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Warning Signs For Large Publishers In August AAP Figures

Warning Signs For Large Publishers In August AAP Figures

Posted on November 2, 2011 by davidgaughran

The Association of American Publishers (AAP) has released its figures for the month of August.

Print continues to fall in all categories, while e-books keep up their breakneck growth.

However, it’s increasingly clear that digital revenue is not growing fast enough to replace the complete collapse of print.

As always, the AAP figures come with a health warning. Only a very limited number of houses report, and you should hesitate before drawing hard-and-fast conclusions, especially with regard to the raw revenue totals.

As I suspected last month, July’s hardcover bounce was a one-off and all print categories are down in August. Trade paperback is down 5.7% on August 2010. Hardcover is down 11.2%. Both Children’s/YA categories are down over 20%. And once again, mass market paperback has plunged dramatically, down a huge 36.4%.

Remember, this is in terms of revenue, not units sold. Here’s the chart (figures in millions of dollars, remember the above caveats):

The above numbers are from the AAP, via eBookNewser.

August was a wipeout for print, but let’s look at the totals for the year to date and see if that huge increase in e-book revenue is replacing the massive losses in paper.

These totals are for the first eight months of 2011 (revenue figures are in millions of dollars).

The above numbers are from the AAP, via MediaBistro.

It’s clear that there is only one growth area here. By my calculations, this puts e-books at 21.5% of the market for 2011 so far, behind adult trade paperback at 25.6%, and just ahead of hardcover at 21.3%.

But this simple arithmetic hides bigger problems for large publishers. First of all, these numbers take no account of returns. Second, they only measure a limited amount of publishers (usually the larger ones), and leave out all the small and micro presses, many of whose digital sales would be way far more than 21.5%. Third, it takes no account of self-publishers whose sales are almost exclusively digital.

In short, the market is far ahead of that 21.5% number. And this is bad news for large publishers, just ahead of what is sure to be a bumper holiday season for e-reader sales.

Why is this bad news? After all, aren’t a lot of those bestselling e-books written by the big writers from the large publishing houses, and selling at very high prices? Don’t they take the lion’s share of that cover price (usually 52.5%)?

That’s all true, but, looking at these numbers, it’s clear the extra revenue being generated by the massive growth in e-books is not enough to offset the huge losses from the drop in print (I peg it at a 5% drop in overall revenue based on the above figures, likely much worse when returns are factored in).

What’s happening here? Are digital readers reading less (or paying less)? Are we losing some readers between the transition from bookstore to online to digital?

In this week’s column for IndieReader, I show that a cursory glance the Kindle genre bestseller lists will show that the large publishers are losing readers in their droves to self-published work (which is not measured by the AAP).

Genre bestseller lists that used to be dominated by the large publishers are being taken over by self-publishers. These are the top-selling books in their category, and all that revenue is no longer going to the publishing conglomerates.

The danger for large publishers, as I argue in detail in that article (which you really should read), is that their customers are switching from print (where they controlled distribution and essentially restricted competition) to digital (which is an open playing field where they face severe competition).

In short, large publishers are losing a big portion of each group of readers that switches to digital. And more are switching every day.

And the worst bit for large publishers? I don’t think they even realize this. They’re blaming falling revenue on phantom causes like piracy. Their solution? Sue their readers.

Good luck with that.