Breaking out the data

This post is the compiled quotes and graphs from Data Guy in the comments to the May Author Earnings report – tidbits and addendums that he broke out to answer specific questions. If you didn’t read through the comments before, this will explain why you should!

First, for those who wonder about the split between science fiction and fantasy, or want to see how nonfiction is doing:

http://authorearnings.com/wp-content/uploads/2016/06/genre-units-w-sf-f-split.pngGenre Split by Units

http://authorearnings.com/wp-content/uploads/2016/06/genre-author-earnings-w-sf-f-split.pngGrenre split by Author Earnings

And for how well books are doing on KU by page length:

http://authorearnings.com/wp-content/uploads/2015/06/ku-bestsellers-by-page-count.pngKU Bestsellers by Page Count

Speaking of KU, there’s no straightforward answer on whether it’s the best choice overall. Specifically:

It looks like 57% of the 311,000 indie-published titles in our million-title dataset were in KDP Select (and KU).
Those Select titles accounted for 71% of the total indie sales (roughly half of that 71% were direct retail sales & half were KU full-pagecount-read sale-equivalents).

All my best,
Data Guy

A breakdown on why there aren’t more indie authors making a living:

Americans spend about $15 billion a year on trade books of all formats. After retailers and publishers take their cut, at most $3 billion actually lands in author pockets. Divided up perfectly evenly, that $3 billion could theoretically support 60,000 authors at the $50,000 level…

But instead, it’s getting divided up among at least 1,000,000 authors, if not more… including the estates and heirs of deceased authors. (I can see at least a million author names in our Amazon ebook data and top-selling Amazon print-book data, and that doesn’t even start to include the 32 million(!) lower-selling print book titles listed on Amazon right now, whose sales are too low to be captured in one of our scrapings.).

But lets imagine that there were only a million authors sharing the $3 billion right now. Which is an average of $3,000 each, if it were evenly distributed — but of course, it isn’t evenly distributed. Not even close.

It’s a Pareto distribution. And it’s one where the top 1% of authors — the top 10,000 — take home 50% of that $3 billion, making the average income among those top 10,000 authors around $150,000 a year. Here’s the thing, though: averages are pretty meaningless in a Pareto distribution. Because the top 1% of that top 1%, or just the top 100 authors — folks like James Patterson, Danielle Steel, Stephen King, Janet Evanovich, and the like — take half of the half. (Those 4 names alone account for 10% of it, if you believe Forbes magazine’s estimates.)

So the remaining 9,900 authors in the top 1% have to split what’s left: $750 million. And the next 10% down — or 1,000 of them — take nearly 50% of that, leaving only $375 million to be split among the remaining 8,900 top-1%-ers, bringing their average income to $43,000 or so. Which means that every single author below that top 10,000 — and the majority of those in it — are actually earning less than $50,000 a year from their writing.

All of which is a painfully longwinded way of saying that there just aren’t enough dollars being spent on books in the US to make “tens of thousands” of $50K-earning authors even a remote possibility.

Throw in foreign sales (again, concentrated in the top few thousand traditionally-published authors) and movie rights (which, again, are mostly going to the top 1% of 1% of traditionally-published authors) and we could maybe talk ourselves up to high single-digit thousands of authors earning $50K.

Which, interestingly enough, ends up being not that far from the number of $50K earners the AE graphs show.

Anyone who sets out with an expectation of earning a living from their writing is setting themselves up for almost certain disappointment. At best a low single-digit percentage of writers are ever able to. But that’s actually good news: before indie publishing became viable, the odds of doing so as an traditionally-published author were far worse — and for unpublished-but-querying traditional aspirants, basically infinitesimal.

The breakdowns in Audio:

http://authorearnings.com/wp-content/uploads/2016/06/audiobook-units.pngAudible Unit Sales

http://authorearnings.com/wp-content/uploads/2016/06/audiobook-earnings.pngAudible Author Earnings

the methodology:

For ACX sales, we calculated earnings based on 54% AL units (where AudibleListener subscribers spend credits) and 46% ALC/ALOP (A La Carte retail purchases & AudibleListener Off-Plan retail purchases) That’s the average percentage split we measured across a wide swath of titles by different authors. We used $14.95 for the AL retail allocation factor (again, the average we measured across a bunch of titles).

And then to compute AuthorEarnings we applied ACX’s 40% rate to that total.

I can’t recall if we factored in a $50 bounty for every 100 sales, although that was about the average. We might have left it out to be extra conservative. I can check.

If I recall, net author earnings ended up averaging around $5-6 a unit, but that’s off the top of my head.

All my best,
Data Guy

And now, for something completely different:

Publishing insiders seem to go out of their way to avoid mentioning that fact in the media. Publishers Weekly is particularly circumspect about it: they frequently publish Nielsen industry stats on the “Retail & club” sector, which lumps Amazon’s online sales in with bookstore sales at B&N, BAM, and the independents; but they NEVER show how sales in that sector actually break down between brick and mortar & online. 🙂

The only open reference I’ve ever seen was by Mike Shatzkin, in the comments on a recent idealog.com post, where he says:

“Amazon has something more than half the retail trade in books in the United States.”

I’ve privately seen official industry numbers that confirm exactly that, but I can’t share them here publicly without violating trusts and subscription terms-of-service. What I can do, instead, is point you at a few public indicators which you’ll find by googling.

1) “Bookstores are back!” articles typically cite stats from the ABA, whose member indie bookstores grew 10% in 2015, adding $50 million in print sales. Add in non-ABA independent bookstores, and that’s about $100 million total. Great news for the smallest booksellers, which make up 8% of all print sales.

2) But during 2015, Barnes & Noble lost over $300 million in print sales, more than three times what the small independents gained. The second-largest US bookstore chain, Books-A-Million, stayed flat, while book sales at Walmart, Target, and Costco — the core of Nielsen’s “Mass merchandisers” print sector — fell 9%, decreasing somewhere between $120 million – $150 million.

3) Despite all those publicly documented retail brick and mortar print-sales losses, industry stats show overall US print sales up almost 7%. There’s a reason for that…

Our own unpublished AuthorEarnings data on Amazon print sales in mid-2015, compared to what we measured in January and May of 2016, shows Amazon print sales up at least 20% year-on-year for the first five months of 2016, compared to the same period in 2015. As Amazon publicly announced, their ebook sales did grow in both dollar terms and unit terms in 2015. But what they didn’t say publicly is that their online print sales grew even faster.

Bottom line: Mike Shatzkin’s absolutely right. While the media is focused on ebook-vs-print, the really dramatic shift happening now is the migration of print-book sales from physical bookstores to online (especially Amazon).

Isn’t that interesting, now?

Here’s to Data Guy, who provides the most unexpected and awesome insights into the true state of the publishing industry!

16 Comments

Filed under FYNBOSSPRESS, MARKETING, Uncategorized

16 responses to “Breaking out the data

  1. Draven

    Notice in SF, Fantasy and especially Romance how indie is selling *multiples* of the big 5’s numbers. No wonder they hate it.

    • In fairness to the big 5, this isn’t taking into account brick and mortar store sales, which are mostly going to be tradpub. Also, the sheer amount of indie titles has to play a role.

      However, tradpub is seeing its power erode, make no mistake about it.

  2. Draven

    Also, it looks like 300 pages is a magic number.

    • (Nods) Based on the graph, it looks like anywhere between 200 and 400 pages is viable. Anything below that and people wonder about value for money; above, and it becomes a matter of time commitment.

  3. Reality Observer

    These numbers would terrify me, a newbie, if I didn’t realize that writers are not statistics.

    Write a good book. Do everything I can to properly publish it. Market it to the best of my ability. GET PAID.

    Rinse and repeat. If I’m actually trying and paying attention, I’ll get better at everything with each cycle. I should then move to the right on that Pareto curve – while other newbies enter and exit at the left end when they find out it isn’t a path to instant wealth and fame. How many of those 1% of the 1% started out there?

    • fynbospress

      Two things, really: 1.) as you pointed out, writers are not statistics. This is a description of the market, not a prescription for how it must be and always remain. It all starts with a good book, and we all started out from scratch.

      2.) The fixed-pie fallacy is a fallacy. There is no fixed amount of wealth in the system. Becoming a bestseller will not force someone else off “The List” and into poverty. Indie publishing has no limit to the number of its publishing slots, and publishing your book will never mean that somebody else “can’t get a publishing slot.” Selling a copy of your book to a reader doesn’t mean that somebody else just lost their turn to sell a book.

      3.) The potential market is almost unimaginably big; we think too small. The Martian proved that people are willing to drop $640 million into a good hard-SF story at the theaters, and it’s sold more than a million downloads, as well as making over $34 Million in DVD/BluRay. The book sales themselves haven’t done too badly, either. Granted, most of us will never get Ridley Scott casting our books – but on the other hand, this proves that there’s a vast audience out there who want to be entertained by a good human wave style SF story, if only we can find them and reach them.

      • All true. Also, the book you publish three years ago can be “discovered” and become a big seller later on. Unlike a trad-pub hardcover, it doesn’t have eight weeks to make it or be forever forgotten.

      • Uncle Lar

        I don’t know. Would not surprise me at all if Brings The Lightning doesn’t at least get optioned.
        Which at worst is free money, and at best is the most wondermous push an author could ask for.

    • I think the takeaway from the numbers is: avoid unrealistic expectations, and don’t get discouraged easily. I’ve been at it for close to three years and it’s only in the last six months that I started generating something like a decent income, and it’s still open to question how long that will last. Persistence is key. And a positive outcome is not guaranteed.

  4. These numbers showed me that I was doing a lot better than I realized. Which as I’ve mentioned before is both heartening, and scary at the same time.

  5. airboy

    My book purchases come from:
    Baen Monthly Collections
    or
    Amazon

    I’m a very heavy book buyer purchasing >1 per week. My wife prevailed on me to start purchasing ebooks if I was not certain I would reread the title. This was done to prevent my books from further taking over the home.

    Amazon is just convenient. The instant recommendations and ability to try a sample is providing free crack to an addict. I cannot get this in a traditional book seller. And being in a small town there is no local bookstore – only a books a million which has more floor space on “stuff” than books.

  6. Excellent post, and the comments provide valuable balance.

  7. mrsizer

    It looks as if Romance is the place to be. Sigh. Not my genre. I might someday take a stab at it as a “stretching exercise” everyone here recommends, but I don’t think I could (or want to) do it repeatedly.