The 2011 EBook Roundup: “What the hell happened?”

Jan 19, 2012


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BEST PRACTICES SERIES

The holiday season has come and just like every other year, publishing sales reports are coming in and people are declaring that sales weren't good enough. The big news was of course ebooks and e-readers. Amazon reported Kindle sales of...well, no, Amazon won't report actual numbers-let's face it, they don't have to- but they did say that consumers were buying over one million Kindles per week in December and three Kindle models dominated their top sellers' list for the better part of December.

According to Nielsen BookScan, print copies of adult fiction and mass market paperbacks were the big losers in 2011-due, in part to higher ebook sales in both categories. Nonfiction print sales were less hard-hit but were still down 3.1% in unit sales.

After a year of disappointment-flat overall sales, the ebook sector not growing fast enough, the loss of Borders-the publishing industry spent the Christmas season waiting and watching hopefully. While it's still too early for perfect data results, Christmas 2011 digital book and e-reader sales do seem to have matched expectations. However just "meeting expectations" may not be good enough anymore.

Forrester Research estimates that Barnes & Noble sold 2 million Nook tablets since the release on Nov. 17, 2011. James Iannone, president of B&N's digital products reported an increase in paper book sales of 4% over 2010, the first increase in five years. One might be tempted to look at results like this and think, "Wow, things really are getting better-ebooks will save us all!" However, you'd probably be wrong. Barnes & Noble is now predicting huge financial losses in 2012, so large that increased ebook and Nook sales have no hope of offsetting them. Projected losses per share went from 30 cents to 70 one month ago to $1.10 and $1.40. According to the Wall Street Journal, while sales for the Nook Tablet were high, sales for the lower-end Nook Simple were lower than expected and had an effect on associated merchandise.

So what do you do with all the Nook Simples when everyone wants color? Well, by mid-January, B&N had begun offering the Nook Simple for free, with a one-year subscription to the New York Times. But more importantly, the costs for implementing Barnes & Noble's big leap into ebooks-research and development, distribution, advertising, etc-have all taken a big bite out of the company's bottom line. That's why it is looking at possibilities such as splitting off the Nook from the main business and selling shares, or even selling the Nook division entirely.

And therein lies the problem; "Books don't sell" has been the rallying cry for so long that it seems like any sales reportage short of "all books are completely sold out!" can be viewed in a negative light. There's always something to offset any actual profit when your margins are so tiny. If you don't exceed financial predictions (and exceed them by a lot) you're pretty much out of luck. The out-of-nowhere bestseller is what has historically energized the industry. Harry Potters are few and far between but the mega-bestsellers show up eventually.  Hey, the Harry Potter books are scheduled to go on sale in ebook form in 2012 through the Pottermore website. So next year when the post-Christmas sales figures come out, it should be interesting to see just how much of an impact on ebook sales the young wizard will have. (Even though they will only be sold through the Pottermore website and not Amazon or BN.com.) So get ready for Harry Potter and the Ebooks that Saved Publishing-I wonder if it will be enough?