Jason Green contributes a very interesting analysis of the trend in eReader device sales versus the growth of eBook sales. Over to Jason:
I start by looking at several years of data from Verso Digital and the American Association of Publishers, which understandably, does not include numbers for self published eBooks. Combining data using the last three annual reports from Verso we get the following table for trending the intent to purchase an eReader device among survey participants:
|2009||2010||2011||’09 to ’11 change|
The last column indicates that Verso survey respondents have acted consistently with their intentions. Nearly 75% of the growth in eBook reader sales has come from those who have said they were “very likely” or “somewhat likely” to purchase an eBook reader in the near future. That leaves a little over a quarter of eBook reader sales going to those who were “not sure” or who received them as gifts. This leaves plenty of room for growth in eBook reader sales, with the ultimate goal being nearly half of the reading population.
But it’s interesting to note that some recent surveys combining eReader and tablet (primarily iPad) numbers have put eReader/tablet ownership at 30%. Does this mean that the vast majority of tablet owners don’t see them as eReaders?
|Planned purchases||2009||2010||2011||Est # purchases per device||# Devices at the end of 2011 (% of 94 M)||2011 est eBook unit sales (29% own 94 M devices)||2010 eBook unit sales (10% own 32 M devices)|
|Not sure||35.4%||16.0%||10.0%||0||9.4 M|
|1-2||25.4||13.0||15.2%||1.5||14.3||21.4 M||6.3 M|
So, if those who intended to buy in 2011 actually buy in 2012, and estimating 2011 sales from the AAP numbers ($950MM in eBooks purchased), then the average purchase price was $5.62. Print books have outpaced inflation in pricing for many, many years. So, could the pricing model for eBooks be ‘recapturing’ sales that were lost due to price resistance of the print book? Casual readers who now own devices may be eReading, not just because it is more convenient, etc., but that it is cheaper. In 2010, my estimate is that the average eReader owner intended to purchase 5.3 books; in 2011 that number is 6.47, which seems to contradict some of the ‘power user’ data. Unless, the casual reader is reading more (which is what the data above indicates).
The issue long term is that you can only read so many books, regardless of the format, reader fatigue may already be setting in.
For my baseline comparison of the eBooks to eReader numbers, I considered that the Kindles were the only eReaders used to download and read eBooks. This gives a comparison that while consistent, actually significantly under reports the decay in eBook to eReader growth, since the universe of eReading devices is growing much more rapidly than the numbers of Kindles.
Two more components are missing, the sales of Amazon only kindle self published titles and the 800 pound gorilla in the room–piracy. Using the 2011 planned eBook purchases over the next 12 months data (from the Verso study data above), if those projections and the average price hold, then the 2012 eBook market will be $3.416B in sales, up 260%.
$5.62 average price * 607.9M units projected = $3.416B in sales
BUT, that number is not trending with the sales of books per device. If you use the data below, then I project that eBook sales in 2012 will be $2.44B, which would be 157% increase.
We can estimate Kindle numbers, based on their recent reports and industry estimates. I estimate there were 12MM Kindles sold in 4Q 2011. Based on Amazon’s recent press releases and reports, I break down 2011 Kindle unit sales as follows:
2011 total 26M units up 189%
2010 total 8M units up 167%
2009 total 3M units
This is close to an IDC study that estimated that Amazon sold 6.2M units in 2010, and that eReader growth was up 143%. So, long story short, I estimate there are 37M Kindles in circulation. Last year, the AAP eBook sales were $432MM; this year the estimate is $950MM.
If *every* eBook was bought on a Kindle, then the following occurs:
2010 $432MM = $39/kindle @ $6/eBook = 6.5 books per device
2011 $950MM = $26/kindle @ $6/eBook = 4.3 books per device
Again, I know there are more eReaders than just Kindles out there. If that growth is figured, then sales per device is even worse and the rate of decay is increasing at an even greater rate. This indicates a few possibilities:
- Long term device owners are buying less (they have built up libraries, and need to read those instead of purchase additional titles)
- New owners are buying less (early adopters buy more, later adopters buy fewer). If you assume that the 2009 and 2010 owners are buying the same in 2011, then the NEW 2011 owners are only spending $20/device; at $6/eBook = 3.3 books per 2011 device–a significant reduction in sales per device.
- Kindle owners are reading more ‘free’ material: library eBooks, lending eBooks, reading .pdfs, free eBooks, etc.
A report given at the Winter Institute indicated that the studies “might include ‘some scary numbers’.” This part of the report is indicative: “The BookStats data indicates that digital growth most notably affected sales in fiction, and, though the volume of eBook sales has increased dramatically, Vlahos said that preliminary data seen from a number of studies suggest that the growth in eBook sales slowed in the second half of 2011′
That is at a time when device sales exploded?
There is a [mis]belief out there that as more people have more devices, that more books will be sold. If that were historically true, then music sales would be at an all time high, since there are more digital music devices than ever. Yet music sales (and per capital consumption) remain low, and could be argued that it has decreased, even with the improvements in technology.
Jason Green is the President of Mardel, Inc., a chain of 35 Christian book stores (and mardel.com), with locations in 7 states in the mid and southwest United States. Jason has been involved with digital content and the shift in consumer behavior in the industry, having been involved with several of the Christian Booksellers Association’s panels, lectures, and events concerning digital content and the changes impacting the industry. Jason is also a student of the history and business of the book industry and a part-time publishing industry analyst.