Thursday, April 14, 2011

eBook Growth Faster than Print Declines

Books could soon start to follow some of the demand trends experienced by music.
AAP have released data from their 14 reporting US publishers that shows that ebooks sales are continuing to build, but these are not growing as fast as physical sales are falling. It should be noted that this is just 14 publishers and is against the collapse of Borders and loss of its sales contribution.

US sales of ebook are reported to have risen from $69.9 million in January to $90.3 million in February and in doing so moved ebooks from being the second-largest trade segment, behind trade paperbacks, to the largest-selling format in February (trade paperbacks only achieved $81.2 million). Reported Trade print sales across AAP members were some $215.2 million, a drop of 30%.

Music has long found that the growth in downloads has been significant, but not as significant as the decline in physical music sales. If this imbalance were to become a real trend in books, it could have a far greater impact than that in music. Books still have a wide number of sales outlets on the street and are heavier and bulkier to transport than CDs. There comes a point when the supply chain starts to creak, with an under capacity of demand and potentially over capacity of product and logistics fixed costs, all of which is not being offset by a compensating contribution from ebooks. In addition the costs within the physical book supply chain are widely spread and therefore far harder to control, whereas digital books have very consolidated channels and cost exposure and are only ‘moved’ when sold.

Print runs and publishing economics tend not to be short term decisions and as things change some of these commitments could easily unravel introducing more waste, cost and result id dead stock. One rule in logistics is, that every time stuff stands still it costs and every time it moves it costs, the art is to move it once and get it sold.

The challenge is to ensure the contribution from digital sales offsets the inevitable drop from print and that costs are driven out of the physical supply chain in a manner that matches the decline in demand.



Michael W. Perry said...

This backs up what I've suspected based on what friends are saying. Smell and feel of paper aside, serious readers do take to ereaders such as the Kindle. It makes carrying a book (or several) about with you much easier. And with all our societal chatter about 'killing trees' digital also makes people feel less guilty about buying a book they read once and discard.

This isn't to say there isn't a downside to some players in the digital age. Radio stations are loosing out to iPods and now TV stations to iPads. Getting show and movies via broadband cuts out local TV stations and movie theaters.

I doubt these non-reading activities will hurt reading. People who only read because there was nothing else to do long ago turned to other media. The remaining core of readers want to read and quite a few of them will read more on Kindles and Nooks than they did in a world of paper.

mjmuk said...

Interesting post and does show that the digital reader audience is increasing, though the UK still seems to be lagging behind the US in uptake.

During a recent holiday (cruise) there were less than 100 eReaders (Kindle being the most) out of around 2,800 passengers covering a broad range of ABC's. As all had arrived on board via airlines, I would have thought using the 'less-weight' argument that there would have been many more.

Perhaps this year will see a bigger surge in the sales of eReaders in the UK.

Martyn Daniels said...

we must recognise that all figures are open to interpenetration and the issue is about whether the digital trends will be substitutional sales or not match the downfall in print sales. If the later then there will be consequences could far greater than a few business closures.