The Diminishing Return on eBooks

In BISG’s most recent Consumer Attitudes Toward eBook Reading survey, the organization found that ebook consumers say they are buying more books overall, but that their total dollars spent on books is decreasing.

No surprise.

With ebooks often offered at a much, much cheaper rate than their corresponding print books, consumers can buy more books and spend less money.

This does not bode well for the publishing industry. The advent of e-readers is not increasing the number of book consumers in our country, rather that number continues to decline. It does not take a mathematician to figure out that fewer readers spending less money on books means less revenue for the publishing industry.

I recently heard on a news broadcast that some of the major publishers were going to start testing to see what the market would hold in terms of ebook pricing. I think that was a fancy way of saying that many publishers are going to try to charge more for ebooks as a way to compensate for the diminishing income that the sale of ebooks (compared to print books) brings in.

What does this finding mean for you, a small or self-publisher?

I suggest that it means that you should be careful how you price your ebooks. Price them too low, and as digital book sales increase, your revenues will stay low. Price them too high, and few will purchase, also causing you to lose revenues over the long haul as digital books sales take up a larger and larger percentage of book sales overall.

Finding the right pricing for ebooks is important. Pricing them less than their print counterpart, but not so low that you lose revenue, is the key.

Be prudent and you may not experience those diminishing returns that the major publishers are concerned about.

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Amazon’s eBook Sales

Amazon recently reported that it sold three times as many Kindle ebooks in the first half of 2010 as it did in the same period last year. This data includes the books sold with Kindle apps that can be read on iPads, iPhones, and other devices.

There is no doubt about it. eBook sales continue to rise.

The interesting piece of information in Amazon’s press release is the following:

The Association of American Publishers’ latest data reports that e-book sales grew 163 percent in the month of May and 207 percent year-to-date through May. Kindle book sales in May and year-to-date through May exceeded those growth rates.”

In other words, the increase in sales of ebooks for the Kindle is rising faster than the rate of increase of overall ebook sales as reported by publishers to the AAP (Association of American Publishers).

Why is this?

Let me give you my educated guess.

Publishers reporting to the AAP are, for the most part, large publishing houses. Hence, the AAP’s numbers do not reflect the small publishers or the large number of self-published authors around the nation. These micro-publishers and self-published authors can and do publish their ebooks directly to Amazon’s Kindle platform.

I believe the large number of books produced by this group of people is what is driving Amazon’s ebook sales growth. The number of ebooks being sold from this group of publishers is not reflected in the AAP reports and statistics.

Small and self-publishers are growing and as they grow, they are collectively beginning to sell enough books to make a difference in the statistical reflections of book sales.

I think Amazon may finally be recognizing the power of small and self-publishers. After all, they recently introduced 70 percent royalty rates for authors who publish their books directly to the Kindle platform. Now for the rest of the industry to catch up.

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