Most Hot Sheet readers are familiar with Michael Cader and his work as a publishing-industry observer and commentator at Publishers Marketplace and its newsletter, Publishers Lunch.
And most of our readers are also familiar with one of publishing’s most vexing problems: we are an industry that can’t accurately count its own output and can’t represent its value accurately because of incomplete data. The airline industry can count its passengers; the auto industry can count its serial numbers; publishing cannot count all of its books.
In the past week, Cader has published an unprecedented four-part exercise, “Blending Statistics to See the Whole Market.” In his opening lines (paywall), he underlines why he has undertaken this task: “All of the core publishing statistics are incomplete in various ways.” Cader is the first to say that his own blending approach is also unavoidably flawed because it’s built on a collection of separately inadequate gauges. However, his attempt is important because he’s one of the most experienced and discerning analysts in the US market.
We won’t focus on Cader’s methodology here. Simplistically described, he compares and contrasts our industry’s mismatched indices and pools them to draw new, informed estimates—we repeat, estimates—that he feels are reasonable.
We’ll start, as he does, with ebooks, an especially hard-to-gauge sector in the industry.
The 2016 US retail ebook market is valued at $2.883 billion and represents the retailers Amazon, iBooks, Nook, Google, and others—with an eye-popping $2.147 of sales going through Amazon. The percentage market share works out this way:
- Amazon: 71 percent
- iBooks: 14 percent
- Nook: 9 percent
- Google: 2 percent
- Other: 4 percent
Cader also breaks out the market share of purchased ebooks by type of publisher. These figures represent dollars, not units, and don’t account for dollars going through ebook subscription services:
- Publisher ebook sales: 80 percent of the overall market
- Indie ebook sales: 16.5 percent of the overall market
- Amazon Publishing ebook sales: 3.3 percent of the overall market
When we then look at units, he points out, we have to remember that indie authors and Amazon Publishing price lower than traditional publishers. “They are optimizing for audience,” he writes, “and the ebook market is their dominant and/or entire market—whereas traditional publishers are optimizing for revenues” across all formats. In traditional publishing, ebooks comprise about 20 percent of sales (dollar-wise).
If you look only at the universe of Amazon ebook sales, self-published work constitutes about 40 percent of unit sales. Cader writes, “Over 86 percent of all self-published ebooks sold are estimated as sold through Amazon. … Traditional publishers are capturing just over half of paid ebook downloads [at Amazon], while self-published authors are above 40 percent.” Summing this up later, he says publishers “captured 80 percent of the [ebook] dollar sales” in 2016, “but only about 53 percent of the unit sales.”
In the second of his four reports (paywall), Cader focuses on Kindle Unlimited and other “borrows” in the Amazon market. These represent activity that contributes to Amazon’s bestseller calculations despite the fact that they’re not direct sales. They also operate in unique payment contexts. As Cader writes, “The larger hole in the ebook market is measuring the growing influence and size of Amazon’s proprietary and promotional markets, in which subscription and member ‘reads’ and ‘borrows’—sometimes inexpensive and sometimes free—take the place of one-at-a-time download sales.”
Cader shows that self-published work accounts for about 60 percent of KU reads and other borrows. The remainder is made up of titles from Amazon Publishing and the Kindle First promotional program (which offers Amazon Publishing titles only). Cader writes of Amazon’s proprietary e-reading programs, “[They] could be moving more units than all of the competitive stores together. It also means that Amazon Publishing … is on its own close to the size of the entire non-Amazon market.”
Bottom line: While he has no choice but to work with ill-matching and individually flawed gauges, Cader presents a new standard for evaluating the performance of the industry. Also, he is unlikely to make the mistake we’ve noted elsewhere (in Author Earnings, for example) of taking a different tack with each report. Having presented what can be estimated for 2016 this time, we expect he will go forward with a consistent set of comparisons in coming years. That rigor will be useful. In our next section, we look at the final part of his report, which focuses on authors.
Jane Friedman has spent her entire career working in the publishing industry, with a focus on business reporting and author education. Established in 2015, her newsletter The Bottom Line provides nuanced market intelligence to thousands of authors and industry professionals; in 2023, she was named Publishing Commentator of the Year by Digital Book World.
Jane’s expertise regularly features in major media outlets such as The New York Times, The Atlantic, NPR, The Today Show, Wired, The Guardian, Fox News, and BBC. Her book, The Business of Being a Writer, Second Edition (The University of Chicago Press), is used as a classroom text by many writing and publishing degree programs. She reaches thousands through speaking engagements and workshops at diverse venues worldwide, including NYU’s Advanced Publishing Institute, Frankfurt Book Fair, and numerous MFA programs.
