Rocket Bomber - article - business - field reports - Business Analysis: Hey - you know what? We Sell Books.

Worrying Point One: Amazon, and Kindles.

Amazon wants to imply they’ve tripled the number of Kindles sold — or, failing that, that they’ve tripled the monthly sales of Kindles. Or something.

But actually: No. The exact wording used in the press release is that “the growth rate of Kindle device unit sales has tripled since we lowered the price”.

They got that ‘triple’ in there, which was the important propaganda bit. —Say the month-on-month sales trends on Kindle was +2%, and now it’s +6% —that’s ‘triple’, as defined. Sales growth is good, and 6% is certainly better than 2%, but we’re only talking about one month of sales, and triple growth in the rate of sales is not triple sales — but the Agitprop arm of Amazon would like you to Get Excited! and not notice that the difference between selling 106 units instead of a predicted 102 units doesn’t amount to anything, really. And any high school student taking AP Microeconomics could run the supply/demand curves that would show that lowering the price increases sales. This “news” is like informing us the Normans invaded southern England in 1066.

The worrysome bit (to a bookseller, and I’m a bookseller) is that Amazon sells Kindles, and they sell some number of Kindles each month, and an even greater number of e-books each month, and week, and day.

Ah, yes. But whom do they sell those books to?

Worrying Point Two: E-Books, vs Books, vs Readers (that is to say, people who read).

There’s a long list of statistics about the book industry at ParaPublishing.com [cross-posted to http://bookstatistics.com/] and yes, it’s a wall-o-text-with-numbers-in-it so of course your eyes are going to glaze over. Fortunately, Robyn Jackson has done at least one pass through the data, to find some interesting trivia, and even a cursory search at the ParaPublishing site pulls up other statistics:

• In 2002: 89.9 million adults in the U.S. did not read a book. (that’s about a third)
• In 2001: 56.5% of households purchased at least one book (the flip side is of course that 43.5% of households—that’s about 130 million Americans—purchased *no* books)
• Customers 55 and older account for more than one-third of all books bought.
• Only 32% of the U.S. population has ever been in a bookstore.
• In 2008: More Books were sold on the internet than any other product, and the number is increasing. “Polling company Nielsen Online surveyed 26,312 people in 48 countries. 41% of internet users had bought books online. 58% of those online in Korea had purchased books online. In the U.S., 57.5-million had purchased books online.” [source]

Here’s my theory:

If the “average” person reads 12 books a year, while about half don’t read any, well: there is a small fraction reading an awful lot of books.

There is a core contingent of readers, like myself and most likely also including you, who don’t just read but read a hell of a lot of books. Not 1, not 10, but dozens and perhaps encroaching on hundreds yearly. We don’t just read books, we love books: and review them, and blog about them, and have homes that are quickly filling with them.

We’re the target market for e-books.

The rest of the beer-swilling, network-TV watching public who read at most one book a year (in 2008, according to one source more than half—55%—of Americans didn’t read any books at all) isn’t buying a Kindle or Nook because hell, they don’t buy books period.

While Jane Six-Pack and her husband skip books in favor of Us and People Magazines and tabloid & reality TV, book lovers are reading — and buying books, to the tune of a billion dollars monthly.

This is the market that Amazon hoped to catch: the 41% of internet users, 45% of the general population, 56.5% of households and as many other statistics you’d care to cite in this instance. Not the general population (who don’t read books) and not even techies & early adopters (who buy gadgets just because) or bargain hunters (who buy books for $3 or less but most certainly balk at even a $100 e-reader that, natch, forces you to spend additional money on the e-books.)

Kindle, and other e-book readers, are not a product for the masses. They’re for readers [as in, readers of books; that is to say people who read books] and when companies like Amazon try to pitch the appliances as a device for everyone they’re doing their customers a disservice. But Amazon desperately wants the Kindle to equate to books in the mind of the reading [and non-reading] public, and has been losing money for years attempting to leverage their online-bookstore-business into an e-bookstore-business — with some success, but also with a large percentage of customers who could give a rat’s ass about e, and nothing close to an air-tight lock on the market segment: in less than a year, B&N has managed to capture 20% of the ebook market.

Surprise, Surprise: hardcore readers, the ones most likely to buy e-books, happen to like booksellers with physical bookstores more. Because they like books. Because they’ve liked books for years [or decades] and while Amazon can compete on price (as can Costco and Sam’s Club, for that matter) there is still something to be said for atmosphere, thousands of books in stock, community goodwill, and a bookstore.

I’m not worried about Amazon.
[I’m actually more concerned about my employer, Big Box Books, neglecting their most important assets: the brick-and-mortar storefronts.]

Point Three: Scale. Millions. [*Pfssh.*] Millions are nothing.

Amazon proudly points out that (as an online retailer) their sales of instant, downloadable books to an online shopping public has exceeded the sales of one type of physical book which must be shipped from a warehouse to the consumer in a process that takes days, and incidentally, also costs more.

So. Um. Wait? Cheaper, instant books online outsell more expensive books with a delivery delay? Well, duh.

I think the news here is that e-books only outsell hardcovers [on Amazon] while paperbacks as a class are obviously still doing quite well, else Amazon would crow about ebooks as their number one format.

That is to say: cheap physical books still outsell cheap e-books when compared to the same book in a premium format. Or, to rephrase: cheap is cheap and e- is less important than price to most consumers.

The most recent numbers I can find [the most recent numbers in which I place faith & trust] are from publishers.org and the headline from a week ago, 14 July: “Publishers’ May Book Sales Increase 9.8%; Year To-Date Sales Increase by 11.6% – Year-To-Date Trade E-Book Sales Comprise 8.48% of Total Trade Market“ [emphasis mine].

So, AAP numbers:

Links to the press releases:
January 2010
February 2010
March 2010
April 2010
May 2010

& here are the percentage gains in ebook sales, year over year [2009 vs 2010]:

Jan 261.2%
Feb 339.3%
Mar 184.8%
Apr 127.4%
May 207.4%

Well, there’s the nail in my job-security-coffin: ebooks are taking over. Might as well retire.

Yeah. the thing is: if you sell one, and next year you sell 3, that’s a 200% increase. It’s not the percentage gain, but the scale with which you measure sales. here are the actual dollar figures from that same source

Jan $31.9 million
Feb $28.9 million
Mar $28.5 million
Apr $27.4 million
May $23.9 million

Millions are millions, and percentage gains year-to-year are fine and all, but let’s not lose sight of the larger market: Here’s the numbers from the Census Bureau, http://www.census.gov/retail/ dating back to 1992, in a handy chart

[the red line on the graph is the One Billion Dollar Sales Mark — since 2000, a mark the bookstores have managed to meet or exceed 90% of the time. One Billion Dollars each month.]

There are five points I’d like to bring to your attention: 1. Since Jan. of 1992 (the earliest date for which the Census Bureau tracked sales) the bookstore market has cleared at least a half billion dollars each and every month. 2. that’s Billion with a capital ‘B’. 3. Since Jan. of 2009 the bookstore market has cleared a billion in sales (more or less; see graph above) each and every month 4. that’s Billion with a capital ‘B’.

5. the much vaunted e-book sales are still only millions (less than 40 millions, and for the last month reported, less than 30 millions each month) and that’s only 3-4% of the total book sales as reported by Amazon itself, The Association of American Publishers, & the US Census Bureau.

We’re wasting ink, bits, and skull-sweat on 4% of the market. Can you [dare to dream] imagine if a major bookseller announced it was going to spend $100 Million Dollars on a graphic novel initiative? (including kids books: comics, picture books, illustrated texts and Graphic Novels are at least 5% of the book market)

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And any number of online pundits are claiming e-books will be fully half the market in a year or two. Um. OK?

From 30 Million to a Half Billion in two years? The book market is a hell of a lot bigger than you think, methinks. [And books are not CDs; books cannot be broken down into ‘tracks’ and the time investment in a book isn’t comparable to the max-70-min time investment in a CD — so your arguments equating digital sales of books to the meltdown in the music industry are incorrect on their face]

Digital books are handy, no doubt. But is their utility that much greater than an actual book?

For works that are already marginal, that wouldn’t have seen a print edition under current publishing regimes, well: the e-book is a gateway, and an excellent opportunity.

But for everything else, for the ‘books’ we’ve seen from major publishers for the past 40 years, is e- really better? Hm. Cheaper, maybe, and more convenient in some applications; but better? That remains to be seen.

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Hey, you know what we do at a bookstore? We sell books.

Right now, I don’t care what the format is — hardcover, paperback; in stock today or ship-to-home from the warehouse: Every day I sell books, and at least half are books we don’t have in the store [yet]. We extend our expertise to help you buy books based on the barest fragments of half-remembered details. We fill in blanks. We help shape searches.

Say the dominant format 5 years from now is e-books.

Everyone who comes into the store today isn’t suddenly going to become smarter or savvier or remember more details in 5 years just because all books are e- — In fact, they’ll likely remember less. And who will be able to help?

Booksellers.

Web sites and searches only take you so far, and to date there is no replacement for expertise. As the world becomes more complex, we’ll rely on experienced guides that much more.

I don’t know if my current employer recognises this fact, but I’m certainly cognizant of it and should be able to make money on it no matter what the future retail environment looks like.

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