Nathan Bransford, Author


Monday, August 12, 2013

Here comes another round of articles about e-book sales slowing down

Author Nicholas Carr helped kick off yet another round of stories about how maybe people don't like e-books that much after all and we've reached peak e-books after the AAP reported increased e-book sales of "just" 5% in the 1st quarter of 2013. Here are entries in the genre by Neil Irwin and Om Malik and here's Carr's graph, which is making the rounds:


Yes, 5% doesn't seem like much compared to the exponential growth we've seen in recent years. But let's get some context here. First, here's another way of showing the exact same data in Carr's chart:


This graph definitely captures what appears to be a plateauing effect (at least, if you look strictly at Q1 numbers). It's not exponential growth. But it's not at all a decline.

Also, here's what both graphs ignore: E-book sales were up 5% at a time when overall trade sales were down nearly 5%. In other words, e-books were still a growing format despite an overall sales decline. In the adult trade market they were up 13.6% at a time when hardcovers were down 0.6% and paperbacks up just 1.7%.

And for the first time ever in Q1 e-books are now the leading format in the adult market, even more than paperback (note: percentages don't add up to 100% because I'm just including the three largest formats):

Hardcover: $226.5 million (22% of the adult market)
Paperback: $306.6 million (30% of the adult market)
E-books: $328.2 million (33% of the adult market)

In fact, when you compare the share of market over the past few years you see a pretty consistent pattern.

E-book market share in the adult market:
23% in Q1 2011
28% in Q1 2012
33% in Q1 2013

This directly contradicts Neil Irwin's assertion that "the ratio of printed books sold to electronic books is going to stabilize at a higher level than it had seemed likely a year or two ago," particularly when you factor in the fact that e-books have lower price points and yet are generating more revenue.

Everyone needs to stop fixating on YOY percentage growth. Even at a steady rate of overall growth, percentage growth inevitably goes down because it's starting from a bigger base. It's simple math. If you keep increasing your sales at the exact same rate, eventually your percentage growth will fall to zero even though your sales are steadily going up.

And, lastly, as author David Gaughran often points out, the AAP stats don't include self-published e-books, which make up a substantial portion of the market, including at least 25% of B&N's Nook sales.

Let's stop philosophizing about how people just don't like e-books very much or only like them in certain contexts or for certain genres or all the people who will convert have already done so.

E-books have never been on pace to rout the print market all at once. It's always been a steady march, and it's one that's continuing.

CORRECTION: The original version of this blog post attributed the Washington Post Wonkblog article to Ezra Klein, but it was actually written  by Neil Irwin. Klein is the editor of Wonkblog. Sorry about that!






30 comments:

Stephen Bargdill said...

Why are people so scared of this move to an electronic format?

Okay, silly question really. You don't have to answer that. :)

Roxy Dillon said...

I love the way you showed what the data really mean.

Kelle Z Riley said...

Nathan, I always appreciate your thoughtful comments and analysis of the industry. Your blog is one a constantly recomment to both new and established writers. Thanks for continuing to blog and post.

Best wishes for continued success. Kelle Z Riley

Anonymous said...

Totally agree.

Excellent post.

And it's refreshing to see how these "things" can be spun in different ways.

The data I would like to see is how many people of all ages have switched to e-books, have an enhanced reading experience thanks to e-books, and have embraced all digital media because they have handicaps.

Do more posts like this, please :)

Shawn said...

Ezra Klein was never one to let facts get in the way of a good narrative.

Delphine Dryden said...

Thank you so much for demonstrating how different graphs can show the same data in entirely different lights. Too few people know that, or the importance of context. Well done.

Nathan Bransford said...

anon-

I would like to see more data like that too. One thing that's clear from the data is the e-books are still a relatively small percentage of the children's market. I would guess that that will change as more children have tablets and the price of Kindles falls further, but that still remains to be seen.

Robena Grant said...

Interesting. Thank you.

Maria said...

I buy'm. I buy whatever is cheapest.

Anonymous said...

I'm interested in what your take is on recent studies that are showing how people read digital text differently than paper text. As an educator, I'm concerned with a couple studies I've read that highlight people and kids in particular don't read digital texts as critically and deeply as print text. I'm not an ebook nay-sayer but if these findings continue to bear out over time then they could have some interesting implications.

Matthew MacNish said...

This doesn't even include SP ebooks? Whoa.

R. L. Copple said...

Thanks for the common sense post on this subject. I've been saying the same thing: the same rate of growth creates a lower percentage each new period. The percentage chart appears more like spin than facts. The decline in percentage is expected in a normal growth rate of any product or business.

To make the point, back when I pastored a mission church, where my family of 4 made up half the congregation, my wife had a baby. That year, due to the addition of one new member, our church won the Eagle Award for the biggest % church growth, despite, I'm sure, lots of other churches showing much higher numeric growth.

Steve MC said...

For a perspective from another medium, it'd be interesting to see how quickly sales of music files grew with the advent of iPods and how quickly sales of CDs dropped.

Just checked, and found this chart showing much the same trend as e-books.

http://robservations.ca/wp-content/uploads/2011/02/Evolution-of-CD-sales-vs-downloads.jpg

The death of the album as an art form vs. selling singles is at least one trend that novels won't have to face.

Susan Kaye Quinn said...

"AAP stats don't include self-published e-books"

This is the whole don't-look-behind-the-curtain aspect that shows most of this is just wishful thinking (again). Add in that on a unit-sales basis the number of ebooks is wildly outselling its print cousins and you start to understand that most of these stats don't even begin to portray what's really happening in the book world right now.

Bruce Bonafede said...

I'm sure now that I've bought my first-ever e-reader these numbers will change drastically. Haha. Kidding, but not entirely. Every time a Kindle or Nook or some other e-reader is sold the market for e-books increases. There is no comparable market influencer with print books.

Anonymous said...

You tell it like it is, Nathan. Good for you!

harryipants said...

All we've really learned from all this, is how any of us can skew the same data, or PART THEREOF, to show what we choose to have others believe.
I'll use an example.
The obvious one is that the "Digital Reader" data you linked to, only counts 85% of Adult sales, and far less of Childrens/YA.
So WHAT are the other sales?
As most YA fiction is paperback, and there's NO paperback sales data listed under that section, I'm going to guess it's paperback sales. AND that the missing 15% in the Adult data is a different type of paperback...perhaps Trade paperbacks?
I may be wrong, but the data is obviously skewed, and someone's not telling the whole truth.

Personally, I buy all types of books, but I've found myself buying less ebooks and going back to more paperbacks lately. I'm not completely sure why, but for some reason Mark Twain's lightning bug quote just popped into my head.
Yes, I know the words are the same in the ebooks as on paper. But somehow, my befuddled old brain doesn't quite seem to be able to make the ewords into quite as bright or fulfilling a shape.
And of course, it may be just me.

Mira said...

Great article, Nathan. You explained the data well and definitely made your point.

All signs point to a growing e-book market. But the bottom line is it is impossible to get accurate data. Until Amazon chooses to share self-publishing data we're just guessing.

But since self-publishing data would only strengthen these figures, I think a reasonable 'educated' guess tells us that e-books are the future.

Although I know print books have appeal, e-books leave print far behind in terms of accessibility, convenience, ease of access and price. These are powerful and attractive qualities.

I believe articles like Carr's are wishful thinking. People are scared. I completely understand that, but I don't think articles like Carr's are really helpful. It's better to have forewarning, so people can think ahead.

mortiana said...

I don't own an e-reader per se except a kindle for PC connected to Amazon. I have downloaded some free and inexpensive "books" to it, and I have not read a single one. I probably never will. E-books are not real to me. Out of sight, out of mind. The books I have stacked around the house waiting to be read are a constant reminder of pleasure waiting to be had. E-books will always be inferior to an actual physical book.

Anonymous said...

@Nathan...

Didn't know that about that market, but all the middle grade kids I know have tablets and know how to use them for e-reading. Same for YA people I know, and they mostly come from moderate backgrounds, with working moms and dads. Maybe we're just not getting all the data? And, the kids I know embrace and know technology as if it comes along as part of their birthright. I think those numbers will be changing in the future.

Joel Mayer said...

Don't forget textbooks! Electronic textbooks can be updated automatically over the internet. There is no reason for an electronic textbook on a fast changing topic, like computer programming, to go out of date. That's why I vote for ebooks.

Richard Sutton said...

eBooks ain't no gimmick-come-lately. I'll bet Gutenberg sold lots of those printed "books" when the word first got out. The scribes of the day nay-sayed until they were out of breath and I suppose some took their grumbles as sacrosanct. The fact that most of them were monks and priests helped their cause.

Huntress, aka CD Coffelt said...

E-book trade is phenomenal. But even so, ups and downs can be expected in any market. So why the-sky-is-falling columns?

Sounds like fear of change to me. People hoping that what will be will pass them by.

Anonymous said...

Nathan,

A quick correction: I believe it was Neil Irwin, not Ezra Klein, who wrote the Post piece.

The point of my post, and I believe it's backed up by your analysis here, is that the growth rate for the e-book market has fallen sharply over the last two years. Some of that drop is natural, as the base grows, but the steepness of the drop in growth is much sharper than expected, and the latest numbers suggest, in the US and elsewhere, a plateauing of the market. This doesn't mean that the e-books aren't an important segment of the book market - they most certainly are - but it does call into question the popular assumption that e-books are fated to be the dominant format for books in the future.

Best,

Nick Carr

Nathan Bransford said...

Whoops! Thanks, Nick, corrected.

I still disagree that e-book growth is plateauing, or at the very least feel that it's too early to reach that conclusion. This is the key part of the post to me:

E-book market share in the adult market:
23% in Q1 2011
28% in Q1 2012
33% in Q1 2013

When you factor in that it was a down quarter overall, I don't see anything other than the steady growth of the e-book market. It's not going to happen overnight (10 years after the introduction of the MP3 they have *just* overtaken CDs). Instead I see steady growth that shows no sign yet of abating.

I think you have a good point about the overseas markets, which are driven by different factors (and a whole lot of rights tied up in the US), but here in the US market I don't see e-books abating or leveling off any time soon.

We'll see though! Thanks again for joining in.

Scott Nicholson said...

Nobody sits on the porch and listens to Grandma tell stories anymore, or to hear Grandpa pluck the banjo, but did civilization fall?

No. We just took up other things.

I don't see what there is to be "concerned" about.

richard levesque said...

I think there's definitely a nostalgia factor involved in some people insisting this new fangled e-reader thing is bound to fail. Some people will always prefer physical books the way some people prefer vinyl records. And I think those physical copies will be available for a long time, but the move to electronic is only just beginning. Thanks for putting the numbers (and the nay-sayers) into perspective.

Anonymous said...

"I still disagree that e-book growth is plateauing, or at the very least feel that it's too early to reach that conclusion. This is the key part of the post to me:"

I totally agree with that sentence, and for many reasons. One of them is that I just finished reading an article about how a brick and mortar bookstore is trying to garner more sales with e-books and they claim it hasn't been all that productive...but they use Kobo, and they sell Kobo e-readers. I like/love Kobo myself, but Kobo is just a small part of the e-book market and I'm not sure they will even last. I think most authors would agree that Kobo is not a huge factor in their royalites. So the information just isn't conclusive in most cases. And it is too soon to tell.

Peter Dudley said...

It's simple math.

There's the problem. Politicians are not the only people to use faith-based math instead of simple math.

Geraldine Evans said...

Damn statistics! Well said, Nathan. No matter how many times they say that black's white, it will still be black.

The Emperor's New Clothes comes to mind as an analogy.

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