Sales

Go Read This | BEA 2013: The E-book Boom Years

Fascinating stuff:

During the 2008–2012 period, trade sales overall rose a total of 14.2%, with the increase due entirely to the introduction of e-books. During the period, sales of print trade books fell 8.4%, from $13.1 billion to just over $12 billion in 2012. The BookStats figures document the important role adult fiction has played in the growth of e-books. In 2012, e-book sales in the segment rose 42%, to $1.8 billion, while sales of adult nonfiction increased 22%. Within the trade category, children’s/young adult had the strongest gain, with sales jumping 117%, from $215.9 million to $469.2 million.

via BEA 2013: The E-book Boom Years.

The Three Most Important Lessons We Can Learn From Barnes & Noble’s Nook Setback

We should be really grateful to Barnes & Noble. The company just spent the last five years driving hard into a new space, consumer devices, and while it encountered much success, over the last quarter or two that success has crumbled away and has resulted in what some might consider an embarrassing and costly mess when many of its competitors in the tablet space have seen soaring sales.

Yet, despite those failings, there are several lessons that are applicable to all players in the publishing industry ones Barnes & Noble has learned at great cost and the rest of us can learn from.

1) Don’t overestimate your addressable audience

In retrospect it now looks like Barnes & Noble’s great success (and its ongoing success, let’s face it, it is still selling many hundreds of thousands of tablets!) was just a very spectacular penetration of the bulk of its available customer base or addressable audience, those already friendly to B&N and its products and willing to convert from print to digital book reading, the bookish digitants if you will.

The company clearly managed to persuade some, but not many of the non-reading (or light reading) early adopting market in its first year of offering tablets, but as more competition come on stream its ability to do that has collapsed. Barnes & Noble simply didn’t have the chops to sell to people beyond its target audience. This wasn’t apparent when the market was smaller and so it seemed like Barnes & Noble had really made a significant advance. That impression was plainly incorrect.

The bookish digitants are sated (at least for now) and the non-converted non-bookish digitants are not going to trust B&N over Apple or Amazon or someone else with a track record in consumer electronics or technology.

That’s an important lesson for anyone involved in a brand extension as dramatic and bold as the one Barnes & Noble tried to pull off. Be exceptionally careful to track monitor and understand the true size of your audience. If you take an ambitious view of what that audience is, be sure that ambitious view isn’t based on a hope! Listen to what your sales tracking is actually telling you about your customers. Don’t mistake early enthusiasm and success with a small group for evidence of wider adoption unless behind the raw figures you are actually reaching beyond your base.

Publishers need to be realistic too about just how big an audience they can reach and not over-invest in product or projects that ultimately won’t deliver results.

2) Books are not driving the tablet market

Oh I know this is hardly a revelation but it is an important thing to note, after all, we KNOW that books drove the adoption of dedicated ereaders. It’s particularly important because tablets seem to be making dedicated ereaders generally less attractive, certainly to those who don’t read many books and seemingly to those who do read lots of books. Not just that, this shift to tablets by a wider public hasn’t been driven by the tablets sold by booksellers. How else can we explain the massive fall off in sales for tablets sold by Barnes & Noble while the market for tablets exploded?

The reality is that even dedicated readers find the logic of buying a tablet that features any number of entertainment forms, email and web access more compelling than a dedicated ereader. Euro for Euro, Dollar for Dollar, Pound for Pound, it just makes more sense to buy a tablet than it does to buy an ereader for the majority of buyers.

Which means that the space dedicated to books on-screen is dropping dramatically as a percentage of the market. It means that book readers are faced with myriad choices of entertainment forms when they fire up their tablets or smartphones and books, face competition in its rawest form. At least the competition on a dedicated ereader was between books. Now it’s between movies, radio, tv, video, gaming, books, web browsing, magazines and pretty much anything that can be made function on a tablet or smartphone.

I’m not personally all that hopeful that reading will win this competition as often as it might need to, certainly not as hopeful as others seem to be.

3) In digital and online, there are huge surprises in store for us

I’m thinking and writing about this with respect to the book publishing and retailing industry, but it holds true for most other industries too. A year ago, it seemed to me and to others that Barnes & Noble had a nice thing going, that they were successfully making the transition from a bricks and mortar, print bound bookseller to something different, now we know that even if that is the case, the path will be a rocky one.

The key lesson I take from that is that we are still guessing when it comes to the power of the web and digital to transform our industry. I’ve felt very forcefully over the last two years especially that most big publishers feel like they have the digital problem solved, or are well on track to get there. They are seeing increased ebook sales and profits from ebook sales, authors are largely playing ball and while they still resent the scale of some of the technology companies they must work with to succeed in the digital space, they more or less have it down.

The truth is something very different. Potential banana skins abound From simple things like Amazon’s patent for reselling ebook licences (bound to have an impact on ebook sales especially of lead titles if it were ever to be put into practice) or like discovering that despite having a great product your brand just doesn’t resonate with consumers beyond your core audience and hence you lose a bundle of cash trying to sell them tablets or realizing that your main competitor is not the rival publisher of literary novels or commercial non-fiction but a game in which trajectory considerations are a more important aspect of gameplay than would normally be considered cool and various music video fads from Gangnam Style to Harlem Shake.

There are several other lessons we can take from the whole tale but these three strike me as the most salient and long-term of them all.

Eoin

Author Services In The Light Of Penguin’s Purchase

I started this post back in April, I REALLY wish I’d published it then! Following Penguin’s acquisition of Author Solutions (DBW, The Bookseller) I’ve reworked it somewhat and added a few ideas around that move.

It all started at the London Book Fair this year, an event which brought to the fore for me questions over what will happen to publishers during this radical digital shift? A number of times, either as part of a conversation or in response to questions about the publisher role in the future, I spoke about Author Services or as I prefer to think of it, changing the editorial department from a cost centre to a profit and revenue centre.

But what does that really mean? Well it turns out that in the background several companies have been thinking about exactly that. Some companies have been busy creating product suites that cater to the diverse needs of authors.

A really good example of someone who is moving into the space in a measured and clever way is Bloomsbury through their  Writers & Artists Yearbook site. What was once  a staid old handbook of contacts has, over the last number of years, been recast as something entirely different, something very impressive.

The property was acquired as part of the A&C Black acquisition is also home to a number of other print products that have since transitioned fairly nicely to digital or represent an impressive list for future transition (the company has a fascinating history, worth reading, here).

What they offer ranges according to what you think you need from the very beginning of the process (you can get a book idea assessed for only £119.99) to the end of it (a meet the agent, beat the rejection pile meeting for £199). The one thing they don’t yet offer is actual help with self publishing, but that is a fairly simple step beyond what they currently offer.

The big opportunity is not so much to draw in new content from those who might otherwise self publish, but rather to create viable and real businesses from the editorial (and I suppose the production) departments that currently cost so much money.

Offerings like that at Writers & Artists Yearbook and their existing and future competitors will, I suggest, probably form the front end of the editorial departments of many publishers when the transition is complete. It is entirely possible that they will be independent entities or only loosely aligned with publishers, but it is equally possible that at some point, a vast transfer of staff will happen that sees the editorial department of a publisher shifting towards the newly created services units.

Imagine how it would be if Penguin was to reshape its business so that Author Solutions (or whatever it is renamed) provided the editorial resources (staffed no doubt by Penguin editors) to Penguin as one client among many (perhaps with privileges the others don’t have) it would change the way the company thinks of editorial services.

If all publishers decided to take that radical step (and I admit right now it IS radical), it would enable publishers to subsidize new titles by generating revenue on what have been traditionally expensive services to provide. Of course it would certainly change the way everyone thinks of that department and would probably lead to some resentment both within those departments and between the authors who were made to pay for them and the lucky authors who publishers felt were safe enough bets to invest in themselves.

I think we are only at the beginning of this re-shaping of publishers but the first big change we are seeing is in how we think about the editorial department (though some changes are hitting home hard in sales and marketing too).

Easons Will NOT Be Building A Platform For Ebooks Anytime Soon

Waterstones decided to team up with Amazon and one of most compelling reasons for that was the sheer cost of developing an ereader and a fully fledged ebook platform (just look at B&N’s capital expenditure and increased costs and their need for cash to support their successful Nook business, hence their deal with Microsoft). Which is why reading the paragraphs below make so little sense:

Ireland’s largest book retailer, Easons, revealed plans yesterday to enter the market as well. “We are not getting into bed with Amazon, that is for certain,” a spokesman said.

“But as part of a €20m plan to modernise our entire chain, we will be providing live wi-fi in our stores from this summer and dedicated e-book areas which will permit customers to download e-books from our website. The next phase of this process is to launch our own Easons branded e-reader.”

Rival

This means that the Irish market leader will follow in the steps of the US market leader, Barnes and Noble, which has already developed its own digital reading device to rival the Amazon one.

via Hodges Figgis and Easons to sell rival e-books – Irish, Business – Independent.ie.

If B&N struggled to build a platform and needed $300 million and a Microsoft partnership, and Waterstones joined forces with Amazon, some portion of a €20 million modernisation fund simply wont be enough to do it for Easons, even given a smaller market.

Unless
That is unless the spokesperson simply meant that Easons would use a white label ebook reader with an Eason logo on the outside. That wouldn’t be the worst idea ever, but it certainly does not mean Easons will be following in B&N’s steps!

As Philip Jones, deputy editor of The Bookseller, commented on Twitter:

A nice, nice day here in Dublin,
Eoin 

Further Thoughts On Waterstones And Amazon

Yesterday I wrote a post that was generally favourable to the deal between Amazon and Waterstones:

If I was to think of one single reason for the move being a good though I would say it is this, it allows Waterstones to stand still and observe for a little longer. The value of inaction is often underestimated and right now when the ebook retail and distribution space is changing rapidly and requires such a huge investment, this move brings revenue, options but most crucially of all, time to just see what happens while rebuilding the core bookselling business.

I still think the above holds true. One major issue has begun to loom larger in my thinking though, and that is the impact of Waterstones dedicated heavy readers converting to dedicated digital readers on Amazon’s platform. The sales those dedicated heavy readers drove will be lost to Waterstones.

That brings me to the issue of lock in and whether, in the new ebook world, it exists in any real sense. The truth is that it does in a modest form, but without doubt it is relatively easy to move away from any individual content silo or platform to any other platform because unlike music, which we listen to repeatedly, we only occasionally re-read the books we buy once we have have read them for a first time.

So the fear of lock in is a misplaced one in my view. As publishers see sense (which I think they will) and move away from DRM systems an ever greater interplay of retailers and devices in the ebook space will be enabled and lock-in will be even less important.

That means it might even be possible for Waterstones to re-gain its lost heavy readers at some point in the future. No doubt the company hopes that the short- to medium-term play it has gambled on with Amazon pays off and enables them to refurbish and revitalise their physical estate and in doing so regain customers, rebuild profitability and take charge of their own future when they have done that.

I still think the logic of this move works, if they CAN make the print side of the business more profitable, more slimline and more flexible. Otherwise, we will look back in five years and it will look like a huge mistake. It’s a big gamble, but I think it’s worth it.

Eoin

Go Read This | Exclusive: Amazon Has Sold Over Two Million Kindle Singles | paidContent

See what I mean when I say gold? I’ve long felt that by far the biggest weapon in Amazon’s arsenal (after the platform itself) is the self publishing/publishing abilities of the platform which is a while new kind of threat for publishers and one that is becoming much more real and present a danger than just the shift to digital:

Amazon says that in the 14 months the program has been running, it has sold over two million Kindle Singles. Seventy percent of each sale goes to the author or publisher, and Amazon keeps 30 percent. Amazon wouldn’t disclose its total revenues from those two million singles, but the minimum price of a Single is $0.99 and most are $1.99 (the author or publisher sets the price). So with an average price of $1.87 multiplied by two million, a rough estimate of Amazon’s 30-percent cut is $1.12 million. (How much are some authors making? See our post later this morning.)

via Exclusive: Amazon Has Sold Over Two Million Kindle Singles | paidContent.

Go Read This | Can WH Smith defy gravity forever? | Business | The Guardian

Love this piece, and not just because I agree with EVRYTHING written there. No, I like it because it’s the kind of clear-eyed analysis that is sometimes lacking when people write about bookshops and the book industry (I’m a  victim of this fault myself).

But mottos are one thing. Common sense also says that no business can suffer declining sales indefinitely without running into problems. Take a look at those like-for-like sales statistics on the high street side since 2005-06. The run has been: minus 7%, minus 6%, minus 3%, minus 6%, minus 4%, minus 6% and, if current trends hold for the rest of the financial year, minus 6%.

A quick back-of-the-envelope calculation suggests that, on a same-store basis on the high street, WHS is selling roughly £68 for every £100 of custom seven years ago. Surely that spells trouble one day: running up the down escalator is not easy.

via Can WH Smith defy gravity forever? | Business | The Guardian.