The May 2015 report is based on a survey and analysis of the top 200,000 titles on the Kindle Store best-seller lists, and among the other details it revealed was an unsurprising trend in the price of ebooks, a continuing shift as indie titles replaced traditionally published titles, and a corresponding shift in revenues.
It does not, however, answer my questions about AAP’s Statshot report from January of declining ebook sales; it raises more questions. And to be clear, I know I have reached a different conclusion from the official Author Earnings Report, and I will explain why later in the post.
But before we get to that, let’s start with ebook pricing trends (and save the more intricate details for later in the post).
As you can see in the charts below, the average prices for Amazon-published ebooks remained relatively constant, while the prices of indie-published ebooks and those from small and medium presses spiked in late 2014 and early 2015 before trending downward again.
The average price of best-seller ebooks published by the Big 5, on the other hand, has continued to increase over the past 6 quarters. Given that four of the Big Five have switched to agency ebook contracts in the past 8 months, it comes as no surprise that they are also raising their ebook prices in general. But more importantly, I would like you to note the patterns of the four charts.
In particular, I want you to note how the indie ebook prices and the small/medium publisher ebook prices follow the same pattern. This suggests that both parties are responding to changes in the market in a similar manner, while the Big Five are not.
The Big Five are simply increasing their prices no matter what. This point is worth watching because it will affect the relative shifts in revenue from one quarter to the next.
In fact, we may already be seeing the impact when we compare the charts from January 2015 and May 2015.
As you can see in the following charts, indies are taking an increasing number of spots on the best-seller list, leading to an increasing number of sales and revenue.
Skipping to the gross sales charts, we can see a huge shift in the revenue split; indies are getting more money, while small/medium/big publishers are getting less.
Have a look:
Before we go further, let me add that I know the dates are different, and I know the sample sizes are different. Those differences weaken this comparison, but they do not completely invalidate it.
If we threw out the above comparison, we would have to throw out the following one as well.
Remember when I reported on the AAP’s January 2015 Statshot report and I predicted that the decline in ebook revenues could point to a shift in purchases to another industry segment (or format)?
Well, we can’t actually back that up with the Author Earning Reports from February 2014 and January 2015. When we compare those two charts, we don’t see a huge difference in the gross ebook revenue shares of the small/medium/big publishers.
The first chart is not labeled, but it is from February 2014:
When you factor in the “single-author publisher” revenues (those are indies by another name), self-published authors aren’t really picking up much more of a share of the revenues in the Kindle Store in early 2015 than they were in early 2014 (21% vs 22%), while publishers only lost a couple percentage points (73% to 71%).
That two point drop does not reflect the 8% drop in publisher revenues which the AAP reported for January; it’s not even close.
And yes, I know that the AE Report itself says that there is a huge difference; they are wrong. They only discuss it in terms of the stats for the Big Five, and not the combined stats of the small/medium/big publishers. The AAP collects revenue data from 1,200 publishers so that is a clearly a mistake on the part of the pseudonymous Data Guy.
Sidenote: The discrepancy is doubly interesting given that the average ebook prices of small/medium/big publishers were higher in January 2015 than they were in February 2014 (scroll up for the relevant chart). The higher prices didn’t affect the revenue share to a significant degree. Chew on that.
Does anyone else wonder why the two annual comparisons point to different conclusions?
This could be a sign of market fluctuations rather than actual change, or it could be a sign that the shift only really picked up steam after January 2015. Either way, we’re going to have to wait for another quarterly report before we know for sure.
I, for one, am waiting on more data from the AAP. Stay tuned.
image by 401(K) 2013