Two weeks ago it was my turn to take our daughter to her Saturday morning gym class. I always bring my Kindle in order to, among other things, get caught up on reading queries. What really struck me on this particular morning was the number of parents that were reading – and more important what they were reading on.
I was reading on my Kindle. The woman to the right of me was reading Hunger Games on her iPhone, while the woman next to her was reading a magazine on her iPad. To my left, a man read a paper copy of the Wall Street Journal, while the girl next to him was reading a book on her Nook (I didn’t ask which one). Only the man reading the Wall Street Journal was enjoying the smell of paper on the particular morning.
Fast forward two weeks. I’m sitting in Manchester Airport right now waiting for a flight to Newport News, Virginia, via Baltimore. I count thirteen people reading on various electronic reading devices, while only five people are enjoying the feel of paper between their fingers.
In short, the way that people are reading is changing, and there is nothing the large publishers can do to stop it.
I’ve seen this change in reading habits based on our own sales; 60% of the unit sales for Hurricane are the eBook. So while there are people in the blogosphere who are more than happy to talk about how publishing works and why this is the only correct model for a publishing business, the truth is that how people are reading and getting information is changing. Publishers large and small need to recognize the change that is already occurring and adapt to it. Failing to do this will make publishers nothing more than the next typewriter vendors in the age of computers…
In my last blog, I mentioned that 60% of our sales of Hurricane, by Jenna-Lynne Duncan, are eBook sales. In this blog I’d like to compare this to eBook sales in general. I then want to discuss what this means for publishers and authors.
Before I begin, a word about how I computed the percentage of sales used in the last blog. Quite simply, I counted the total number of eBooks sold and divided by the total number of books sold in all formats – in short, I computed the percent units sold. While this seems pretty obvious, it’s not how most people compute eBooks sales. Most numbers you find on the internet are based on percent revenue – the total revenues for eBooks sales divided by total revenues for all formats. Does this matter? In the case of Hurricane, because of the large price difference between the eBook ($3.95) and the paperback ($9.99), using percent revenue gives 41% of sales attributed to the eBook. In short, using revenues to compute the percent sales makes it seems like we are selling more paperback copies of Hurricane than eBook copies, which is not the case.
This bring us to an important observation. Even when using revenues to compute the percent of eBook sales, our sales for Hurricane are still much higher than the industry average, which predicts eBook sales to currently be between 8% and 22% of total sales revenues. I suspect the reason for the difference is the eBook price for Hurricane is at such a discount relative to the paperback that it is resulting in far more eBooks sales than we would have if the book were priced more comparably.
So what does this mean for publishers? As eBooks sales are becoming more prevalent, the days of treating them as “extra sales” is over. In the case of Hurricane, 60% of our unit sales only account for 40% of our revenues. If 60% of your unit sales are going to be eBooks, then those sales need to help cover your production (editing and cover design) costs. Pricing the book too low to try and generate higher unit sales is a recipe for failure, and one that you should avoid. While it is true that eBooks should cost less than their print counterparts, our printing costs are only 25-35% of the list price for the paperback; there’s no reason for the eBook price to be 60% less than the paperback.
What does this mean for authors? It means you should not be surprised when your publisher doesn’t price your eBook for $0.99 on Amazon. Quite simply, a publisher will never cover their costs that way. One lesson we’ve learned is that we need to price our eBooks in such a way that both our revenues and an author’s royalties are comparable regardless of formats. It is important for authors to work with their publishers as they try to achieve this goal.