This month, as I analyzed our sales, it was evident that eBooks have continued a fairly steep decline. I have been commenting on this for years and have been reading a lot of conflicting information. The chart to my left shows how much Amazon dominates the eBook marketplace worldwide. As an part-time economics professor, I know just enough to recognize a monopoly when I see one! Also evident is how dominant the US market is for eBooks. The rest of the world is not even close — the UK being a distant second.
The conflicting information I have been reading concerns some who say it is only the big publishers that are seeing a decline in eBook sales. The owner of SmashWords claims eBook sales are performing fine — IF YOU LOWER YOUR PRICE.
Meanwhile, the Amazon monopoly is a few years into the Kindle Unlimited subscription model. As this service has gained in popularity, outright sales of eBooks have continued to collapse while pages viewed in Kindles through this program have increased. However, it is evident from many sources that author incomes are DOWN SIGNIFICANTLY.
Diagnoses — Amazon took over and is now ruining the eBook marketplace by completely controlling everything. Publishers and independent authors can no longer influence how much they get paid through the service — you are at the mercy of the variable pennies paid per page. While Jeff Bezos continues to be the richest man in the world, authors and publishers are making less from eBooks.
What should we do about this? EBooks are less than 10% of our mix and they cost extra to create plus we pay higher royalties for them. It is also not profitable or sensible to try to increase our efforts on other platforms that have such a small percentage of the business. In other words, a platform that is 10% of the ebook marketplace that is a portion of our 10% of sales would only be a 1% impact. We’re looking to grow much faster than that. To paraphrase the soon-to-be Speaker of the House, “These are just crumbs!”
What shall we do?
A) Chase the crumbs — lose money and diversify among different eBook channels?
B) Drink the Kool-Aid — Go all-in with Amazon and sign everyone up for Kindle Unlimited. This means taking everything down everywhere else — yes, that is the contractual requirement!
C) Bag eBooks altogether? How many of you actually read this way anymore?
D) Protest and pull all eBooks from Amazon and only sell them on other platforms?
E) Start a class-action lawsuit charging Amazon with monopoly power. This is something the Federal Government would need to take up in an anti-trust suit.
I will be thinking about this in my spare time. I welcome your suggestions.
Recent news about bookstores has been a mixed bag. Longtime readers of this newsletter know I’ve been on a death watch for Barnes and Noble for a couple years. We’ve recently worked out a direct arrangement with them and are trying to make a go of it, but they are also in an ever weakening position. Recently, it was announced they would be closing eight more stores in the coming year. I wouldn’t be surprised if their eBook business was sold off to Kobo and they get out of this losing business. EBook sales remain flat or down and have plateaued at 20% of all book sales. The vast majority of eBook sales are fiction titles.
While B&N is up and down, The Last Word in Charlotte, North Carolina went bankrupt this past week. While they sold mostly used books and media, they were on our list of independent customers. We’ve noticed a decided slowing in the payments coming from independents of late. Many are more than 90 days past due. We’ve recently sent another round of dunning emails, some going unanswered. I worry if I follow up I will discover a couple more bookstores exiting the business. This bears watching. In a strong economy, to still have business failures in this industry indicates there are structural changes afoot.
And here’s our culprit …. Amazon! We are all very familiar with their global online offerings. In fact, they are about one-third of our business and about half of the overall book trade (Barnes is 17% overall — the only other player over 10%). Amazon recently opened a brick and mortar bookstore in New York City near the site of a former Borders store (boy do I miss those!)