I’m estimating that Amazon sold over three million eBooks during the last week of the year, December 26 through January 1st. The estimate is based on an extrapolation from my Kindle sales rank graph, updated this week. The actual number I came up with was a little over 3.5 million sales, but it’s heavily dependent on what’s happening with the top 500 sellers, and how the curve turns in that area.
I like the three million round number for a week’s sales because it’s easy to do some basic math to look at the book market for 2011. For starters, nobody outside of Amazon knows exactly how many Kindle readers have been sold in the U.S., but if it edged up to nine million during Christmas, that would mean that Kindle owners are purchasing an average of one new eBook every three weeks. That may seem low, it may be low, but keep in mind that there are a lot of Kindle owners who primarily read free eBooks. And if the actual number of Kindle readers out there is only six million, that would mean the average Kindle owner is buying an eBook every two weeks.
While one would expect sales to be high during Christmas week, if we take into account the continual growth of the Kindle population, I expect it would be a low estimate by the time we reach the summer of 2011. Three million a week projects out to Amazon selling well over 150,000,000 eBooks in 2011, roughly one eBook for every two Americans. And at that rate, Kindle eBooks alone will account for over 10% of trade unit volume in 2011.
How about profits for Amazon? Earlier last year Amazon shifted to the agency model, with a fixed 65% share of eBooks priced below $2.99 or above $9.99 and 30% for eBooks priced between $2.99 and $9.99. If we assume that 99 cent eBooks make up a relatively small percentage of Amazon sales and estimate an average price of a little over $6/eBook, Amazon will end up with over $1 billion dollars in eBook sales in 2011. That implies a gross profit of well over $300 million dollars, if large publishers get the same 70% terms as small publishers.
Kindle is a runaway train heading for Manhattan, and as it roars through Penn Station and under the city, it is shaking the foundations of New York’s oldest trade publishers. Increasing eBook sales mean increasing cost per unit for print books, since fixed production costs will be amortized over fewer print unit sales. Trade publishers are struggling to exercise pricing power in an environment that demands cheap eBooks, and where the temptation of underselling competitors on all but the biggest brand-name authors is ever present.
I think it’s clear that wherever the Kindle train is heading, Amazon is driving, and the big trade publishers have little choice at this point other than buying a first class ticket and making up to the engineer. At some point, perhaps in just another year or two, Kindle may represent a large enough percentage of trade sales that even name authors will be better off jumping ship and taking their own seat on the Kindle train. Yes, some authors will stick with the trades in return for fawning attention over their delicate genius, but writing for most authors is a business. When Amazon Kindle represents a better business opportunity than greater paper sales at a lower royalty, Amazon will take the prize.
Amazon has always claimed they don’t want to be in the publishing business, that they are merely offering new ways for authors and publishers to reach their public. But let’s face it. The very definition of publishing is changing, and in a few short years, nobody will be surprised to see Amazon described as both the world’s largest bookseller and the world’s largest publisher.