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Ebook sales -- Comparing Apples to Apples, and Besides, it's Not the 10% Today, it's the "If This Goes On..." Tomorrow

Dec 29, 2010   [permalink]

Pro science fiction author Jim C. Hines reports his disappointment with ebook sales. He comments that ebooks were 3-5% of his pro-published sales, through June 30, 2010; and how when he self-published one of his lesser-selling books as an ebook he only earned $75 in two months. Meanwhile his print sales are 370 copies each in that timeframe, earning him $1000 (over six titles). He goes on to bemoan how the ebook sales are "Hardly the thousands certain voices led me to expect" and "So much for buying that new mansion."

Jim makes some good points, and does balance the story with success tales. Still, there are several points to make here:

  1. First, while he cites "$1,000" royalties for his backlist sales after a sentence talking about one book, I confirmed with Jim that $1,000 is for all six books together.

    Thus: $166 in royalties per book on average. Apples to apples, $75 (ebook) vs. $166 (print) is the comparison, which seems a lot less horrible than $75 vs. "$1,000."

    There's also the question of price point. He sold the ebook at $2.99, making approximately $2 each for himself. I'm conducting an optimal pricing "elasticity of demand" survey. It will be interesting to see if $2.99 is the price that maximizes author profits or not. There isn't enough data yet to analyze, but my "What's a fair price to pay for an ebook?" survey suggests that $9.99 is a price readers consider fair. The author makes around $7 on a $9.99 sale, so Jim would only have had to sell 11 copies to make the same $75. My hunch is he'd have sold more than 11 copies at $9.99.

  2. The question is ultimately not about ebook sales today; the question, and potential, is for where ebook sales might be going. That is, he's comparing ebook sales with print sales. That's an interesting data point for six months ago, June 2010. But ebook sales were already at 9% by October, and as my curve-fitting projections show, they could easily climb much higher.

    The promise of earning decent money from self-published ebooks sales is not today. It's in the Heinleinian world of "If This Goes On..." If — and that's the word "if" — ebook sales continue to increase exponentially, and possibly even overtake and mostly replace print sales, then the potential for self-publishing ebooks vs. major publisher sales takes on a very different look.

    That is, today they're 10%; if they were "100%", or a simple 10 times what they are today, his $75 in two months would be $750 in two months, and would wallop the $166 he made from major publishers.

  3. There are other factors in his analysis that merit attention: He's comparing the first two months of ebook sales on a title outside his genre and that he was only ever able to sell to a smaller publisher. What Jim said about it being out of print from a small press implied to me the book was likely turned down by the major publishers. I haven't read the book, but it's possible, just possible, the book doesn't appeal to a wide audience in the first place. It might be excellent, just of narrower appeal. Sales might thus be expected to be lower. The first two months sales might increase as awareness rises, as he mentions for Sherwood Smith's ebooks. Sales of print books tend to decline after a few months mostly because there are fewer copies on bookstore shelves after that, unless it's been selling like hotcakes. That is, print publishers more or less allow print book sales to taper off. Not to mention, they've got new titles coming out they want to sell, so it's just as well for them that the slow-simmering backlist books drop out of sight. This needn't be true of self-published ebooks.

  4. The long run: Print sales also decline over time because of the cost of a print run, inventory costs, and tax consequences (e.g. the "Thor Power Tool decision" that makes it unattractive for publishers to keep books in warehouses). That is, publishers eventually quit printing paper books even if they might sell in smaller quantities. Ebooks never need go out of print for those reasons. Thus they can continue to sell small quantities. Even if ebook sales never grew above 10% of the market, at $75 per two months, they can keep earning for, who knows, 10 years? 40 years? Life+70 years? (AKA the duration of copyright) If Jim sold $75 per two months, or $450/year, for 40 years (assuming the price rises with inflation to keep it all in today's dollars), he'd earn $18,000. Not bad for a novel that the major publishers wouldn't touch. Point being that 37 copies in two months isn't necessarily as bad as it sounds. And if ebook sales rise significantly above 10% of sales, as seems quite possible, then Jim could earn even more, and maybe afford that mansion after all. :)

  5. I've been selling my own ebooks for a few months now, and have so far earned more in ebook income on them than I did from their first sales to print publishers (at e.g. 3¢ a word for short stories). They've probably reached fewer eyeballs than they did in print, though it's hard to know how many people actually read a given story in a magazine. And — back to "the long run" — over the course of their digital life they will probably reach more readers. Especially if ebooks continue to grow and surpass print.

So kudos to Jim for trying the experiment! More to the point, I hope he's less disappointed after reading this. :) We're in the first days of self-published ebooks as a viable revenue source for authors. If they continue to grow as the curve-fit suggests, ebooks could turn out to be more important to literature than even the Gutenberg printing press. I think it's an exciting time to be a writer.

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