A former tech executive in the video game industry, Paul Abbassi’s work crunching e-book sales figures has made publishers reassess their digital strategies. Ahead of his keynote address, he spoke to The Bookseller.
You first came onto the scene as Data Guy, with your Author Earnings reports. What were you trying to achieve, and why the anonymity?
In my previous career as a video game-industry tech executive, I led data-driven publishing decision-making for large publishers of video games. So as a new author, it was natural for me to seek out similar data on book sales. It quickly became apparent that the industry’s published numbers for e-book sales and reported directional trends didn’t match the reality I was seeing daily in my own sales, and those of my peers. Adding fuel to the fire, Amazon’s frequent vague statements about continuing e-book market growth tended to align with what we were observing, too. All of which made the official industry numbers useless for guiding my business decisions.
The first Author Earnings data set was initially compiled to answer my own questions. But when I shared the data with a few writer friends, they convinced me to publish it as a resource to help all writers, and the Author Earnings reports were born in a collaboration with author Hugh Howey.
We wanted to shine a light on a fast-growing part of the market that had gone entirely unreported, and which represented a significant financial opportunity for authors. We also hoped to shift the prevailing narrative about self-publishing away from "fluke indie million-seller" stories, and help encourage a broader industry conversation about the new and large author "middle class" that was emerging, made up of five-figure and six-figure [selling] indie writers, an optimistic trend we did not see in the self-selected "author income" surveys that frequently made the rounds in traditional media.
My anonymity as Data Guy was mainly a way of keeping my involvement in the pro-bono Author Earnings reports from becoming a distraction, so I could focus on writing books instead. But being anonymous also served to keep the discussion focused on the then controversial data itself and how to pressure test it, and whether that data was able to stand on its own merits.
There was an inevitable backlash from some in the traditional media about those initial reports. How did you view that commentary?
I viewed the initial backlash as both validation and opportunity. It validated the idea that the opaque digital marketplace had become a significant industry pain point, which existing providers of data were unable to address. It also created the opportunity for dialogue with the traditional industry’s savviest and most knowledgeable market analysts. It often led to our drilling down into the numbers together, and jointly coming to understand our industry in a more nuanced way.
Many of the highest-profile industry analysts who were vocal critics early on have become friends and colleagues with whom I consult to pool our combined knowledge of the market, or to co-author blog posts or collaborate on in-depth analyses.
You’ve been largely vindicated, and despite reports of a softening of e-book sales, Amazon continues to grow its e-book business. Why did it take so long for the industry to ‘get it’?
Private recognition of our data’s basic accuracy by key industry players came much earlier than any public acknowledgement. For the past few years, I’ve been doing a fair amount of consulting work for publishers, distributors, private equity investors in the publishing space and the like, helping them answer questions about the digital and online sides of the book market that existing industry data couldn’t.
The largest publishers actually "got it" relatively quickly. Behind the scenes, they’ve been adapting to the opportunities and risks inherent in e-books by seeking out new, external sources of data, or building up their own internal market-tracking efforts for digital, to fill in the gaps left by the traditional data sources’ inability to cover a huge part of the market. Big publishers also see no real business benefit in publicly advertising a shrinking digital market share, especially when it’s a considered and deliberate strategic trade-off made to avoid cannibalising their print sales.
Conversely, a lot of the trade press, as well as midsize and smaller publishers, took much longer to "get" what was actually happening in the market. In retrospect, that isn’t all that surprising. Lacking the whole-market data they needed, and not having the resources to build out their own tracking solutions, smaller players could only work with the industry data they could get: mainly self-reported e-book sales from a handful of the very largest publishers. That limited data set told a consistent (but without context, highly incomplete) story of declining sales: one that ran counter to the true direction of the e-book market.
We’ve already seen some initial overtures acknowledging that, in recent years at least, unreported e-book sales not included in publishers’ numbers have made up a very large share of overall e-book sales.
While e-book sales have grown, print book sales have also stabilised, creating two distinct but successful markets. What are the parallels between the two that you see?
The parallel success and growth of e-books and print books reflect how well each format has been able to evolve separately to better suit its own primary customer base. Each format appeals to a distinct set of book buyers, differentiated mainly by the genres they read and, more importantly, by how many books they each read. For high-volume readers of genre fiction and serial fiction, e-books essentially replaced mass-market paperbacks with a more accessible, lower-cost alternative that encouraged frictionless, instant-gratification purchase and download of the next book as soon as one reached the last page.
On the other hand, for close readers of non-fiction, literary fiction, and other bookshelf-building genres, and for the gift trade, publishers could now divert valuable print resources away from low-margin mass-market paperbacks to focus on higher-quality hardbacks and trade paperbacks, for which that particular set of book-buyers would pay a premium. Each marketplace was able to optimise itself, and both grew.
But another major parallel exists between the e-book and print growth, and that is in where the overwhelming majority of that growth is occurring today: online, through a single, increasingly dominant retail channel.
In the US, the most dramatic shift has been happening on the print side. But this shift has gone almost entirely unreported, because it cannot be seen in Nielsen BookScan print numbers, which only show a single aggregate total for retail bricks-and-mortar sales and Amazon online print sales, combined. The blended total has continued to climb steadily by a few per cent each year ever since 2012, masking the rapid cannibalisation of bricks-and-mortar bookshop sales, which, aside from a statistically insignificant bright spot at small independents, have been decimated during that time. Overall, annual print sales in the US have continued to grow by single digits only because Amazon’s online US print sales are growing by double digits each year.
We’ve recently begun tracking the UK online print market as well, so it’ll be interesting to compare and contrast how it differs from, or is similar to, US online print sales. In many aspects, the UK’s online market resembles the US market two or three years ago. Audio, in particular, bears close watching. But there are some very significant differences, especially in e-book prices and relative market shares, that appear to reflect a key structural difference.
Audio adds a further dimension: what are the main differences between the e-book market and audio download space?
A professional-quality audiobook is far more expensive to produce than an equally professional e-book. Self-published audiobooks also have far less control over their retail pricing than e-books, because audiobook prices are largely governed by the distribution platform. Both of these factors make the lucrative audiobook space far more defensible for traditional publishers. Only the most successful self-published titles are likely to be released in audio. Consequently, the roughly half-million audiobook titles available today represent a far less crowded marketplace than today’s six million-title e-book market, which helps with discovery. And audio revenue, at a strong double-digit year-on-year pace, is still growing far faster than audio title count.
But audio sales are also highly concentrated through a single distribution platform, whose own audio publishing imprints also compete directly with publishers to acquire audio rights. These in-house publishing imprints today account for roughly a fifth of all digital audio units sold, while self-published audio- book sales still only make up a single digit percentage of the audio market: a marked contrast to these two cohorts’ relative shares in the e-book marketplace.
With the launch of Bookstat, you’ve now begun selling your services to traditional publishers. Does this mean you’ve switched your perspective on who has most to gain from the changing marketplace?
The launch of Bookstat’s UK service, which provides daily title-level tracking of UK e-book, audio and online print sales, is a fairly recent development. But in the US, where we first launched, over the past two years Bookstat’s customer base has been expanding steadily, and now includes some of the largest publishers in the industry, three of the top 10 in audio, and a growing number of non-publisher customers like retailers and subscription platforms.
In working closely with large traditional publishers, we’ve found them to be the players best positioned to take advantage of the changing market. They already have the backlist catalogue depth and a steady stream of new books in the pipeline, the in-house marketing resources, the pricing and merchandising expertise, and knowledgeable editors and analysts who are already working with other data and can immediately put ours to use. They’re able to leverage the better real- time market visibility provided by Bookstat right away, to optimise their businesses.
Our feature set has evolved over time to mainly serve the needs of large publishers, driven by the the feedback they provide.
Paul Abbassi will address delegates at the FutureBook Conference at 10.05 a.m., delivering a talk based on the theme Take Smarter Risks. He will also appear on the panel Generation Headphone: Who Is Consuming Audio And What Are They Listening To? at 11 a.m., alongside speak- ers from Acast and Harris Interactive.