Forbes: Please Hire Someone Who Understands Books, or Math, or Both.

3915904999_898e8302ed_bForbes just put up Amazon Vs. Book Publishers, By The Numbers – claiming at least on the face to “ignore the overheated rhetoric for the moment and focus on the raw data.”

Fine. But can you hire someone who can do math?

Forbes: “$5.25 billion: Amazon’s current annual revenue from book sales, according to one of Packer’s sources. That means books account for 7% of the company’s $75 billion in total yearly revenue.”

I’d take that one further. Books, at least as has been self-reported by the members of the Association of American Publishers, is a $27 Billion a year industry. To be fair, trade books (publishing minus the textbook market) is only (only) $15 Billion. Amazon is the big, ugly, 500lb. gorilla of the market but two-thirds of books are still being sold elsewhere.

Putting that $5.25 Billion in context and knowing the publisher’s side is at least as important: one could argue that Amazon is only 7% invested in books and the Amazon-Publisher relationship, while publishers are at least 30% invested and growing increasingly worried as that fraction keeps getting bigger. This is the wrong way to think about the numbers (note my use of the phrase “one could argue”) but knowing the relevant percentages is more important than throwing around billions — and does a better job of putting the original New Yorker piece in context.

Forbes: “19.5%: Amazon’s share of the e-books market. E-books now make up around 30% of all book sales, and Amazon has a 65% share within that category, with Apple and Barnes & Noble accounting for most of the balance.”

Thank you, Jeff Bercovici, Forbes Staff — you have successfully demonstrated you can multiply the integer 30 by 65%.

The number is completely meaningless, but you’ve certainly nailed the arithmetic. What in the hell am I supposed to do with 19.5%? I suppose, if it were described as the percentage of the Total Book Market that Amazon Happens to Sell as Ebooks Rather Than Physical Books, there might be some point in knowing about 19.5% — but this isn’t what the data means.

19.5% is NOT “Amazon’s share of the ebooks market” – a point directly disproved in the very next sentence of the Forbes article, where Amazon’s [estimated] share of the ebook market is listed as 65%.

Also, ebooks are only “around 30% of all book sales” when we restrict ourselves to sales self-reported by the 1200 or so publishers participating in AAP industry reporting, and again, that would be 30% of the $15 Billion in trade books, excluding the other $12 Billion in publishing annually from textbooks, which are still resistant to the widespread ebook adoption we’ve seen in other publishing categories. Of course, Amazon’s books sales would also include their Kindle-exclusive ebooks — a number not reported anywhere and also not part of the AAP’s estimates (the 30%-ebook number we all like to throw around). The stronger one assumes KDP to be, the smaller Amazon’s share of the trade book business—including the AAP’s publishers’ ebooks—but, if anything, a thriving Kindle program is even more worrisome to a publisher.

Just how much of Amazon’s [estimated] $5.25 Billion is ebooks? – more than 30%, I’d bet, since the publishers report 30% and Amazon sells at least as many ebooks as print books, by their own reporting. (or is that bragging?)

Just how much of Amazon’s [estimated] $5.25 Billion in book sales is Amazon’s? – This is a big ol’ question mark, because Amazon isn’t saying. Kindle Direct Publishing and the menagerie of imprints are, if nothing else, a growing fraction of Amazon’s book sales, and could be a significant fraction. How we parse it can make a big difference. If Kindle ebooks, CreateSpace print-on-demand, and Amazon Publishing account for exactly zero of Amazon’s [estimated] $5.25 Billion, that means Amazon really is selling 35% of all adult and juvenile trade books. I’d say the combined-Amazon-book-cheetah is getting close to a billion dollars, though, because the fraction I keep hearing for Amazon’s share is closer to 30%.

Ebook cheerleaders and Amazon partisans keep sharing anecdotal stories about just how great things are on their side of the dome. How much of Amazon’s ebook sales are Kindle native?

I might read the Forbes article and think 19.5%, but now I’m just rubbing it in.

How about used books, also available from Amazon – Are sales on Amazon’s marketplace figured into that $5.25 Billion? They shouldn’t be, as Amazon only collects fees on these transactions and the sales are actually banked by the seller-of-record. While used book sales wouldn’t impact the reported sales from the AAP, they certainly affect the public perception of Amazon as an online “book store” and that means Amazon’s mindshare for books is bigger than $5.25 Billion and the estimated dollar figure for “book” sales is almost certainly off.

George Packer did an excellent job describing how many publishers feel about Amazon. Forbes, in reporting on the article, pulls out some numbers from his article (in a mildly condescending way) for their puff-piece-listicle but adds nothing to the original, or the conversation.


I’m not done.

Forbes: “>50%: The decrease in the number of independent bookstores over the past 20 years. There used to be about 4,000 in the U.S.; now there are fewer than 2,000. Amazon’s arrival on the scene is only part of the story here, of course; the decline of the indies started with the debut of big-box stores like B&N and Borders.”

Do you want to go there, Mr. Bercovici? Amazon, Big Boxes, indie bookstores, wow things have changed but from the tone of the Forbes author we get the impression that Amazon’s “part of the story” is supposed to be the largest part. Let me show you how we provide context for a story:


“The Wasserman piece [“The Amazon Empire: How the Online Colossus Snuffed Out Competitors and Their Next Battle for Publishing” : Steve Wasserman, 3 June 2012, The Nation article reposted at] is a long read, but a good one. Please note that in 1994, if the figures/fractions quoted are correct, then in the year Amazon launched 55% of the total book market was selling outside of bookstores! – we have short memories, it seems, and a long list of assumptions to work through when it comes to book retail. If Amazon were merely displacing book-of-the-month clubs and hoovering up the book retail that (in the 1980s) was happening in grocery stores and newsstands (newsstands! remember those?) then their stratospheric growth has a ready explanation that doesn’t involve the death of book stores. In 1994 the big-box-bookstores were just getting started: Borders & Waldenbooks were still owned by K-Mart (yes) and hadn’t been spun-off yet, that division consisted of 1,102 mall stores and just 75 Big Boxes; B&N had 268 stores alongside 698 (B. Dalton) mall locations. (Remember mall bookstores? I used to buy books there every weekend. The local mall had two bookstores in it. Good times, good times.)”

Let’s Talk About The Business, Then. : Rocket Bomber, 8 May 2013. [some edits for clarity; it’s OK, I cleared it with the author]In the last 20 years, two multi-billion-dollar bookstore chains rose — and one fell. A hell of a lot has changed in 20 years.

In 1994, Viacom owned Simon & Schuster and was buying Macmillan USA; now in 2014 Macmillan (via the original UK root) is back in the US book business – but under the imprimatur of privately-held German firm Holzbrinck. Viacom spun off S&S, as the publishing arm of CBS. Hachette Book Group USA (Hachette Livre being the bookish face of French multimedia conglomerate Lagardère) was born in 2006 with the French purchase of Time Warner Books — and more recently Hachette has also added on Disney’s Hyperion. (Hyperion, I’ll remind you, was built by Disney from scratch in 1990.)

Rounding out “The [old] Big Six” – HarperCollins is only 25 years old, assembled from parts by Rupert Murdoch’s News Corporation over the course of the 1990s. And everyone is shadowed by the Randy Penguin merger: the imprints of Random House already read like a directory of 1947 New York publishing houses; added to Penguin’s haul the new Penguin Random House is set to publish half of all adult trade books (or more). That merger isn’t even a year old yet.

Publishing has gone on, of course: the day-to-day of editors and booksellers is of more immediate import than the boardroom maneuvers and empire building going on behind the scenes, but the corporate shenanigans still matter. It’s not that the publishing world suddenly changed in November of 2007 — a monolithic seeming industry that was already beset by supervolcanoes, tsunamis, and major tectonic shifts also got hit by an asteroid. (If a few bookselling dinosaurs are wandering around looking confused, I think they can be forgiven.)

The way people read has changed; the things people read have changed. Your options in the 1980s consisted of newspapers, magazines, mass market paperbacks, or maybe, rarely, an amateur newsletter or ‘zine — now people read more than ever but we’re staring at a screen, and occasionally it’s the screen we keep in our pocket. You can start your day reading an news aggregation site, follow up with a few expert blogs, churn through email, go back to the blogs (the funny ones), check your email again, waste time on tumblr, twitter, reddit, and then finish up by reading fan fiction in bed before falling asleep. You don’t even need to fire up your old-school-desktop-PC to do any of it, and seemingly, amateurs are in control of all of it. You can spend 14 or 15 hours of every day staring at a screen, reading.

Reading Demand has not changed. In fact, given all the new options, it may be increasing. The ways we meet that demand have adapted to the new tools — primarily the web, which is still the best part of the internet. Like the internal combustion engine revolutionized agriculture and oh-by-the-way also could be used for personal transport, the concoction of url-html-http that we call the web has revolutionized publishing (“the act of making something public”) and we’re still in the very earliest days trying to figure out what the ‘oh-by-the-way’ impact is going to be — on society as a whole, and on our personal lives. In 1914, whether we were riding in a horse-pulled omnibus, a steam-cable trolley, electric street car, or driving ourselves in a horseless carriage — we were still just going about our day. Motels, drive-ins, drive-thrus, the Interstate Highway system, and suburban cul-de-sacs came later.

Book retail, like all non-food retail, will suffer as we make the online & digital shift. The “major book publishers” may stall out as a ‘forgotten’ $15 Billion a year industry — no longer growing but instead, just serving the same niche for decades as we re-align our lives around the new technology. That doesn’t sound that bad to me. I know, ‘If you’re not growing you may as well be dying’ but if there were ever an industry that was readymade for a caretaker role, the stereotype of the quirky local bookshop supplied by small, early 20th century publishers fits perfectly — direct from central casting; a cliché right out of the gate.

Amazon isn’t the only thing to impact publishing and bookselling.

“Let’s go through that again: In November of 1998, B&N had their own website, 15% of the book market, was looking to buy Ingram — the company supplying Amazon with more than half of their inventory at that point — and was being run by a driven, ruthless bastard whose modus operandi was buying up companies to either consolidate operations or just get bigger. Can I remind you that at that point Riggio had also bought Babbages, Software Etc., and GameStop and had built up this sideline into a chain of 500+ stores?
“This raised all-kinds of antitrust flags, apparently, so it’s no wonder the B&N/Ingram merger didn’t go through. I think when the deal went sour, Riggio took a step back to reappraise strategy. GameStop was spun-off into its own company and Barnes refocused on books. B&N built a massive warehouse of their own, and took up in-house distribution and logistics like a new religion. This quiet and behind-the-scenes stuff isn’t as flashy as mergers or new store openings, but the efficiencies B&N built over the 2000s are part of the reason they’re still open today, after 4 years of recession and shrinking consumer demand.
“Amazon borrowed a billion dollars (no exaggeration: they were carrying $1.4 Billion in debt by 1999) to build up the infrastructure they needed following this close call — 15 years ago the market changed, more distribution and warehousing was brought in-house and verticals were built. You might also be forgiven if you pointed to 1999 as the year Amazon changed strategic focus: from building a website and sales portal to building a business.
“I find it amazing that in 1999, the owner of a physical, brick-and-mortar bookstore chain was precluded from purchasing a book distributor (even when neither was the only player in their individual markets, and on the cusp of market changes already in motion and being trumpeted by both online-sales advocates and voices in the business press) — and the same sort of monopoly-building in 2012 is not just condoned by the state, but is being actively supported so long as some Justice Department lawyer can buy his ebooks for $9.99 instead of $14.
“It is said Amazon has 30% of physical book sales and 60-70% of all e-book sales. 15 years ago, Barnes & Noble was blocked on anti-trust grounds when they had only 15% of the book market. I find this fascinating.

Rocket Bomber, ibid.I wrote that longish piece last year, and George Packer did all my research and a hell of a lot more to write the 12,000 word article that inspired an ongoing, and very relevant conversation about books.

That’s how you cite “raw data” and put things into context, Forbes. It’s fine to pretend that you’re the ‘serious’ one in the room, and that publishers and book partisans are the ones engaging in “overheated rhetoric”. But if you’re going to present to all the world as a business publication: at least do us a favor and learn about the business.

(And get the math right, too, while you’re at it.)

reposted under a CC license from RocketBomber

image  by Dominic’s pics

1 Comment

  1. Nate Hoffelder11 February, 2014

    It sounds like that Forbes article was an infographic without the graphic, but just as shallow.


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