Last week The Bookseller published, as part of its "Review of 2014", the e-book volume numbers for all of the big UK publishers, confirming that though e-book sales outpaced print sales during the year, the rate of growth continues to relent.
Domestic e-book sales for the five groups—Penguin Random House, Hachette, HarperCollins, Pan Macmillan—totalled 49m units in 2014, a 15.3% rise on 2013. Three of the five publishers recorded double-digits growth, with only Simon & Schuster down—albeit marginally—on 2013. By contrast, the top five publishers recorded an 18% rise in digital volume versus 2012, which followed that huge 105% gain in 2012 (on 2011).
For the past few years, we have used the numbers provided by the big groups to make some assumptions about the overall digital market. The top five publishers represent 56% of BookScan’s print volume in 2014; if we assume their digital market share is broadly in line with this, we can argue that the overall e-book market in 2014 amounted to 87.8m units, representing a year on year rise of 18.5% (compared with 20% in 2013). From this we extrapolate an overall market value of £370m: which is based by using the average selling price for digital content up to October as recorded by Nielsen.
How do these numbers chime with those reported elsewhere? The best source for publisher data is the Publishers Association’s Yearbook, which takes sales from across its membership, but reports the invoiced value (not the price paid at tills). Its figure for consumer e-book sales in 2013 was £263m, compared with £222m in 2012, representing growth of 18%. It has yet to release 2014 numbers, but in July reported that publishers’ digital sales grew 10% in the first quarter.
Calculating the value of the overall market based on the PA numbers is problematic. In the physical book space, the invoiced value is generally one-third the value of the RRP, and then the cost to the consumer would be the RRP less whatever discount the retailer puts on the book. In the e-book space any calculation would need to factor in those publishers on agency terms, with those on wholesale contracts, and that many retailers continue to discount e-books to prices that are below the invoiced value. In late 2012/2013, for example we had the 20p e-book distorting the value of the overall e-book market, while in 2014 we have seen a number of “free” e-books at the top of The Bookseller’s monthly e-book Ranking. As far as we know, in both instances, the publishers were paid the wholesale price for each sale of the e-book. In 2015, we might have to contend with the impact of subscriptions, where again consumption of e-reading may not reflected in the value of the market, and where the invoiced value may well exceed what the consumer pays.
This context is important to understand when trying to figure out the growth rates of a market that is still in its infancy, and prone to tantrums. Last year I wrote that—in the UK at least—the rate of growth in the e-book market was exaggerated in 2012 because of the Fifty Shades trilogy, which also then further skewed the perceived slowdown in sales growth in 2013—for example in 2012 the companies that would become Penguin Random House reported e-book sales volume growth of 169%, but one year later their e-book sales business fell by 20%. By contrast, Hachette followed a more understandable pattern, recording growth of 82% in 2012, 58% in 2013 and 7% in 2014.
If we remove the Penguin Random House numbers from the calculations altogether, the market growth over the past three years has been as follows: 95% in 2012, 40% in 2013, and 13% in 2014.
If that looks familiar it should, in the US, e-book sales registered treble digit growth rates until 2012 when that market came off the boil and (in volume terms) recorded growth of around 50%, which then relented further in 2013, when the rate dropped to 10%. By this calculation, we are still about a year behind the Americans, meaning that all eyes should be turned to the States when it releases its 2014 full-year numbers to see what the e-book market has in store for us in 2015.
Of course the usual caveats apply to this piece, which is inevitably focused on trade publisher sales (and the sales of the big publishers). There is currently no way of tracking the clearly growing shadow market of independently published titles, and for the purposes of this analysis we have ignored the nascent digital textbook market, about which we will hear more when the Publishers Association releases its 2014 statistics.
There are one or two conclusions worth reflecting on.
The first, follows the view put forward by HarperCollins UK chief executive Charlie Redmayne that the traditional Christmas sales spike has "all but" disappeared, confirming what Waterstones m.d. James Daunt told us two weeks ago that e-readers are no longer a Christmas gift item. Ironically, this may help the book business, if book spend that was deviated to devices comes back to the trade.
The second conclusion, is around the "print renaissance" we have been hearing so much about. Or as Anthony Forbes Watson put it in The Bookseller last week, how the trade "rekindled its love affair with the physical book". Rather than seeing the print book and e-book markets as two counter-vailing forces, it may be wise to figure out how they are working together. If the big fiction bestsellers are now predominantly being bought digitally, then has this created space within book stores to focus on different books? For journalists looking to report on this sector, the narrative might be how digital has helped revive and reinvent print, rather than the other way round.
Last, the shift to tablet reading, alongside the rise of subscription services, will likely change the narrative again. As Kindle's Russ Grandinetti suggested at Digital Book World last week, stability is not on the menu. The good news seems to be that the book business is better at absorbing the shocks, than we once thought.