About five years ago I looked at the future of publishing and felt . . . deeply worried. The rise in the sale of e-readers heralded both opportunities and concerns. You see, there aren’t a lot of avid readers in the world. About 40 percent of the people in the US won’t read a book this year—or in any other year. About ten percent of the readers in the US buy half the books sold.
This means that with 300 million people in the US, only about 160 million of those people will buy a book each year, and only about 16 million people make up half of the audience for books. These 16 million are the hardcore readers, our “super readers.”
As authors, we rely upon those super readers who go through twenty or thirty books per month for instant sales when a new book comes out, along with word-of-mouth advertising.
So when I began to see sales of 4 million e-readers in a year, it sent up some danger signals.
First, it suggested that the super readers would be moving to a much cheaper format—e-books. So readers would save money on their e-books. But what does that mean for us authors?
As an author in the traditional publishing world, I have a partner. My partner, my publisher, makes about 8% profit per year on his investments, on average. This means that if anything messes up the publishing world—so that all of his books take a 20% hit in the course of a year, the publisher’s revenues constrict. The publisher loses money.
To some degree, the publisher can try to adjust for those losses. They can print cheaper covers, use low-quality paper, print books in Korea or China, and so on. But they can’t do very much to cut costs.
So a lot of things have to go.
The first thing that goes when a publisher loses money is large print runs on books. With fewer books on the shelves, that means that I make less money. The next thing that goes is advertising budget. That means that books that might have been placed at the front of Barnes and Noble as part of “cooperative advertising campaigns” (that’s where the publisher pays a couple dollars extra in order to get some prime advertising space) now don’t get decent placement, so that the few copies that you do get on the shelves don’t sell as well. Then of course the publisher has heavier returns than expected, and so profits dip even more.
Publishers can try to respond to declining income by raising book prices, but the market was already at the top of what it could bear. So that means that the publisher has to take it a hit.
The problem that I saw was quite simple: with the transition from paper books to e-readers, the publishers were going to be hurled into a downward spiral. For several years, as people transitioned to e-readers, the market for paper books would plummet, profits on paper books would diminish, and publishers would lose money.
As sales dropped for paper books, a secondary problem would occur: the bookstores would begin to go out of business. At the time, the Borders chain, our second-largest chain, was in deep trouble. It seemed obvious that they would go out of business. But some other large chains were in trouble and continue to be.
The paper book market hasn’t gotten any healthier. I know, some new bookstores are taking the place of some of our fallen giants, but I worry about Barnes & Noble, for example, whose e-book market seems to be contracting.
You see, as the market for paper books began to contract, the market for e-books rose, and the only company at the time that was positioned for the coming explosion in e-book sales was Amazon. In other words, they were the ones who would be taking the majority of the profit from e-books, and they were well positioned to create something of a monopoly in the e-book market.
So for five years, a lot of us authors have been lying awake at night suffering from fever dreams. The real questions were, “How am I going to make a living in these changing markets? Will there be a paper book market in five years? Should I even continue to publish in the traditional markets? What retailers will be left standing? What is the path to success in e-publishing, where I won’t have a marketing department and editors to back me? Will the big publishers—who tend to lumber about like dinosaurs—be facile enough to leap into the new market and take over (thus putting an abrupt end to the careers of people who might be investing time and money into e-publishing)?”
Well, that was five years ago. In the years since, things have changed. In 2009 I was terrified by the future. In 2010 I struggled to remain cautiously optimistic and plan for contingencies. In 2011 the publishing world seemed to be crumbling right on schedule, and in 2012 I was able to finally calm down. For me personally, 2013 turned into a good year, with e-book royalties covering a lot of our bills. Sure, the money all went to my son’s medical bills, but a lot of people jumped in and purchased e-books, for which I will be eternally grateful.
But 2014 brings something new. I’m no longer cautiously optimistic about the future of e-books and publishing: I’m wildly excited!
You see, big changes are coming. I don’t have time to go into tremendous detail here, but the future is looking good on every front.
First, the sales of paper books are stabilizing. Sure, they don’t represent the big revenue source that they were five years ago for me, but they’re consistent, and my publisher has managed to hang on over the past few years, along with a couple of major bookstore chains. Heck, the bookstores are even rebounding.
At the same time, the future of electronic books is expanding. A couple of weeks ago, I forwarded a little survey that Hugh Howey made as he tried to look at the world of publishing. I forwarded it without comment because I knew that a lot of people would be making comments on it—some pro, some con—and I wanted my readers to make their own analysis of the data.
Hugh pointed out that Amazon.com is the largest bookseller in the country. He’s absolutely right. Over half of all books sold in the United States come through Amazon.com. A lot of the people who criticized his work seemed to be unaware of this. They also seemed to be unaware that electronic books outsell paper books (on a raw number basis), but that as far as money goes, more money is spent on paper books. That’s because paper books cost more to create, ship, and sell.
Hugh was looking primarily at e-books, and he was trying to use some formulas to see just how well self-publishers were faring on the bestseller lists. His real question was, Can an independent author hope to compete against the big publishers and against Amazon.com itself in order to top the bestseller lists?
His data suggests that: yes, you can. In fact, it’s happening all of the time. Independent authors are consistently hitting the bestseller lists on Amazon.
What Hugh’s data doesn’t look at is e-book sales in total. He can’t get those numbers. In part he can’t get them because Amazon won’t release them. But in part he can’t get them because they aren’t available. Right now, many of my author friends are making great gains by selling e-books on Kobo. (Kobo is an e-book seller that is working hard to build alliances with independent bookstores, and is having tremendous success.) So if Hugh’s data were to be complete, he’d have to look at book sales on Kobo, Barnes & Noble, iBooks, Sony, and so on. Even then he couldn’t get all of the sales data, because many authors are selling books from their own websites, skipping the middlemen entirely, or selling them through book bundles.
In other words, the e-book market in the US may well be twice as large as Hugh’s marketing sample suggests. If anything, I suspect that Hugh’s findings, which some people see as wildly optimistic, are a bit conservative.
But that doesn’t really matter. Whether Hugh’s research is off by ten percent, either high or low, really isn’t important. What is important is that when you look at his charts, you can see instantly that on any given day, the bestseller lists in e-books are dominated by independent authors.
That’s great news. It means that in the past five years, a new and more-lucrative market has opened up for authors. Not only that, with a bit of study and hard work, one can figure out how to excel in that market by doing such things as advertising through social media, setting proper price points, and so on.
At the same time, there are some changes going on in the paper book world that are equally exciting. A recent survey found that while 55% of the super readers bought a book in e-book format in the last month, 82% of them still prefer to read paper books. In other words, the paper book market seems to have a nice future.
But there’s other good news. Now, an author who publishes book through POD can instantly gain access to bookstores, so that his or her novel can gain placement in tens of thousands of brick-and-mortar stores.
I see some other changes looming on the horizon that have me smiling, too. Through social media, it’s easier than ever for an author to develop a personal relationship with readers, and the onset of major comic cons around the country is creating a new venue for established science fiction and fantasy authors to meet potential readers.
Whether you’re selling books in print or as e-books, I can now see a clear path to success.
A year ago I was struggling to stay cautiously optimistic. Right now, I’m deliriously excited.