In today’s show, Tom Corson-Knowles shares data, facts, and insights into global ebook and print book industries and the future of publishing. If you don’t understand the numbers, it’s hard to make good decisions as an author or book publisher!
Global print book sales are predicted by PWC to decline by over $10 billion by 2018 (that’s a $10 billion decline in a market of only $80 billion!). Those sales will all be replaced by sales of eBooks, which means the industry is stagnant as a whole. In fact, after inflation, the publishing industry in the United States is actually declining a little bit each year.
Yet, even in a declining industry, there’s a massive opportunity to earn a huge amount of money, especially for independent and self published authors. Why? Because there’s a huge wealth transfer happening right now, and anytime there’s a wealth transfer it creates opportunities for new entrants to earn a fortune.
That’s why we’ve seen hundreds of success stories of self published authors like Hugh Howey, Amanda Hocking, John Locke and many others. Most of the sales for most self published authors come from eBooks, and it makes a lot of sense because that’s where the growth is happening.
Print Book Distribution
Physical distribution is almost completely locked up by major publishers. Most print books in the trade market are now sold in big box retailers: CostCo, Walmart, Target, Kmart, etc. The Big Publishers pay millions for prime placement for books, and they’ve pretty much shut out the competition.
But with eBooks, there’s a brand new, totally open playing field. Amazon dominates the US and UK eBook markets (the two biggest eBook markets in the world currently), and anyone can now publish their eBooks on Amazon free. No more gatekeepers. No more monopoly. No more big profits for major publishers. And a whole lot of new opportunity for authors who take advantage of self publishing.
This show will give you some key insights into what’s going on right now in the industry, why eBook sales are still growing despite a global economic slowdown, and why print sales are declining globally.
Becoming Successful as an Indie Publisher
It’s important to recognize trends in the marketplace. You should be aware of what formats of books are selling, and in what genres.
In general look at:
- E-book sales
- Audiobook sales
- Paperback sales
- Large genres and subgenres where a lot of books are being sold
- Tiny genres and subgenres that aren’t worth your time to pursue
“It’s important that you understand the big picture and where the market’s headed so you can be in the right place at the right time.” – Tom Corson Knowles
Know Your Market size
“At TCK publishing our goal is to help every author we work with earn a full-time living from their royalties.” – Tom Corson Knowles
When I first started publishing books at TCK publishing I thought that anyone could make a living in any market on Amazon, because many of my books and books from our early authors did so well.
But I soon found out that the poetry market and the children’s book market on Amazon are particularly hard to sell e-books in. That’s when I decided to look at the different categories on Amazon and do my market research.
Publishing Industry Sales Data
Every study I reference in this episode has some sort of bias built into it. Some studies only take data from Amazon, other studies only take data from traditional distribution channels. The publishing marketplace is so vast it’s impossible to get a clear picture of all the sales from all the distribution channels. Even though you should to take all the data with a grain of salt, there are some trends that are important to understand.
The Global Book Market
In 2014, more e-books are being sold then print books in the US. But the average price of an e-book is less than a print book.
So people are still spending more money on print books than e-books, but print book sales are declining while e-book sales are growing.
Price Waterhouse Coopers did a study on the growth of tablet sales, and how that growth will drive the growth of the e-book industry.
Their study found that the publishing industry is currently worth about $60 billion. From 2013 to 2018, the industry as a whole is going to grow slightly, and the revenue from e-books is going to double and reach $20 billion a year in 2018.
Over that same five year period sales of physical books will decline by $10 billion. So the fastest growing sector of the publishing industry is the e-book market, followed by audiobooks.
That’s a huge decline in print book sales. Print book sales will still be a big market in 2018, but it’s a declining market. And the trend doesn’t look good. The other thing to consider is this isn’t a declining market because of something like obsolete technology. It’s also a declining market in general as inflation is growing faster than the industry itself.
What’s even more important to understand is that the loss in the print book sector of publishing will be mostly made up for by e-book sales growth. And that growth is going to be driven by all the different tablets available in the marketplace like:
- The Kindle Fire
- The Nook
- The iPad
In 2014 there are 500 million active tablet devices available in the marketplace. By 2018 there will be 1.5 billion tablets available in the marketplace. It’s easy to see why that’s going to spur growth in the e-book market.
The Growth of the E-Book Market
The growth rate of the e-book market is declining predictably. In previous years e-book sales grew by a growth rate of 20% per year. Now that e-book technology is more ubiquitous and more e-books are available, the growth rate in the United States is starting to decline. People are still buying more e-books, they’re just not buying e-books at quite the rate they once were.
Audiobook sales are growing as well, but audiobooks are such a small market when compared with e-books, the two markets aren’t really even in the same league yet.
If you’re a new author, the growth is going to be primarily in the e-book marketplace. That’s where I’d focus my efforts.
Longer or Shorter Books?
A big question a lot of authors have is should they write longer books or shorter books.
Smashwords did a study and found that the top 10 best-selling books have an average length of 125,000 words. If you look at the top selling 1,000 books, the average length is 73,000 words. So in general, longer books sell more than shorter books.
One caveat to this: the data is heavily weighted towards fiction books. If you look at the top 100 books that are selling across platforms 80 to 95 of those books are going to be fiction books. This means the word count averages are skewed towards fiction books, which tend to have more words than nonfiction books.
Personally, I’ve had good sales numbers with shorter nonfiction books.
The take away from this study is if you write fiction, writing longer novels may help sales. I wouldn’t pad your word count just to try and increase sales, but if you can write longer stories that might help. Certainly it’s tough, if not almost impossible, to get a short story to rank in the Top #100 on Amazon.
Another thing to consider is that traditional publishing has word count conventions for certain genres. If you’re writing science fiction for example, the word count convention is between 70,000 and 85,000 words. If your book is too long they’re going to ask you to cut it to stay within genre conventions.
As a self published author, you don’t have to please agents or publishers. You can publish whatever size novel you want. If you have a longer manuscript that doesn’t have interest from traditional publishers, consider self-publishing. You may be surprised what the market shows you.
Indie Author Profits
An indie published author earns $2.06 from selling a $2.99 self-published e-book on Amazon.
On average, a traditionally published author will earn just $2.00 from a $24.99 traditionally published hardcover.
All other things being equal it’s much easier to sell something for $2.99 than it is to sell something for $24.99. Add in the fact that the e-book sector of the publishing industry is growing while the sale of print books are declining, and there’s a very strong case to become an indie published author.
Self-publishing vs. Traditional Publishing
Overall, self published authors earn between 50% and 100% more income from royalties than traditionally published authors.
This is entirely because of e-book sales. Self published authors earn significantly more in e-book sales than traditionally published authors. Traditionally published authors are earning more in royalties from e-book sales than they do royalties from hardback and paperback book sales, but they still don’t earn as much as self published authors.
When you’re traditionally published, other people get a cut of your book sales. When you self publish, although you have to do more work, you reap the rewards of your efforts.
Whether you’re self published or traditionally published, your e-book distribution channels are going to be the same. As a traditionally published author, your print book distribution network is going to be much larger than a self published author.
Remember I said earlier that print book sales are declining where e-book sales are growing. This is why self published authors are making more money from royalties than traditionally published authors.
A traditionally published author might make 60% of their income from e-books and 40% from print books. Self published authors are probably going to make 90% of their income from e-books and 10% from print books.
Author Earnings by Publisher and Genre
In 2014, there’s a good balance of publishing between the three major sectors of the publishing industry. One third of the books published are self published, one third are published by small presses, and one third are published by the big five publishers.
There are four big markets in the publishing industry.
The Romance market is the biggest publishing market by far. It’s far bigger than mystery, thriller, and suspense. It’s bigger than nonfiction, and is 2 to 3 times the size of the science fiction and fantasy marketplace.
Romance is dominated by self published authors. 66% of all romances available on Amazon are self published.
Only 18% of romances published on Amazon are published by the big five publishers.
If you want to make money as a self published author, romance might be a good genre to look at.
Mystery Thriller, and Suspense
Mystery, thriller and suspense are dominated by the big five publishers. 54% of the titles in this category on Amazon are published by the big five publishers. Self published novels in this category account for 23% of market share.
Nonfiction is pretty evenly divided between self published books and traditionally published books.
26% of all nonfiction e-books on Amazon are self published books. 35% of all nonfiction books are traditionally published books.
If you want to make a lot of money with nonfiction, concentrate on the major subcategories:
- Health and wellness
- Business and finance
- Religion and spirituality
Those are the major nonfiction categories. Focus on those and you can make a decent living.
Science Fiction and Fantasy
56% of all books published in the science fiction and fantasy genre are self published books.
29% of the science fiction and fantasy category on Amazon is published by the big five traditional publishers.
Children’s Books and Literary Fiction
As I’ve mentioned before these markets are very small and there dominated by traditional publishers. If you’re looking at self-publishing, I would honestly say avoid these markets, because there aren’t enough people interested in these types of books to make it worth your time to publish them yourself.
E-book Bestsellers on Amazon
The publishing industry is surprisingly balanced right now. The big five publishing companies publish about one third of the books, small presses publish one third of the books, and indie publishers published one third of books.
My Self Published Sales
Over the last three years I have sold over 100,000 books.
89% of those sales have been e-books.
9% of those sales (monthly) have been audiobooks. I just started selling audiobooks eight months ago but I’m really liking my sales numbers.
And 1% to 2% of my sales have been from paperback books. If you’re just starting out, they’re really not worth your time.
How much does it cost to self publish a book?
It can cost anywhere from $5 to $5000.
I published my first book for five dollars. I went to fiverr.com and got a book cover for $5. I did the rest of the formatting myself and published the book on Amazon.
At the $5,000 end of things: that includes having a high end cover designer, high-end editor, and you’re looking at e-book, audiobook and paperback book distribution.
Audiobooks can be expensive to produce. Paperback can also be expensive to produce depending on the type of book and paper you’re using.
You can go as inexpensive or as expensive as you’d like. I tried to keep my self-publishing costs inexpensive, so that I can keep more money for myself and reinvest it in my business.
E-book packaging is going to be crucial to the growth of the industry in the future.
There are three major elements to packaging for e-books today:
Your title needs to be memorable, repeatable, and searchable.
No matter what type of book you are selling, the number one driver of sales is word-of-mouth marketing. This is why your books need to be memorable and repeatable. The more memorable and repeatable your book titles are, the easier it is for the reputation of your book to spread by word-of-mouth.
It’s also important that your book title be searchable. This means that when people put your book title into Amazon, they’ll be able to find your book.
2. Cover Design
You’ve got to have a good cover. You can find good covers on fiverr.com. You just have to look at the different artists and their offerings. Also look at their reviews.
I recommend fiverr.com if you have no idea what you want your book cover to look like. For $100, you can get 20 book cover designs and see which you like best.
3. Book Description
The book description is key to packaging. Amazon gives you 600 to 700 words to describe your book. Use as much of that space as you can. Don’t keyword stuff, but use keywords as you can, naturally in your description.
Kindle Unlimited is Amazon subscription-based e-book service where subscribers can read as many books as they want for $9.99 a month.
The service currently has over 600,000 titles enrolled.
Subscribers can have 10 books at a time on their device.
Authors are paid out of a pool of money when a customer reads more than 10% of their e-book. The more of your e-book they read the more you get paid.
On Amazon anyone can read the first 10% of an e-book for free.
This program is similar to the Kindle owners lending library. Amazon prime members can borrow one Kindle e-book for free per month. If you’re in KDP select and a prime member borrows your e-book you get paid around $2 for every borrow you collect.
Kindle Unlimited is Amazon’s response to Oyster and Scribed and other e-book subscriptions services. Amazon is clearly going to win this competition. It dominates the US marketplace for books, and they have a huge database of customers to market to.
Digital content is going to a subscription-based model. In the long run I think Kindle Unlimited can only help authors, especially new authors with no customer base.
Kindle Unlimited readers are the types of readers that you to want to attract into your reader community, because these are the type of readers who read a lot.
Subscription services aren’t going to take over the publishing industry entirely, because there are always going to be readers who just want to buy the books they want to read.
It’s good marketing for self published authors to have at least one book in Kindle Unlimited. It gives you access to a fan base that can read your book for free while you get paid for it.
Does Free Pay?
Smashword’s did a 2014 e-book study which showed that fiction series where the first book is free earn more money overall for the author, then series where the first book was not free. If you have a series that’s at least three books long, consider making your first book free, enrolling it in KDP select for the free promotion days, or enrolling it in Kindle Unlimited.
Studies have shown that piracy can help the sales of new or unknown authors, sort of in the same way that making a book free does.
Those same studies have shown that it hurts the sales of well-established and best-selling authors. For example, JK Rowling and the Harry Potter series are hurt by piracy. But a new author can be helped by piracy, because it gets your book out there and gives you exposure.
Digital Rights Management (DRM) Doesn’t Work
Digital rights management as an anti-piracy strategy doesn’t work. Anyone with basic computer skills can defeat digital rights management with a Google search and an hour of time.
What digital rights management does is make it harder for people who don’t have computer skills to share your stuff.
I don’t have a good solution to fix the DRM problem, but DRM doesn’t work.
I think subscription services like Kindle Unlimited, Netflix, and Amazon prime help to cut down on piracy because it makes content easier to consume. If it’s easier to consume things legally than pirate them, people won’t be tempted to pirate your content.
Resources and People Mentioned in This Episode
Hugh Howey as an example of self-publishing success.
Amanda Hocking as an example of self-publishing success
http://authorearnings.com/ – a website with a lot of good information about authors and how much they can earn self-publishing.
https://ebookpublishingschool.com/ – Learn how to format, publish and market your book for free. Just sign up for my mailing list.
See the slides for this show:
Get even more data and key market insights for authors and publishers at www.BestsellerRankingPro.com