Digital growth relents for Big Five

Digital growth relents for Big Five

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.

It should be emphasised that the digital market is still very much in growth, and is in ruder health than print, which contracted 9% by volume and 6.5% by value in 2013 through Nielsen BookScan’s Total Consumer Market.    

Much as E L James did in the print market, the author skews the figures—both inflating the health of the e-book market in 2012, and deflating its performance in 2013. Regardless, the e-book market is still growing. James certainly had a slower 2013 than 2012: last year she shifted 323,000 e-books, the previous year she sold 3.9  million units. Stripping her out of both years’ digital figures and e-book growth for 2013 would have risen 31%, still a far shallower rate of growth than in previous years.

The slowdown has not been unexpected by publishers, and follows a similar pattern of a plateauing of digital sales seen in the US. Simon Johnson, HarperCollins’ group m.d., said: “What you’re just seeing is a slowdown in a transition from physical to e-books. Anyone who has worked in or studied technology would say that is normal. When you move far enough along an S-curve, things slow down.”

Hachette and Simon & Schuster led the way in e-book percentage growth. George Walkley, Hachette head of digital, said his group had e-book figures that were “flying in the face of  plateauing”: up 58% in volume, to 13.6 million units, and 34% in value. Walkley added: “Clearly that is very influenced by key authors like Gillian Flynn, ‘Robert Galbraith’ and J K Rowling, and Sir Alex Ferguson. Yet overall publishing plays a strong part in this. We look at our list and we see good growth across the list [not just among the bestsellers].” Hachette’s digital sales, combined with its shallower-than-market decline in print, meant that the group saw its combined “e” and “p” volume sales rise a healthy 10%.

S&S had a Big Five-leading leap of 90%, to 2.6m e-books sold. The publisher benefited from the BBC adaptation of Philippa Gregory’s The White Queen—the author was responsible for five of the publisher’s 11 bestselling e-books in 2013. S&S was also the leader in combined digital and physical sales rises: up a massive 27%. Penguin Random House’s combined e-book volume experienced a 9% drop in e-book sales, with RH down 20%—suffering in comparison to the E L James/erotica-powered 2012.  

Pan Macmillan certainly bats above its weight digitally. It has a 3.4% print market share through BookScan, yet in 2013 it sold almost a third more e-books than much larger print player Penguin. HarperCollins, meanwhile, had the shallowest year-on-year growth of any of the Big Five, up 8% to 7.4 million units (though value was up 28%), which gives it a combined physical and digital drop of 3%.

The wider picture

Full market e-book data is not available, but if the top five publishers’ share of the e-book market is similar to print (57% in 2013; 60% in 2012), then the size of the e-book market totalled around 74 million in unit terms in 2013.  That would be a 20% year-on-year rise, but a dramatic slowdown from 2012, when sales doubled to 60 million units.

According to The Bookseller’s internal analysis, based on publishers’ e-book figures and Nielsen BookScan data, e-books took a 28.6% share of the total book market last year—up from 23% in 2012, and from 12.5% in 2011. However, due to the relative cheapness of e-books in comparison to printed books, e-books accounted for only 13.4% (£220m) of the value of the overall market.

Overall, then, the consumer book market saw sales fall 2% in volume (five million units year on year), to 258 million, and by 4% (£73m) in value terms, to £1.64bn. Given the aforementioned slowdown in sales of James’ trilogy—a reduction of almost 14 million units year on year across both print and digital formats—the book market actually appears to be in relative health, in overall sales terms.

Data analysis the key, trade says

Despite an e-book sales growth slowdown, digital will be even more important for publishers this year, with an emphasis on new products, marketing and data analysis.

Simon Johnson, group m.d. at HarperCollins UK and International, predicted the industry would “enter more normal growth rates for e-books, but still strong double digits”, and that “the discussion around disruption in 2014 will move on to digital product development, digital marketing, and data. What does it really mean for publishers?”

Faber c.e.o. Stephen Page said more innovation could lead to more partnerships, in the way the film industry collaborates on projects; while Amanda Ridout, c.e.o. and publisher at Head of Zeus, said her company was hoping to “make various partnerships”, as well as publish more.

Hachette’s head of digital, George Walkley, said the company’s priority “is great publishing judgement and good consumer insight to publish great books in formats readers want”. He said: “We will continue to produce e-books as they will be the majority of our digital sales,” he said. “Where there is growth for enhanced products we’ll take those up more. We can now really think much more in those terms. We will see a growing number of different enhanced books making up the market.”

Douglas McCabe of Enders Analysis said publishers would have the chance to develop more of a relationship with the end consumer, but to do that would “need to get smarter at collecting data and data analysis and responding to findings”.

Penguin Random House UK c.e.o. Tom Weldon agreed that research was key. He said: “We’ll continue to focus on understanding audiences through insight gained from consumer research and analysis of our marketing and retailer data. This insight, coupled with the great instincts of our publishing teams, will enable us to create excitement around our authors through many different means including creative campaigns, partnerships, new digital experiences and working closely with retailers to secure the best possible placement for our titles.”

Pan Macmillan m.d. Anthony Forbes Watson said: “Understanding the consumer is about understanding what they do with their day. You have to understand the broad preferences of the consumer as a whole, to understand their reading aptitude in relation to that.”

Page agreed that there is “definitely a side to digital growth that’s about expertise and understanding data” but that companies have to look carefully at what data would be useful and meaningful.

Forbes Watson said Pan Macmillan would continue to explore bundling as “we think that’s what consumers want”, but that there would still be a push behind physical books. He said: “We’ll continue to push hard on our physical book sales. That awareness and discoverability are still very effectively achieved in the physical book space. If you don’t make a focus of growing your physical books your discoverability in general will fall.”

He added that Pan Macmillan would “focus on an integrated approach across formats and divisions…and across back list, mid list and front list”, as well as look to “develop metadata, search and mobile”.

McCabe said that while the slowdown in the growth of e-book sales had come earlier than was expected, it had always been predicted that a rapid growth would turn rapidly into a “plateau phase”. He said: “From a macro perspective I don’t see a problem. I think it gives the publishing industry more of an opportunity.” Johnson was also excited about there being “lots of players in the space”, making a “very healthy ecosystem”. He said: “E-books by Sainsbury’s really made an impact last year, Tesco have a device now and Kobo, BNN, Google, Apple and of course Amazon, to name but a few of the players, are all driving innovation and competition into the sector.”

Page said: “You cannot but imagine in five or 10 years’ time that we’ll have stopped talking about digital because it will be such an integrated part of us.”