The world is not flat

The world is not flat

In The Bookseller last week we revealed how the major trade publishers' e-book sales performed in 2013. The findings showed what most in the trade now accept: that the stellar e-book sales growth seen since the beginning of this decade is at an end. But thinking of this as a flat market seems spectacularly unhelpful.

The data itself is clear. As my colleagues on the stats desk noted: "After several years of triple-digit sales rises, the rate of e-book growth has slowed considerably for Britain’s top publishers. The e-book sales for 2013—collated by The Bookseller from figures supplied by publishers—for the top five trade players was 42.3 million units. This is a rise of 18% year on year (up 6.4 million units, from 36 million in 2012), but it pales in comparison to the 105% growth digital had in 2012 on 2011." As I wrote in my Leader. "Yes, that is still growth, Jim, but not as we knew it."

But to understand it, we need to think about the nuances: what we were looking at, what we were not looking at.

First, the data we have only looks at volume sales--since the major publishers considered sending through value data would be too commercially sensitive. Making judgements based on volume sales alone is not helpful, particularly at a time when volume sales growth can be ramped up by a low price promotion such as Sony's 20p drive that began in 2012. Where I have seen figures for value growth they are impressive: Hachette UK was up 40%, HarperCollins 28%, and S&S up 68%. We are clearly not seeing an end to heavy-price discounting, but as publishers and e-book retailers wrestle with the implications of agency-lite contracts, we may be beginning to see publishers looking to extract value out of the market, rather than driving volume growth.

Second, we did not look at data from smaller publishers, such as Faber, Profile, Quercus, or Bloomsbury; though we do know that Quercus' ebook sales underperformed, and that Bloomsbury registered digital growth of 15% in the last four months of the year. According to one chief executive I spoke to, e-book sales are now considered patchy: on some titles there remains strong growth, and a ratio of 50:50 between print and e, but in other cases, print remains dominant.

Third, we did not look at the indie market. We estimated the overall e-book market (for traditional publishers) to be 74m units, with sales of £220m, but we might add on a further 15m in unit sales to that figure, and a further £30m in sales, if (as we should) include everyone. Doubtless some indie authors will have continued to experience huge rates of growth, but it seems unlikely that these authors will be insulated from the wider trend. In his 2013 review, Mark Coker of the indie author e-book distributor Smashwords wrote that sales author book saleas grew to $20m, up 33% from $15m the year before. In a comment he gave to The Digital Reader blog, he extrapolated a little: "2013 started off strong post-holiday at all retailers, but the rest of 2013 was fairly lackluster at all retailers and flat compared to the growth trends of previous years".

Last, and perhaps most important, the sample did not look at export sales, which as e-reading of English-language books is more widely adopted could become a significant driver of sales, above and beyond local markets. Hachette UK revealed last year that it sells in 190 territories worldwide; at DBW Simon & Schuster's chief executive Carolyn Reidy said it sold e-books in 200-plus countries, many of which were now growing more quickly than the US, which she described as 'mature'. According to data published by ePubDirect, its publisher clients sold into a third more countries in 2013 than 2012, with those clients averaging growth across all markets up 146%.
How publishers, re-orientate themselves to capture this growth will be intriguing. We may see more global lists such as HarperCollins 360 launch, where publishers have world English rights and cannot or choose not to sell them on, and we may see more efforts on the part of the big publishers to acquire world rights in the first place. There has been talk for some years of territories breaking down, of markets becoming open, and of publishing's power-base moving out West: and I think over the next half-decade this talk will become supercharged as publishers across the globe look for new digital growth.

We should be careful about the conclusions we draw from all this data gathering, even accepting the wrinkles. This market shift can be measured in lots of different ways, but seeing it only through the prism of e-book sales numbers would be mistake.

In his blog on the future of bookstores, Mike Shatzkin writes that at DBW he felt that "with more than half the sales of many kinds of books — fiction in the trade area, of course, but also lots of specialized and professional and academic topics — already online, many seem to feel whatever 'adjustment' is necessary has already been made". He warns that any further erosion of high street booksellers may prompt a rapid reassessment of this view. He is quite correct: as Quercus' results showed last week, high street visibility remains a key plank of any publisher's sales strategy.

Mike sees bookstores as the canary in this particular mine. Others look to the steady drip-drip of successful self-published writers as the true indicators of how difficult the future might become for publishers: that some indie authors believe they are leading a revolution should worry everyone in the trade.

Perhaps publishing's transition to digital has been too comfortable, that a period of great growth, followed by a relent, feels more like an 'adjustment' than it should. It seems to me that the phoney war is over. Publishers are now looking at a market that will no longer drive itself, but needs to driven, whether that is through product development, author acquisition, price promotion, consumer marketing, or international expansion. The game is on: and these changes are speeding up, even as the growth curve flattens.