A lot of traditional publishing and its authors have had fainting spells over negotiations between Amazon and Hachette concerning a new ebook contract now that Hachette is out of the court-ordered lockdown on its price-fixing conspiracy. (Or maybe, as David Gaughran and others have suggested, it’s just a Hachette negotiating tactic in the form of a PR campaign.)

The anguished cries have torn at everyone’s hearts:

- Amazon has been selling Hachette ebooks at Hachette’s list price! 

- Amazon has stopped allowing preorders on Hachette books! (Something indie authors don’t have.)

- Hachette good, Amazon bad!

On the other hand, Hugh Howey and Data Guy have released a new analysis showing that indie authors are making more than tradpub authors selling ebooks on Amazon (a PG simplification of the analysis). And that an author who writes well enough to receive a contract offer from traditional publishing will probably make much, much more money if he/she goes indie than than traditional.

If PG were an author who had just signed a traditional contract instead of self-publishing, the Author Earnings report might elicit some anguished cries from him.

So, here’s PG’s rhetorical question: Which is more dangerous to Big Publishing – pricing negotiations with Amazon or the direction the dollars are blowing for indie authors on Amazon?

PG says it’s the indie author and the dollars they’re earning on Amazon.  While this kind of information has been passed from author to author for some time, the Author Earnings reports demonstrate that it’s not anecdotal data – it’s happening to a large number of authors on Amazon.

The simple fact is that Big Publishing relies on big authors for its profits and its survival. Imagine traditional publishing as an inverted pyramid balanced on a small percentage of its authors and their books. A handful of authors make the difference between a good year and a bad year, between people keeping their jobs or losing their jobs.

Look what E.L. James did for Random House in 2012. With E.L. James, record profits. Without E.L. James, a decline in revenues and maybe a loss on the year. RH will probably receive another great sales bump when the movie comes out. All from one author.

The E.L. James experience isn’t a one-off. It’s pretty much what passes for business strategy in New York. “Find me the next E.L. James!” “Find me the next James Patterson!”

But what happens if the next E.L. James doesn’t answer the email? Or the phone call? What happens if the next E.L. James believes she has a better life and is making more money as an indie author?

In another month or two, Hachette will be old news because it will make a deal with Amazon. It has to. While the agreement will be confidential, PG predicts that Hachette will win Publishers Weekly and Amazon will win the contract negotiation.

The Author Earnings reports, on the other hand, are each another tick of a financial time bomb that Big Publishing really, really, really wants to ignore.

Big Publishing is already missing some big authors and, as time passes, it will miss more and more big authors. A missed author is a missed backlist. As the latest Author Earnings report demonstrates, Big Publishing makes a whole lot of money from the backlist sales of a relative handful of bestselling authors.

When those authors signed contracts for those big books, self-publishing was not a realistic option, so there wasn’t really a choice. Now it is an option. A good one.

Author Earnings is not only pointing out that there is a choice today, they’re saying, to quote a comment from Hugh Howey:

1) For the 1% who can choose [to take a traditional contract because they are offered one], the majority of them should be choosing to self-publish. From everything and everyone we know, these authors would be happier, more productive, and far wealthier if they struck out on their own. They are paying middlemen a fortune to perform a service that is no longer needed. Instead of being saddled with cover art they don’t really like and an editor they didn’t choose, they could have complete control over both for a fraction of the price. (I know I’m singing to the choir here. It’s the agnostics in the pews we’re running these numbers for).

2) Earnings show market potential. If we discovered that only 5 indie authors are earning a decent living, the legacy publishing pundits would be screaming our findings from the mountaintops. Remember when the dialog was all about how 95% of self-published authors don’t sell more than 100 books in their lifetimes? That’s the sort of thing we set out to check. What we are finding instead is that the chances of making a living from writing fiction is likely greater for self-published authors than traditionally published authors. Those findings include enough of a variety of books on both sides to be a meaningful conclusion. If you are weighing how to publish, the numbers from Amazon’s bestseller lists should tempt you into self-publishing.

PG says this is much, much, much bigger news than Hachette/Amazon.

From Author Earnings:

In our most recent earnings report, one chart jumped out at us and begged for deeper analysis: It was a look at daily author earnings according to publication date, and it revealed the heavy reliance Big 5 publishers have on the sale of their backlist titles. The same chart showed, less surprisingly, that self-published authors are making the vast majority of their earnings on recently published works. In a single chart we were witness to the economic effects of new participants entering an industry in which they were formerly uncompetitive. The same chart made it apparent that the effects self-publishing will have on the trade book industry have only just begun.

Because of this chart, we began looking more deeply at authors from two different camps: those who debuted prior to the explosion of self-publishing and those who debuted after. Authors getting their start today will of course be joining the latter camp. And we believe those authors will want to know the following:

• Big-5 publishers are massively reliant on their most established authors to the tune of 63% of their e-book revenue.

• Roughly 46% of traditional publishing’s fiction dollars are coming from e-books.

• Very few authors who debut with major publishers make enough money to earn a living—and modern advances don’t cover the difference.

• In absolute numbers, more self-published authors are earning a living wage today than Big-5 authors.

• When comparing debut authors who have equal time on the market, the difference between self-published and Big-5 authors is even greater.

In this report, we will also reveal how e-book earnings represent roughly 64% of a traditionally published fiction author’s income, and therefore why authors should focus less on statistics geared toward publisher earnings and trade bookstore sales and consider their own incomes instead. Finally, we will tackle the difficult question of just how many authors are earning a living wage today. The results are sobering. I’ll spoil it for you and say that there aren’t many.

. . . .

If the Big 5 hadn’t signed a new author since 2009, and simply released new works from their long-established authors, they would still be making 63% of the e-book revenue that they are making today. Ownership of backlist and long-tenured authors is quite clearly big publishing’s most powerful commodity. This goes a long way toward explaining ever more restrictive reversion and non-compete clauses in publishing contracts. It also lends credence to rumors that some top-name authors are already receiving ebook royalties higher than 25% of net. Publishers rely heavily on these established authors and may be willing to violate their own most favored nation clauses in an attempt to retain them.

. . . .

Roughly 46% of traditional publishing’s fiction dollars are coming from e-books, while the other 54% comes from print sales, audiobooks, and other formats. On the non-fiction side, e-books make up a far smaller fraction of gross dollar revenues: only 20%.

. . . .

For the average traditionally-published fiction author, this means 59% of unit sales are now e-books. But what percentage of their earningscome from e-books? Remember that industry numbers are usually focused on how the corporations are doing.

. . . .

While only 32% of the publishing industry’s gross revenue currently comes from e-books, nearly 64% of the average traditionally-published fiction author’s earnings is coming from their e-books. Earnings for the average genre-fiction author will skew even further toward their e-book sales.

. . . .

[T]here are far more indie debut authors from 2010, 2011, 2012, and 2013 who are now holding spots on the Amazon bestseller charts than Big-5 debut authors. Even more striking, the number of today’s bestsellers from these “New” indie debut authors increases steeply year-over-year, while the number of today’s bestsellers from “New” Big-5 debut authors stays flat. The number of today’s bestsellers from small to medium publisher debut authors is also growing year over year, although not at the same explosive rate with which indie debuts are grabbing and holding slots on the charts.

. . . .

Taking all of the above into account, let us now pose two frequently asked questions facing new authors today: What are my chances of being able to earn a living from my writing? And which publishing path gives me the best shot at eventually being able to do so?

For the first time, we can look at a large enough cross-section of author earnings data that, despite its acknowledged limitations (Amazon-only, e-books only), can help light the way to some answers.

. . . .

Of the 500 or so Big-5 debut authors in 2013, only 245 (fewer than half) are today earning $10,000 or more from their Kindle e-books.Surprisingly, despite having more books published and on the market, even fewer of the roughly 1,500 Big-5 authors who debuted in 2012, 2011, and 2010 are earning $10,000 or more. Referring to the earlier blue-and-orange pie chart showing what portion of the average traditionally-published author’s earnings is from e-books, we might convince ourselves that print and audio (as well as other e-book retail channels) could on average double this author-earnings number. But few folks would consider $20,000 per annum a living wage, and fewer than a third of the Big-5 debut authors from the last 4 years are earning that much today.

After years and years of querying and jumping through gatekeeper hoops, it appears that even the less-than-1% who are lucky enough to land an agent and a Big-5 publishing contract can’t manage to quit their day jobs. (This is an observation in the data that matches what we have seen anecdotally in the publishing and bookselling trenches).

By contrast, we see over 700 Indie-published authors who debuted in 2010, 2011, 2012, and 2013 who are today earning more than $25,000/year from their Kindle e-books alone. For these authors, e-book sales on other platforms and POD print sales will add another 20%-30% on average to this total. It’s easy to see that, for the past 4 years, and even taking lost print sales into consideration, far more Indie authors than Big-5 authors are earning a living wage from their writing.

. . . .

The picture that is emerging from our data collection and our look at bestseller churn is that the number of Big-5 debuts at each earning level is relatively flat, year over year, while the number of living-wage-earning indie author debuts is growing exponentially year over year. Even ignoring the hurdles and roadblocks that are a built-in part of traditional publishing’s drawn-out querying process, it’s easy to see which method of publishing represents the greater and faster-growing opportunity to earn a living wage as a writer.

Link to the rest at Author Earnings

PG would like to issue a warning: Be prepared for an explosion of innumeracy from traditional publishing enthusiasts attempting to rebut this report.

On an anecdotal basis, PG frequently hears some form of the following from indie authors: “I didn’t make much money from my first books, but I kept writing and publishing and learning how to market my books. Over time, my sales went up. First I replaced my salary and quit my day job. Then I replaced my spouse’s (usually husband’s) salary and we decided it would be better for both of us to focus on writing and promoting my books.”

From Author Earnings:

Three months ago, we released our first full report on Amazon e-book sales and author earnings. Our goal was to look at unit sales and earnings by various publishing paths in order to help authors make informed decisions in this rapidly changing publishing environment. The results were eye-opening, but it was merely our first data point. Our long term goal has been to pull data every quarter to see if we can spot developing trends.

. . . .

The exciting thing about pulling this data is that we have no idea what we’re going to find. Our conclusions since the last report might need rethinking. Our advice on what an author might want to do with a manuscript today could very well change as the publishing industry takes another swerve. My partner and I debated what we expected to see from this second round of data. We both predicted no more than a 2%-3% swing from any one publishing path to the other over such a short period of time. I wagered we’d see a 2% drop in self-publishing titles, offset by an increase in Amazon imprints, as the latter continues to snatch up high performing e-books and put more marketing muscle behind their own authors. My partner thought we’d see a 2% hike in self-publishing at the expense of traditional publishing. We bet a dollar on the outcome.

. . . .

This first graph shows the number of titles on Amazon’s e-book bestseller lists by publishing type:

 

Of note with this chart: The vast number of small and medium publisher e-books reflects their dominance in obscure categories. The overall ranking of most of these books is extremely low, which is why the number of titles on Amazon bestseller charts does not correlate to daily unit sales volume.

. . . .

Next we have the estimated daily unit sales, based on the overall ranking of each e-book:

 

This is what my partner (affectionately known as Data Guy) predicted.Yes, I mailed him a dollar. What we see here is that self-published e-books and those from small/medium publishers have captured sales lost by the Big 5 and Amazon’s own imprints.

. . . .

Using list price, we get the daily gross sales revenue:

 

Despite the lower number of daily unit sales, Big 5 revenue has gone up 1%. Investigating this, we found the average price of a Big 5 e-book went up nearly 3% between reports, while self-published e-book prices went up 1%.

. . . .

Finally, the estimated daily author earnings report:

 

Here we see self-published authors earning 2% more while Big 5 authors hold steady. Again, with fewer daily sales but a higher price, the Big 5 publishers increased their own revenue while their authors stayed pat. Amazon Imprint authors saw a 3% decline, which might be due to the volatility they have as a small number of titles can see a large number of sales. What we can’t tell with these two data sets is if we are seeing real trends or just random fluctuations, but we can say that our findings from February have now been corroborated by this second data set. Self-published authors are clearly earning as much as traditionally published authors on the largest e-book sales platform in the world.A few months ago, this seemed impossible. It is already beginning to feel like old hat.

. . . .

Major publishers aren’t just reliant on these rare blockbuster bestsellers, they are also heavily reliant on their backlist, which the above chart also captures. Look at that massive bar on the far left of the graph, which shows all books published before 2011. Ignoring pre-orders, the author revenue for Big 5 books published prior to this date is equal to 31% of the earnings on all books published since then. This backlist dates to before the self-publishing revolution gained steam, which suggests that the share of pie earned by self-published authors has a lot of room to grow as these writers establish backlists of their own. It also means that the parity we see in our author earnings charts between self-publishing and Big 5 publishing has a lot to do with the latter’s existing titles and not their new releases. How you decide to publish your manuscript today means looking at the difference in earnings due to recent works. Self-published authors are not just holding their ground with Big 5 authors when it comes to releases after 2011, they are out-earning Big 5 authors by a 27% margin.

Link to the rest at Author Earnings

UPDATE: PG forgot to mention that if you follow the link, you can compare February with April numbers by rolling over each pie chart.

From Author Earnings:

In our first two reports, we concentrated on Amazon’s e-book sales. We analyzed the top 7,000 e-books in three bestselling genres [link]. Then we followed up with a look at all 54,000 ranked bestselling e-books on Amazon in a single day snapshot [link]. We now turn our attention to the next bestselling book and e-book retailer, Barnes & Noble. The methodology is the same. Barnes & Noble’s online store lists overall ranking for their e-books, and as with Amazon, current rank generally correlates with daily sales.1 We determined sales rates based on the sales of our own books and from data gathered from other authors. In all cases, the rates we collected were within 20% of each other. Adjusting rates even beyond this margin of error does not alter the percentages of market share shown in our pie charts — it simply adjusts the overall size of the pie.

Last year, Barnes & Noble reported that 25% of the Nook market was made up of self-published works [link]. We were curious to see if this meant 25% of the bestselling titles were self-published, 25% of the sales came from self-published e-books, or if self-published e-book sales accounted for 25% of the gross dollar market. As always, our primary concern here is where authors are doing better, sale for sale. It doesn’t help authors to say that 70% of the book market is in print if only a small fraction of that money ends up in authors’ pockets [link]. What we want to see is the combined effect of royalty rate, sales volume, and sale price. These three factors combine to give us a true picture of comparative earnings, as shown in our pie charts. Let’s see what our spider gathered as it snared 5,400 of Barnes & Noble’s top genre e-books in its digital web:

 

Just as we saw in Amazon’s store, indie titles make up a very large percentage of the bestseller lists. More than half, in fact.

 

Indie titles make up almost a third of Barnes & Noble’s e-book sales as well. The extent to which self-published content dominates Barnes & Noble’s e-book store is even more starkly apparent when the market shares of the Big-5 publishers are shown individually, rather than lumped together:

 

 

The Big-5 publishers still rake in the lion’s share of Barnes & Noble publisher dollars, as shown below:

 

However, publisher revenue is far less meaningful to authors than authorrevenue. And in Barnes & Noble’s e-book store, just as in Amazon’s case, we see that indie authors and small publishers are earning almost as much as all of the Big-5 combined:

. . . .

Far from being an Amazon-only or Amazon-created phenomenon, the market dominance of indie authors can also be seen here at the second-largest e-book retailer, Barnes & Noble. As some have opined, this reflects a much larger consumer-driven economic reality at work. Retailers and industry middlemen no longer dictate to readers what they should be reading. Readers now vote with their wallets, and everywhere we have thus far looked with our spider, readers are choosing self-published works at a higher rate than those by any other publishing entity.

. . . .

Publishing’s print retailers, print providers, and other businesses in the print supply chain clearly have reason to expand and simplify print distribution options for self-published authors. By doing so, they can increase their profitability and ability to serve consumers, while giving consumers the full range of quality content they demand. In fact, looking at the above chart might give Barnes & Noble a reason to reach out to indies for merchandising opportunities, and also to readers in order to promote these works.

. . . .

[A]t Barnes & Noble, just as with Amazon, best-selling indie content is better rated on average than best-selling traditionally published content. Our initial speculation about price correlating to average review score has since been disproven by others, who looked at our data more closely. We may be left with the conclusion that self-published works are outselling every other publisher by dint of readers simply liking them better.

Link to the rest at Author Earnings

PG says, given the generally poor placement of indie books on the Nook Store and its poor search capabilities, it’s interesting that indie book sales patterns for the Nook are so similar to those on Amazon.

The Author Earnings report also raises the widely-circulating, but never confirmed (at least to PG’s knowledge) report that the Nook Store sells top spots on its bestseller lists to Big Publishing’s books.

PG hasn’t commented on the paid bestseller spots before, but, if the reports are true, it reflects one of the dominant reasons why Nook is losing so badly to Amazon.

Customers, particularly online customers, particularly heavy readers, use bestseller lists to help them locate books they will like.

A customer-centric organization would never tamper with bestseller lists because doing so would not improve the customer’s shopping experience and satisfaction. If a customer is less likely to find a book he/she likes, that customer is less likely to buy in the first place, to return as often as he/she would if the store made it easier to locate desirable books or to return at all.

Smart ecommerce companies treat customer visits like gold. They never want to waste a single visit or send a customer away unsatisfied.

However, Barnes & Noble is a creature closely tied to Big Publishing and in Big Publishing, you can work your way onto the New York Times and Barnes & Noble bestseller lists without actually outselling books that aren’t listed. In Big Publishing, what’s best for the customer takes a backseat to generating cash in pay-for-play schemes.

One of the behaviors of traditional publishing that never fails to puzzle PG, regardless of how often he sees it, is that publishers don’t treat authors as exceptionally valuable partners – customers for publishing services, if you will.

Sweet talk often ends as soon as the forever publishing contract is signed. Marketers treat authors like cheap labor with clueless social media exercises. Authors are constantly blamed for poor sales regardless of the failings of the publisher. Royalty reports are a semi-annual insult, not just for the size of the royalty payment, but also for the impenetrable mass of numbers designed to obscure, not enlighten.

On the other hand, Kindle Direct Publishing explicitly regards indie authors as customers for its epublishing platform.

When customer-centric organizations compete with those which aren’t, guess who wins?

Here’s a hint: What would happen if the Seattle Seahawks played the Bayonne High School Bees?

From The Canberra Times:

Successful self-published author Hugh Howey wants authors to help him start a publishing revolution. He caused a stir among authors and publishers recently with attempts to dispel some myths about self-publishing. Self-publishing, or ”vanity” publishing, has long been disparaged as a way to reach an audience.

These days many authors have successfully gone down this route, but Howey thinks many more should consider it before approaching a traditional publishing house.

. . . .

According to Howey’s analysis, over 53 per cent of the bestsellers on e-book genre lists were self-published and accounted for 43 per cent of daily sales. This compares with 34 per cent of sales generated by the big five US publishers (HarperCollins, Penguin Random House, Hachette, Simon and Schuster and Macmillan).

. . . .

Howey seems to bear a grudge towards traditional publishing houses. He told The Guardian in an article on February 14: ”I understand that some authors are thrilled with their publishing partnerships, but I believe they are the minority. Major US publishers operate in lockstep with abusive contract terms and horrid digital royalties.” Several notable bloggers have published rebuttals to Howey’s conclusions. Howey’s data came from one day of sales, which – as publishing guru Mike Shatzkin has pointed out – means it is open to problems associated with too small a sample.

More broadly, in my opinion, Howey got two crucial things wrong. The first is that he concentrated on genre books – the science-fiction, thriller and romance fields mentioned above – and not just that but the bestselling 1 per cent to 4 per cent of writers in those genres. That cannot be seen as anything but selecting the most successful of writers in the most successful e-book genres.

. . . .

I couldn’t disagree more with this idea about what guides Amazon. It wants monopoly and will demand excessive discounts and low prices until it gets it. It does not care about authors or books except as a product to sell, and then only if the product is available from its own site – preferably exclusively. It would be a sad world if publishing became a by-product of Amazon’s profit margins.

Link to the rest at The Canberra Times

PG says this may be a new publishing meme – successful self-published authors bear a grudge against traditional publishing houses.

This is certainly true in some cases because traditional publishing houses treat almost all of their new authors badly with unfair contracts and stories of bad publisher behavior are easy to find.

PG notes that, although The Canberra Times mentions Hugh’s citation of terrible contracts and royalties, it immediately cites rebuttals from Mike Shatzkin and others that criticize Hugh’s data.

Absent from any criticisms of Hugh that PG has seen is any rebuttal of his claim that traditional publishing has abusive contract terms and horrible digital royalties. Where are the ringing cries that tradpub contracts are completely fair and include wonderful royalties? This strikes PG as something like the dog that didn’t bark.

What PG thinks should be of even greater concern for tradpub is that more and more authors who don’t bear any sort of grudge against the traditional route are making the self-publishing decision for the most fundamentally rational reason – they’ll make more money by self-publishing.

The Author Earnings data provides evidentiary support for such a conclusion. That’s why it’s so dangerous for tradpub.

From Joe Konrath:

Joe sez: There is a new www.authorearnings.com report by Hugh Howey and Anonymous Data Guy. This time they looked at the rankings of over 54,000 Amazon titles.

The data blew me away. But my imaginary Big 5 Pundit, Legacy John, wasn’t impressed.

Legacy John: His data is all full of lies and nonsense and nonsensical lies. I want to do one of those fisting things that you do.

Joe: You mean fisking?

Legacy John: Where you take someone’s post and insult him, line-by-line.

Joe: Actually, the sarcasm is only a by-product of debating poor arguments, faulty logic, and bad data. I use it to accentuate how shoddy and worthy of ridicule their points are.

Legacy John: Whatever. You say you’ll let traditional publishers have their say on your blog, so will you let me fask Howey or what?

Joe: Sure. Have at it. I’m all about contrary opinions.

Hugh: One week ago, we released our initial Author Earnings report on the prevalence and breakdown of nearly 7,000 genre e-books on Amazon’s bestseller lists. We only looked at three categories of genre fiction. Since that time, our spider has been hard at work gathering data on a wider variety of titles as it probes deeper into the lists. This time, over 54,000 titles were collected, practically every book on every Amazon bestseller list.

Legacy John: It is widely known by those who know things that the Amazon bestseller lists represent less than 2% of all book sales. This data is all bullshit, and I’ve heard that Hugh steals cars from the poor and tries to run over the elderly and military veterans and the disabled. Also, he invaded Peru.

Joe: Do you have any sort of evidence to back up these claims?

Legacy John: The truth needs no evidence.

. . . .

Legacy John: I’m pretty sure you lie about your sales, and are only popular because you got your start with the Big 6. You’re just angry they kicked you out because your writing sucks.

Joe: That’s actually not how it happened. If you read my blog–

Legacy John: No one reads your stupid blog, loser. Don’t cry sour grapes to me because no one wants to publish you.

Joe: I sense a little hostility.

Legacy John: Can you sense me flipping you off? Because that’s what I’m doing, right now, Konrath. And I’m going to Tweet that, too, and my six Twitter followers are going to RT and we’re all going to laugh and laugh like a cool high school clique who laughs at others. Then we’re going to take selfies combing our hair.

Link to the rest at A Newbie’s Guide to Publishing

From TeleRead:

If you were worrying you might run out of traditional-publisher vitriol since it’s been a week since Hugh Howey uncorked a gusher of it with his original post on Amazon web crawl analytics, fear not! Not content to analyze 7,000 genre titles, Howey and his Stats Guy went back and crawled the top 50,000 books on Amazon across all genres and categories for a single day (Febuary 7th) and ran some analyses on that data set (and, naturally, offered up all the raw data for other statisticians to crunch however they like).

. . . .

However, the most interesting analysis comes when he removes the top 1,000 titles and crunches the data for the other 49,000—since, after all, if the chart was being skewed by a few excessively popular outliers, removing the most popular titles should show a different picture. But not only does the chart look similar, the percentage of Big Five published books drops from 39% to 32%. The proportions of Amazon-published books also drops, also, while indie-published, small- or medium-publisher, and uncategorized single-author publisher each gain some points.

This would seem to suggest that, whereas Big Five publishing is more reliant on bestsellers, indie publishing draws its numbers from lots of smaller sales. The pieces of pie each indie book gets might be smaller, on average—but on the other hand, in terms of revenue, they don’t have a traditional publisher going around with a fork and taking away everything but the crust.

Link to the rest at TeleRead

From Author Earnings:

One week ago, we released our initial Author Earnings report on the prevalence and breakdown of nearly 7,000 genre e-books on Amazon’s bestseller lists. We only looked at three categories of genre fiction. Since that time, our spider has been hard at work gathering data on a wider variety of titles as it probes deeper into the lists. This time, over 54,000 titles were collected, practically every book on every Amazon bestseller list.

. . . .

As before, our spider is looking at a snapshot of sales rankings for one particular day — in this case February 7, 2014. Extrapolation is only useful for determining relative market share and theoretical earnings potential. Our conclusions assume that the proportion of self-published to traditionally published titles doesn’t change dramatically from day to day, and the similarity of this dataset, collected 9 days after the previous one, lends that assumption some support. By comparing successive reports over the coming months, we will be able to answer the day-to-day variance question more completely.

Of the ~54,000 titles sampled, ~11,000 (or 22%) were genre fiction. ~30,000 (60%) were non-fiction. ~900 (1.8%) were literary fiction. And ~10,000 (20%) were children’s books (young adult is not included in this last category). The preponderance of nonfiction in this sample does not reflect market share. Rather, it reflects the many hundreds of detailed Amazon sub-sub-sub-category bestseller lists for non-fiction (Health, Fitness & Dieting > Alternative Medicine > Holistic, for example), that make lower-selling nonfiction more visible to the spider than equally low-selling fiction.

In order to better understand where and why this data differs from the three genre categories of our original report, let’s look at four different segments: Genre fiction, literary fiction, non-fiction, and children’s books. Here’s how daily unit sales and gross dollar sales divide up among them:

 

As with our previous report, daily unit sales and dollar sales estimates are based on crowdsourced sales rates by overall Amazon ranking. Adjusting these sales rates does not greatly alter any of our conclusions, as all titles are affected. What these graphs represent, then, is a snapshot of Amazon bestseller rank—which has been observed to correlate neatly with daily sales figures—and price.

With all of genre fiction lumped together, the previous estimates of 70% market share still hold. Future reports will break these genres down further. The goal of this report is to look at all e-books, rather than a single subset.

. . . .

The roughly 11,000 genre titles from our 54K sampling look very similar to the previous dataset of Mystery/Thriller & Suspense, Romance, and Science Fiction/Fantasy. These 11,000 genre books now also include Action & Adventure, Horror, Historical Fiction, Erotica, and the like. Here is the breakdown of how these 11,000 genre titles were published, and we can see that including all genres has given a boost to small publishers when compared to our initial report:

This breakdown is very similar to our original report, with self-published authors commanding roughly the same share titles on bestseller lists as the Big 5 combined. Ah, but where on the lists are these books? By estimating daily sales according to rank on the overall list, we can get a clearer picture:

Not to belabor the point, but no matter how the unit sales by rank figures are adjusted, all titles are impacted equally, so the share of the pie remains largely unchanged. The above graph is a neat visual indicator of relative strength across Amazon bestseller charts. We can see that small publisher titles are well-represented on the lists but that the sales are relatively muted. As with our first report, self-published and Big 5 published genre works are roughly equivalent.

Gross sales and author earnings come next, where we anticipated a fall-off for self-published authors as we included all genres, but we’re seeing just a few percentage points difference from our earlier report:

Again, because of the higher royalties for self-published works, this daily snapshot of earnings reveals indie authors as a group making more than traditionally published authors:

. . . .

The lesson from these graphs and the overall genre breakdown at the very beginning of this report is that e-literature and e-literary-fiction do not make up a large market share, not as an overall share of all e-book sales. But they do pay better for self-published authors than the traditionally published. This is not a trivial observation. It is well known that self-published authors make 5.6 times the royalty rate as their traditionally published counterparts. But these graphs capture more than that. They also take into account the lower average price of self-published books plus the variable royalty rate that occurs below the $2.99 price point. More crucially, these charts capture the relative strength in number and ranking of self-published and traditionally published works. It is one thing to know that self-published authors make more, sale to sale. To see an earning snapshot that compares overall Amazon ranking with lower prices factored in is quite extraordinary. For non-fiction and literature both, the results here show that genre fiction is not the only place for self-published writers to carve out a portion of Amazon sales.

. . . .

Across the entire range of e-books, fiction and nonfiction, adult and children’s, genre and literary, indie authors make up a large slice of the overall Amazon pie. While indie market shares in bestselling nonfiction, literary fiction, and children’s fiction are still catching up with genre fiction—where indies already beat out the Big-5—indies have already made surprising inroads into those other categories, too. We see also that including all the other genres alongside the three top-selling categories of our first report did not appreciably alter the distribution of self-published titles across the lists.

. . . .

Let’s try something interesting. What if we ignore the top 1,000 e-books and look at the 49,000 titles that follow? By removing the most extreme outliers, we can see if the lists are top-heavy for traditionally published authors or if the most extreme self-published bestsellers are the exception as some claim. Frequently, self-publishing success stories are explained away as rarities. If this is true, once we remove the top 1,000 from consideration, we should see the needle move toward the traditionally published mid-list authors who are making a steady living further down the charts.

. . . .

The picture emerging from relative ranking on Amazon bestseller lists is that self-published authors have captured a large piece of Amazon’s total market share, more than any other single publisher and often more than all five major publishers combined. Looking at daily sales rankings for 54,000+ titles reaches well beyond outliers and beyond even what might be considered midlist e-books.

Our next report will step away from Amazon for a moment. Our spider has been crawling up B&N’s waterspout. What we have discovered there surprised us. Stay tuned.

Link to the rest at Author Earnings

From TeleRead:

So, self-publishing and traditional-publishing author Hugh Howey published a report on some data he pulled from Amazon and crunched . . . purporting to show some things about the number of self-published books compared to those from traditional publishers. This has touched off a lot of blowback in the last couple of weeks as everyone and their uncle has attacked the data set for not being comprehensive.

Howey has some interesting things to say, to be sure. Across 7,000 titles, Howey noticed that those from Big Five publishers tend to have the lowest average star rating, but the highest average price. He wondered if those two statistics might be related—that people’s amount of satisfaction relative to the amount they paid drives lower star ratings. He also noted that Big Five published titles made up only 28% of the titles on genre bestseller lists, and only 34% of daily genre unit sales (as estimated by sales rankings)—which is to say, the minority of the books sold. Furthermore, his data suggests e-books (in the form of Kindle books) made up 86% of the top 2500 and 92% of the top 100 selling titles from the genres.

. . . .

[N]o matter what the percentages are, it’s abundantly clear there are plenty of people making a go of self-publishing now, in ways that simply were not possible before e-books and especially the Kindle.

It used to be that the only way to get your book out there to a wide audience was to publish through a traditional publisher. When you did that, you didn’t have a lot of control over how it happened. The publishers controlled the vertical and the horizontal, and you took what crumbs they could give you and were grateful. But now there’s another way.

. . . .

Does it matter whether self-published author revenue makes up 30%, 40%, or 50% of daily revenue earned by authors from Amazon? Not really. All we need to know is that it’s a big, non-trivial chunk of revenue, no matter what the real size of the chunk actually is. Maybe Howey is off on the size of it in one direction or another, but there can be no question that it exists. And as he gets more data, the numbers should become more accurate.

. . . .

Small wonder that publishers are starting to feel threatened. What if everyone—or even just a whole bunch of people—decided they were no longer necessary? They can’t publish good books without decent manuscripts. Whether that’s actually likely to happen is not clear, but from all the vitriol coming out of publishing industry mouthpieces, it sounds like they’re certainly worried about it.

Link to the rest at TeleRead and thanks to David for the tip.

Passive Guy would add that publishers don’t have to lose all the good authors to self-publishing to be harmed, perhaps fatally.

Trade publishing is a narrow-margin business with high fixed overhead, primarily salaries and rent. It is also absolutely reliant on bestsellers. If a publisher manages to grab a Hunger Games or Fifty Shades, it has a great year or, with sequels and movie deals, several great years. Since the majority of books break even or lose money, those bestsellers are the difference between profit and loss.

The Author Earnings report focused on ebook bestsellers.

Big Publishing is psychically invested in the idea that indie books are those that BP could never have made money on.

If indie books aren’t bestsellers or if BP can grab the one-in-a-million indie author who somehow emerges from the primeval swamp and sells well, then the future of Big Publishing looks pretty much like the past did.

However, if the next Fifty Shades or Hunger Games starts indie and stays indie, the sun is setting on the publishing empire. The bean-counters at the big media conglomerates that own Big Publishing will send the band home and shut off the lights or, perhaps even worse, move the party to a Chuck E. Cheese in New Jersey.

The reason that Hugh and Author Earnings have generated such a hissy-fit in the publishing establishment is because they have intimated that which must not be spoken: Bestsellers ≠ Big Publishing.

From Joe Konrath:

Michael Cader has a two part report on Publishers Lunch, opining on Hugh Howey’s and Anonymous Data Guy’s Authors Earnings website.

The second part of his post is behind a paywall.

Now, I dislike paywalls, in much the same way I despise DRM. But Cader is entitled to try to earn a living, and if he wants people to pay for his silly opinions (unlike me, who offers silly opinions for free), that’s his prerogative. So rather than fisk him word-for-word as I’d normally do, I’m going to respond to specific excerpts according to the doctrine of Fair Use. If Cader, or anyone else who has read his complete piece, feels I’m missing his point or taking things out of context, feel free to chime in and correct me.

Michael: It’s a quiet “news” day, so we’re going to start looking at what a lot of people have been talking about this week: bestselling self-published author Hugh Howey’s “Author Earnings” website and “report.”

Joe: Congrats, Michael! In the first five words of your post, you managed to marginalize and denigrate Hugh Howey and his report not only once, but twice.

First, by claiming that the only reason you’re deigning this topic worthy of your time is because it is a quiet news day. Perhaps because there was no collusion to report on, or because Turow has been blessedly quiet lately. But we know the truth: Howey’s report was so popular his server crashed (over 50,000 unique hits in four days) and I haven’t seen Twitter and Facebook activity like this since the DOJ ruling.

Second, by putting “news” in quotes, you’re slyly stating that Howey’s report isn’t news at all.

Which amuses me, because that’s my feeling about “Publishers Lunch.” And for the record I only read your article because I was looking for a decent critique of Howey’s new venture, but I found you instead.

Michael: That information is being presented as revealing “data” about how the ebook world really works.

Joe: Actually, Hugh’s info is being presented as revealing how big a portion of Amazon’s sales are self-published vs. legacy published, while estimating how much authors make off of each type of publishing. Because Amazon is very often the largest generator of author income, authors are very interested in this information. Which is why Hugh and Data Guy named the site “Author Earnings” and not “How The Ebook World Really Works.”

I’m “also” going to sponsor an “intervention” to get you to stop abusing “quotation marks”.

. . . .

Michael: At the end of the day, asking questions and challenging assumptions ought to be valuable for us all. Sometimes being provocatively wrong is a very effective way of getting people to re-examine their assumptions.

Joe: Agreed. But not always. For example, right now you’re being provocatively wrong, but your two part article didn’t effectively get me to re-examine my assumptions. What it did was help me cement the opinions I already had about how the legacy industry tries to explain away its mounting fear of the future by using incomplete data (the same thing you accuse Howey of) to further your own agenda.

. . . .

Michael: The primary reason we do not have deep data and transparency about ebook sales, in both units and dollars, is because of Amazon. They keep their data private for competitive advantage in the marketplace, plain and simple. (BTW, if Amazon were to disclose their data in a Bookscan-style system, the other major players would happily participate.)

Joe: I’m transparent with my numbers. So are many self-published authors (search Kindleboards.com for “sales thread”). We get clear, detailed reports from Amazon, and we share them publicly.

Do you know who doesn’t share them?

Publishers.

Publishers, who are getting the same reports from Amazon as we authors get.

I post my numbers, down to the annual unit sales per title. The Big 5 don’t post theirs.

And I bet any of the Big 5 would throw a huge hissy fit if Amazon suddenly put out a press release saying “Simon & Schuster Sold X Number of Ebooks This Quarter.”

Publishers have a hundred year history of keeping their data private. And not only private, but cryptic and often indecipherable, as any author reading his bi-annual royalty statement can attest to.

Publishers didn’t invent Bookscan. They’ve never been forthcoming with their sales figures. Hell, you can’t even get a straight answer out of them as to exact print runs. There is NO WAY they’d ever start sharing information as you suggest. If they did, Amazon wouldn’t have to share numbers, because we’d all have the same information Amazon has. We’d have even more information, because publishers could also reveal their B&N, Kobo, and iTunes sales.

And when they do, I’ll ride a flying pig through a snowstorm in hell while wearing a T-Shirt that says “I Was Wrong”.

. . . .

Amazon, in a rare case of revealing data, mentioned there were over 150 authors who each sold over 100,000 ebooks in 2013. That’s 15 million ebooks that legacy publishers didn’t sell. And those are only 150 authors.

But earlier you discounted PR stories released by Amazon as “entirely in the etailer’s self-interest.”

Well, c’mon, Michael. Make up your mind. Do you want Amazon to disclose data, or not?

Now let’s take a closer look at Hugh Howey’s data. According to Data Guy:

“Our sample of the top 7,000 Amazon genre e-book bestsellers alone–just the small sample we took–adds up to $185M/year when the daily SP revenue is multiplied by 365. It’s right there in the spreadsheet we shared: the indie part of our sample adds up to $500,000 /day in gross dollar sales.”

So just the top 7000 authors in a few genres on a single retailer are doing better than your predicted $180M a year for the whole shadow industry of self-publishing.

. . . .
You also talk about the USA Today bestseller list. I don’t know how the list is compiled or weighted. I don’t care. I made a million bucks last year and didn’t appear on the USA Today list, even though I was an Amazon Top 100 Author dozens of times, often selling thousands of ebooks per day.

You also talk about Bowker and Codex and yes, I get it. Publishers Lunch is for publishers, and you can cite sources that show publishers they need not be concerned about the self-publishing revolution by going into explanations about how growth is flat or rising or falling.

Authors. Don’t. Care.

Studies and surveys and polls about ebook sales only matter to authors in terms of how much the author pockets.

And since publishers make their living off the backs of authors, perhaps they (and you) should be less concerned with what Peter Hildick-Smith is tracking, and more about what Hugh’s and Edward’s data shows: lots of self-pubbed ebooks being sold. Self-pubbed ebooks that earn 70% of list price for authors, not 12.5% of list. Self-pubbed ebooks that are taking up a good deal of real estate on Amazon’s bestseller lists—real estate once entirely occupied by legacy publishers.

Link to the rest at A Newbie’s Guide to Publishing and thanks to Michael for the tip..