Apple has never been one to give specific details about how much content they are selling, so when I read today that an analyst with Asymco had released a new estimate of iBooks sales I was thrilled. Horace Dediu has a post over on the Asymco blog which claims that apple could be earning an nearly 2 billion dollars from iBooks.
If you take Mr. Dediu's numbers at face value then iBooks could be quite profitable, generating $1.8 billion in sales and about $1.3 billion in payments to publishers, aggregators, and distributors.
That looks like a lot of money, but unfortunately the figure is bogus. It only took me a couple minutes to debunk it, and it turns out that absolutely none of the figures used by Mr. Dediu stand up under scrutiny.
First, Mr. Dediu arrives at the $1.8 billion figure by making guesses about the number of ebooks sold each month, and he also made a WAG about the average selling price. But let's skip that and focus on the bigger error that Mr Dediu made at the very beginning of his analysis. Let's see if you can spot it:
In June of 2011 Apple announced that 130 million ebooks were sold through iTunes. In October of 2012 it announced that 400 million sold.
If you've followed Apple news then you know they don't announce the number of ebooks sold; Apple has announced the total number of downloads (example). That is not the same thing.
Downloads includes all the free ebooks that don't generate revenue. And if the statistic I found while writing about Amazon's changes to their rules about free ebooks promotions was any sign, free ebooks outnumber paid titles by at least 15:1 and possibly as much as 100 to one (according to Smashwords).
So the short of it is the billion dollar figure that Asymco is reporting today is complete bunk. And that's a shame because this was potentially a very hot story.