Podcast Audio | Posted by Phil Leigh on April 26, 2011
It was the first month when e-books outsold all other categories including paperbacks. According to the Association of American Publishers (AAP), domestic e-book sales tripled from the year-earlier month to over $90 million. Unfortunately for the established industry the news is probably worse than reported because AAP only records e-book sales for sixteen traditional publishers. Yet activity at Amazon.com confirms an enthusiastic surge of self-published titles not included in AAP numbers.
Even more significant, self-published authors are discovering that low price is a viable path to popularity. As the chart below illustrates, the statistical distribution of e-book sales at Amazon.com last Wednesday was bimodal. Over half of the top fifty titles sold at two price points. Sixteen sold for $12.99 and were provided by traditional publishers. But twelve sold for only $0.99 and were presumably self-published.
Amazon’s royalties for self-published e-books are either 35% or 70%. Those priced between $2.99 and $9.99 get 70% while those outside the range earn 35%. Yet even the 35% rate is generous by comparison to what’s offered at traditional publishers for any but top-selling authors.
Consider John Locke of Louisville. Two years ago at age 58 he became a part-time thriller writer. He’s authored seven novels about a retired CIA assassin and priced all at $0.99. As a businessman Locke was impressed that Amazon empowered him to earn a gross profit of 35% on an item selling for less than one dollar. His March Amazon revenues were $126,000 as he sold 370,000 copies, compared to 75,000 in January and only 1,300 in November.
As if Locke’s independent success isn’t sufficiently alarming to incumbents, the author adds he does not consider self-publishing to be an “on-ramp” to a “respected” publisher. He doesn’t like the added time it takes to get published in the traditional way, and he’s concerned that conventional editors may want to change his characters. Finally, he doesn’t believe incumbent publishers know how to market his novels as well as he does himself, both in terms of Internet promotion and pricing.
Yet the February e-book sales milestone has implications beyond publishing. For example, a successful movie requires a good story. When a friend recommends a movie, we naturally ask, “What’s it about”? We seek clues regarding whether we’ll like the story. We normally don’t ask about the actors or director until we have some concept of the tale. Saying it’s a John Grisham movie tells us infinitely more than commenting “Tom Cruise plays a freshly minted lawyer…”, or “Mathew McConaughey is a young attorney who…”
Self-publishing no longer permits the established book industry to be a near-gatekeeper for successful motion picture stories. Henceforth Hollywood can option stories from self-published authors at much lower prices. Yet the authors will do well financially because they avoid splitting motion picture royalties with conventional publishers who normally take the lion’s share.
However, the availability of popular original stories at low-cost has more profound implications. There’s always been an oversupply of people wanting to work in movies. Advancing electronics and computer technology has steadily lowered the cost of cameras, recording, and editing. Similarly, YouTube, iTunes, NetFlix, Amazon-Video-on-Demand, and similar Over-the-Top options provide new distribution platforms outside the control of Hollywood interests.
Thus, the cost of independent motion picture production and distribution is progressively dropping. Economical access to popular story scripts is a historically important missing ingredient that self-published authors can provide. It could prove to become the Internet-induced catalyst that forever changes the motion picture industry much like the Net transformed newspapers, book publishing, radio, and the record label businesses.
Consequently, when e-book sales surpassed paperbacks in February, the milestone had implications beyond book publishing and likely portends a radical transformation of the motion picture and television production industries as well.