Rising eBook Sales = Declining Revenue

The recent book sales data from Neilson BookScan and the Association of American Publishers (AAP) shows some interesting data.

Print book sales dropped 4.4% from 2009 to 2010. A closer look at this data shows that print book sales dropped by over 15% during the first six weeks of 2011 compared to the same time period the prior year.

On the other hand, ebook sales continue to rise. eBook sales in February 2011 totaled $90.3 million, significantly ahead of the record $69.9 million reported the previous month in January 2011. eBooks made up about 22% of book sales in the first quarter (Jan-Mar) of this year.

The data gets more interesting. The revenue from the increase in ebook sales in January and February of this year did not make up for the lost revenue from the decline in print book sales for those two months.

In other words, the gain of $60.4 million in ebook sales did not equal the decline of $93.5 million from print book sales over the same time period.

Why is this? It’s simple. eBooks retail for less than print books. The difference in sales price is wide enough that publishers net less from ebook sales when comparing selling the same amount of print books versus ebooks.

As a small publisher, you might not experience the decline in revenue like many large publishers are. You might actually be selling more copies of your book by making it available in ebook format, actually making more money.

However, economies of scale make the difference for the large publishers. If a publisher can sell 5,000 hardback copies of a book at $26.00 a book and nets $10.00 a book, they have just made $50,000. If they, instead, sell 5,000 copies of that book in ebook format at $9.99 per book and net $6.00 per book, they have only made $30,000.

Overall book sales peaked in the United States in 2007 and have been on the decline since (even taking into account ebook sales). The increase in ebook sales is not making a difference in the overall book sales figures (see chart below).

Book sales from the US Census Bureau

Year 2010 2009 2008 2007 2006 2005 2004
$Millions 15,662 16,051 16,870 17,184 16,983 16,889 16,877

What will this mean in the long-run for the book publishing business? A decreasing number of books sold coupled with the lower revenue per book sold will result in fewer people employed in making and selling books. In our current economic recession, this does not seem like good news.

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