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The Myth of the E-book Plateau

by on April 1, 2016

I recently read an article here on Public Libraries online referencing a report from the Association of American Publishers (AAP) talking about the plateau of e-book sales, a sure sign that paper books are making a comeback. In my role as an author and editor, I have experienced quite the opposite. So what’s really going on here? Is there some kind of deception happening? Could I be wrong? The answer, I think, lies in where you get your information. Where are the statistics you are using coming from? Does it really matter?

Data Based Decisions
Data-based decisions are increasingly becoming the norm for website owners, companies, and government agencies. Data gathered from online customers has driven the success of Amazon’s first physical bookstore, which I learned a lot about by paying them a visit. The data these decisions are based on is often known as big data, or sets of data too large to be handled effectively by humans or a computer with normal capabilities. In the library world, these decisions are similar to the data based decisions of other businesses as they involve inventory, product development and participation (like Self-E), human resource and hiring, and image management.

Do we stock more e-books for electronic check out? Do we opt into Overdrive and Self-E? How many digital librarians do we need to have, hire, or train? What is our library to the community? Are we a digital center, with maker labs and other activities, or are we an archive for paper books and nothing more? It is vital when making these decisions that we have all of the facts, not just those presented by certain portions of the publishing industry. Quarter after quarter, AAP reports that e-book sales are declining, while Amazon and other sites report they are on the rise. What’s the real story?

The Sources of the AAP Information
The AAP gets its sales figures from the 1,200 largest publishers, and continues to report declining e-book sales.[1] This sounds like a pretty impressive big data sample, and it is. It’s also much easier to examine that segment of the market rather than looking at a broader picture. The sales numbers come straight from the publishers, right? But those sales figures, limited to just the largest publishers, leave out most small presses and indie authors, and they also counts sales of physical books to bookstores rather than those sold to consumers. What’s the difference?

Well, if a book sits on the shelf too long at Barnes & Noble, for instance, it moves first to the bargain table. Why? Because it costs more to ship it back to the publisher than it does to sell it at a discount, since they only get a partial refund of the cover price. Even if it is returned to the publisher, or a distributor, those books are pulped and recycled rather than shelved in a warehouse for future sales that may never come. It’s just a cheaper option. So the number of physical books is somewhat artificially inflated, as not all of those books make it to the hands of readers. E-books, however, are a different story. Once ordered, they are immediately in the hands of the reader, or at least at their disposal on their device.

What They Left Out
The information they don’t have comes from sites who do not report e-book sales, and the hundreds of indie publishers, from small press to single authors, who also do not report sales numbers to the AAP. And that is a ton of books.

A website called Author Earnings, the brainchild of Hugh Howey and his partner, known simply as Data Guy, has been gathering sales data for well over a year now. In March, in a presentation at Digital Book World (DBW), their data and methods were presented in an eye-opening keynote address. The data offers a much broader picture of the industry.

Basically, there are five major retailers of e-books in the United States: Amazon, the largest; Apple Books; Barnes & Noble (Nook); Kobo US; and the now nearly obsolete Google Play Books. A large majority of the books sold on those sites are not reported to the AAP, as they are published through non-traditional (read: small press or indie author) methods. The share of the market these books have is growing all the time.

95% of US ebook sales go through only 5 major online retailers

Fig. 1: 95% of US ebook sales go through only 5 major online retailers [2]

Why Should We Care?
A more complete picture of the e-book market shows several things of import to libraries.

Pricing: In the pricing war between publishers and libraries, a more complete picture shows the prices of books actually selling, and can certainly give libraries leverage toward fairer pricing, and even toward moving to an ownership model.

Inventory: What genre are people reading and buying; i.e., what genre are they likely to borrow? This is important because the overall picture shows different trends than the partial picture the AAP numbers present.

Personnel: If e-books are indeed on the rise, and becoming the norm, more digital librarians are needed, or at least librarians who are tech-savvy. This seems logical anyway, as more libraries are becoming community gathering places, educational and making centers, and sources for Internet access for those who do not have it at home.

Image Management: My wife’s grandfather loves his local library. He most often visits it on his iPad. He’s reading e-books borrowed through their digital library system. The library fosters the image that is it more than just a physical building, but a place that extends to the Internet.

All of these things make an assumption: e-books are on the rise and here to stay. What about the APA numbers and the way they conflict with those of Amazon and other retailers?

What does an incomplete picture of the market tell us about consumer spending by genre...

Fig. 2: What does an incomplete picture of the market tell us about consumer spending by genre… [3]

...versus what a complete image of the market says?

Fig. 4: …versus what a complete image of the market says? [4]

The True Trend
E-books are the new paperback. Genre fiction that once lined the stacks now can be stored and borrowed digitally. This can only become most efficient when pricing issues are solved, but it seems there is progress and there is the potential for alternate ways to bridge the price gap.

This does not mean paper books are dead. Far from it. In nonfiction and reference, paper books still dominate the market. While e-textbooks are popular to some, the novelty has worn off in favor of note taking and highlighting in the margins, to the point where Barnes & Noble is closing its e-textbook division, Yuzu.[5]

What this Means to Libraries
The library will never be a solely digital space, yet it’s unlikely libraries will ever go back to being a solely physical place either. Both digital and physical collections are important, even though they make collections management much more complicated.

The key is to have a realistic view of the publishing world. Digital media experts often say “everything is a concept” and creative thinking and innovation are just as important to the library industry as knowledge and analysis. This intuitive and imaginative approach is critical in what Daniel Pink calls the “Conceptual Age” in his book, A Whole New Mind.[6]

Programs like Self-E, the Open eBooks app, and free digital libraries set up by different states will all have an impact on how and where the library spends its budget.

The key may be to realize that using simply traditional sources of information is what has become a clearly nontraditional industry may be a mistake, and looking at the whole picture offers benefits not otherwise available.


References:

[1] Association of American Publishers, “AAP StatShot: Publisher Net Revenue from Book Sales Declines 2.0% Through Third Quarter of 2015,” Association of American Publishers Newsroom [website], January 27, 2016.

[2] Data Guy, “Outside the Data Box: a fresh look at ebook sales” (2016 Digital Book World Keynote Presentation), March 11, 2016.

[3] Ibid.

[4] Ibid.

[5] Michael Kozlowski, “Barnes and Noble Closes Digital Textbook Division,” Good E-Reader, March 8, 2016.

[6] Daniel H. Pink, A Whole New Mind: Why Right-Brainers Will Rule the Future (New York: Riverhead Books, 2005).


Resources:

Making Data-Based Decisions

Author Earnings

Digital Book World

Open eBooks


Further Reading:

E-book Trends Flattening, Paper Books Holding Their Own

A Visit to Amazon Books


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