In case you missed it, Amazon told the world yesterday that for the last three months it was selling more e-books than hardcover books and in the last month it sold 180 digital books for every 100 hardcover copies. It was one of those great self-serving press releases that had a terrific headline and all the blogs and major newspapers jumped on it.
Well played, Amazon. As your CEO Jeff Bezos succinctly put it, "We've reached a tipping point with the new price of Kindle--the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189."
To those who follow the book industry and happen to be part of it, this is not surprising. What I find interesting is how easily a lot of the press took the bait, ran with it, and did little to look beneath the numbers provided by Amazon, which it chose carefully.
Here are some things to ponder:
- Growth rate of Kindle sales tripled but what were they before the price drop? Let's compare the month that Amazon dropped the price of the Kindle from $359 to $299 to the month that Amazon dropped it from $259 to $189. I wouldn't be surprised if sales tripled back then as well.
- I'd like to see gross revenue from e-books vs. gross revenue from hardcovers. Until recently, Amazon was actually losing money on bestsellers that it sold for $9.99 when their wholesale price from publishers was around $12 or more. Now that the publishing industry has shifted to an "agency" model, Amazon is taking a 30 percent cut, but the prices of many e-book titles are higher, possibly squelching demand. Amazon hasn't told us yet whether the higher prices have had any impact on sales. Most Kindle users I talk to say they are buying fewer traditionally published Kindle titles because many cost over $9.99.
- Just how many e-books sold are self-published titles? The Kindle Store is literally flooded with self-published titles and many of them sell between 99 cents and $3.99. Some self-published authors are doing very well because they've written a decent book or books that are priced cheaply. Cheap sells these days.
- Yes, as expected, the e-book industry is growing at a rapid rate. But is Amazon gaining or losing overall share? Apple is claiming that it has already taken 20 percent of the e-book market. I've also heard similar, non-confirmed numbers come out of Barnes and Noble. If you believe those numbers, Amazon actually lost quite a bit of market share in the last year, though the overall pie is growing.
- Certain genres are doing very well on the Kindle. Romance novels, for instance. These titles are typically very big in paperback not hardcover. According to Wikipedia, in 2004, romance novels made up 54 percent of all paperbacks sold.
- On the iPad, iBooks is currenly listed at #1 under free book apps, the Kindle app is listed #2, and the Barnes & Noble app is number #3, though the Kindle and B&N apps tend to flip flop places. So one would presume that Apple and B&N are very competitive on the iPad, which has already sold well over 3 million units.
- Amazon is a master of selling paper books online and still offers the best user experience. It has transitioned that experience over to the e-book world and Kindle Store and clearly had much success. But in the digital book world, where pricing is largely fixed now (at least for traditionally published books), you're starting to see a more level playing field as Barnes & Noble invests millions in its online arm and Apple knows a thing or two about user interfaces. Sony and scrappy upstarts like Kobo are also trying to get in on the e-book game, though consolidation seems inevitable.
- I can't give out exact numbers, but after the price drop to Amazon's and Barnes & Noble's e-readers, the number of people reading reviews of Nook e-readers (Nook 3G/WiFi, Nook WiFi-only) is three times the number of people reading reviews of Amazon Kindles e-readers (includes the Kindle and Kindle DX). Sony Readers are third in terms of interest from our readers. To be sure, our top products list skews these numbers (the Kindle and both Nooks all have 4-star reviews), so take them with a grain of salt. Undoubtedly, a lot of people simply buy the Kindle (or Nook) without ever reading a CNET review. After all, the Kindle--or Kindle apps--are promoted front and center on the Amazon home page virtually every day. With millions of people checking in each day, it's no wonder the Kindle is the best selling product on Amazon.
- When Jeff Bezos said that we'd reached a "tipping point," I would argue that he was giving a big wave to brick-and-mortar stores. He wasn't necessarily saying goodbye and nice knowing you, but the message certainly was that e-books are the future and good luck with your multi-thousand square-foot physical spaces.
The long and short of it is there are many ways to present numbers. Yes, the odds seem stacked against hardcovers these days (disclaimer: I have one out now and it's a lot easier to sell a $3.99 e-book than a $16.47 hardcover). And while the The New York Times
and the American Publishers Association say that industrywide sales of hardcovers are up 22 percent this year that seems hard to believe, especially since e-book sales have allegedly quadrupled since last year.
But just remember who's trying to control the narrative here. Amazon has an agenda. It wants to sell e-books. And lots of them.