According to numbers released today, e-book revenue for U.S. publishers doubled to over $2 billion in 2011, a number that means big changes have already occurred in the book publishing industry and that more are on the way.
I know 2011 seems like a million years ago considering what has happened in 2012 so far, but these are the first comprehensive numbers that show just how big e-books grew last year. The report comes from BookStats, a joint venture of the Association of American Publishers and the Book Industry Study Group; BookStats gets its data from nearly 2,000 U.S. publishers across the four major branches of publishing: trade (all the books directed toward regular consumers), K-12, higher education, and professional and scholarly publishing.
I generally focus on what's going on in trade publishing. Let me put it into perspective for you:
-- In 2010, the trade publishing industry had $13.90 billion in revenues and of that, $869 million was from e-books, or about 6% of the total
-- In 2011, overall trade revenues barely moved to $13.97 billion, an increase of 0.5%, while e-book revenues jumped to $2.07 billion, or about 15% of the total
That means that while the trade publishing industry was basically flat in 2011, over $1 billion in revenue ($1.2 billion, to be exact) shifted from print books to e-books.
The number $2 billion in and of itself is not a significant figure any more than its already huge size indicates. What will be significant is when the e-book revenue is high enough to force fundamental changes in the business (more than it already has). Once e-book revenue reaches, say, 50% of total trade publishing revenue, that will mean that a lot of support businesses like packagers, distributors and, of course, bricks-and-mortar retailers will have a different paradigm under which to operate -- not to mention the publishers themselves.
What the BookStats headline numbers obscure, however, is that many companies are already facing this reality. In the adult fiction category, where major publishers like Random House, Hachette and Simon & Schuster make much of their money, e-books are at about 30% of overall revenue. For these companies, fundamental changes have already taken place. At Simon & Schuster, for instance, digital skills have been embedded into every department so that all editors, marketers and publishers can make all decisions -- from title acquisition to editing to distribution to sales and marketing -- with e-books and digital publishing in mind.
And where there is change, there is opportunity. A whole ecosystem of companies have cropped up around the $2 billion in revenues that e-book generated in 2011. From large e-book conversion houses like Aptara and Innodata, which are now pivoting to offer more than just e-book conversion services; to e-book community sites like WattPad, which has raised $17.3 million in funding; to new kinds of e-booksellers like OnlyIndie, which starts every book off at $0 to build an audience; to digital-first publishers like Open Road Media and Open Air Publishing, which just raised $800,000. There is a whole new ecosystem of e-reader and reading device distributors. Macmillan, one of the world's largest trade publishers, just launched a $100 million fund to invest in educational technology start-ups to get in on the action -- and perhaps disintermediate itself. There are countless examples.
Things are changing, that's clear. The question is, at what pace will they continue to change?
The people I spoke with at the AAP about BookStats wouldn't guess whether e-books were going to double again to $4 billion in 2012, grabbing a third or so of market-share. What other reports have seemed to indicate is that growth in e-books has hit an inflection point and is slowing somewhat as the market becomes saturated. The explosive growth of tablet computers, however, suggests that growth in e-book sales could continue as massive companies like Amazon, Apple and Google continue to emphasize digital content on their tablet platforms (even though tablet owners may read fewer e-books than e-reader owners).
So, it's anyone's guess what the 2013 BookStats report will say, but one thing is nearly certain: E-books will continue to grow in 2013. How much? Your guess is as good as mine.
(For sport, let's guess. I'm going to say that e-books will in fact nearly double in 2012 to $3.9 billion. What do you think? Leave your guess in the comments below.)
