Why E-Sales Dipped in Q2

We’ve been so spoiled by triple and quadruple jumps in e-book sales that when there’s a dip we wring our hands and wonder if the long-dreaded Topping Out has arrived.

A few of us felt a chill wind the other day when the monthly statistics furnished by the American Association of Publishers and he International Digital Publishing Forum reported that sales in the second quarter of 2010 showed a light decline to $88.7 million from the $91 million reported by the industry in the previous quarter. See E-Sales Soften – if You Call Double “Soft”

Given the fact that Q2-10 sales were twice those of the prior year, most analysts felt it was nothing to get hung about. But we were curious and asked a few knowledgeable professionals if they could shed light on this small reversal.

One said he thought that the kicking-in of the agency model, which broke e-book prices out of the $9.99 list price ceiling that Amazon had tried to establish, had something to do with it. (See Apple Promoting a New (and Radical!) Model for Selling E-Books?). Consumers just rebelled against paying $12 to $14 or more for e-books. This view was supported by this comment posted on our website: “Second quarter is when I started feeling the sting of agency pricing for e-books, and I cut way back on my e-book buying. I imagine a few other folks did, too.” (Thanks Stacy!)

The so-called Big Five publishers that switched to the agency model not only took a hit in sales but took in less revenue per e-book sold. Plus many independent e-book retailers did not and in some cases still do not have signed agreements to sell some of the most popular titles.

Another observer reminded us that a huge number of people bought e-book reading devices or received them as gifts for the Christmas holiday in 2009, and that led to their purchasing tons of e-books in January 2010, still the biggest month in e-book history. In subsequent months there was no place to go but soft.

Okay, so a cloud darkened the sky momentarily. But one glance at the charts reassures us that the prediction for years to come is sunny with a chance of a sprinkles here and there.

Richard Curtis

Tags: E-books, IDPF
Posted in All, Book Pricing & royalties, E-book Industry (news), E-books (business) | 4 Comment »

anne marie gilbert wrote on August 24, 2010 at 8:49 am

I am still downloading a lot of books, but definitely buying fewer of the overpriced e books, instead of buying 3-5 books a week, I’m buying 6-7 books a month. My book budget has not diminished but I just won’t buy some books I want to read but feel are over priced. My entire family read Jim Butcher’s Changes in a library copy rather than buy it at $12.99 for our Kindles. (We share an account with two of our grown sons, that way they can read my books but I don’t have to raid their homes to get them back.) We have all his other books on Kindle and would still download it to reread but not until the price comes down. I’m not a $9.99 purist but for most new fiction it feels right. For back list works I would expect the price to be less than the paper version or I won’t buy it. My price points for scholarly and general non fiction works are much more flexible and I will and have paid a great deal more for those works. BUT I still will not pay more for the e version and expect to pay at least 20 per cent less than the print version of any book I buy. When the prices are low enough I am happily replacing my print books with their e versions. Less e dust, less book case space needed, and easier on elderly eyes. I am particularly unhappy with the Penguin price points as I read a lot of their authors and simply will not pay, (not can not but will not) what they are asking. $18 mumble for Black Lamb and Grey Falcon to replace a many year old copy I already own in paper is greedy for them to ask and would be insane for me to spend. If books are priced well I’ll buy, if the price points set by some of the major publisher’s remain inflated, I’m going to be giving some serious thought to self scanning books I might otherwise just re-buy for kindle and spending my reading money on the sensibly priced books that are still out there and worth reading, not to mention downloading the public domain books that I could spend the rest of my life profitably reading and rereading. Except for Art History books, Museum catalogs, graphic novels and military history that has a lot of maps, I don’t expect to be buying anymore paper books in the foreseeable future and once there is good color e ink those purchases will be made for Kindle as well. I love books, but it’s the content I’m interested in, using them as a decorating statement has long since gotten old. Yes some books are works of art in format as well as content and those books if one is lucky enough to own them are to be treasured but they are the exception not the rule. I never thought I would come to this point but I’m done buying hard copies of books just done with it and the authors who will be profiting from my spending are the ones whose publishers do not leave me with the feeling that they are the pirates and I’m the one being ripped off. For the works I want from those publishers I’ll just use the very fine library to which I’m lucky enough to have access and feel bad for the author who will be losing a sale.

M. Evans wrote on August 24, 2010 at 11:35 am

Personally, I chalk it up to the Agency Model. There are a number of books I have on my Want To Read List, but the price (more than $12.00), so I’m waiting for the price to come down. In the mean time, there are plenty of authors who are releasing their out-of-print books for less than $5.00, so those are the ones getting my hard-earned dollars, not the corporates who are only out for themselves and don’t seem to care about the authors.

Stacey wrote on August 24, 2010 at 2:10 pm

While my ebook purchases from the Agency 5 have stopped almost entirely, lately I am finding more and more authors from indie publishers that I like a lot and am able to buy more ebooks from them at the $4-7 range. I wish that sales report reflected small publishers, because I bet their sales are increasing dramatically, and will continue to. So I share your overall optimism for ebooks, Richard, but think the outlook is flat (or worse) for anyone who continues with unreasonably high prices.

Bree wrote on August 25, 2010 at 9:10 am

I think the Agency model had its impact in a different way – there are many e-book retailers that had to remove Agency titles because they were incompatible with their member loyalty discount programs. Fictionwise, eReader, Diesel, BooksonBoard all lost access to the Agency titles. Some permanently, others for at least a month.

So anyone who had frequented these long-standing e-tailers had no access to the majority of new releases. That HAD to have impacted sales figures for at least April and May, maybe even into June and beyond.

Personally, I went from 7 years of shopping for $40-50 of e-books a month to almost nothing. I waited about 6 weeks for my usual e-tailers to get books again, and then had to acknowledge that it wasn’t going to happen. In the meantime, I discovered my local library had signed up with OverDrive and has a healthy catalog of 2009 and 2010 releases.

Since April, I’ve spent $22, vs the $200-250 I would have normally spent. I estimate I’ve read $460 worth of titles from the e-library in those 4 months alone. Based on the climbing rate of patrons waiting for titles, I’m not the only one who has made the the move from paid e-books to library e-books.

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