept it from appearing on the NYT List.)

But the exciting news for indie print books doesn’t end there. Walmart will very shortly be carrying a self-published book on its store shelves: Jamie McGuire’s Beautiful Redemption.

Both pieces of news disprove the outdated notion that a traditional publishing contract is necessary if an author wants to achieve chart-topping PRINT sales, or to see their print book sold on Walmart shelves.

Old print distribution barriers are starting to crumble, just as they already have for digital.

We can’t help but wonder what the next 18 months will bring.

The only thing that we’re certain of is that the publishing industry is far from stabilizing. From here forward, the rapid pace of change will only accelerate.

In the coming months, what do you think we’ll see?

 

The “standard” suite of Author Earnings pie charts and graphs for September 2015

We won’t expend a lot of words covering them, but here they are.

(*) I’d like to offer up an apology, though, for the accessibility-unfriendly colors, and make the following request: if anyone has a good palette of accessible colors to recommend instead, please email them to me, at: authorearnings [at] gmail [dot] com

Thanks! —Data Guy

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2015-aug-trend-author-earnings

 

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Download the raw data this report is based on (.xslx)

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Author Earnings is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License.

 


73 Responses to “September 2015 Author Earnings Report”

  1. Thank you for all the work you put into this!

  2. Noble Lee says:

    First off, thank you thank you for all the work you do make this available to writers.

    Can you please explain how the category “single author publisher” differs from “Indie publisher”?

    Thank you, Noble

    • Data Guy says:

      Hi Noble,

      Explanation here: http://authorearnings.com/note-on-methodology/

      Basically, single-author publishers are almost all low-selling indies that we didn’t have time to Google and confirm one by one.

      • TheSFReader says:

        Just adding a link to my “Author earnings methodology primer” in which I tried and centralize all the Q&A pertinent to methodology in the different reports and commments http://readingandraytracing.blogspot.com/2015/02/an-author-earnings-methodology-primer.html

      • A.K. says:

        So this means the Indie publishers are only those whose names you recognize ??? In other words, largely the big, well-known names?

        If so, this might also be a little misleading.

        • TheSFReader says:

          Actually, AFAIUnderstand, the goal was to bias the evaluation as most as possible “against” self-publishing to make it more difficult for opponents to use bias against the results. So to avoid grouping small publishers with a single author (starting business maybe ?) with self-pub (which would have overestimated the self-publishing results, DG and Hugh Howey decided to “underestimate” and only count “single author self-publishers” as one when it’s verified.

          • A.K. says:

            Then the results are not likely to convince a person deciding whether to go the traditional route or the indie route to go indie because the realistic expectation is that person will end up in the 2%, which is not growing, instead of the 43%, which is.

            Why give up a small advance for nothing, since it appears that single author self publishers are (realistically) going to earn nothing.

          • TheSFReader says:

            I don’t understand your point. While underestimating self-publishing it still gains WAY more than an overestimated trad-publishing. I find it fairly conclusive.

        • Liana Mir says:

          You’re misunderstanding. This means that there was a small percentage that were not VERIFIED as self-published but were likely self-published as their publishing house had only one author. Many single-author houses ARE verified. This is a small category of likely indies, possibly starting small pub instead. It does not include all indies with only one author.

          • TheSFReader says:

            Yes, I was misunderstanding. But the point of keeping track separately of “Single author publishers” is not to help choose between “single author publishers” and Self-publishing, but between self-publishing and big5/small-mediumP. To make sure self-p is not over-representated, they biased AGAINST it, which leads to the creation of that marginal “single author publisher” category.

            Tha fact is : the result is in favor of self-publishing despite having the methodology stacked against it.

  3. Rachel Aaron says:

    This is freaking amazing, but also not unexpected in hindsight. Went to buy my friend’s NY debut novel this morning only to see the eBook was $12.99.

    THIRTEEN BUCKS?!

    I could see charging that much for a novel w/ a built in audience (like a Star Wars novel or a TomClancy) but who the hell spends $12.99 on an eBook from a debut novel?! She’s my friend and even I hesitated to buy, what chance dose she have with a normal reader at that price?

    It’s supposed to be a great book, but I feel like her publisher is crushing her career before it can even begin with these absurd prices.

    • I felt the same way last month. Got really excited after reading the sample of a new sci fi author’s book and clicked on over to buy it. It was the full $7.99 mass market price for the ebook. I so did not want to buy it since I wasn’t sure if this author would be for me, but I did, mostly because I felt badly for this debut author. It’s very sad.

    • James Palmer says:

      Well said, Rachel. There is never a legitimate reason to charge thirteen bucks or higher for the e-book. What most people do is wait a year for the paperback to come out, when the e-book price usually drops to match it. That is if the reader remembers to hunt for said book in a year’s time. The only real reason publishers are pricing their e-books that high is to maintain their stranglehold on print distribution.

    • Feh says:

      $4.99 is the most I’ll pay for an eBook. Above that and I’d rather have the real thing.

      • I’m the same way. I might spend twenty bucks on a physical book but i will not spend a cent over 4.99 for an e-book regardless of whether it is traditionally published or an indie, the work of my best friend or a loved author. Ain’t gonna do it.

  4. Alan Tucker says:

    Terrific stuff as usual from you guys! Thank you so much for all your tireless work on this.

    I’m wondering about the aggressively increasing share Amazon-published works are getting. Do you have data on the total number of titles published by Amazon for each quarter? What I’d be interested in seeing is if the increased market share is proportional to an increase in the number of titles, or if Amazon doing more to market their own books as time has gone on. I suspect it’s a bit of both, but this is also something the criers of, “monopoly!” will likely be pointing at in the future.

  5. As always, thank you so much for all the work on this. The main concern I have with drawing conclusions here is Kindle Unlimited. The way that you are obtaining unit sales and dollars is by extrapolating from rank. Before Kindle Unlimited, this was a very accurate way to do it, because we had so much data from authors over the months and years about what it took to hit certain ranks. But now, a book ranked 10,000 might be there due to 12-20 sales or it might be there due to 12-20 ghost borrows or some combination thereof.

    We have very little idea how to value a ghost borrow. If every ghost borrow was read to completion, then we could speculate that under Kindle Unlimited 2.0, an indie title would make roughly the same amount per ghost borrow as a sale. This is on average of course, as list price and book length could make it vary for individual books. But obviously ghost borrows aren’t being all read to completion. It could be only half of the potential page reads are actually occurring, it could be 30% it could be 70% – we just don’t know.

    What assumptions are you making in terms of unit sales and more importantly income as far as that goes? As accurate as Author Earnings likely was the first 2 or 3 reports, it seems like we’re getting further and further from being able to make accurate conclusions. And that’s even putting aside the likelihood that the formula to tie sales to rankings has likely changed significantly since then -I’ve read suggestions that it takes nearly twice the sales/ghost borrows to hit the top 500-1000 as it did a couple years ago.

    • Data Guy says:

      Hi Edward,

      You’re right 🙂 — Kindle Unlimited does make things a little trickier. But Amazon also provides us a nice monthly mechanism for calibrating our model: the overall KU payout size and the number of KENP read. With the KU 2.0 switch to compensation for pages read, the ghost-borrow issue is no longer a source of error. Our model for KU compensation now factors in the page-length of each title, the per-page KU 2.0 payout, and an average-%-read factor that lets us exactly match Amazon’s announced $11.5 million / 2-billion-KENP-read numbers from July.

      Nonetheless, expect to see a significantly updated rank-to-sales curve soon. It won’t affect the relative %-ages and market shares to any degree, but it will let us be more accurate about the absolute size of the combined pie.

      • David says:

        DG, have you spelled out somewhere the logic you’re using to figure out unit sales and revenue under the new KU? I’m curious to see the method, if you’ve published it.

        Also, how dangerous is it to draw comparisons between pre-KU2.0 data and post-KU2.0 data? I’m sure you’ve made the most sense of it that you can, but still, it’s necessarily causing a change in methodology, so there’s a whole apples and oranges risk. How big of a caveat do you think that is?

        Thanks for all you do. Hugh, too!

        David

        • Data Guy says:

          “DG, have you spelled out somewhere the logic you’re using to figure out unit sales and revenue under the new KU?”

          Hi David,

          Spelled out in gory detail here. 🙂

          “…how dangerous is it to draw comparisons between pre-KU2.0 data and post-KU2.0 data?”

          My thinking is this:

          KU 2.0 changed how indie authors are compensated for KU borrows. But that wouldn’t impact consumer behavior directly. One could argue that there will be an indirect change in consumer behavior, because the mix of titles authors put in KU will vary as a result of the change in author compensation. But I don’t think it’ll have a significant effect on consumer behavior, and here’s why: even under KU 1.0 subscribers were already predominantly downloading longer works, as we saw that back in May:

          • David says:

            Thanks for the link! And regarding my second question, even if consumer behavior won’t change as a result of KU2.0 (and I agree that it won’t, except possibly in the indirect way you called out), the concern is that your methodology is changing… and thus the Sept report might show a “change” that isn’t actually real — it’s strictly driven by a change in the way we measure a static behavior. I know there’s no way to know for sure exactly how big a deal that is, so was just wondering if you think that’s a big or a small caveat. Sounds like your gut says “small,” so I’ll go with that. 🙂

            David

      • Regarding KU, that sounds like a step in the right direction. What is your average read factor percentage per ghost borrow (and how did you arrive at it)? That seems to be the key assumption that could raise or lower indie earnings by as much as 10% depending on how far off it is from actual. Also, how do you handle the borrows for Amazon imprint books and small publishers who are in KU, which as far as I understand it are not part of the pool? I’m not familiar with what those folks get paid.

        Again, it is awesome that you are gathering all this data. And I’m glad you will be updated the rank-to-sales curve. It may spur charges of changing your assumptions to fit a narrative, but probably that would only be from folks just looking to poke holes. Anyone with even a small understanding of the market should be expecting a once a year or so recalculation of this curve.

  6. Thanks, as always, for the fantastic data and analysis, gentlemen! It’s so refreshing to see someone doing hard analysis on these trends, and the fact that you make the raw data available is just incredible.

  7. Jim Johnson says:

    Thank you so much for the data, gents! Really amazing story you’re putting together here. Ever thought of publishing these findings (in an ebook, on KU, of course)?

  8. Joe McNally says:

    Thanks for the work on this.

    You mention ‘unfriendly colours on your charts – 1 in 12 men is colour blind (1 in 200 women). I always find these charts difficult to follow because of colour blindness. Could some form of hatching be used instead? If, not some very highly contrasting colours?

    Many thanks
    Joe

  9. Evil Overlord says:

    Thanks, as always, for this careful, insightful look at publishing data. It’s nice to see real world experience confirmed.

    I’d be interested to see how sales affect the data. For example, there are so many good books to choose from these days, and standard pricing is so high, that I don’t buy unless they’re on sale. Tools like eReaderIQ make that easy to do.

  10. Thanks so much for all the work you put into this. I would also like to know how “single author publisher” differs from “Indie publisher”.

    I would like to pass on this info to other writers and will shortly be giving a talk on e-publishing. Would it possible to sum up the data with a short conclusion at the end?

  11. TheSFReader says:

    Thank you guys !

  12. G says:

    This is another landmark report, especially the part about how big the KU earnings are.

    It’s an enormous ecosystem that the big five have no part of and no real concept of. This is why indies and Amazon will continue to eat big pub’s lunch until they wise up…

  13. What a great analysis: a huge amount of data turned into very insightful information.
    And what a momentous change it captures!
    A great time to be an indie author trying new things.

  14. Excellent report, as always! It’s incredible to watch the market shift so radically in so short a time, and these reports are the greatest illustration of that fact.

  15. Great work as ever. Thank you.

  16. David Rogers says:

    Thanks yet again to Hugh and Data Guy! You guys are doing great work and great service to us all!

    Is it incompetence or deception that the data used by the industry is so out of touch with what’s actually happening in publishing? That’s an interesting question. I think we won’t know until the trad side collapse starts in earnest. Then the tongues will begin wagging as former employees spill the secrets.

    Until then, go indies! Money flows to the writer, and now it actually does.

    • Gary Jonas says:

      I don’t think it’s deception or incompetence. The reports they’ve been getting match up with their own data so they haven’t had a reason to look deeper.

  17. Lisa Grace says:

    Thanks for publishing. What a wealth of information! Trade publishers should be taking your information and using it to increase their market share.

    Question:
    I sold some group orders direct to school and churches of my ISBN print books for summer reading programs. I ordered these books direct from Createspace and drop ship or deliver myself.
    Data Guy, Are they counted anywhere?

    I wonder how many authors do this. I’m sure these books are not counted in. I plan on growing this part of my business substantially.

  18. James Wells says:

    The sweeping change and the related denial are similar to other cases where a disruptive technology has been defined away as not real by the incumbent industry until the takeover is so complete that it can’t be denied. Whether it’s personal computers or other technology, the initial version of the disruptor is “not as good” by conventional measures (in our case, indies are seen as lower quality, indies can’t get into book stores, …), but then it steadily gets better both by tangible improvement and also by redefining the measures of success.

    The artificially high eBook prices from the Big 5 are very directly reminescent of high priced, high end computers that eventually people ceased to buy.

  19. Nonfiction-author says:

    Great report. What I would so love to see is some analysis of indie nonfiction, and by nonfiction I don’t just mean self-help and light stuff like that, but serious journalistic/historian nonfiction, narrative nonfiction, that sort of thing.

    It seems to be the one area that has yet to make a dent in self-publishing, and I’m wondering if that situation will ever change.

    I am not yet convinced that there simply is no market for indie serious nonfiction; especially in ebook format. Instead I’m guessing that journalists and historians simply are going indie at a much slower pace than genre fiction authors. Perhaps due to the long research periods necessary for such nonfiction, and the fact that such authors largely rely on up-front advances from legacy publishers. I don’t know.

    If AuthorEarnings has any data or insights into this area, I sure would love to see it.

    • Data Guy says:

      Hi Nonfiction-author,

      We’ve looked at genre-specific market share — including nonfiction — in a couple of past reports.

      The results were pretty surprising:

      But with every report, we also publish the raw data set as a spreadsheet so that others can delve deeper into aspects of it that we were also curious about but didn’t have time to dig into ourselves. 🙂

      The categories column (P) in the spreadsheet should contain all Amazon categories that each book was listed under. Back in January, Alexis Radcliff (Hi, Alexis!) looked into the spreadsheet data and found a bug in my data-scraping spider software, triggered by a recent Amazon change in their product-page HTML which caused most Romance categories to appear as just “Books” (weird, huh?). Luckily, the rest of the data was fine, and we weren’t using that genre category data for anything in those early 2015 reports.

      But for the September report, I fixed the bug, so the column-P “Categories” data in the spreadsheet should be good to go.

      If anyone wants to dig into analyzing how different genres are doing, I’d love to hear what you find.

  20. AO says:

    I’m super lazy right now (plan to read the whole thing later tonight), but for now can someone give me a TL;DR version?

    • Jim Johnson says:

      From the report:

      When we first started analyzing Kindle sales in February 2014, traditionally-published authors were taking home nearly 60% of the ebook royalties earned in the largest bookstore in the world.

      Not anymore.

      Today, traditionally-published authors are barely earning 40% of all Kindle ebook royalties paid, while self-published indie authors and those published by Amazon’s imprints are taking home almost 60%.

      From an author-earnings perspective, in 18 short months, the US ebook market has flipped upside down.

      Elevator pitch: Indies rule, tradpubs drool. 🙂

  21. Laura Taylor says:

    Brilliant work – many thanks for all that you do! LT

  22. Kay Franklin says:

    I look forward to your reports and I think this one is the best yet! Thank you.

    I do wonder what is happening over at ibooks? It would be interesting to see some statistics concerning their sales.

  23. J Dawn King says:

    Thank you so much for this data. As one of the indie publishers through Amazon with all three books enrolled in KU, I shudder to think of how long I would have had to wait for publication of my stories had I gone the Big 5 (sounds like a sports league) route. Once the files are edited, proofed, and formatted they can be available for purchase online in 12 hours as an EBook. A print book takes about one week. Audio takes longer, depending on the narrator/producer. Also, I LOVE getting 70% royalties on the majority of my sales as well as a huge chunk of change from pages read on KU. My out-of-pocket costs for hiring a professional team to format, story and copy edit, and design beautiful covers is minimal in comparison to the income received.

    Do I need to have the distinction of being published by one of the big houses? Nope – as I chuckle all the way to the bank. (BTW – I write and publish Jane Austen fan fiction which has a ready audience. I do all the same marketing that the big houses are now asking their authors to do. I am not a Tom Clancy or a JK Rowling, nor will I ever be. But, I have absolutely NO regrets.)

  24. LJ says:

    Thank you for this report and all the hard work that has been done to make it and past reports possible.

  25. Chris Wiltz says:

    Many thanks to DG and HH. The results are pretty amazing! “The times they are a-changin.”

  26. M R Mathias says:

    I am an indie author and I have 3 AWARD WINNING PEN NAMES.

    Publishers are like anchors. They used to use them, but due to Global Positioning Systems, and wind/current thrust compensation technology, they are now just dead weight. – M. R. Mathias

  27. Thank you for putting these reports out there. I can’t imagine the data you had to dig through to get the actual numbers that all of us self-pubbers have been guessing existed.

    So many authors look at a publishing contract as the brass ring. I’ve never understood why. Even before seeing these numbers in black and white, I couldn’t see the benefit to the author (unless you count the ego boost of being able to say “I have a publishing contract”). With this report, I’m even more confident in my choice to self-pub.

    As far as I’m concerned, trad-pubbers are welcome to fill their egos while self-pubbers fill their bank accounts.

    • Smart Debut Author says:

      “So many authors look at a publishing contract as the brass ring…”

      The previous generation of writers maybe…

      But that’s not at all what I’m hearing when I talk to newer authors, who started writing in the Internet era. To them, a publishing contract is just another piece of paper. It’s only as interesting as the financial terms and marketing commitments the publisher is willing to offer.

  28. “There are no more than a few thousand books published by these imprints — Montlake, Thomas & Mercer, 47North, Skyscape, and the like — but unsurprisingly they punch well above their weight, being uniquely positioned to sell well in Amazon’s own Kindle store.”

    THIS scares the heck out of me.

    Nobody seems to be commenting on how ‘a few thousand’ books can grab such a huge market share (relative to the millions of self-published books), and whether their authors are getting a fair share of that pie.

    Amazon is a business; I get that. They are in it for themselves; I get that, too. But when they are both the distributor for self-published books, and in a position to compete with those self-published books themselves (where they HAVE access to all that data everyone would love to have), a little voice in the back of my skull keeps asking me: What do you do if Amazon comes calling and offers a deal? And what do you do if they DON’T?

    IOW, what do I do now that I see from the graphs what a significant fraction Amazon-published books have?

    Are we switching corporate masters here in any way? And is it still better to cast your fate with the millions of self-published books?

    You did well to make it a fluorescent lime green – it is VERY easy to see that Amazon’s share is disproportionate.

    Nothing wrong with that – in principle, they can do whatever they can get away with, and they seem to have helped launch an awful lot of indie careers – but it worries me down deep that it is such a huge section.

    Thanks, DG, for making this comment possible – without the data you’ve carefully gathered and made public, I would not have thought of the Amazon imprints as huge competitors here.

    • Chong Go says:

      I suspect that Amazon is cherry-picking the best of the indie books. They have the sales data for *every* book, and so are in a position to notice which ones are trending up. They almost certainly have data that gives them an idea of the threshold of sales and reviews a book needs to really take off, and I’m guessing that when they see this, they make an offer. There’s probably a program running in the background that flags the books that have most potential.

      • Yes – they can.

        You can’t submit to these imprints; only agents can – but Amazon can contact you.

        However, even with their huge sales push, the question is: Is this the best choice for the AUTHOR – who, if selected this way, is either doing well, or has the potential to?

        It’s even harder than submitting to BP/agents – and having them take you on. It is more rewarding?

        Just things to think about.

        Alicia

  29. EndOfPatience says:

    The reason seems pretty obvious. The Big Five are controlled by Social Justice warriors intent on pushing “message” fiction. Which is always crap. ALWAYS crap. That doesn’t mean Leftists can’t write good fiction, or even great literature. It DOES mean that if the selection criteria is inclusion of Social Justice themes instead of quality of writing, you’ll get dreck published.

    Case on point: TOR, a SciFi imprint of Macmillan, with a catalog of mostly garbage. LOW SELLING garbage.

  30. I appreciate the work that went into this report. But I quit reading it when I realized that it equated Kindle sales with ebook sales. They’re not the same thing. It isn’t even good business practice to treat them as if they were.

    Indeed, a good case can be made that the best long-term strategy for AAP publishers is to increase sales through other ebook retailers, even if that means in the short term fewer Kindle sales. Making your business success dependent on Amazon is like signing yourself into slavery.

    The same argument, both short-term and long-term, applies to independent authors who self-publish. They should be devoting their business and marketing attention to shifting as much of their sales away from Kindle and to other outlets, particularly Apple’s iBookstore, the second largest ebook retailer. Why? Look at the numbers.

    Apple pays authors 70% at all retail prices from $0.99 to $199.99. Amazon merely pretends to pay that same 70% over a narrow price range of $2.99 to $9.99. Outside that range, it pays half as much or a measly 35%. Inside that range it charges a hideously over-inflated “download fee” which lowers the actual rate to from 60-65%.

    Self-publishing authors are showing pitifully poor business sense with they put most of their marketing into Kindle sales. For ebooks outside that $2.99 to $9.99 window, they could double their per-sale income by simply moving their readers from Amazon to Apple. Inside that range, they could earn another $100 out of every $1000 by making that move. Outside that range, their added income could be even greater and—this is important—without increasing the price their readers pay.

    Changing how they market their ebooks wouldn’t be that hard. Assume, for a moment that they have a series of novels, each normally retailing for $1.99, that a new one has come out, and that they have a way to inform most of their fans. The steps would go like this:

    1. Release the new book through the iBookstore and the other non-Amazon retailers at an ‘early bird’ price of $0.99. At 70%, that means each sale would net about $0.70.

    2. After a month or so, add the Kindle edition and raise the price to $1.99 at all outlets. Amazon sales would pay the same as that earlier discounted price or $0.70. Sales at the iBookstore would now pay $1.40.

    Do you see what you’ve done?

    * Short-term you’ve given your most avid fans a $1.00 discount (50% off) for the first month of sales and at the same time encouraged them to buy your books from Apple rather than Amazon. That discount has cost your nothing in comparison to selling those books at full retail ($1.99) on Amazon.

    * Long-term you’ve moved an increasingly larger slice of your sales to the iBookstore, where you earn $0.70 more or twice as much per sale.

    Even more important, over the long run, as you shift more and more sales to the iBookstore, you’ll be dramatically increasing your income. To illustrate that, compare for 1000 sales what you’d get if your sales divide like the market is divided (say 70/20), with what your income would be like if you manage to increase your iBookstore sales to 50%.

    * Do nothing to shift sales. You earn 700 x $0.70 = $490 from Amazon and 200 x $1.40 = $280 from Apple. That’s $770.

    * You shift half your sales to Apple. You earn 500 x $0.70 = $350 from Amazon and 500 x $1.40 = $700 from Apple. That’s a total of $1050.

    Note the difference. By simply moving 30% of your readers from Amazon to Apple, you’re earning an additional $280 dollars for every 1,000 books sold. Could you use that added income? You sure could.

    For the record, I have no connections to Amazon or Apple. I simply know a good business move when I see it. I might add that Amazon can easily fix this difference. It can simply pay what Apple pays, 70% at all retail prices. If enough authors and publishers make the move described, it will be forced to do that.

    • Correct me if I’m wrong, but this analysis seems to rely on extremely low prices – 0.99 and 1.99 – to make sense, and most people wouldn’t price their novels in that range.

      And many of those who do, are using that novel as a loss-leader for the first book in a series – and the rest of the novels are priced at something between 2.99 and 9.99, where the Amazon and iBooks royalties are the same.

      Many people recommend going wide with their distribution; others have found success staying in one place. But it should be based on an analysis of ALL the possible price points, not just ones off the low end of the curve where I wouldn’t price my work.

      You may be right – I’ll figure that out eventually for me and what I write – but I’m not convinced from this.

    • Michal says:

      Great SF, but I sold just 36 copies via several other vendors this year.
      I sold more every single week on Amazon.

    • The thing that you do not understand is that the readers are all at Amazon, NOT at Apple. Apple has less than one tenth of one percent of the readers that Apple has.

      Apple also has a very noxious contract that you have to sign, and treats people a lot worse than Amazon ever has.

      I’ve been doing this for 5 years now, I make a living as an independent author. I think my lifetime Apple earnings aren’t even a hundred dollars. However my lifetime Amazon ones are crossing into six figures.

  31. Monica Burns says:

    Great info, and I love the push back of Indie titles to traditional publishing. I do find it distressing/irritating/whatever that Amazon’s imprints are seeing a larger share as this ties in with their publishing arm books being pushed in their store. While it’s their store, their rules to some extent, it does beg the question why the DOJ hasn’t called them on it.

    My second observation is that many of the strategies here and/or the results presented need to be studied with an eye as to the genre and subgenres. Short of inspirational genre books, romance is the biggest seller. But it’s the type of subgenre in romance that determines one’s success not so much the price range. I’ve done price changes, done free, done Book Bub, and my sales have increased only a small amount (and I’ve been traditionally, small press, and epub published and now indie). I think the “gold mine” of indie is rapidly changing to a leveling off period until the next best thing hits the cyber and everyone tries to hop on and catch the wave.

    Thanks again for the break out. This does make things seem a little less bleak for me, as I was considering subbing to a NY house. Now I’m thinking my best bet is to just diversify more in subgenres and to keep putting out quality books as fast as I can.

    • I don’t see why a big publisher can have its own store (not well done, but they have their own websites where you can browse their books and buy them), but not Amazon.

      And at least Amazon opens its store to almost anyone who has a book to sell; the BPs only allow their own.

      There is no cause for DOJ to do anything – all stores offer their own brand as well, if they have one.

      • Rachel T. says:

        I agree. It’s like walking into a giant book store that sells everything by every author, but they have a table near the front door with their “house pub” label on it. Nobody says you have to buy from that table. You’re free to look at all the others. And they’ll pay authors fairly no matter what you buy. But the “house pub” label and the table by the front door are a marketing strategy, nothing more.

  32. This is all wonderful information, but where do small press publishers fit in? They’re not the Big Five and not self publishing authors (indie authors). Small presses are the original indie publishers who broke away from the Big (pick your number) 25 years ago. Have they now been classed as part of the larger traditional publishers, or is this category either misnamed or forgotten altogether?

    • Data Guy says:

      Hi Kemberlee,

      Small press publishers are included in the red sections of each chart (i.e. Non-AAP Traditional Publishers in the bar charts, and Small/Medium Publishers in the standard AE set of pie charts and line graphs at the bottom.)

  33. Amazing analysis again! I love seeing all of this data in lovey graphs!

  34. Eric Hammel says:

    It seems to me that the numbers confirm that Amazon is providing an advantage to new titles published by an Amazon subsidiary.

    Do you think this represents a conflict of interests?

  35. Nat says:

    I see the NYT is crowing about those AAP figures today: http://www.nytimes.com/2015/09/23/business/media/the-plot-twist-e-book-sales-slip-and-print-is-far-from-dead.html

    I wondered, do you have a graph for the absolute numbers rather than the percentages of the total sales?

    (Apologies if I have missed this information somewhere …)

  36. Russ Benk says:

    This is some incredibly detailed data you have delivered here. Thanks for putting it all together.

  37. MitchS says:

    Ive worked with data for years as a DBA and know the complexities of analysis. In your case you not just dealing with shifting definitions (example: what is Indie now represent?) but shifts in how data is carved up from various sources that change over time. That makes apples to apples extremely “iffy”.

    If you say that traditionally published authors ebooks used to take up 60% of Amazon eBooks and now are only 40%, how do we know if thats due to loss of sales, increase percent of Indie to Traditional marketwide, or changes in Traditional marketing strategies by pulling out and selling eBooks through their own vendors….like Ingram, etc? How do we know if Amazon’s new unlimited/free books/KENP royalties shift isnt killing eBook sales.

    Not being critical but I think there’s some missing information there factors in. I will say, if Traditional publishers are seeing declines in revenue, thats important. If that revenue is separate from Amazon revenue its even more relevant, because all the political factors (traditional publishers leaving or returning to Amazon) and Indie book demographic surges are now stripped out of that result. Otherwise, I doubt you can say much simply because the 800 pound Gorilla (Amazon) is causing so many constant titanic shifts on buying experiences without releasing crystal clear purchasing data.

    If we could firs measure all buying trends across all industries and vendors first, independent of eBook and print breakdowns, you would certainly have a strong case on buying trends. Otherwise, its hard.

    Last thing…are you defining “Indie” by the publishers they claim to use as thats also not reliable…..how many of us use our own publishers, a friends, a made-up one, or a shadow publisher?

  38. John B says:

    First off, this is an awesome analysis to have done and to keep doing. Thanks. Have you done any work recently on the Amazon ranking vs. # of books sold? The number per day seems high in the 7000 and higher rankings. Have any of the readers done any spot checking? Is there another resource to help develop/confirm this relationship.

  39. Bernie says:

    :”But now, in 2015, the largest traditional publishers are seeing both their ebook revenue and their overall dollar revenues — including print revenue — declining.”
    I am not sure it is the case that for the largest traditional publishers overall revenue including print revenue is in decline. I saw the FY-15 figures of a big international publisher and revenue/ profit both increased substantially on the previous year.
    I believe the main strategy of big publishers for raising eBook prices was to protect print’s share of the market and I think they have been successful so far.
    The question is for how much longer?

    • Data Guy says:

      Hi, Bernie,

      If the publisher you refer to is Penguin Random House, that “increase” is due to currency-exchange rates alone (they report in Euros, which — due to the weakened Euro this year — makes their US-dollar-sales decline for 2015 appear as an increase in Euro sales). And they’re the only one I know of reporting any increase.

      Here’s a broader, more nuanced look at 2015 sales, from Publishers Lunch:

      http://lunch.publishersmarketplace.com/2015/12/whose-print-is-back-where-a-disappointingly-nuanced-view-of-2015-stats/

      The biggest US brick-and-mortar retailers are down this year, with Barnes & Noble & Books-A-Million both reporting lower sales.

      Among the Big Five publishers, HarperCollins, Hachette, and Simon&Schuster have all reported being overall down for the first three quarters of this year.

      The Publishers Lunch article also sheds some interesting light on the “print is back” meme — pointing out that print sales are actually down as well in the areas where the AAP’s ebook sales have fallen the most (i.e. fiction), but that only paperback nonfiction is up. This is sharply at odds with the recent media narrative — i.e. that the lost ebook fiction sales are being replaced by the sales of print editions of those books instead.

      And we’ve also since learned that the majority of that reported “nonfiction” print growth — perhaps even all of it — can be attributed to sales of adult coloring books. It’s very doubtful that reflects any linkage with the prices or sales of fiction ebooks.

      I think you’re correct that the big publishers’ strategy in raising their ebook prices was to protect their print market. In 2016, we’ll find out if it worked for them.

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