Why ebook market share is important

I speak quite a bit here about which path to pursue for publication of your book (self, indie press, large traditional). There are a myriad of reasons to select each one but a deciding factor for many is maximizing income. At AW there in a discussion about ebooks and what impact the new AAP numbers means to writers.

For those that don't know the AAP (which gathers data from 82 publishers, 16 of which report ebook sales) shows that 29.5% of all sales (by $ not volume) are now ebook. So if you add up all the fiction and nonfiction (excluding educational and academic texts), including children and adult in formats such as ebook, hardcover, trade paperback, mass market paperback) almost 30% of those are ebooks. There are a few on the AW site that get upset when ebooks and self-publishing are used somewhat interchangeably. They point out that both traditionally published authors and self-published authors sell ebooks and they want to keep format separated from publishing choice. I'm not sure why they want this but you can't separate them and here is why.

Traditional published authors receive revenues from both print and ebooks. Historically ebooks have represented a small portion of overall sales (3%-8%) so the vast majority of their income is based on print sales.

Self-publishers have a more limited print distribution system (mainly limited to online) their print sales are nothing compared to ebook (2% - 4% for my authors).

• An author at AW said...."Whether a writer chooses to pursue commercial publishing of self-publishing (or both) is a DIFFERENT SUBJECT from paper books vs e-books" I couldn't disagree more. If you are analyzing the decision from the financial perspective then the print verses e-book ratio is the CRITICAL component in deciding which way to go.
  
  
• Traditional published authors receive income from print sales and ebook sales. Historically ebooks have been a small % of the overall picture (3% - 8%) so the majority of an author's income has been from print.

Self-published authors have very limited access to print distribution (usually mainly online outlets) the vast amount of their income comes from ebook sales (in most of my writer's cases print is 2% - 4% of overall income.

Now let’s look at the authors cut for ebooks in the two models:

• Traditional: author: 14.9%, publisher: 52.5%, distributor: 30%, agent: 2.6%
• Self-published: author 70%, publisher: 0%, distributor: 30%, agent 0%

If we look at how ebooks are priced (we'll use Kindle as they are the market share leader) We'll see the following generalities:

• Traditional: Usually price from $6.99 - $14.99
• Self-published: Usually priced at $0.99 or $2.99

For the most part, books (or anything) at a lower price sell more. When deciding price you are always trying to see the total income which is # of sales times price. Its hard to determine exactly which will produce the best income - low number o high priced books or high number of low priced books - for the rest of this discussion I'm going to remove this component because both traditional publishers and self-published authors are free to experiment with price/sales and I'm going to assume that they do whatever they need to from a pricing decision and found that "magic number.
Getting back to the task at hand. If the question is...from a financial perspective which should I choose, traditional or self I think the single biggest factor is what is your thoughts on ebook dominance.

If you feel ebooks are for only the elite and most readers will remain in print - then the large disparity in author share (70% vs 14.9%) is not an issue because a larger % of a small number doesn't effect the overall income much.

If you feel ebooks are exploding and print will soon become a subsidiary right - then you MUST focus on maximizing ebook revenue and the 70% vs 14.9% disparity plays a huge role.

When I look at the data I see #2:

• Borders closing
• Amazon sells more ebooks then paperback or hardcover
• AAP reports 29.5% ebook/print ratio
• AAP reports triple digit increases in ebooks with each sales report press release while simultaneously reporting declines in hardback and mass-market paperbacks (trade paperbacks have in most reports remained flat)

So again if only judging financial aspects, then I contend that you MUST come to grips with what you think is happening between ebook and print ratios. Where you come down SHOULD allow you tally that one item of decision making for one or the other column.