Ebooks from major publishers: a disastrous fall
Frankly, as in English jazz, there is something wrong with the big publishers' policy towards ebooks. It is not clear why they continue to beat the market to such an extent that in 2016, after two and a half years of stagnation, the United States, the leading market, fell by 10%. A double-digit drop really torments even if we are talking about the ebooks of the publishers of the Association of American Publishers, i.e. the large and medium-sized publishers. For independents and self-publishers the numbers are completely different.
By now no one is surprised if, on Amazon.com, they come across an ebook from a major publisher at a price higher than the paperback and often even the hardcover, which is heavily discounted at retail. Since the ebook has nothing more than the book, consumers prefer the book, if they really don't live in 20 square meters or are about to board Ryanair. When you've read a book, you can lend it to a friend or colleague, donate it to a charity, or resell it on ebay. You can't do any of this with the ebook. A book is forever, an ebook is ephemeral.
The 900 books that Napoleon donated to the city of Portoferraio in 1814 are still in the Foresian Library of the Elba town and will now be digitized by an Emir of Dubai. Try to recover your degree thesis stored on a five and a quarter inch floppy disk. If you haven't printed it in his time, it's lost. At the same price and content book beats ebook, there's just no match.
Two years of self-flagellation
It is not clear who can benefit from the pricing policy of the big publishers. Certainly not for them. It will be because of Amazon, it will be because the managers of publishing houses and editors are unfamiliar with technology and the web, it will be for other very serious reasons, but the fact is that this pricing policy resembles a sort of self-flaggelation and you really don't see the sense of it.
Readers are known to like ebooks and are willing to download them if encouraged. It is also known that publishers have much higher margins than books, a product with industrial and distributive costs that the ebook has almost eliminated. Finally, it is known that the ebook is the future of the book, the only one that can withstand the challenge of the new media that come to compete for consumers' time on any type of screen connected to the Internet. It is also known that the price is strategic to boost the market and fight the plague of piracy that still hasn't fully noticed ebooks.
A Nielsen survey showed that 60% of consumers surveyed said they prefer ebooks to books only if they are at least $4 cheaper. A 50% percent of those interviewed would still prefer the ebook if there was a difference with the book of 2/3 dollars. This is why Nielsen writes “Price drives ebook interest”. Amazon has been saying it for a long time, but Amazon is the Savonarola of the book industry.
We know all of this, but so far this knowledge hasn't helped the big publishers to shape an appropriate strategy to face this new scenario. Until now.
The average price of the big five ebooks is down
Finally he seems to see some signs of repositioning the price of the ebooks of the 5 major American publishers. These are the so-called big five: Penguin Random House, HarperCollins, Simon and Schuster, Macmillan and Hachette. These five publishers, part of large media conglomerates, have a market share close to 40%.
It is still not clear whether this change is a random and spontaneous fact or the result of a conscious and perhaps agreed choice. Whatever the reason, analysts at Author Earnings, who have collected, compared and analyzed the prices of nearly 100 ebooks from the big five on Amazon's Kindle Store, tell us that ebook prices have been going down since January 2016.
In May 2016, the average price of a Big Five ebook was $9,25 compared to $10,49 in January 2016. A drop of $1,24 in six months, or 11,8%, isn't bad. and it is even above the expectations of Amazon which has long indicated the ideal price of high-end ebooks at 9,99.
Data in chiaroscuro for first-time authors
The average data, however, does not say everything. Let's look at this table.
What considerations do these data stimulate us? The first concerns the number of novelties by big five new authors which is in a ratio of 1 to 4 with the novelties of established/consolidated big five authors. It is certainly not a penalizing relationship for beginners, on the contrary. Contrary to the widespread perception that the big publishers only publish authors who are confident, ignoring any initiative to scout for new talent, these data show that the big five give space to young authors who try their hand at fiction or non-fiction for the first time. Even for the novelties published in the last year, the newcomers/established ratio rises to 1 every 3,5.
So for a young author who is determined to build a career as a writer and has the basis for it, there is not only the path of new publishing, self-publishing or independent publishers, there is also the possibility of being accepted into a big brand with great investment and promotion capabilities. But here the donkey falls: there is immediately a second survey to cool the enthusiasm.
This second survey concerns the pricing of the ebooks of the big five rookie authors, the engine, as Nielsen says, that ignites the public's interest. Well, the price of beginners' ebooks is higher than that of the established authors of the big five. Not a little superior: it costs almost two dollars more to buy a first-time ebook than an established one. A surcharge of 19,7% which penalizes those authors who need to build a readership base and are looking for visibility and therefore need a nice price incentive. However, this incentive does not exist and the reader moves on.
The decline in the weight of the big five on Kindle Store revenues
But there is even more. Precisely because of the ebook pricing policy in the last two years, the weight of the big five on the total revenues of first-time authors within the Kindle store has decreased from 22% in 2014 to just 9% in 2016. more than halving the revenue from this channel as this graph shows.
We leave these data to the analysts of Author Earnings to comment.
The high prices of ebooks end up hurting first-time authors more than established authors who already have a readership and an established career. Our data clearly shows that between 2014 and 2016 too high prices penalized the revenues of the big five newcomers and even more compromised their chances of being discovered which is the most important factor in creating the reader base necessary to build a literary career. From 2012 to 2014, the revenues generated by the ebooks of the newcomers of the big five dropped by 70%.
The Kindle Store's contribution to author revenue
There are other data disclosed by Author Earnings that deserve comment. These data concern the share of revenues of the big five authors attributable to the Kindle Store, i.e. to ebooks. Meanwhile, let's look at this graph.
As you will notice, it is established authors, the creators of bestsellers, who benefit most from the current pricing of the big five on the Kindle store. 46,1% of the revenues of a big five author, who exceeds the income bracket of one million dollars a year, comes from the Kindle Store, proving that the latter is a formidable tool for selling books and content both for the great authors, both for the great publishers. In the light of these data, the crusade they are both carrying out against Amazon is not understood. This is, to say the least, not rational behavior.
Therefore, it is the unestablished authors, with a low-middle income bracket, who benefit least from the big five policy on KIndle Sore. In fact, the further you go down the income bracket, the more the incidence of the Kindle Store on the author's total revenue decreases: in fact, from 46% of the wealthiest authors, it drops by almost ten points to 35,6% of authors with an income bracket between 10 thousand and 25 thousand dollars. Be that as it may, the Kindle Store's share of Big Five authors' revenue is huge. The drop of no less than 12 points in two years in the overall share of the big five cluster of revenues from the Kindle Store is truly dramatic and proves that major publishing is really shooting itself in the foot.
An accompanying consideration: look at the share of audiobooks. We are around 10% of the total revenues of the authors! The audiobook market is growing in a truly amazing way.
We would now like to show another statistical analysis that relates the revenues on the Kindle Store of the big five authors to their length of career. Also in this case there is a penalty for beginners as proof that the big five are not pursuing the right policy to promote and contribute to the affirmation of authors in their first literary experiences. It is precisely the ability to support and promote a first-time author that constitutes the single competitive advantage of the big five on self-publishing.
Observe this data in this regard
Conclusion
Let's rely on the words of Author Earning analysts.
At the macro level, it essentially sees a lost opportunity for both the big five and their first-time authors. Each of these authors represents a major investment for the publisher. Lowering the price of the ebook would give it a better chance of reaching a wider audience, allowing some of them to become bestselling authors. Such a policy would provide the big five with a solution to replace today's bestselling authors as they age. For the big five, the only alternative to this newcomer policy is to look outside the mainstream publishing industry at celebrities, YouTube stars, high-profile independent publisher buyouts and cinema. All options that will become increasingly expensive and risky to practice as large publishers have little experience venturing outside familiar territory.
Couldn't have said better.
