Author Earnings Report-January 2015
18% of Amazon “Bestsellers” are Indie-Published; 19% are Big 5-Published
January 2015 Author Earnings Report
- AuthorEarnings reports analyze detailed title-level data on 33% of all daily ebook sales in the U.S.
- 30% of the ebooks being purchased in the U.S. do not use ISBN numbers and are invisible to the industry’s official market surveys and reports; all the ISBN-based estimates of market share reported by Bowker, AAP, BISG, and Nielsen are wildly wrong.
- 33% of all paid ebook unit sales on Amazon.com are indie self-published ebooks.
- 20% of all consumer dollars spent on ebooks on Amazon.com are being spent on indie self-published ebooks.
- 40% of all dollars earned by authors from ebooks on Amazon.com are earned by indie self-published ebooks.
- In mid-year 2014, indie-published authors as a cohort began taking home the lion’s share (40%) of all ebook author earnings generated on Amazon.com while authors published by all of the Big Five publishers combined slipped into second place at 35%.
U.S. ebook sales have plateaued — or are even declining, relative to print — declare some widely-cited industry statistics. Publishing pundits opine that readers’ Kindles are all “full” now, and talk about the “glut” of ebooks. News articles imply that consumers are abandoning ebooks and are returning to print books, and then those articles speculate about whether ebooks were “just a fad.” Other pundits assert that indie authors will no longer be able to compete with the Big Five traditional publishers, now that those publishers have begun to price some of their ebooks lower.
Lots of speculation. Lots of flawed studies based on 2008 methodologies. Lots of inaccurate statistics. And very few facts.
As always, we turn to the data for real answers.
This is our fifth quarterly Author Earnings report. It is based on a data snapshot of 120,000 of the best selling ebooks on Amazon, giving us a deep cross-sectional data sample comprising roughly 50% of Amazon’s daily ebook sales. According to the publishing industry’s most oft-cited estimate, Amazon controls 67% of the U.S. ebook market. Thus the title-level data used in our analysis includes roughly33% of all daily ebook sales in the U.S. No other industry survey or ebook market-size estimate comes close to this level of accuracy or detail.
(Later in the report, we’ll discuss some of the widely-cited official ebook market surveys and industry-wide sales estimates that the industry news sites and pundits rely on for their numbers — and we’ll show you why those surveys and estimates are so remarkably wrong.)
The methodology used in this report is identical to our four previous reports, published in Feburary,May, July, and October of 2014. We capture real-time data from Amazon.com’s thousands of public ebook bestseller lists and sublists. Using a software “spider,” we grab a snapshot of each of the hundreds of thousands of listed books and how well they are selling.
We then group these 120,000 bestselling Amazon ebook titles by publisher type, separating them into:
- Indie Published (self-published titles)
- Small or Medium Publisher (any publisher that publishes more than one author, but is not an imprint of one of the Big Five Publishers, not an Amazon Publishing imprint, and not a known self-published author collective)
- Amazon Publishing (Amazon’s semi-traditional publishing imprints, such as Montlake, Thomas & Mercer, Skyscape, etc.)
- Big Five Published (the imprints of Penguin Random House, HarperCollins, Hachette, Macmillan, and Simon & Schuster)
- Uncategorized Single-Author Publisher (publishers who published only a single author in our dataset, but that were not the self-publishing DBA or LLC of a well-known indie author)
We looked at the number of titles in each category that held slots on Amazon’s thousands of hierarchical bestseller lists and sublists, as well as the daily unit sales of each, the gross dollars spent by consumers on each, and the share of author dollar revenue (in the form of royalties or revenue share) going to each.
Earlier reports have described in some detail the methodology we use. More importantly, with each of our reports we also provide a public link to the full raw data set as a 120,000-line spreadsheet, showing all books and calculations the report numbers are based on. (We anonymize author and title names, for privacy.) The spreadsheet also contains “live” versions of the charts and graphs, so the curious can try changing key parameters (like traditional publishing royalty rates) to see how those changes would affect the overall numbers.
Enough about methodology. Let’s dive right into the data.
The January 2015 Author Earnings Report
Somewhat to our surprise, despite all the overheated media coverage of Amazon’s 2014 negotiations with Big Five publishers and the ongoing discussion of the Kindle Unlimited (KU) program’s effect on indie self-publishers, the pie charts for this author earnings report are almost boring this time around. They look so similar to our October 2014 snapshot, we had to double-check to make sure we hadn’t simply regraphed last quarter’s data by mistake. Let’s start with the mix of titles on the bestseller lists and sublists.
Not much to say here. The number of bestseller list and sublist slots grabbed by different publishing types is nearly identical to what we saw back in October. Indie self-publishers and the Big Five Publishers have each gained a percent since then, but that lies within the bounds of statistical error and is not necessarily significant.
The more interesting takeaway is this:
The increasing prevalence of lower-priced Big Five titles has had no measurable effect on the Big Five’s share of titles on Amazon’s daily-sales-based ebook bestseller lists.
Similarly, the agency-pricing control afforded by the new contracts Big-Five publishers Macmillan and Simon & Schuster have signed with Amazon.com now allows them set their own final retail prices for many ebooks. Both of them have done so for the majority of titles we captured:
- 81.6% of Simon & Schuster titles in our dataset were tagged with “This price was set by publisher”on their Amazon.com product page.
- 94.4% of Macmillan titles in our dataset were tagged with “This price was set by publisher” on theirAmazon.com product page.
But what effect has Macmillan and Simon & Schuster’s return to agency pricing had on the overall ebook market? Apparently not much.
The return to agency pricing by two of the Big Five has had no measurable effect on the Big Five’s share of titles on Amazon’s daily-sales-based ebook bestseller lists.
Let’s look at something more interesting now: daily unit sales.
There’s an awful lot of blue on that chart.
At least a third of all paid ebook unit sales on Amazon.com are Indie self-published ebooks.
But the 33% shown is an extremely conservative lower bound on the true indie market share. The real number is almost certainly several percent higher, because the vast majority of the Uncategorized Single-Author Publisher ebooks are also self-published titles — we simply didn’t have the time (or energy) to check all ten thousand of them, one by one. And what we’ve labeled as Small or Medium Publishers — a designation we use for all publishers that are not the Big Five and not Amazon Publishing Imprints — includes a significant chunk of multi-author collectives and tiny indie micropresses publishing through KDP. Many in the industry would classify that fraction under self-published ebooks as well.
In our past reports on Barnes & Noble’s ebook sales, we found the ratio of ebook sales by publisher type to be roughly the same on Barnes & Noble as on Amazon, and together Amazon and Barnes & Noble command at least 75% of the U.S. ebook market. The large indie ebook market share is not an Amazon-only phenomenon. It’s safe to conclude that at least a third of all paid ebook unit sales in the U.S. are Indie self-published ebooks.
But publishing industry pundits usually prefer to talk about dollar market share instead of unit market share. They point to the higher average price of traditionally-published books and say that publishers bank dollars, not numbers of books sold. So what about gross consumer dollars spent on ebooks?
At least a fifth of all consumer dollars spent on ebooks on Amazon.com are being spent on Indie self-published ebooks.
Again, that’s a conservative lower bound. The true indie dollar market share is most likely a few percent higher, including most of the Uncategorized Single-Author Publisher gross dollars and a small portion of the Small or Medium Publisher gross dollars. Projecting to the remaining non-Amazon third of the ebook market, we can conclude that at least a fifth of all consumer dollars spent on ebooks in the U.S. are being spent on Indie self-published ebooks.
The Big Five publishers as a cohort still command just over half of consumer dollars spent on ebooks. But this website is titled Author Earnings, not Publisher Earnings. Our focus is always on authors and how much they take home in earnings, rather than how much money is spent on corporate publisher overhead. We are primarily interested in the portion of that gross consumer spend that goes to authors in the form of traditionally-published ebook royalties or self-published ebook revenue share.
Let’s look at that all-important chart of dollar author earnings next.
40% of all dollars earned by authors from ebooks on Amazon.com are earned by Indie self-published ebooks.
A quick aside on Kindle Unlimited (KU). The indie share of author earnings includes 8% from KU borrows of indie books. In our last report, KU was a brand new part of the author-earnings landscape. To account for it accurately, we crowdsourced borrow-versus-buy ratios from hundreds of indie authors participating in KU, and found that they averaged 1:1 (half KU borrows, half full-price purchases). We used that 50% borrow ratio as a baseline in our author earnings calculations, although we found that plugging in any other ratio instead, even 0% borrows or 100% borrows, made little difference in the overall numbers and pie charts. In November, when Amazon.com announced the size of the October KU “pot” at $5.5 million and the indie per-borrow payout at $1.33, we could now double-check our crowdsourced KU-borrow ratio of 50%. So we did:
$5.5 million / $1.33 = 4,135,338 indie KU borrows in October
Which is exactly 48% of the 8,561,293 paid monthly downloads (purchases + borrows) of Indie & Uncategorized books in KU shown by our data — quite close to the 50% we originally crowdsourced. Perhaps the wisdom of crowds is a thing, after all.
It’s worth taking another look at the above pie chart of author earnings and considering how little this information surprises us now, compared to last year.
Only seven months ago, the idea that indie self-published authors and their ebooks were outearning all authors published by the Big Five publishers combined was jaw-dropping heresy. Today, it’s boring — a widely-acknowledged fact among knowledgeable authors, if not industry pundits. Many authors who publish both ways point out their earnings disparity in favor of their self-published titles, and so this data is no longer surprising.
But what is surprising is how consistent each of our quarterly snapshots has been. And because of that quarter to quarter consistency, we can discern a few broader trends…
Across 12 Months of Quarterly Snapshots, The Broader Trends
From snapshot to snapshot, a percent or two difference isn’t statistically significant. But when comparing five consecutive AuthorEarnings data snapshots over a period of 12 months, a clear trend becomes visible. The most notable change over the last few quarters is the continued progressive growth of indie market share at the expense of traditionally published ebooks. Here, we can see it in unit sales terms, in gross consumer dollar terms, and in the all-important metric of author earnings.
Somewhere between May and July of 2014, Indie Published authors as a cohort began taking home the lion’s share of all ebook author earnings generated on Amazon.com, while authors published by all of the Big Five publishers combined slipped into second place.
We are only looking at one year here, and digital publishing is still in its infancy, as is the transformation of the publishing industry — all claims of “stabilization” and “plateaus” notwithstanding. It remains to be seen what the future holds. But it’s apparent that indie self-publishing remains as viable and robust a publishing option as it was a year ago, and an increasing number of authors — perhaps even the majority, according to Digital Book World’s 2015 publishing survey — now see indie self-publishing as their first choice, and traditional publishing as a backup plan.
Which brings us to an interesting question:
If One-Third of All EBooks Purchased In The U.S. Are Now Obviously And Verifiably Self-Published, Why Do Publishing Industry News Outlets And Pundits Continue To Claim Otherwise?
Back in 2013, Amazon.com and Barnes & Noble separately announced that consumer purchases of self-published ebooks already made up over 25% of all their ebook sales. By early 2014, our first Author Earnings reports found that on both channels, the number was closer to 30%. Over the last 12 months, indie market share has grown another several percent, and today indie books make up more than 33% of all ebooks sold.
You don’t need a fancy software “spider” to see this. Anyone with a web browser can verify it for herself or himself. There’s nothing we have done in our AuthorEarnings data capture and analysis that a curious person with Internet access, a notepad, and a pencil cannot confirm by browsing a few of Amazon’s or Barnes & Noble’s Top-100 lists for different genres, looking at the listed publisher and overall sales rank for each of the top-selling books on those lists, and doing a little basic math. That’s essentially all our software “spider” did, but for a vastly larger number of titles.
So if the one-third share of the ebook market now supplied by indie self-publishers is so clearly and verifiably obvious, why do industry news sites like Publishers Lunch and veteran traditional-publishing pundits like Mike Shatzkin claim otherwise? Why do they continue to insist that indie self-published ebooks only make up a tiny share of the market, and cannot possibly account for a significant volume of sales?
The answer is simple. Bad data.
All of these industry pundits rely on three officially-recognized sources of ebook market size estimates and projections: AAP/BISG BookStats, AAP StatShot, and now Nielsen PubTrack.
Each of these sources arrives at their ebook market-size estimates by collecting self-reported data from a small subset of participating publishers (1,919 for BookStats, 1,200 for StatShot, 30 for PubTrack) and then using average per-title sales numbers from those participating publishers to project the size of the entire ebook market. They do this by multiplying those average per-title sales numbers by the number of active ebook ISBNs (International Standard Book Numbers) purchased from Bowker by the many tens of thousands of non-participating publishers and indie self-published authors. (Here is BookStats describing their methodology.)
In fact, the organizations disseminating these statistics (the AAP, BISG, Nielsen, Bowker) explicitly state that they cannot track self-published books which do not use ISBNs, and that the self-published segment of the market might be underrepresented in their numbers.
But all of them nonetheless make the assumption that the vast majority of ebooks — including self-published ebooks — do in fact use ISBNs.
From AAP/BISG BookStats:
“While the self-publishing market continues to grow in terms of the number of books published, BookStats is limited in its ability to ascribe total value to this group, especially in the case where ISBNs are not utilized. While self-publisher outreach was attempted, response was relatively low. It can be concluded that this sector is underrepresented for these reasons.”
“Bowker’s analysis is based on ISBN registrations in the U.S. The vast majority of books in all formats have an ISBN.”
All of the industry’s official ebook market-size estimates thus rest on a single key assumption: that ebooks without ISBNs do not represent a significant portion of consumer purchases, and can thus be safely ignored in calculations of ebook sales and market share.
With captured title-by-title data in our hands which represented 50% of Amazon’s daily unit and dollar ebook sales, we were in a position to definitively check that key assumption.
So we did.
Title by title, we checked whether each book in our data set had an ISBN or not.
All 120,000 of them.
And we found that the key assumption underlying all of the industry’s cited ebook statistics and official estimates of market size is wildly, wildly wrong.
The Invisible “Shadow Industry”: Indie Ebooks Without ISBNs
One of the most-widely-cited “official” sources for ebook market size is the annual AAP/BISG BookStats report.
BookStats claims there were 512.7 million ebooks sold in the US in 2013.
But BookStats only counts ebooks with ISBNs.
Here’s what they aren’t seeing…
30% of all ebook purchases in the U.S. do not have an associated ISBN.
Nor are these non-ISBN ebooks lower-selling titles by any means. Many of them are among the bestselling ebooks in the U.S.
In the January 21 dataset, we found that:
20% of Amazon’s overall Top-10 selling ebooks did not have ISBNs.
16% of Amazon’s overall Top-100 selling ebooks did not have ISBNs.
34% of Amazon’s overall Top-1,000 selling ebooks did not have ISBNs.
37% of Amazon’s overall Top-10,000 selling ebooks did not have ISBNs.
Ebooks without ISBNs also represent a large and growing portion of the ebook market as measured in consumer dollars, too:
16% of of consumer dollars spent on ebooks were spent on ebooks without ISBNs.
But again we are primarily interested in the portion of that gross consumer spend that actually goes to authors in the form of ebook royalties or ebook revenue share, rather than the portion that is dissipated on publisher corporate overhead.
Looking at what portion of total ebook author earnings lie invisibly within the no-ISBN “shadow industry,” we see:
28% of of all ebook dollars earned by authors were earned on ebooks without ISBNs.
And therefore invisible to all officially-recognized industry estimates cited by pundits.
It is no wonder the typical publishing-industry pundit’s reaction to our initial Author Earnings reports has been a mix of dismissal, denial, and suspicion. After all, those pundits have seen official “proof” that our data is wrong… they are paying thousands of dollars each quarter to the AAP, BISG, and Bowker for data surveys and reports that say otherwise.
But the ISBN-based self-published sales that the AAP, BISG, Bowker, and Nielsen include in their reports are only the tip of the iceberg — the other 90% of the self-published ebook market lies invisibly underwater.
Wait! Aren’t ISBNs Necessary To Sell Ebooks Thru Retailers Other Than Amazon.com?
No. They aren’t.
Despite Bowker’s misleading FAQ claims that “most vendors” require an ISBN to sell your book, none of the major ebook vendors actually do. ISBN-less ebooks can be sold on Barnes & Noble, Apple, Kobo, and most other places where ebooks are sold.
Still, Doesn’t Buying An ISBN Confer Some Advantage In The Crowded Ebook Marketplace?
In other words, do books with ISBNs noticeably outperform their ISBN-less peers in unit and/or dollar sales?
From the data, the opposite seems to be true.
The top several-thousand indie titles without ISBNs outsold and outearned the top several-thousand indie titles with ISBNs.
- The top 3,830 indie titles without ISBNs sold an average of 42 copies a day and earned their authors an average of $70 a day.
- The top 3,830 indie titles with ISBNs sold an average of 24 copies a day and earned their authors an average of $52 a day.
Indie books that use ISBNs are selling fewer copies and making less money than their ISBN-less peers.
We caution against reading too much into this finding. Correlation does not equal causation. These results may well be due to a third factor, such as the higher average book prices for books with ISBNs, or a lower average level of entrepreneurial sophistication among those indies still believing they need to purchase ISBNs. But the “why” is of course speculation; we are simply dispelling a common myth using hard data.
What we can say for sure is that the clear lack of any material benefit in the marketplace makes the cost of purchasing an ISBN for an ebook very difficult to justify — the same money would be far better invested instead in better professional editing, proofreading, formatting, cover art, and the like.
As the data shows, the vast majority of indie authors are choosing not to spend money on ISBNs for their ebooks, and that number is growing year over year. And surprisingly, it’s not just self-publishers that are making the choice to abandon ebook ISBNs.
A growing number of non-Big-Five traditional publishers are choosing to forego the unnecessary expense of ebook ISBNs, too.
Grouping the books in our data set by the year of publication, we see a definite year-over-year trend. Fewer and fewer of the bestselling ebooks are using ISBNs each year. Nearly 25% of indie ebooks sold that were published in 2011 used ISBNs, but three years later, only 13% of indie ebooks sold that were published in 2014 use ISBNs.
87% of ebooks purchased that were published in 2014 by indie author-publishers did not have ISBNs.
Even more interestingly, a growing number of small or medium traditional publishers are no longer using ISBNs either. In 2011, 92% of the bestselling ebooks published by non-Big-Five traditional publishers used ISBNs, but last year, only 70% of the bestselling ebooks by non-Big-Five traditional publishers used ISBNs. Which means that…
30% of ebooks purchased that were published in 2014 by non-Big-Five traditional publishers did not use ISBNs.
Undoubtedly, the 30% of Small or Medium Publisher ebooks that are sold without ISBNs are almost all coming from tiny, agile, innovative smaller publishers and micropresses, rather than large corporate publishers. But these non-ISBN traditional ebooks are just as invisible to Bowker and the industry’s official statistics as the non-ISBN indie ebooks are.
ISBN-based analysis, reporting, and industry statistics about the overall ebook market are now so incorrect as to be meaningless.