# The Effects of Higher eBook Prices (Latest AE Report - Shocking Results)



## Hugh Howey (Feb 11, 2012)

When we pulled the data for the latest Author Earnings report, we expected to see continued price increases from the Big 5, as several publishers have moved to agency pricing, and Amazon is no longer allowed to discount these titles. We also expected to see the widely reported drop in ebook sales from the Big 5, as they have reported year-on-year declines. But we weren't expecting to see THIS BIG of a drop.

http://authorearnings.com/report/may-2015-author-earnings-report/

The number of Big 5 titles showing up on Amazon bestseller lists fell *26%* in the last quarter. Meanwhile, the number of self-published ebooks appearing on these lists shot up *44%*. That's insane.* Over a quarter of the ebooks listed on every Amazon bestseller list combined are now indie ebooks.* A quarter! 14% of the ebooks on those lists come from major publishers.

This is a simple counting of the titles there, and how they were published. And it's an undercounting of indie titles, as we don't have the time to track down all the uncategorized small press ebooks. The true disparity is much greater.

Something I point out in this report: Industry veterans have long looked to bestseller lists in order to gauge the market, to see what's selling, who is selling it, and which publishing houses were ruling the roost. You still see this today, as industry sites discuss the percentage of books by each publisher on weekly lists. They are looking at a dozen or so titles. We're looking at 120,000 at a time. And a simple counting reveals a massive shift in reader behavior. They prefer lower priced ebooks. Also: ebooks are not on the decline or plateauing. At least, not for self-published authors.


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## AlexBrantham (Feb 27, 2014)

There is some seriously fascinating data in here - thanks, Hugh!


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## SM Barrett (Feb 28, 2014)

And what will the Big Publishers do now? That's what has me curious.

Will they wait and see if this is an ongoing trend or a blip in the numbers, while complaining that self-publishers are ruining the value of literature?
Will they lower prices in increments to see if sales improve?
Will they simply dismiss this information and pretend it doesn't exist for the next year or three?

And if they do lower prices, will their authors begin serious discussions about royalty rates?

It's one thing to postulate and offer prophetic pronouncements, but Authorearnings is really spotlighting the cracks in the hull. The cause of said cracks is the issue. I'll be watching to see if this trend continues, bearing in mind that correlation=causation is a false premise, and we'll want more data.


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## Jordan Rivet (Jan 13, 2015)

This is very interesting, especially the changes in market share. Thanks for compiling so much good information, Hugh!


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## Gator (Sep 28, 2012)

Thanks for the info, Hugh!  I'll dig into it after I wake up in the morning.


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## Paul K (Jan 11, 2014)

Awesome work again. Thanks Hugh!


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## Hugh Howey (Feb 11, 2012)

SM Barrett said:


> And what will the Big Publishers do now? That's what has me curious.
> 
> Will they lower prices in increments to see if sales improve?


I blogged two years ago about the challenge publishers face in lowering prices. Basically, they can't afford to. But they can't afford NOT to.

My advice was for one of the publishers to move out of New York as quickly as they could. Set up shop in Iowa, near the best MFA program in the world. Lay off all the marketers and hire better editors and talent nurturers. Operate like a startup, but with the history their name conveys. A Simon & Schuster in Iowa would have the same power, if not more, than one in NY.

Because the first thing they could afford to do is pay their authors a greater share of revenue. 35% - 40% of net, rather than 25%. Now you've got the best talent, and your competition can't compete, because they are paying NY rent and NY salaries and still trying to market with 5-figure email lists.

At the same time, you drop your prices and you tell Amazon, "We're all in. Our catalog is yours. Promote us, and we'll give you what you need to make readers ecstatic."

Now you've got the best authors, giddy agents who send to you first (their cut comes from the authors' cut), avidly loyal readers (I also suggested in the blog post to get rid of DRM immediately), and the muscle of the largest retailer.

If a publisher pivoted like this, even right now, today, they could dominate the publishing landscape. Instead, they are taking their salaries while the ships go down. Uninspired, afraid, confused, and victims of the corporate bloat that resulted from decades of consolidations and from putting mom-and-pop publishers and small independent bookstores out of business.


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## Barbara Morgenroth (May 14, 2010)

"Uninspired, afraid, confused, and victims of the corporate bloat that resulted from decades of consolidations and from putting mom-and-pop publishers and small independent bookstores out of business."

My first books were published by Atheneum, a very well-respected house started by a Knopf son.  They were on their own.  Then they merged with Scribners to protect themselves.  Then Macmillan bought them. Simon & Schuster bought Macmillan.  With each takeover, what was so good, so vital, so decent about publishing books, the vision and intent, was diminished.


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## 80593 (Nov 1, 2014)

As always Hugh, you and Data Guy are heroes for the work you put into this. Thank you!

Interesting results this quarter. I guess they're just going to keep squeezing their eyes shut, putting their fingers in their ears, and shouting PRINT PRINT PRINT until someone gives them a time-out. It's really a shame that so many great authors, editors, and champions of books get caught in the crossfire of bad business decisions.


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## Patty Jansen (Apr 5, 2011)

I want to read this but boohooo, my internet is so slow that the page won't load! Internet fixing guy coming tomorrow.


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## Hugh Howey (Feb 11, 2012)

Patty Jansen said:


> I want to read this but boohooo, my internet is so slow that the page won't load! Internet fixing guy coming tomorrow.


You want me to ring you up and read it to you?


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## HMLynn (May 1, 2015)

Thank you so much for doing this - I've an excessively large soft spot for a graph!


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## Hugh Howey (Feb 11, 2012)

HMLynn said:


> Thank you so much for doing this - I've an excessively large soft spot for a graph!


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## Mark E. Cooper (May 29, 2011)

Hugh Howey said:


> You want me to ring you up and read it to you?


An audiobook version would be great


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## HMLynn (May 1, 2015)




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## Navigator (Jul 9, 2014)

Hugh Howey said:


> I blogged two years ago about the challenge publishers face in lowering prices. Basically, they can't afford to. But they can't afford NOT to.
> 
> My advice was for one of the publishers to move out of New York as quickly as they could. Set up shop in Iowa, near the best MFA program in the world. Lay off all the marketers and hire better editors and talent nurturers. Operate like a startup, but with the history their name conveys. A Simon & Schuster in Iowa would have the same power, if not more, than one in NY.
> 
> ...


But Hugh, doing all of that makes too much sense.

And making sense is abhorrent to them.


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## bobfrost (Sep 29, 2013)

While most of the information in this report doesn't surprise me, I did find a small piece of it to be rather sad...



> Barnes & Noble's Nook store's well-covered collapse appears to be accelerating. It is now possible to hit the overall Top 50 Best Seller list on Nook.com with fewer than 100 sales per day from a standing start. It takes around 1,500 sales per day to hit the same benchmark on Amazon.com. We currently calculate B&N's ebook market to be in the single digits, perhaps even the low single digits. No author should be happy with this development, as the more healthy markets that exist for our works, the better.


I used to have high hopes for B&N. They had a decent user base and could have done more to maintain a share of the market. Instead, they have completely ignored Kindle Unlimited and stood still as the market rapidly changed. No compelling devices, no compelling royalty structure, no compelling reason for readers or authors to continue using the marketplace. There was an opportunity for B&N to fight back, but they squandered it.

It'll be interesting to see what happens with apple and google... I suspect Apple will remain a more or less walled garden with a decent share of sales but not much overlap. Google is probably in the best position to do something BIG (they certainly have the warchest), but they seem preoccupied with other projects. Their company is so large and grown in so many directions that bit-players like their book marketplace seem to get extremely poor priority in the grand scheme of things (if you don't believe me, I offer up their screwy publishing system as exhibit A - and point out that while it's better than it was before, it's still rather awful). Google's random price-changing and their "tough titty" attitude about it when they screw over an indie with it (thanks to amazon's price match feature) certainly isn't helping their cause either.

At this point, I wonder... Is any competitor going to truly stand up against KU?

Anyway, I'm off for now to put another book into KU...


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## Drake (Apr 30, 2014)

Thanks Hugh for another insightful post!  It's wonderful to see the trends towards more indie publishing success.


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## SM Barrett (Feb 28, 2014)

Hugh Howey said:


> You want me to ring you up and read it to you?


If anyone ever asks me why Hugh Howey is an important figure in self-publishing, I'll explain the success, the openness, the reports at Authorearnings and then hit I'll them with this Howey quote. 
That comment pretty much sums up the attitude that self-publishers adopted in the beginning, and is one of the reasons I'm published today. 
And yes, I try to pay it forward when I can.

Hugh, in your scenario, wherein Simon&Schuster hit the Midwest, does that only work for them, leaving the others to deteriorate? Can Randy Penguin move to Indiana, for example?


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## Jan Hurst-Nicholson (Aug 25, 2010)

Hugh Howey said:


> My advice was for one of the publishers to move out of New York as quickly as they could. Set up shop in Iowa, near the best MFA program in the world. Lay off all the marketers and hire better editors and talent nurturers. Operate like a startup, but with the history their name conveys. A Simon & Schuster in Iowa would have the same power, if not more, than one in NY.


So would we then be vying to get on the Iowa bestselling list


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## Jim Johnson (Jan 4, 2011)

Another great report. Thanks Hugh and Data Guy. Being able to see a year+ spread of data is amazingly useful.


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## D-C (Jan 13, 2014)

Boom time for indies!


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## cinisajoy (Mar 10, 2013)

Hugh is amazing.


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## John Hamilton (May 6, 2010)

Mentioned this in a Facebook post this morning. Good work, Hugh.


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## OwenTyler (May 28, 2014)

Thanks for the info.

I tried downloading the spreadsheet to my computer, but its too large to open. Otherwise, I would check the data instead of asking. What has the number of book sales done? Personally, I've read more books this year than I ever have. I'm curious what the trend is for other readers. If market share goes down, while number of overall sales goes up, it might still be the same number of sales for the traditional publishers.

In any case, its exciting to see that indie publishers can make decent money and readers can get more books to read.


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## Weibart (Oct 27, 2014)

Just wanted to say a big thank you for posting this. AuthorEarnings has been very educational and has helped me a lot with understanding the self-publishing landscape. Reading the report motivates me even more and I feel genuinely excited and driven. Looking at how flawed and disconnected traditional publishing's approach is really helps frame how vital and beneficial self-publishing is to authors and to readers. Looking at what self-publishers are doing right is so reassuring and impressive. I'm at the drawing board doing pre-production on my graphic novel as I type this, and after reading the report, I'm really pumped and motivated to put in more pencil mileage today!


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## Jim Johnson (Jan 4, 2011)

OwenTyler said:


> What has the number of book sales done? Personally, I've read more books this year than I ever have. I'm curious what the trend is for other readers.


Probably a good topic for a new thread. A combination of good prices on indie books, my subscription to KU, and occasional visits to the library, has ended up with me reading more now than ever before. And looking at my goodreads lists, I've been steadily reading more over the last three years. I don't see that trend changing.


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## Hudson Owen (May 18, 2012)

Hugh Howey said:


> I blogged two years ago about the challenge publishers face in lowering prices. Basically, they can't afford to. But they can't afford NOT to.
> 
> My advice was for one of the publishers to move out of New York as quickly as they could. Set up shop in Iowa, near the best MFA program in the world. Lay off all the marketers and hire better editors and talent nurturers. Operate like a startup, but with the history their name conveys. A Simon & Schuster in Iowa would have the same power, if not more, than one in NY.
> 
> ...


Not gonna happen. Once you become a slave of New York, you want all the amenities, they are yours by right of living in the imperial city. What's Iowa but a little bump on the road? Daring thought, though.


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## AmpersandBookInteriors (Feb 10, 2012)

Jan Hurst-Nicholson said:


> So would we then by vying to get on the Iowa bestselling list


We're in Iowa. Is this a good sign  LOL


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## blakebooks (Mar 10, 2012)

Great and important info, Hugh. Bravo to both you and Data Guy.

Here's my take, FWIW:

Publishers are screwed. They operate on an archaic paradigm that has new titles launching with an expected shelf life of 6 weeks. They issue forth tens of thousands of new titles each year. They simply cannot offer any sort of meaningful marketing for the vast majority of those titles, which languish and eventually fade to obscurity. Their model depends upon a tiny fraction going viral, which they then push with all their might. The rest? Chaff. 

What I believe we're seeing are the effects of better and more consistent marketing by savvy indies, which buys their current and backlist titles more consistent visibility, coupled with the effect of price on genres with voracious readers (yes, I'm talking about you, romance). Companies like Harlequin are taking it in the shorts as their former authors and new competitive scribes generate more targeted content at a discount. Readers don't care whose name is on the publisher page. They care about the content, and the price.

Books do not, and have never, sold themselves. One in a million goes viral for unknown reasons. Leaving 999,999 titles that don't. So the ones that receive more attention, as in visibility, will naturally do better. I think we're experiencing that in the ascent of the cottage industry publishers, the indies.

The truth is that price doesn't account for all, or in my opinion, even most of this. As an example, James Lee Burke, who is a masterful author, has his backlist priced mostly at $5.99. That's a bargain for his work, but most people have no idea they're available, because the backlist receives zero marketing or promotions - and people can't buy what they don't know exists. Contrast that to my titles, many of which are priced at $5-$6, and sell briskly, mas o menos, on all platforms. Why do I sell more than someone like Burke's backlist? Because I promote. Simple. I catch an eye here and there, and his publisher doesn't.

Now extrapolate that to the countless titles from meritorious authors that are also languishing, and I believe you have a reasonable explanation aside from price.

I agree that the big pubs should move from NY, perhaps to Idaho, or Utah. But there's a cult of effete erudition that comes from dining at Nobu and rubbing shoulders with other kingmakers in a six block area of NYC that they're reluctant to abandon. I get it. But the cost of maintaining that lifestyle is high.

I don't believe they'll change any time soon, largely because of you look at their 10K's, they're booking record profits, so have no reason to. Most of those profits are at the expense of authors who are receiving 25% royalties on ebooks that have zero production cost aside from editing and a cover. That's massive margin improvement for the publishers, at the direct expense of authors. But nobody's holding a gun to the authors' heads, and it's not like the disparity between successful midlist indie incomes and successful midlist trad pubbed authors shifting the same number of units is a secret. Many choose the old model because of the prestige of having a NY MFA give their work benediction, and that's fine. They're simply paying an awful lot for that approval.

I don't care either way. Doesn't affect me. I do trad deals with my co-authoring, and enjoy the work and the opportunity to see my name in airports. I also enjoy the paychecks each month for my indie efforts. It's all good. Each author needs to make his own informed decision based on his ambitions. Author Earnings makes valuable information available, but you can't make a horse drink. To each his own.


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## crebel (Jan 15, 2009)

Jan Hurst-Nicholson said:


> So would we then be vying to get on the Iowa bestselling list


<<<see poster location. My Kindle already puts many of you on the Iowa bestselling lists.


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## AmpersandBookInteriors (Feb 10, 2012)

crebel said:


> <<<see poster location. My Kindle already puts many of you on the Iowa bestselling lists.


We pass through Ottumwa when we take the Amtrak out to NY. Shall wave generally through the town next time to say hi to Crebel


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## Joe_Nobody (Oct 23, 2012)

As usual, Hugh is doing a great service for all authors.

But...

I have to wonder if the big houses took a hit in revenue as well?

Obviously, they're sold fewer copies... but did they realize more profit?

And then you have to ask, "Did they sell more paperbacks because of small differential?" That is, after all, their goal.

Being a high-priced indie myself, we've debated and tested this theory numerous times. The bottom line has always been we make more with higher priced books. Not saying that's the ticket for everyone.

It would be interesting to apply the price points to the volume, but that would take some serious number crunching.


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## blakebooks (Mar 10, 2012)

Joe_Nobody: No number crunching required. They're public companies. Just read their 10Q and 10K. My hunch is the publishers are doing just fine.

Which is not to say the authors are doing as well. But that's not the publishers' problem. They're in business to maximize the profits for their shareholders, and if vendors are willing to sell them content for a song, that's just good business. I'd do it too. I feel no responsibility to maximize my suppliers' profits - that's their job.


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## Lucas (Jul 15, 2014)

The big 5 still have tricks lurking in their empires. They will bite back.

But yay for now.


Sent from my iPhone using Tapatalk


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## Joe_Nobody (Oct 23, 2012)

blakebooks said:


> Joe_Nobody: No number crunching required. They're public companies. Just read their 10Q and 10K. My hunch is the publishers are doing just fine.
> 
> Which is not to say the authors are doing as well. But that's not the publishers' problem. They're in business to maximize the profits for their shareholders, and if vendors are willing to sell them content for a song, that's just good business. I'd do it too. I feel no responsibility to maximize my suppliers' profits - that's their job.


BTW... It's good to see you, sir. I kind of miss the days when you, Miss Ward, Hugh, and Bella would all hop on a thread. It was fun to watch the fur fly!


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## blakebooks (Mar 10, 2012)

Likewise, it's always nice to be seen.   

Just extremely busy with my production schedule, marketing, launching a new series, and preparing for a Kindle Worlds. The usual 12 hour days are still the norm. Sigh.


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## Antara Mann (Nov 24, 2014)

Thanks for this report, Hugh. Trad publishers are really dying and every sane person knows it.


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## Jim Johnson (Jan 4, 2011)

Antara Man said:


> Thanks for this report, Hugh. Trad publishers are really dying and every sane person knows it.


Well...not really. They're not dying, they're just horribly inefficient and mismanaged. A multi-billion dollar industry doesn't just die. As long as there are still authors who want the big name prestige of working with a traditional publisher, the trad publishers won't go anywhere.


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## Guest (May 6, 2015)

Is there anything to prevent James Lee Burke from promoting his ebooks himself?


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## David J Normoyle (Jun 22, 2012)

Okey Dokey said:


> Is there anything to prevent James Lee Burke from promoting his ebooks himself?


Hard for him to make money if he pays full marketing cost yet only gets back the % that the publisher pays him. He'd basically be shoveling his marketing money directly into his publishers pockets.


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## Jan Hurst-Nicholson (Aug 25, 2010)

Okey Dokey said:


> Is there anything to prevent James Lee Burke from promoting his ebooks himself?


The author does all the work and the publisher gets the $$$


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## Taking my troll a$$ outta here (Apr 8, 2013)

Hugh Howey said:


> Also: ebooks are not on the decline or plateauing. At least, not for self-published authors.


True that! Passing this onto a "friend" who predicted I would need to return to working as an RN because "ebooks are just a phase."


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## G.L. Snodgrass (Aug 12, 2014)

> My advice was for one of the publishers to move out of New York as quickly as they could. Set up shop in Iowa, near the best MFA program in the world. Lay off all the marketers and hire better editors and talent nurturers. Operate like a startup, but with the history their name conveys. A Simon & Schuster in Iowa would have the same power, if not more, than one in NY.
> 
> Because the first thing they could afford to do is pay their authors a greater share of revenue. 35% - 40% of net, rather than 25%. Now you've got the best talent, and your competition can't compete, because they are paying NY rent and NY salaries and still trying to market with 5-figure email lists.


Hugh, The executives in publishing aren't in it to make money. They are in it so that they can sit atop the New York social network. To be the powers that decide what is good and who is important. It is about power, not money. While a publishing company might have the same power in Iowa. The managers wouldn't. Their perceived power comes from being admired and respected by their friends in the upper crust of the publishing society.


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## cinisajoy (Mar 10, 2013)

Running in to say hi to three of my favorite guys.
Great words as always.


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## Becca Mills (Apr 27, 2012)

Okay, here's the part I don't get:



> One does not need to theorize on why publishers would make these decisions. One CEO of a Big 5 publisher wrote in a note to herself that higher prices would slow ebook adoption and casual purchasers, protecting retailers (pg 47). So speculation is not required. This was the same conclusion reached by the judge in the collusion case, whose reading of Big 5 CEO emails showed a willingness to erode Amazon's market share at any cost, even to themselves.


Why do they think this is going to work out? Are they seeing something I'm missing?

I'm imagining that many, many consumers who dislike that $12.99 ebook price are not going to run over to Barnes & Noble and buy the (even more expensive) paper copy. Instead, they'll scroll down to the also-boughts and find a good book priced at $4.99 to buy. And doesn't the AE report show that happening? As Big 5 sales, revenue, and author earnings fall, indie sales, revenue, and author earnings rise.

It can't be about just taking the shine off ereading, in a general way. EVERYONE has an ereading device now -- phones and tablets have made ereading already available to every person, even if they didn't buy their device(s) with that in mind. So it's not like you can nurture a general sense of disappointment with ereading by flashing high prices at shoppers, not when low prices are evident on the same page. If they see those low indie ebook prices and they're the slightest bit interested, they already have the equipment they need to read tons of cheap ebooks.

I just don't see how this approach, at this late date, seems viable to the Big 5 folks. It seems totally counterproductive: they've reduced their own and their authors' revenue and increased Amazon's, for no clear gain that I can see.


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## A. S. Warwick (Jan 14, 2011)

Interesting read.

Thanks for putting that together.


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## 75845 (Jan 1, 1970)

Becca Mills said:


> Okay, here's the part I don't get:
> Why do they think this is going to work out? Are they seeing something I'm missing?


No it's Author Earnings over-interpreting a subset of the data, what we call in the academic trade bias confirmation, i.e., once you find the information that backs up your presuppositions you stop looking and do not see the contradictory evidence.

Most trade books are sold at less than $9.99. The big prices are for getting an eBook early of a new book from a consistent bestseller. Midlist authors are often never as high as $9.99 and the big names come down after a while once sales taper off. It is simply eBooks fitting into the established trade publishing pattern of hardback, then trade paperback (UK: Paperback A), then small trade paperback (UK: Paperback B), then possibly mass market paperback.


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## Becca Mills (Apr 27, 2012)

Mercia McMahon said:


> No it's Author Earnings over-interpreting a subset of the data, what we call in the academic trade bias confirmation, i.e., once you find the information that backs up your presuppositions you stop looking and do not see the contradictory evidence.
> 
> Most trade books are sold at less than $9.99. The big prices are for getting an eBook early of a new book from a consistent bestseller. Midlist authors are often never as high as $9.99 and the big names come down after a while once sales taper off. It is simply eBooks fitting into the established trade publishing pattern of hardback, then trade paperback (UK: Paperback A), then small trade paperback (UK: Paperback B), then possibly mass market paperback.


The AE data show the _average_ price of B5 books rising $1.44 over the last 16 months. I suppose this rise could be the result of pushing the prices of new-from-consistent-bestseller books way up while also reducing slightly the price of less popular books. But I'm not seeing why it matters. Why does it? And where is the confirmation bias in pointing out the rise in average price? In order to support such a claim, you need to cite some data that's being ignored or misinterpreted. Since no claim is being made that *all* Big 5 books have gone up in price, only that the average price has gone up, I'm not seeing the problem.

The B5 might want ebooks to fit into the established pattern of hard > trade paper > mass. Their wanting it doesn't mean it's a smart business strategy or a viable one.


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## Bishoppess (Apr 11, 2015)

I'm no scientist, and math is not my friend, but here's my two cents on the hard>trade>mass shift. If they're  treating ebooks as the bottom of that stack, how does that  work for Trad Pub books that don't hit that 'success' threshold right out of the gate? If they are priced high and people don't buy them, won't the Big 5 just look at it as another failed book?  (Again, not an expert)


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## B.A. Spangler (Jan 25, 2012)

blakebooks said:


> Likewise, it's always nice to be seen.
> 
> Just extremely busy with my production schedule, marketing, launching a new series, and preparing for a Kindle Worlds. The usual 12 hour days are still the norm. Sigh.


A new KW? WHOA!!!
Congrats.

Hugh, thank you for the latest AE Report -- always an interesting read.


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## Hudson Owen (May 18, 2012)

New York may fail, but not for the reasons suggested. Ive lived in New York during the best of what the city has to offer, not that I sampled it directly. I've walked by Nobu many times and owner Robert DiNiro did not come out and and share his wisdom, although he deserves credit for helping the film industry come back after 9/ll.

Botton line, the city is gaining people and losing money. The literary life is dying. Who ate lunch at Elain's is replaced by an editor from Harper Collins who actually hunted down a three- star Goodreads reviewer to complain to her. Editors behaving badly. I don't know if Iowa has much to offer, but if it has lower rents, I'll listen.

_Edited. PM me if you have any questions. --Betsy/KB Mod_


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## WHDean (Nov 2, 2011)

Good points, Russell, but a couple of quibbles...



blakebooks said:


> Publishers are screwed. They operate on an archaic paradigm that has new titles launching with an expected shelf life of 6 weeks. They issue forth tens of thousands of new titles each year. They simply cannot offer any sort of meaningful marketing for the vast majority of those titles, which languish and eventually fade to obscurity. Their model depends upon a tiny fraction going viral, which they then push with all their might. The rest? Chaff.


You're not counting classics and perennial sellers in your analysis, which make up a sizable chunk of the bestsellers in any given year. For example, Statista has the _Great Gatsby _listed as the bestselling book of 2013 (ranked 9 for that year on Amazon). _Gatsby_ almost matched the first two _50 Shades _books. So focusing on new releases leaves out much of the market.



> The truth is that price doesn't account for all, or in my opinion, even most of this. As an example, James Lee Burke, who is a masterful author, has his backlist priced mostly at $5.99. That's a bargain for his work, but most people have no idea they're available, because the backlist receives zero marketing or promotions - and people can't buy what they don't know exists. Contrast that to my titles, many of which are priced at $5-$6, and sell briskly, mas o menos, on all platforms. Why do I sell more than someone like Burke's backlist? Because I promote. Simple. I catch an eye here and there, and his publisher doesn't


Burke's backlist is in print, which means it's available used. That counts for a lot. The last figure I heard for used books was around 15% of books sold-and that doesn't include unconventional sellers, trading, flea markets, garage sales, etc. If publishers aren't pushing backlists, it's because there's no money in it for them. There might be some digital money in it for Burke, of course, if he went on his own. But he hasn't yet, so maybe there isn't enough.


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## blakebooks (Mar 10, 2012)

WHDean: How does The Great Gatsby's success or failure any given year play into how the big 5 market the 300,000 new titles they issue forth every year? I'm a little unclear on that, just as I'm unclear on whether you're saying that the top 100 is filled with literary icons like that book, or not. I don't see it, and I just looked. It's mainly romance, with a few BB deals, some marquis name legends that will shift millions, and a couple of perennial big sellers. My point is that the trad pubs market for bookstore shelf space, and that space is on a four to six week turn. If it doesn't catch in that time, they get the carton returned, with maybe a couple marketed spine out on a shelf in the back of the store. That's how they market titles, and they don't make a distinction between how they market ebooks or the hard copy, that I can see.

Whether or not Burke's backlist is available used is immaterial to how his ebooks sell, although I'll be happy to give you that 15%. He still radically underperforms someone like mine's sales. Because nobody's marketing his backlist. The reason they aren't is simply that the big houses have cut staff back to the bone in the ever increasing attempt to squeeze out more profits, so there's nobody to do so. And in the trad world, your backlist is deadwood. Look at Joe Konrath's experience with his backlist books. They were dead money, languishing. He got the rights back, put new covers on them, promoted them some, and they have made a sh#t ton of money for him. The reason the publisher didn't is because that is inconsistent with the industry wisdom, which is based on how paper performs in store. That's the entire orientation of the people in the biz. That's what they know. So they continue to do what they know.

I think you are giving them a little too much credit. These are the people who could and should have seen the advent of a device like the Kindle coming from a decade away, and gotten ahead of the curve. Instead, they've been reacting every step of the way. I love the people I've dealt with in the industry, but the speed at which it works is glacial compared to the speed at which successful indies work. Which is why they're eating trad pub's lunch with ebooks. Far more nimble and aggressive. And of course, perhaps the most important: it's their money, not some corporation's, and people tend to fight a lot harder to not lose their own money than that of a billion dollar behemoth.


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## tommy gun (May 3, 2015)

Is some of the blindness caused by the organizations are so big and change is slow?
Are there so many layers of management that most simply follow the party line?
Profits are usually best when the company or industry is so big and they are just milking their cash cows.... until they dry up.
Perhaps the big shake up is still coming down the line and at the end they'll explode and sink fast.

If so a few will see the writing on the wall and shift operations and tactics.

Sorry just my 2 cents worth.


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## Becca Mills (Apr 27, 2012)

WHDean said:


> You're not counting classics and perennial sellers in your analysis, which make up a sizable chunk of the bestsellers in any given year. For example, Statista has the _Great Gatsby _listed as the bestselling book of 2013 (ranked 9 for that year on Amazon). _Gatsby_ almost matched the first two _50 Shades _books. So focusing on new releases leaves out much of the market.


I don't think this matters. I don't think the point of Author Earnings is to precisely measure the financial health of traditional publishing; the point is to illustrate the comparative positions of authors who take the traditional vs. indie routes. Being dead, Fitzgerald isn't in a position to choose which route he's going to take, so what _Gatsby_ earns isn't particularly relevant to the kind of decision you or I face in choosing to publish. There are certainly also living authors who really must publish traditionally and who are thus also outside this decision. AE compares the groups of authors who could reasonably choose between the indie and traditional routes -- not the dead authors and not the academic authors and not the authors of avant garde contemporary fiction but rather the writers of genre fiction. Those are the people who need to be able to look at AE's data and decide which route is likely to earn them a better income. This is my impression, anyway. Hugh or Data Guy can correct me if I'm misrepresenting their goals.


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## WHDean (Nov 2, 2011)

Russell,

On the first point, I’m talking sources of revenue. You seemed to be suggesting that the year’s big sellers are the sole source of revenue with the rest of everything being a loss. My point is that legacy titles still make up a big chunk of revenue when you look at total sales. Also, we may be talking different things when it comes to bestsellers; I mean total sales for the year, not the bestseller list for the year. Bestseller lists mask the high margins made from books that paid for themselves long ago. 

On the second point, I don’t think we’re completely at odds. The same debate took place on JK’s blog at one point (I can’t remember whether I participated directly or not). At any rate, the upshot was that it made sense for JK (and for you) to market your backlist. But it’s probably not worth the Big 5 paying someone—let alone a team of people—to market backlists because it’s just too complicated (= expensive). That’s what I meant by there not being enough money in it. The only way I see that working—and maybe the Big 5 is listening—is paying people sales commissions for marketing backlists. 

As for seeing the Kindle coming, well, I don’t know that anyone did.


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## chrisstevenson (Aug 10, 2012)

Hugh, I just read that report today. The implications of the direction of the publishing industry is staggering and mind-blowing. I couldn't believe it at first. But then again, I wrote a very involved blog post on the subject about four days ago, examining the same trend. My slump in trade/commercial sales has a written in stone explanation now--I'm pretty convinced. Just because of that blog post, a company wants to hire me and give me a position to refer services. I've had the highest number of hits and memberships in the history of my blog.
And wouldn't you know it, after my blog post and four days later, It_ appears_ that I was correct.

My version of this huge transition is in my sigline under my blog title, but it's my newest post.

Chris--your benefactor...


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## TheGapBetweenMerlons (Jun 2, 2011)

WHDean said:


> As for seeing the Kindle coming, well, I don't know that anyone did.


Hypertext, upon which e-books are built, was conceptualized at least as far back as the mid-1940s even though a computer implementation of it wasn't available until 20 or so years later. I published my first e-book before Amazon existed as a company. The steps toward the Kindle started _long_ before the Kindle, so I'd be surprised if there weren't at least _some_ forward thinkers in the 70s or 80s who saw a Kindle-type product coming.

Beyond just esoteric history rambling, I really do think the big publishing companies could have seen it coming, could have developed it (or controlled development, or been involved in development), and could have constructed a very different e-reading scene than what we see today without the ease of self-publishing we now enjoy. I'm extremely glad they didn't.


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## 75845 (Jan 1, 1970)

Trade publishers were selling eBooks via Peanut Press in 2001 long before the Kindle at a time when Amazon were only selling eBooks via Microsoft. The Kindle was a big hit largely because as smartphones began to edge out PDAs Microsoft lost interest in the PDA market that they had produced the best OS for and the by then also-rans at Palm were close to closing up shop. The Kindle slotted into a hole that opened up in the market, a market that trade publishers had been milking for over five years by that point.


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## 75845 (Jan 1, 1970)

Becca Mills said:


> The AE data show the _average_ price of B5 books rising $1.44 over the last 16 months.


The latest AE report is written as if most Big 5 books are sold above the price that the price that Amazon wanted to keep them below ($9.99). This is not true. There is also a bias in how the data is collected. Data Guy notes in the comments that by expanding the number of bestseller subcategories trawled they added a larger proportion of small publishers. This shows how the AE method is not producing reliable results. They are capable of simply going down the Amazon top seller list, they did so in the first report, but use bestseller lists as that disfavours the Big 5 who stick to major categories. To illustrate the problem download the data and ask yourself how accurate data can be if the 179th bestseller in Amazon is missing from the dataset. By going for bestseller lists indies who target specialised categories are favoured over Big 5 who focus on the main categories, because the Big 5 book at 102 in Suspense is probably selling a shedload more than the indie that tops the Arthurian subcategory. AE is counting apples and oranges to compare pears.


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## RedGolum (Nov 2, 2011)

As a consumer, I find that the majority if my ebooks are now indies or small publishers.  I will pay $15 for a non fiction work, and maybe for a series I am really into. But I will not do so for a book or author I don't have much information about.  Simply put, I can drop $3-6 without thinking about it and not feel to bad if I don't like the story.  If it is $15, I will move on.


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## Bishoppess (Apr 11, 2015)

RedGolum said:


> As a consumer, I find that the majority if my ebooks are now indies or small publishers. I will pay $15 for a non fiction work, and maybe for a series I am really into. But I will not do so for a book or author I don't have much information about. Simply put, I can drop $3-6 without thinking about it and not feel to bad if I don't like the story. If it is $15, I will move on.


Exactly. I went to go look at the nominees for the award Locus gives out, hunted up a book, and fell over twitching. First one I found: $12 for the EBOOK. No way. I have now started a wishlist on amazon for all the books I'll be requesting from my local library instead of paying an arm and a leg for.


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## TheGapBetweenMerlons (Jun 2, 2011)

Bishoppess said:


> I have now started a wishlist on amazon for all the books I'll be requesting from my local library instead of paying an arm and a leg for.


And if you use your library's e-book lending (if they offer that), you don't have to worry about the biohazards mentioned in the "celebrate e-reading" thread.


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## Bishoppess (Apr 11, 2015)

Crenel said:


> And if you use your library's e-book lending (if they offer that), you don't have to worry about the biohazards mentioned in the "celebrate e-reading" thread.


Eh. Germs. I think I'll live  . Easier than dealing with Overdrive's stupidity.


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## Daniel Knight (Jul 2, 2013)

Mercia McMahon said:


> There is also a bias in how the data is collected. Data Guy notes in the comments that by expanding the number of bestseller subcategories trawled they added a larger proportion of small publishers. This shows how the AE method is not producing reliable results. They are capable of simply going down the Amazon top seller list, they did so in the first report, but use bestseller lists as that disfavours the Big 5 who stick to major categories. To illustrate the problem download the data and ask yourself how accurate data can be if the 179th bestseller in Amazon is missing from the dataset. By going for bestseller lists indies who target specialised categories are favoured over Big 5 who focus on the main categories, because the Big 5 book at 102 in Suspense is probably selling a shedload more than the indie that tops the Arthurian subcategory. AE is counting apples and oranges to compare pears.


First off, talk about cherry-picking data. You point out that rank 179 is missing, yet fail to mention that 95% of the the top 1000 ranks are represented.

It is true that there are holes in the data, which get more prominent the higher you get in ranking. But what evidence do you have that the distribution of indie versus small press versus trade would be any different in those missing ranks? You are making an unsubstantiated claim based on how you think trades handle categories.

That being said, the distribution could be different for the missing ranks but how can we make that leap without any data to support it? I asked Data Guy over on the Author Earnings website if he has any more information on this question so we'll see if he can shed any more light on it.

The irony is that if you were right and trades don't make use of sub-categories very well - that is just one more reason to avoid them. Obviously getting on bestseller lists is one of the major ways to gain visibility and if trades can't even competently manage the simple task of taking advantage of Amazon's many sub-categories, then why would anyone trust them as a reliable way to gain exposure?


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## RedGolum (Nov 2, 2011)

Navigator said:


> But Hugh, doing all of that makes too much sense.
> 
> And making sense is abhorrent to them.


I live in Iowa. Great place. I have friends in the publishing world (namely in Ads). They will not live in Iowa, because it doesn't have the "bling" of living in NY or Chicago.


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## blakebooks (Mar 10, 2012)

WHDean: On your second point, we aren't that far apart. I believe you're correct, in that with backlists running into the millions of books it isn't financially viable to push the backlist. That's an advantage indies have - when it's your precious cargo, you are willing to put your back into it. When it's just a seriously big number, you shrug and go onto the next new release.

On the first point, I'm quite sure they make plenty of money off the backlist titles that do get sales. All one has to do is read their 10Ks to see that they are swimming in cash. However, that doesn't really help an author who's book is added to the pile and sells enough to earn them minimum wage, but were it self published, might make them more like $45 an hour.


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## RedGolum (Nov 2, 2011)

Hudson Owen said:


> New York may fail, but not for the reasons suggested. Ive lived in New York during the best of what the city has to offer, not that I sampled it directly. I've walked by Nobu many times and owner Robert DiNiro did not come out and and share his wisdom, although he deserves credit for helping the film industry come back after 9/ll.
> 
> Botton line, the city is gaining people and losing money. The literary life is dying. Who ate lunch at Elain's is replaced by an editor from Harper Collins who actually hunted down a three- star Goodreads reviewer to complain to her. Editors behaving badly. I don't know if Iowa has much to offer, but if it has lower rents, I'll listen.
> 
> _Edited. PM me if you have any questions. --Betsy/KB Mod_


 I live in Eastern Iowa. Iowa City (where the University of Iowa is located) is a nice town with a lot of "bigger" amenities. I live about an hour east of there, and while the area has more people, it is a manufacturing town.

While I have little to no comparison of with the cost of living in New York, it is much cheaper than Chicago or its suburbs.


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## jd_ruthers_85 (Mar 25, 2015)

My takeaway from this latest report? Writing paranormal threesomes/questionable family-related romances and chopping them into little .99-cents chunks is hella lucrative!


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## Quartknee (May 7, 2015)

I'm new here and missed your original post - thanks for including the highlights - I love your suggestions! It reminds me of several similar ideas floating around Silicon Valley a few years ago that suggested that the more mature tech companies (Apple, Google, Facebook, etc.) would better serve the national economy by moving their headquarters to rust belt spots like Cleveland. Their absence would free up resources for many more start-ups in SV while adding stable, middle-class jobs to areas that sorely need them.



Hugh Howey said:


> If a publisher pivoted like this, even right now, today, they could dominate the publishing landscape. Instead, they are taking their salaries while the ships go down. Uninspired, afraid, confused, and victims of the corporate bloat that resulted from decades of consolidations and from putting mom-and-pop publishers and small independent bookstores out of business.


This reminds me of a similar dynamic in the mid-to-late 90's as the Web, and especially Craigslist, started eating newspaper's market share and profit centers in earnest. All of the entrenched incumbents threatened by tech disruptions have had the same opportunities/challenges but the whole ostrich thing is so trendy! I wonder if it's a shadow element of the Baby Boomer approach to mid/late life or just a fear of change that seems so endemic to the middle-class mindset.


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## PhoenixS (Apr 5, 2011)

************


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## Gone To Croatan (Jun 24, 2011)

Tall Guy Q said:


> All of the entrenched incumbents threatened by tech disruptions have had the same opportunities/challenges but the whole ostrich thing is so trendy!


Few companies want to destroy an established profit centre in favour of something that may not be as profitable. Often, you may be better off milking the established business until it disappears, then closing the company down. Companies don't exist for the sake of existing, they exist to make money.


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## Herc- The Reluctant Geek (Feb 10, 2010)

Companies burring their heads as the world changes around them has happened before. A Kodak engineer invented the digital camera in the 70's but that didn't stop them going broke in the 2000's.

What's really sad about all this is that ebook sales were a cash cow for the publishing industry in 2012-2013, but they'd rather choke the goose that lays the golden eggs to protect the Dodo that lays the paper egg. Or some such thingy (it's early here and I haven't had any caffeine yet).


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## DRMarvello (Dec 3, 2011)

I love your reports, Hugh. Thanks to you and DG. Even if you have it all wrong (which I don't believe), the reports are inspirational.

To quote Christine Comaford, "Everything’s an illusion, so pick one that’s empowering."


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## Chris Fox (Oct 3, 2014)

I'm late to this, but thank you again for compiling these data, Hugh. It's so refreshing to see large scale shifts in the market, and that's something almost none of us have the resources to do. The fact that you share it so openly is incredibly helpful. Thanks man!


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## Cherise (May 13, 2012)

The thing is, the trade publishers are looking at a different set of data.

Trade publishers don't look at the Amazon bestseller lists in order to determine which books are doing well. They still look at reports generated by ISBNs, which do not include most indie ebooks. According to these ISBN reports, I bet 99.9% of the bestsellers are trade published, even just among genre fiction books.

Related aside: FYI, if you want to be on the NY Times or USA Today bestseller lists, then get ISBNs for your ebooks, because those publications use ISBN reports to gather their data, too. They do not consider most sales of Kindle ebooks at all, because most Kindle ebooks do not have ISBNs.


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## Speaker-To-Animals (Feb 21, 2012)

> Trade publishers were selling eBooks via Peanut Press in 2001 long before the Kindle at a time when Amazon were only selling eBooks via Microsoft. The Kindle was a big hit largely because as smartphones began to edge out PDAs Microsoft lost interest in the PDA market that they had produced the best OS for and the by then also-rans at Palm were close to closing up shop. The Kindle slotted into a hole that opened up in the market, a market that trade publishers had been milking for over five years by that point.


Prior to the Kindle, ebooks were something that nerds read, not so much to read the book as to say "hey I'm reading an ebook! Aren't I snazzy!" Kindle changed everything and created the mass ebook market. It was successful because it combined a reading device that felt and acted like a book with a store that was seemlessly integrated with the device and enabled easy purchase and acquisition of books. You didn't need to go to some obscure website and then fiddle with a cable and some weird software.

Really, the same as Apple did with iTunes, the iPod, and music or netflix did with streaming video.


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## Victoria J (Jul 5, 2011)

Hugh Howey said:


> ebooks are not on the decline or plateauing. At least, not for self-published authors.


Well I like that!


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## DRMarvello (Dec 3, 2011)

Cherise Kelley said:


> The thing is, the trade publishers are looking at a different set of data.


Yep. That was more or less the subject of Hugh's last report: indies represent a shadow industry that accounts for about 30% of the market.

Self-pubbed authors (with a little help from Amazon, of course) couldn't have done a better job of sneaking in under the radar than they did by thumbing their noses at ISBNs and scuttling a decades-old system for tracking book sales. Thank goodness. Otherwise, the Big 5 might have seen us coming and done something about it.


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## 69959 (May 14, 2013)

That's certainly wonderful news!


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## Becca Mills (Apr 27, 2012)

Mercia McMahon said:


> The latest AE report is written as if most Big 5 books are sold above the price that the price that Amazon wanted to keep them below ($9.99). This is not true. There is also a bias in how the data is collected. Data Guy notes in the comments that by expanding the number of bestseller subcategories trawled they added a larger proportion of small publishers. This shows how the AE method is not producing reliable results. They are capable of simply going down the Amazon top seller list, they did so in the first report, but use bestseller lists as that disfavours the Big 5 who stick to major categories. To illustrate the problem download the data and ask yourself how accurate data can be if the 179th bestseller in Amazon is missing from the dataset. By going for bestseller lists indies who target specialised categories are favoured over Big 5 who focus on the main categories, because the Big 5 book at 102 in Suspense is probably selling a shedload more than the indie that tops the Arthurian subcategory. AE is counting apples and oranges to compare pears.


This is an interesting critique, but how do you know the Big 5 don't bother trying to place books in any but the major categories? Before Amazon started letting us trigger additional categories through keywording, the complaint I always heard was that Amazon unfairly let traditional publishers pick lots of categories while restricting KDP users to two.

Would you be satisfied if AE pulled data only from the all-store list and then excluded books that weren't categorized in genres of interest? I don't have any idea if that's possible, mind you, but it seems like it would provide a very straightforward comparison. It would pull back in what Daniel mentioned, the 5% missed out of the Top 1000 ... assuming they were in relevant genres. I think the point here is to focus on genres where indie publishing is a reasonable choice.

I didn't get the impression that Hugh and Data Guy were suggesting all or most B5 ebooks cost over $9.99. It seemed clear to me their point was that B5 prices are rising markedly.


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## Data Guy (May 8, 2015)

Becca Mills said:


> This is an interesting critique...


Covered at length in the comments on the January 2015 report:

http://authorearnings.com/report/january-2015-author-earnings-report/#comment-225803

The data shows the exact opposite to be true.


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## Hugh Howey (Feb 11, 2012)

Becca Mills said:


> This is an interesting critique, but how do you know the Big 5 don't bother trying to place books in any but the major categories? Before Amazon started letting us trigger additional categories through keywording, the complaint I always heard was that Amazon unfairly let traditional publishers pick lots of categories while restricting KDP users to two.
> 
> Would you be satisfied if AE pulled data only from the all-store list and then excluded books that weren't categorized in genres of interest? I don't have any idea if that's possible, mind you, but it seems like it would provide a very straightforward comparison. It would pull back in what Daniel mentioned, the 5% missed out of the Top 1000 ... assuming they were in relevant genres. I think the point here is to focus on genres where indie publishing is a reasonable choice.
> 
> I didn't get the impression that Hugh and Data Guy were suggesting all or most B5 ebooks cost over $9.99. It seemed clear to me their point was that B5 prices are rising markedly.


We do cherry pick our data.

And by "cherry pick," I mean: "We pick every dang cherry off every dang cherry tree in sight."

The spider doesn't discriminate. Amazon just keeps adding new categories, and more ebooks flow into those spaces. Since these categories get every more niche-y, they are usually occupied by ebooks with very low overall rank. You can be #100 on the Fiction > Horror > Things Under My Bed > Reanimated Toys subcategory, but be ranked in the hundreds of thousands or millions overall.

The big area of growth (and Data Guy has covered this in the past) has been in non-fiction, where small/medium presses and indies are making gains. If you look at the first two pie charts on any of the AE reports, you can see the effect of this. A LOT of small/medium publisher ebooks showing up on bestseller lists that aren't selling in great quantity.

The reason a book at some overall rank can not be in our data set is because that overall bestseller isn't strong enough to hit the authors' chosen categories and sub categories. The spider can only crawl the top 100 overall list. Crawling through all several-million ebooks on Amazon would entail enormous costs, as the spider would have to bounce through also-boughts and follow random trails until it plugged every hole. Even then, it would miss some of the most obscure ebooks. And it might take weeks to run it like this (with rank changing all the while). All this just to plug a few gaps, which statistically wouldn't change a thing (of the small percentage of nicely selling ebooks we're missing, some will come from each publishing type).

A lot of the criticism we see on the AE reports seems to be of the variety: "This data isn't perfect!" No doubt. It just happens to be the best data available, that anyone has, or that anyone is looking at. It has consistently given us insights into things occurring in the trenches, often before we were aware of them elsewhere. There's no better overall visualization of the movement of the digital book market in the universe. And it's not even close.

Are we satisfied? Heck no. We try to improve each report. We do this instead of moaning about Amazon not giving up data that's probably worth tens of millions of dollars to competitors, an unrealistic expectation. And I don't think these parties would be happy if they heard what Amazon had to say, because we are underreporting indie gains in every way we can.


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## Data Guy (May 8, 2015)

Hugh Howey said:


> You can be #100 on the Fiction > Horror > Things Under My Bed > Reanimated Toys subcategory...


Things Under My Bed > Reanimated Toys 

*gulp*

Now I'm going to have nightmares.


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## CJAnderson (Oct 29, 2014)

Hugh Howey for President


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## Hugh Howey (Feb 11, 2012)

Data Guy said:


> Things Under My Bed > Reanimated Toys
> 
> *gulp*
> 
> Now I'm going to have nightmares.


Your avatar is giving me nightmares.

And I can be Treasurer or something. Data Guy for Prez.


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## 80593 (Nov 1, 2014)

Hugh Howey said:


> Fiction > Horror > Things Under My Bed > Reanimated Toys


Now I've got something new to start over the weekend.


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## 555aaa (Jan 28, 2014)

The thing that irks me about Amazon's non-data sharing is that as an occasional shareholder of the company, I can't tell where my money goes. B&N has to report how many books they sell because they are a bookseller. They would be better off becoming something else, so that they can hide their data. Maybe that's their plan?

But if publishers want to charge a lot of e-books, that's fine with me as it preserves the perceived value of ebooks. If the "big publishers" all decide that they are going to make every book 99 cents, that sort of screws the rest of us over.


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## WHDean (Nov 2, 2011)

I'm a little confused because this report doesn't seem to account for the single biggest difference between traditional publishers and indie publishers: Many (most?) indies steeply discount price to achieve rank and traditional publishers don't. That difference will have an enormous impact on revenue. (Needless to say, 10 books priced at $10 earn the same as 80 books priced at $1 plus 5 priced at $4.) There's an intuitive corollary here too: An increase in price should negatively affect time in rank more than a constant price, so books that achieved rank by discounting will also lose rank faster than books that didn't. In short, the inference from cover price to earnings ignores the (probably substantial) losses from discounting to achieve rank in the first place.

My critique could be wrong for at least two reasons. The first and most obvious is that discounting to achieve rank is far rarer than it seem. I rather doubt this because it's proffered so often as a strategy. The second and less obvious is that discounting is (basically) a one-time loss. For example, if a large portion of the top ranks are filled with series by indies that got there by only discounting or giving away the first in the series (of many books), then, intuitively at least, the loss on the first would be made up by having achieved a consistent rank for the rest of the series. The same would hold for an author who wrote stand-alones: first book discounted, the rest constant. It's clear to me that some people have successfully used this strategy (i.e., when compared with trads) and that they're in the rankings you surveyed, but exactly how many are there is unclear.


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## DRMarvello (Dec 3, 2011)

Hugh Howey said:


> A lot of the criticism we see on the AE reports seems to be of the variety: "This data isn't perfect!" No doubt. It just happens to be the best data available, that anyone has, or that anyone is looking at. It has consistently given us insights into things occurring in the trenches, often before we were aware of them elsewhere. There's no better overall visualization of the movement of the digital book market in the universe. And it's not even close.


This is exactly how I see it. Since I've started hanging out on forums and learning about publishing, I've been inundated with anecdotal information that is cherry picked for how well it supports a specific argument. We *need* aggregate information like the AE reports if we are to see past the distortions of personal bias and understand what's really happening in the marketplace.

The data doesn't have to be perfect, because perfect data won't give us a different picture. It might give us a clearer picture and possibly a more accurate picture, but I doubt the differences would be substantial enough to change our decision-making process. And that's what this is all about to me: understanding the marketplace so I can make informed decisions.

The fact is, these reports have incredible value. Organizations often charge big bucks for the kind of analysis that Hugh and Data Guy have shared with us for free. I'm extremely grateful for that.


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## Hugh Howey (Feb 11, 2012)

DRMarvello said:


> This is exactly how I see it. Since I've started hanging out on forums and learning about publishing, I've been inundated with anecdotal information that is cherry picked for how well it supports a specific argument. We *need* aggregate information like the AE reports if we are to see past the distortions of personal bias and understand what's really happening in the marketplace.


This is it precisely. Before Data Guy came around, I had a sense from discussions in the trenches that indies were doing well. I had an idea of it from threads started here. From going to conventions and from private email listservs. But I couldn't KNOW. I couldn't see it.

When I saw the numbers from that first spider run, and what a lot of us suspected from shared notes, our own experiences, what we were seeing on bestseller lists, what we were seeing as we compared notes . . . it was a revelation. Because some part of you refuses to believe, even though all the evidence is screaming at you. And then you see that indies are making nearly as much as the Big 5 COMBINED on daily royalties?! And two quarters later, indies are dead even?! And then another quarter, and they are earning more on ebook sales than the publishers who are supposed to represent the entire industry?

Before Data Guy, it was all speculation. The anti-indie crowd could call any success story an outlier (as if Patterson and Rowling are what's expected on the other side). Before Data Guy, the usual culprits were deriding indies as second rate cattle. Literary agents were turning up their noses. The anti-indie trad authors were comparing our artwork to spewing volcanoes of dung. There was hardly any media coverage, except for those "outliers."

After Data Guy, the argument was that people should publish however they like. That traditional publishers weren't all that bad. That, sure, you can make a living self-publishing, but wouldn't it be nice to have a team and see your books in bookstores?

The entire attitude and conversation changed. Right now on Twitter I've got a literary agent trying to convince me that publishers aren't idiots and that they are just "experimenting" with pricing. A literary agent is trying to convince me, a self-pubbed dweeb, that the Big 5 aren't complete morons. And I keep thinking to myself, as I try to walk him through it all and get him up to speed, "Why am I spending valuable time dealing with this guy?"

Everything is topsy turvy and inside out. And Data Guy is to blame. And I need a form rejection letter that's under 140 characters long.


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## Cherise (May 13, 2012)

Hugh Howey said:


> ...Right now on Twitter I've got a literary agent trying to convince me that publishers aren't idiots and that they are just "experimenting" with pricing. A literary agent is trying to convince me, a self-pubbed dweeb, that the Big 5 aren't complete morons. And I keep thinking to myself, as I try to walk him through it all and get him up to speed, "Why am I spending valuable time dealing with this guy?"


Hugh, please don't let him distract you from writing your next book!

But it is funny that's what they've resorted to.


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## DRMarvello (Dec 3, 2011)

Hugh Howey said:


> When I saw the numbers from that first spider run, and what a lot of us suspected from shared notes, our own experiences, what we were seeing on bestseller lists, what we were seeing as we compared notes . . . it was a revelation. Because some part of you refuses to believe, even though all the evidence is screaming at you.


One of the most satisfying aspects of all that data had to be verification that the real story wasn't the outliers. I was intrigued by the points you made in the "authors I want to hear from" thread, because those points reflected my own experiences with self publishing. I haven't reached the level where my writing earns a living, but my book sales (and my wife's) add a useful amount to our household income.

If I had insisted on being traditionally published, that money wouldn't exist. Assuming my first story would have been accepted by the gatekeepers in the first place, those same sales that have given me a satisfying income wouldn't have earned out an advance at trad royalty rates, and my writing career would have been over after the first book was remaindered.


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## edwardgtalbot (Apr 28, 2010)

WHDean said:


> I'm a little confused because this report doesn't seem to account for the single biggest difference between traditional publishers and indie publishers: Many (most?) indies steeply discount price to achieve rank and traditional publishers don't. That difference will have an enormous impact on revenue. (Needless to say, 10 books priced at $10 earn the same as 80 books priced at $1 plus 5 priced at $4.) There's an intuitive corollary here too: An increase in price should negatively affect time in rank more than a constant price, so books that achieved rank by discounting will also lose rank faster than books that didn't. In short, the inference from cover price to earnings ignores the (probably substantial) losses from discounting to achieve rank in the first place.


This strikes me as a very reasonable question/criticism. I would add that tradpubs do in fact discount to gain rank - Book Gorilla regularly has a number of discounted tradpub books that wind up in the top 100. But there's no question that indies do it a lot more. And I do think it could have an impact of a few percentage points on the report. But not more than that. The reason is that after price goes back up, if the book does not keep selling the same amount, it will drop very quickly. And the higher it is, the more quickly it will drop. The other thing is that the numbers Author Earnings uses to estimate earnings based on ranking are not of the type that "if you go from zero to 30 sales in a day, you'll achieve this ranking". They are numbers derived from many, many authors sharing data with Hugh and Data Guy and in theory should be averages of what it takes to get a ranking, including rankings driven by having had a sale at a lower price.

So not perfect, but again nothing likely to skew the data very much.


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## debbsmith1 (May 10, 2015)

Mercia McMahon said:


> The latest AE report is written as if most Big 5 books are sold above the price that the price that Amazon wanted to keep them below ($9.99). This is not true. There is also a bias in how the data is collected. Data Guy notes in the comments that by expanding the number of bestseller subcategories trawled they added a larger proportion of small publishers. This shows how the AE method is not producing reliable results. They are capable of simply going down the Amazon top seller list, they did so in the first report, but use bestseller lists as that disfavours the Big 5 who stick to major categories. To illustrate the problem download the data and ask yourself how accurate data can be if the 179th bestseller in Amazon is missing from the dataset. By going for bestseller lists indies who target specialised categories are favoured over Big 5 who focus on the main categories, because the Big 5 book at 102 in Suspense is probably selling a shedload more than the indie that tops the Arthurian subcategory. AE is counting apples and oranges to compare pears.


I agree completely. Hugh et al cherry picks information and looks at very narrow pictures of a very big system. The big pubs are not losing money on higher ebook prices -- the higher profit margin makes up for fewer sales. Anyhow, most ebooks are still priced far lower than Hugh claims. My small press prices below the figures quoted in AE's report on small press pricing.


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## Daniel Knight (Jul 2, 2013)

debbsmith1 said:


> I agree completely. Hugh et al cherry picks information and looks at very narrow pictures of a very big system. The big pubs are not losing money on higher ebook prices -- the higher profit margin makes up for fewer sales. Anyhow, most ebooks are still priced far lower than Hugh claims. My small press prices below the figures quoted in AE's report on small press pricing.


If you define "cherry picking" as using the only readily available data to present a statistically significant representation of the entire Amazon ebook ecosystem - then sure, I guess they cherry pick.

Data Guy has thoroughly debunked these criticisms of the data and conclusions. The method they use: to mine data from the bestseller lists (through all the different categories and sub-categories) is the only realistic way to collect this data right now. In order to insure no holes in the data they would have to use an algorithm that randomly jumped around through also-boughts and other incidental ways books are linked. You would have to keep doing this until you filled in every ranking number. This would take loads more computer power and time - so much time that the rankings would keep shifting and make completing the data probably impossible.

Considering how much computer power they are using to do the analysis the way they are, I can only imagine they would need something like Skynet to do it that alternative way (and they would probably crash the Amazon website in the process - which I guess would be a secondary concern if they did actually create Skynet).

What data do you have to back up any of your claims? From what we can tell the only thing you know for certain is that your small press prices are lower than the averages shown in the data - from which you have concluded the data must be wrong. How does that make any sense? You are one data point, and of course any given individual data point can be below or above an average - that's how averages work.


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## WHDean (Nov 2, 2011)

edwardgtalbot said:


> I would add that tradpubs do in fact discount to gain rank - Book Gorilla regularly has a number of discounted tradpub books that wind up in the top 100.


True, but I also left out the money indies spend on promotional services like BookBubâ€"an investment that compounds the effect of discounting. On another thread here, for example, a writer is spending over $1,000 on an upcoming promotion. By his own admission, heâ€™ll need to move 3,000 books to break even. Judging by KB, heâ€™s not the only one. Now, Iâ€™m not criticizing him or anyone else; Iâ€™m just saying that money spent to achieve rank is an important variable in profit, especially when youâ€™re comparing a group that spends money on promotion and other publishing costs (indies) with one that doesnâ€™t (tradpubbed authors).



> And I do think it could have an impact of a few percentage points on the report. But not more than that. The reason is that after price goes back up, if the book does not keep selling the same amount, it will drop very quickly. And the higher it is, the more quickly it will drop.


I think thereâ€™s far more room for variation here because weâ€™re (or, at least, Iâ€™m) talking revenue and profit, not units sold at a particular rank. If indies are moving quickly in and out of rank on the back of deep discounting and promotional outlays, and tradpubs are not, there will be a huge disparity in net revenue between trad and indie books. Even if we leave aside promotional money (as I did originally), a high, short trajectory achieved through discounting will not necessary beat out a long, low trajectory achieved without discounting. It remains to be seen whether this is the case or not. But thereâ€™s a strong prima facie case for the effect of discounts on rank.



> The other thing is that the numbers Author Earnings uses to estimate earnings based on ranking are not of the type that "if you go from zero to 30 sales in a day, you'll achieve this ranking". They are numbers derived from many, many authors sharing data with Hugh and Data Guy and in theory should be averages of what it takes to get a ranking, including rankings driven by having had a sale at a lower price.


I think youâ€™re saying that the self-reported earnings reinforce the evidence collected from surveying bestseller lists. Leaving aside the problems of self-reported earnings collected by soliciting self-reported earnings for stated motives, I see the same hole in the evidence: earnings are reported, not net incomes (unless I missed something). Either way, this is important. Tradpubbed authors donâ€™t spend anything on promotions, covers, editing, etc., and conventional wisdom here says neither do publishers. But indies do spend money on all these things. So a real comparison requires factoring in these outlays. Comparing indies to tradpubbed authors the way the AE report does is like comparing business ownersâ€™ gross revenue (= indies) to the salaries of employees (= trad authors).

Anyway, Iâ€™m as interested in these issues as the next writer. But the report raises as many questions as it answers because too many variables have been left out.


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## edwardgtalbot (Apr 28, 2010)

WHDean said:


> Anyway, I'm as interested in these issues as the next writer. But the report raises as many questions as it answers because too many variables have been left out.


In the colloqial sense, I suppose it "raises as many questions as it answers". But by any measure we have a lot more answers now than we did without the report. There are things that someone so inclined could do with the data as it stands to estimate potential impact given certain scenarios. It would take some work, though, not something I'd want to do with an issue that I don't believe will have a big impact.

Aside from the existing data, there *is* a way to get a very good idea actually. The problem is, one could not share the raw data, only the results. For two weeks, capture the top 1000 a similar manner to what Data Guy is doing. For the second week, you could definitively say what books owed a substantial amount to a discounted or free promotion and do a very good estimate of the impact. A week would be an excellent sample size for determining just the impact of this variable. But you couldn't share the raw data because it would be too easy to identify all the books and authors. Maybe if all you did was share the ranking, different publication types (indie, big 5, etc), and the prices and you publicized it a month after the fact, it would be acceptable. Maybe not: I'm sure Hugh has a good handle on what can be shared without exposing more than is comfortable.


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## Trish McCallan (Jul 16, 2011)

Bishoppess said:


> I'm no scientist, and math is not my friend, but here's my two cents on the hard>trade>mass shift. If they're treating ebooks as the bottom of that stack, how does that work for Trad Pub books that don't hit that 'success' threshold right out of the gate? If they are priced high and people don't buy them, won't the Big 5 just look at it as another failed book? (Again, not an expert)


Interesting you should ask that question. On a marketing loop I'm on, a debut author who released her book in early March through a big 5 house posted to the group asking for advice on promotion. Her publisher had apparently told her the book's sales were abysmal. (her words) When I checked the book out the ebook price was 12.99 and hard back was 21.94. There was NO PAPERBACK or Trade back available. All they'd produced was a ebook and hard back- both high priced for a debut, and then they blamed the book that the sales were lack luster.


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## Quartknee (May 7, 2015)

Trish McCallan said:


> The ebook price was 12.99 and hard back was 21.94. There was NO PAPERBACK or Trade back available. All they'd produced was an ebook and hard back- both high priced for a debut, and then they blamed the book that the sales were lack luster.


The big 5 are playing a very different game, with very different numbers - it's like apples/oranges - you can't compare trad/indie. With a debut author, they should at least be expected to do intense promotion and maybe they've just done their standard promo - I imagine they're keeping the ebook price high so it doesn't cannibalize the hard back sales but if their budget calls for releasing a certain number of books per year and others in the current release schedule have more momentum or gain traction with readers much quicker, they are smart to concentrate on those and leave the 'lack luster' titles to languish.

Now that I'm thinking about it, this seems quite similar to the relationship between broadcast channels and cable channels. Weak ratings to a broadcaster are often 5x+ those required to be a 'hit' on a cable channel. Broadcasters debut many new shows each season but they always have a few 'mid-season replacements' because they've been at it long enough to know some shows need longer to find an audience but the market is so different now they often don't have the time to nurse it along. If this model translates to publishing, there's a bright spot for your friend in that broadcasters bought up cable channels to farm our some of their content. Like ABC and ABC Family or NBC and Bravo - at some point the big 5 traditional publishers will wise up and have a 'mid season replacement' strategy set up. That way if sales are flat, lack luster or "abysmal" during the hard back portion of the property's life cycle they can farm it out to a subdivision of the organization better positioned to switch to a discounted ebook focus.


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## PhoenixS (Apr 5, 2011)

************


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## edwardgtalbot (Apr 28, 2010)

Phoenix Sullivan said:


> If I find time this week I may play some with the data using my understanding of current rank/sales for BB-type runs vs books maintaining ranks, flash sales, the KU effect, etc.
> 
> Ed, I'm not sure I understand your concerns about identification of titles in the data. The spider is crawling public data only and extrapolating from that. No different than if I were to go into the KND Tracker tool or NovelRank and estimate how much money your inventory made last month. Or if I were to look on Amazon right now and make the same estimates for the Top 100 titles. The only difference is, because I know the special circumstances around many of those titles (the trad titles churning along for weeks in the same rank tiers, the KDDs, the BBs, the KFs from last month and this month, etc), I can actually come up with a closer estimate for my snapshot versus another someone doing analysis who doesn't have the same insights. Analysis results certainly don't need to call out individual titles or publishers, but having public metadata info in the raw data shouldn't be considered proprietary in any way. Should it?


I largely agree with you, Phoenix. Hugh and Data Guy don't share titles or author names in their raw data, that's all I was saying. They've probably shared some of the specific reasoning behind it, but I'm not recalling when. I was talking about if someone ran a spider against the top 1000 every day for two weeks (to test a specific theory raised on this thread) and how one would really need to share the title and author names in that case or it wouldn't really be transparent enough to convince skeptics.


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## Gator (Sep 28, 2012)

Phoenix Sullivan said:


> If I find time this week I may play some with the data using my understanding of current rank/sales for BB-type runs vs books maintaining ranks, flash sales, the KU effect, etc.


Just to let you know, I'm holding my breath for that, because I'm really interested in your analysis. I know you're not 100% in agreement with Hugh and David The Data Guy's interpretation of the data they gather, so I want to see your view, too.


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## Gone Girl (Mar 7, 2015)

We miss you, Harvey Chute.


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## cinisajoy (Mar 10, 2013)

Tall Guy Q said:


> The big 5 are playing a very different game, with very different numbers - it's like apples/oranges - you can't compare trad/indie. With a debut author, they should at least be expected to do intense promotion and maybe they've just done their standard promo - I imagine they're keeping the ebook price high so it doesn't cannibalize the hard back sales but if their budget calls for releasing a certain number of books per year and others in the current release schedule have more momentum or gain traction with readers much quicker, they are smart to concentrate on those and leave the 'lack luster' titles to languish.
> 
> Now that I'm thinking about it, this seems quite similar to the relationship between broadcast channels and cable channels. Weak ratings to a broadcaster are often 5x+ those required to be a 'hit' on a cable channel. Broadcasters debut many new shows each season but they always have a few 'mid-season replacements' because they've been at it long enough to know some shows need longer to find an audience but the market is so different now they often don't have the time to nurse it along. If this model translates to publishing, there's a bright spot for your friend in that broadcasters bought up cable channels to farm our some of their content. Like ABC and ABC Family or NBC and Bravo - at some point the big 5 traditional publishers will wise up and have a 'mid season replacement' strategy set up. That way if sales are flat, lack luster or "abysmal" during the hard back portion of the property's life cycle they can farm it out to a subdivision of the organization better positioned to switch to a discounted ebook focus.


You really can't compare broadcast to cable channels. They have two totally different sets of FCC rules they have to follow.


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## Herc- The Reluctant Geek (Feb 10, 2010)

Tall Guy Q said:


> Now that I'm thinking about it, this seems quite similar to the relationship between broadcast channels and cable channels.


A more appropriate analogy, I believe, would be the video game industry where the Steam platform, owned by Valve, has changed the face of gaming. Once upon a time, gamers had to buy boxes from physical shops if they wanted to play a computer game, but that has changed in recent times thanks to Steam, which pioneered (more or less) the digital distribution of video games.

Steam has a GreenLight program for indie game developers that has been very successful, and is almost analogous to Amazon's KDP (it's not as open and requires the community to vote in games they would like on the platform). On top of that, there are several outliers that got their funding through Kickstarter and the like (Star Citizen, Elite: Dangerous, Divinity: Original Sin, etc).

So successful has Steam and digital distribution been that, in recent times, some of the established developers have gone without a publisher altogether (Chris Roberts made Freelancer and all the Wing Commander Games, while Shadow of the Avatar is being made by Richard Garriot and is the spiritual successor of the Ultima series, including Ultima Online).

The discussion surrounding the changing video game industry is very similar to that surrounding the changes in the book publishing industry: Like this article, and this one and this one demonstrates.

It's not just book publishing that is changing. There is a huge groundswell of changing consumer habits that is affecting all media/information industries. Just ask Rupert Murdoch, whose Australian Foxtel subscription television service has just been knocked off its number 1 spot by Netflix, which has only been available in the land of Oz for 6 weeks.


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## Maria Romana (Jun 7, 2010)

Trish McCallan said:


> Interesting you should ask that question. On a marketing loop I'm on, a debut author who released her book in early March through a big 5 house posted to the group asking for advice on promotion. Her publisher had apparently told her the book's sales were abysmal. (her words) When I checked the book out the ebook price was 12.99 and hard back was 21.94. There was NO PAPERBACK or Trade back available. All they'd produced was a ebook and hard back- both high priced for a debut, and then they blamed the book that the sales were lack luster.





Tall Guy Q said:


> The big 5 are playing a very different game, with very different numbers - it's like apples/oranges - you can't compare trad/indie. With a debut author, they should at least be expected to do intense promotion and maybe they've just done their standard promo - I imagine they're keeping the ebook price high so it doesn't cannibalize the hard back sales but if their budget calls for releasing a certain number of books per year and others in the current release schedule have more momentum or gain traction with readers much quicker, they are smart to concentrate on those and leave the 'lack luster' titles to languish.


But that's just the thing. _Readers _don't differentiate between trad and indie; most have no idea who the publisher is. It's not like Mercedes vs. Chevy, where the buyer has some idea of how much they'll like the product. All they see is a high-priced book from an unknown author. And I doubt the publisher in question did any promo AT ALL for the debut author's book. With only an over-priced ebook and expensive hardback available, I'd say it'd be a miracle if any significant number had sold (as was her point). Who the heck buys a hardback book at full-price from an unknown author?

Whatever money the trads are making, it's coming from their handful of stable super-stars and that occasional one-in-a-million lucky strike. Their model is to acquire a bunch of books for peanuts and lousy terms, throw 'em at the wall, and see what sticks. Those that don't, fall to the floor and get swept out in the monthly cleaning. This model works great for the publishers, but it stinks for the 999,999 authors who aren't the lucky strike.


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## DRMarvello (Dec 3, 2011)

Maria Romana said:


> But that's just the thing. _Readers _don't differentiate between trad and indie; most have no idea who the publisher is. It's not like Mercedes vs. Chevy, where the buyer has some idea of how much they'll like the product. All they see is a high-priced book from an unknown author. And I doubt the publisher in question did any promo AT ALL for the debut author's book. With only an over-priced ebook and expensive hardback available, I'd say it'd be a miracle if any significant number had sold (as was her point). Who the heck buys a hardback book at full-price from an unknown author?
> 
> Whatever money the trads are making, it's coming from their handful of stable super-stars and that occasional one-in-a-million lucky strike. Their model is to acquire a bunch of books for peanuts and lousy terms, throw 'em at the wall, and see what sticks. Those that don't, fall to the floor and get swept out in the monthly cleaning. This model works great for the publishers, but it stinks for the 999,999 authors who aren't the lucky strike.


LIKE

This is exactly what I was thinking. Publishers do not promote unknown authors. They barely promote *known* authors.


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