The following overview provides key data for the two leading English markets, those of the US and the UK, as a benchmark for a more in-depth representation of trends and developments in places where English is not the first language of the average reader.
The debate on the ebook market in the US shifted gears and focus in 2013. While in previous years, the fast pace of the expanding market share of ebooks had hit the headlines, 2013 saw more complex patterns emerging.
Accounting for 20% of the US trade book market, ebooks have become an essential part of mainstream reading (see AAP BookStats 2013). By the end of 2012, over 1,000 ebook titles had been estimated to account for sales of more than 25,000 copies each (Publishers Weekly,March 18,2013). Major trade publishers have reported a market share for ebook revenues around the 30% mark (e.g. at Simon & Schuster), and 29% of revenues came from digital books in the second quarter of 2013, up 39% from the first quarter.
Nevertheless, a debate started about a plateau in ebook sales, as the previous strong growth patterns in sales had come down in the first half year of 2013 (see e.g. USA Today).
The total US trade book market showed a return to solid growth of almost 7% in 2012 (while the total US book market had shrunk again), after a previous slump in the first stages of ebook expansion, and “virtually all of that growth comes from ebooks rather than print books.” (as reported by PublishersLunch). In the first quarter of 2013, ebooks helped overall trade publishing to increase by 3.3% (AAP Statshot, as quoted in Publishers Weekly). Ebooks also continuously provide a lively push for US exports, which increased in 2012 by 7.2% to $833.389 million, with 135,526 million units.
By mid 2013, the developments had become more complex though, as in the first six months of 2013, as “overall ebook sales of $731.4 million actually declined — yes, declined (!) — for the first time across such a period, down $40 million or 5 percent. But adult ebooks were the single-largest of seven format breakouts (!) for the first time across such a period.” (Publishers Lunch, 19 September 2013) In units, ebooks accounted for 30% in this period (up from 27% in the first half of 2012, according to Bowker, quoted in Publishers Weekly, 20 September 2013)
Aside from commercial developments, several legal battles as well as pricing strategies, notably those of online retailer Amazon had a critical impact in shaping the US ebook market.
On July 10, 2013, a New York court found “by a preponderance of the evidence that Apple conspired to restrain trade in violation of Section 1 of the Sherman Act,” resulting in higher prices for ebooks, to the disadvantage of consumers (see a detailed summary at Publishers Weekly). In the hearings preceding this ruling, Apple had declared the company’s market share for ebooks through the iBookstore at around 20% (Publishers Lunch, June 13, 2013).
The court decision was widely commented as giving Amazon a significant advantage to strengthen its position in the ebook market further, with new challenges with regard to pricing strategies for both print and ebooks anticipated.
In late July 2013, for instance, Amazon had decided to discount major bestsellers, inlcuding Inferno by Dan Brown, between 50 and 65% in response to a campaign of discounting by Overstock, which subsequently ended the skirmish in early August (see Publishers Weekly, August 12, 2013).
The other litigation, on Google’s practice of scanning huge numbers of titles, both in and out of copyright, from libraries, continued to -grind on- in its eigth year, after the company settled with publishers as well as the Association of American Publishers (AAP) (see Silicon Republic, October 13, 2012), but it is still in a confrontation with the American Author’s Guild (for a ccincise status and assessment, see e.g. Publishers Weekly, July 4, 2013).
Key Indicators | Values | Sources, comments |
Book market size (print + electronic [p+e], at consumer prices) | Publishers’ net sale revenues: $27.124 billion | Down from $27,124 bn. Source: AAP/BISG; data for 2012. Nielsen reported print sales to have declined by 9.3% in units, in 2012, against 2011. (Quoted in PublishersLunch, 7 January 2013). No comparable data available for ebooks. |
New titles per 1 million inhabitants | 1116 | |
eBook titles (available from publishers) | 1,700,000 | Amazon claims in early 2013 to have 1,700,000 ebook titles in their catalog, the vast majority of which are in English. |
Market share of ebooks | ca. 20% of all trade sales | AAP/BISG; data for first half 2013. |
Key market parameters | No price regulation |
The US publishing industry and the US public have embraced new reading formats like no other nation. For readers, ebooks came as a natural and permanent choice in addition to printed books. Publishers have effectively responded to consumers’ fast-growing acceptance of new reading devices by constantly redefining and expanding new concepts for books.
“The eBook phenomenon continued in 2012 with eBooks ranking, for the first time, as the year’s #1 individual format for Adult Fiction” was the headline in the BookStats report on US publishing in 2011, issued jointly by the Association of American Publishers (AAP) and the Book Industry Study Group (BISG) in July 2012. The $27.2 billion 2011 US book market declined by 2.5& from $27.94 billion in 2010, while unit sales grew by 3.4%, as did the number of new print titles, from 328,259 million in 2010 to a projected 347,178 million in 2011 (Bowker, June 5, 2012).
By the end of 2012, with incomplete data available for the entire 12 months, a somewhat complex picture took shape. Unit sales of print books had fallen over 9% according to Nielsen BookScan, continuing the decline seen a year earlier, from 2010 to 2011 (Publishers Weekly, January 6, 2013). Print sales were largely driven by a few bestselling titles, notably E.L. James’ Fifty Shades of Grey trilogy with 14.4 million print units sold, followed by Suzanne Collins’ Hunger Games books with 9.6 million. “Together, these two authors accounted for over 4 percent of all print sales for the year” (data from Nielsen BookScan, quoted in PublishersLunch, January 7, 2013).
Despite the decline in print, according to the American Association of Publishers (AAP), based on data from September 2012, the overall bookmarket reflected “the trends we’ve seen all year: continued publishing growth overall with significant increases in children’s/young adult (especially eBook format) and slight erosion in religion publishing” (“StatShot” for September 2012, quoted in PublishersLunch, January 25, 2013).
Similarly, the US Census Bureau reported that bookstore sales increased by 3.3% in November 2012, largely compensating for prior losses (Publishers Weekly, January 15, 2013). As for holiday and year-end sales, independent booksellers widely congratulated themselves on the highly positive development in sales (Publishers Weekly in a summary for this report). At the same time, Barnes & Noble reported a decline of 8.2% in comparable store sales for the nine-week holiday period. Digital NOOK sales decreased by 12.6% compared to 2011, with revenue from digital content going up by 13.1% and device unit sales going down (Barnes & Noble press release, January 3, 2013).
Overall, the spectacular growth in ebooks since the fourth quarter of 2010 seemed to have come to a halt by 2012, arguably the result of saturation in the migration of readers from print to digital. By September 2012, ebooks “comprised just 19 percent of trade sales for the month—their lowest percentage since December 2011” (AAP StatShots September 2012, summarized by PublishersLunch, January 25, 2013). The “revolution has reached an evolutionary stage,” according to Mike Shatzkin (“The Shatzkin Files”, August 13, 2012).
Still, the number of Americans over age 16 reading ebooks rose in 2012, from 16 to 23%, while those reading printed books fell from 72% to 67 (PewInternet, “E-book Reading Jumps; Print Book Reading Declines,” press release, December 27, 2012).
In fiction, the share of ebooks was 34% in units and 31% in value in the first quarter of 2012, according to the AAP (“StatShots”); for the first time, ebooks—which on average sell at a significantly lower retail price than printed copies of the same work—at $282.3 million brought in larger revenues than hardcover sales at $229.6 million, sparking comments such as: “It’s the end of books as you knew them” (ZDNet, June 18, 2012). The change was mirrored in purchases and ownership of devices as well as in reading habits.
The shift in devices, with tablets gaining on dedicated ereaders, continued throughout 2012, according to research by BISG, and the recent increase in tablets was notably fueled by Amazon’s Kindle Fire, which was the first choice of 17% of ebook consumers, as compared to 10% who preferred Apple’s iPad. Barnes & Noble’s NOOK increased from 2% in August 2011 to 7% in August 2012 (“Tablets Gain on Dedicated E-readers, Says New BISG Study,” Bowker press release, November 14, 2012).
US title production grew significantly, as it had already done in previous years, driven notably by self-publishing, roughly tripling since 2006 to 235,000 titles for print and digital combined (“Self-Publishing Sees Triple-Digit Growth in Just Five Years, Says Bowker,” Bowker press release, October 24, 20012).
In 2012, the US publishing industry began to witness the transition from print to digital as well as the transformation of the very business practices governing the sector. At first, a battle over who controls pricing in ebooks came to a seminal settlement. Only a couple of months later, the announcement of the merger between two of the largest trade houses, Random House and Penguin, was understood to be just the first step in a major process of industry consolidation that, according to most commentators, was set to redefine the industry (“Random House, Penguin Agree to Merge,” Publishers Weekly, October 29, 2012; for a critical economic analysis of the merger, see Adam Davidson’s “How Dead Is the Book Business,” in the New York Times, November 13, 2012).
In April 2012, a filing by the US Department of Justice (DoJ) in New York against five large publishers and Apple defined what may become the key battle over the terms and conditions for the ebook economy in the US and beyond. After a standoff between Macmillan and Amazon in early 2011, the DoJ alleged that a scheme known as the Agency Pricing Model, in which publishers set retail prices for their ebooks, came from an “ongoing conspiracy and agreement” between defendants, causing “e-book consumers to pay tens of millions of dollars more for e-books than they otherwise would have paid” (quoted in PublishersLunch, April 11, 2012).
Three of the publishers — HarperCollins, Hachette, and Simon & Schuster — settled with the DoJ by promising for two years not to “restrict, limit, or impede an e-book retailer’s ability to set, alter, or reduce the retail price of any e-book or to offer price discounts or any other form of promotions to encourage consumers to purchase one or more e-books.” Macmillan and Penguin argued that they “did not act illegally” and therefore declined to settle (John Sargent, Macmillan, quoted in PublishersLunch, April 11, 2012).
The settlement between HarperCollins, Hachette, Simon & Schuster, and the DoJ was approved on September 7, 2012, more swiftly than had been expected (Publishers Weekly, September 7, 2012). The settlement almost instantly resulted in publishers reconsidering their pricing policies and renegotiating their agreements with many of their ebook retailers, including Amazon (see the discussion of HarperCollins in PublishersLunch, September 11, 2012; for a detailed overview of all related lawsuits, see Publishers Marketplace, September 8, 2012; for an initial assessment of the agreement on pricing policies, see PaidContent, September 11, 2012). By December, a settlement had also been reached between the DoJ and Penguin (Department of Justice press release, December 18, 2012).
By spring 2012, 21% of adults had read an ebook in the previous year, versus the 17% who reported doing so in December 2011. This is part of a broader “shift from printed to digital material,” according to Pew Research, as 43% of Americans ages 16 or older had read either a book or “other long-form content” in digital format (Pew Research Center Publications, April 4, 2012).
The US ebook market in 2011
The increase of ebook sales “was the major story in 2011”; in the trade segment, sales of ebooks rose to $2.07 billion from $869 million, as units increased 210% to 388 million. In adult fiction, ebook revenue increased by 117% to $1.27 billion, representing 30% of segment sales (Publishers Weekly, June 18, 2012). Online retailers reported growth of 35%, and direct-to-consumer sales grew by 57%, while sales through brick-and-mortar stores fell by 12.6%.
After the collapse of the bookstore chain Borders in 2011, Amazon “appears to have been the big winner,” with a share of 29% of overall spending on books in the first quarter of 2012; % Barnes & Nobles’s share of the book market rose from 19 to 20% (Bowker Market Research’s “PubTrack Consumer Survey”, quoted in Publishers Weekly, July 27, 2012).
The 2011 end-of-year holiday season had already seen a significant spike in sales of devices. The share of US adults owning a tablet nearly doubled, from 10 to 19%, equaling the ownership of ereaders, which was also at 19%, with stronger adoption by women than men (Pew Internet, January 23, 2012). However, another survey only a few months later pointed toward tablets outperforming ereaders as the preferred ebook reading device (Bowker with BISG, April 30, 2012).
The work of authors has also undergone broad structural change, as self-publishing has become the path to market for an increasing number of books. Based on ISBN statistics, Bowker has counted 211,269 self-published titles for 2011 (compared to 133,036 in 2010), with fiction accounting for 45% of the titles. The average retail price is $6.94 for self-published fiction. eBooks represented 41% of self-published units, yet a mere 11% of sales, as the average self-published ebook sold for $3.18; in comparison, trade paperbacks had an average price of $12.68 and hardcovers averaged $14.40 (Publishers Weekly, June 4, 2012).
Bowker announced the creation of a self-published bestseller list; the segment was represented strongly in overall charts, a development that became a game-changer with Fifty Shades of Grey, a three-volume novel by E.L. James, which (as mentioned earlier) was originally written as fan fiction for the Twilight series. The reworked version was first self-published. In early summer 2012, it was published by major traditional publishing houses internationally and became a bestseller, first in the US and then in countless translated editions around the globe for autumn 2012 and the end-of-year holiday season 2012.
In the meantime, all sectors and elements in the value chain of publishing have been confronted with new players and new business practices, notably as the largest retail platforms assume more and more roles that had been previously taken care of by specialized actors. eBooks and reading devices are now host to hefty controversies with regard to market access, business practices, and consumer attention. Amazon launched and then scaled up its own publishing activities. Even libraries have found themselves becoming battlefields, as a controversy between public libraries and US publishers took shape over lending rights for ebooks when several major groups, including Simon & Schuster, Hachette, and Penguin, decided to withhold titles from library loans (The Bookseller, February 16, 2012).
Still, not all segments of the book market seem to follow one and the same rapid transition from print to digital, as reports with regard to children’s books indicate, pointing to a remarkable preference for printed book by many of the youngest readers (for a detailed discussion, see the summary of a Scholastic study, “Children still prefer reading physical books,” in The Bookseller, January 16, 2013, and a similar study by Bowker, “The Children’s Digital Market: Still Uncharted Territory,” quoted in Publishers Weekly, January 16, 2013).
Earlier Developments (through 2011)
The popularity of ebooks was demonstrated by impressive growth rates. According to a survey by AAP and BISG, the total share of ebooks in the trade market rocketed from 0.6% in 2008 to 6.4% in 2010. Although that number represented a small amount of the total market for all formats, it translated to total net revenue for 2010 of $878 million from 114 million units sold. From October 2010 through the 2010 holiday season into early 2011, ebook sales exploded month by month. In adult fiction, ebooks accounted for 13.6% of the net revenue market share in 2010 (AAP/BISG, data for 2010; AAP February 2011 sales report).
According to Publishers Weekly, sales of printed books dropped in the first half of 2011 by 10.2% compared to the same period in 2010, to 307.1 million units, mostly due to ebook purchases but also to reluctant consumers. Adult fiction was hit hardest, with a decrease of 25.7% versus the same period in 2010, according to Nielsen data. Nonfiction decreased by only 2.7%. Mass-market paperbacks showed a decrease of 26.6% by units sold, with the most popular genres—romance, mystery, and science fiction—hardest hit (source: various reports summarized by Publishers Weekly, July 8, 2011).
Consumers’ attitudes as reported by BISG reflected the deep and rapid change in the industry, particularly the revenue losses of hardcover and paperback sales. About 67% of ebook buyers said that they increased spending on ebooks in May 2011, up from 48% in September 2010. Just over 50% of ebook buyers said that they cut back on their purchases of printed books in May 2011, and 45% said they reduced spending on hardcover books.
Dedicated ereaders as well as multifunctional devices continued to gain in popularity in the spring of 2011 as the favored way to read ebooks, while computers continued to lose ground (BISG, “Consumer Attitudes Toward E-Book Reading,” quoted in Publishers Weekly, August 19, 2011).
The leading actor in the ebook market, Amazon.com, also dominated the US retail market for printed books. More than 70% of ebook buyers used the store to buy ebook titles, an increase of 60% over the previous year. For the second quarter of 2011, Amazon reported revenue growth of 51% to $9.91 billion, of which $5.41 billion was in the US ($4.51 billion in Europe). Amazon’s Kindle store offered 950,000 ebook titles, of which 800,000 cost $9.99 or less; 110 of the 111 titles on the bestseller list of the New York Times were available as ebooks for the Kindle.
The second heavyweight player in retail, and the strongest competitor to Amazon, is Barnes & Noble (barnesandnoble.com or BN.com), with more than 2 million ebooks available. Although BN.com’s total revenue increased by only 2% to $1.42 billion (first quarter ending July 2011), its digital content and ereader device (NOOK) segment grew 140% and represented 19.5% of total sales. With an investment from Liberty Media of $204 million, Barnes & Noble announced plans to become the leading bookseller in the US.
BN.com stayed ahead of Apple’s iBookstore and iTunes in May, with about 27% of ebook buyers going to BN.com, while ebook buyers using the iBookstore or iTunes stayed below 10% (and actually fell slightly from January) (BISG, May 2011; Publishers Weekly, August 19, 2011).
In the first half of 2013, 20% of the UK book market was digital, up from 15% the previous year, and 30% of fiction revenues came from ebooks, with the rate of digital migration slowing down in similar ways as in the US.
Meanwhile the print book market declined in this period by 6.7% against the first half of 2012, yet with over a third of this drop coming from slower sales of E.L. James Fifty Shades of Grey superseller.
Overall in 2012, the increase in ebook sales for the first time compensated for the loss in print: “The invoiced value of UK publisher sales of books rose 4% in 2012 to £3.3bn with a 66% increase in digital sales offsetting a 1% decrease in physical book sales.” (The UK Book Publishing Industry in Statistics 2012. UK Publishers Association)
In the first half of 2013, the battle around ebook pricing, started in late 2012, has continued, as at first Sony, closely followed by Amazon.co.uk, launched a campaign of 20p ebooks, resulting in a significant increase of volume shipped for some bestselling titles, such as Yann Martel’s Life of Pi selling 406,000 ebooks, or Jonas Jonasson’s Hundred-Year-Old Man with 396,000 ebooks sold. Certain titles of genre fiction, like Sylvia Day’s erotic bestseller Entwined in You recorded up to 55% of sales from ebooks, while ebooks of narrative nonfiction, like James Bowen’s A Street Cat Named Bob, accounted for a more modest 22%, with Dan Brown’s Inferno, the top bestseller in print, recorded 29% digital sales.
Random House was the most successful publishing house in the UK, with a 12.6% share in the British print book market. Together with Penguin, which merged with Random House effective July 1, 2013, the new group controls some 24.2% of the UK book market. Hachette UK came in third (data from Nielsen/Kantar Worldpanel and Nielsen BookScan, quoted together with original research in a “Half Year 2013 Review” by The Bookseller, July 19, 2013).
Another round of deep discounting of ebooks was launched in the summer by Nook and Amazon, offering frontlist titles at 99p (The Bookseller, July 31, 2013).
Early 2013 also saw the first publishers to introduce a “refined agency model” with online retailer Amazon.co.uk. Notably HarperCollins and Hachette UK removed text indicating that the retail prices for their books were “set by the publisher” after an antitrust investigation by the European Commission. This moved resulted in a slight drop in prices ( The Bookseller, April 4, 2013).
At the book chain Waterstones, a major restructuring was announced in spring 2013 in response to the “unforgiving bookselling environment” (CEO James Daunt, quoted in The Bookseller May 5, 2013).
Key Indicators | Values | Sources, comments |
Book market size (p+e, at consumer prices) | £3.1 billion | PA Statistics Yearbook 2011 |
Titles published per year (new and successive editions) | 149,800 | PA Statistics Yearbook 2011 |
New titles per 1 million inhabitants | 2,424 | |
eBook titles (available from publishers) | ca. 1,750,000 | eBook titles available at Amazon UK, in early 2013, of which the vast majority is in English. |
Market share of ebooks | 12.9% | January to June 2012 (PA release; September 18, 2012); eBook market estimated at £250 million at the end of 2012 (The Bookseller, January 18, 2013) |
Key market parameters | No price regulation; VAT: 0% for print, 20% for ebooks |
In all 2012, ebook sales doubled their volume for the top trade publishers in the United Kingdom, forming a digital market worth around £250 million, “putting the overall book market back in the black after a transitional 12 months for the trade,” according to numbers collected by The Bookseller (“E’ market nears £300m”, The Bookseller, January 18, 2013). At Random House UK, digital reportedly accounts for over 22% of revenue (CEO Gail Rebuck in a letter to her staff, The Bookseller, December 19, 2012). Hachette UK reported 250,000 ebook downloads between Christmas and Boxing Day alone (The Bookseller, January 7, 2013).
Among the 65 million estimated downloads, fiction clearly dominates the ebook charts, led, as in most markets, by E.L. James’ Fifty Shades of Grey trilogy, followed by Suzanne Collins’ Hunger Games, and 43 out of the top 50 titles were brought to market by traditional publishers (The Bookseller, January 11, 2013).
In the first half of 2012, digital sales accounted for 12.9% of the total value of sales, up from 7.2% in the equivalent period of 2011. Sales of digital fiction increased by 188% in value in that same period, and overall digital sales accounted for £84 million for the January to June period, compared to £30 million for the same period in 2011, according to the British Publishers Association (The Bookseller, September 18, 2012).
The continuing shift toward online ordering and of digital replacing physical reading altogether has much broader implications. As a survey by Deloitte frames the issue, “the majority of UK retailers have simply got too many stores” (The Bookseller, March 21, 2012). An ever-broader sector of the market for content has moved online. Amazon alone accounts for 21% of the British entertainment market (The Bookseller, July 24, 2012).
The resulting momentum brought about some surprising new coalitions of (primarily) brick-and-mortar book chains; for instance, in May, Waterstones started selling Amazon’s Kindle devices, Kobo engaged in a partnership with 100 WHSmith stores, and Barnes & Noble —in preparation to enter the UK market as their first step in a broader strategy of going international— began selling its NOOK in 37 John Lewis retail stores, 60 Blackwell_’s stores, 6 _Foyles stores, and 700 Argo stores, as well as online in October 2012. In April 2012, Sony entered the field of content offerings by opening its Reader Store UK, with digital editions of old and new fiction and nonfiction books. Retailers in the traditional book sphere also secured their part of the pie: Tesco acquired the ebook platform MobCast with 130,000 ebook titles from British publishers (buchreport, September 5, 2009).
From numerous new dedicated ereaders under £70 to multifunctional tablets of various brands and operating systems —and a new strong push in early fall of 2012 before the end-of-year holidays— the underlying sales trend points to a shift from dedicated black-and-white gadgets to full-color tablets. At this point, though, dedicated ereaders still occupy a significant market share. One-third of Britons owned an ereader as of early 2012, and 40% of ebook readers do so on a Kindle. However, tablets have more than doubled their market share to approximately 12% among readers of ebooks (The Bookseller, May 15, 2012; for the evolution of devices, see The Bookseller, September 10, 2012).
Debates Shaping the Book Industry in 2012
The one piece of news that clearly triggered the most heated debate within the industry was the proposed merger of Random House and the London-headquartered Penguin in late October 2012, a deal resulting in a “supergroup to redefine trade” (The Bookseller, November 2, 2012).
For the broader reading public, however, another story probably induced stronger emotions and succeeded in encapsulating the entire scope of change and transformation of books: “Amazon’s billion-dollar tax shield” (Reuters special report, December 6, 2012). It was revealed by numerous media reports that the US retailer saved hugely by having set up European headquarters in tax-friendly Luxembourg, and optimized its management of revenues across complex fiscal networks. As a result, Amazon would charge the full VAT of 20% on ebooks in Great Britain, while paying only 3% of taxes at its Luxembourg holding. The uproar among consumers, which included calls for a boycott, was huge. In December 2012, the European Commission ordered Luxembourg to close the VAT loophole (The Guardian, December 21, 2012).
Other events also show how much the book business has evolved.
The already stiff competition over pricing in the UK was further hightlighted when both Amazon and Sony started promotional campaigns through their ebook platforms in early fall, offering scores of bestselling ebook titles at a radically low retail price of 20p. Discounts of up to 97% raised author concerns that such a downward spiral on prices might ruin the industry. Publishers recorded significant volume growth, which translated into extra value, as the promotion cost was pocketed by the distributors (“Ebook price war sees discounts reach 97%”, The Guardian, September 18, 2012; for a detailed analysis by value and volume and publishers, see The Bookseller, January 24, 2013).
In January 2013, news broke that one of the main retail chains for all kinds of media content, including books, had to go into administration. HMV operated 239 stores across Britain, with analysts pointing to competition from online channels as a main cause for the failure (The Bookseller, January 18, 2013).
The value chain around ebooks has not just been upset by confrontations between brick-and-mortar retailers and online outlets or by aggressive pricing strategies. Libraries have also raised the concerns of publishers because of their desire to include ebooks in their offerings, a development that publishers think could significantly reduce the number of book buyers. Confronted by major budget crises and severe cuts in government support, British libraries are struggling to cut costs and better serve the public. As a result, some 71% of libraries have either already introduced e-lending or plan to do so imminently (“UK Library E-lending Evolves”, Publishing Perspectives, November 21, 2012).
Publishers in the US and UK have reacted by strictly limiting options to lend their books. At the consumer level, digital rights management (DRM) embedded in ebooks further limits their ability to lend books to friends. In the UK, the Intellectual Property Office has stepped in by proposing new legislation that will allow “greater freedom to use copyrighted works such as computer games, paintings, photographs, films, books, and music, while protecting the interests of authors and right owners,” targeting possibilities for private copying. The British government is expected to have new regulations in place by fall 2013 (PublishersLunch, December 20, 2012). Such a move would further enliven the debate on the use of DRM altogether.
Earlier Developments: 2010 and 2011
In 2011, sales of books by UK publishers fell 2% compared to 2010 to £3.2 billion, with a 5% decrease in physical book sales outweighing a 54% increase in digital sales.
All digital formats—ebooks, audio book downloads, and online subscriptions—accounted for 8% of the total invoiced value of book sales in 2011, up from 5% in 2010. Consumer ebook sales in 2011 constituted 6% of consumer physical book sales by value. 13% of academic and professional book revenues came from digital products (UK Publishers Association (PA), based on Nielsen data, May 1, 2012).
As in previous years, the end-of-year holidays in 2011 resulted in yet another push from print to digital, as mirrored in statistics reported by Nielsen BookScan; print sales in fiction declined by 30% in the three weeks after the holidays, according to The Bookseller. In the week of December 31, 2011, fiction hardcover sales were down 14% and paperbacks declined by 34% (The Bookseller, January 23, 2012). At the same time, sales of printed works showed significant decline in the UK and other English-speaking markets. According to statistics presented by Nielsen BookScan in February 2012, in the UK “the print decline accelerated in 2011, while in the first four weeks of 2012 print sales have dropped 12 percent, with fiction sales down almost 26 percent” (The Bookseller, February 8, 2012). In the first quarter of 2012, eight out of the top ten UK publishers recorded double-digit drops in print sales (Nielsen, The Bookseller, April 13, 2012).
In its annual report for 2010, the PA disclosed growing digital sales figures, demonstrating the acceleration of the digital market in the UK. The overall size of the digital market stood at £180 million, having increased by 38% from 2009. Most striking was the rapid growth of total consumer digital sales, which increased by 318% from £4 million to £16 million between 2009 and 2010. This figure includes consumer ebooks, downloads, and audiobooks.
Consumer sales of ebooks and downloads account for 11% (from 2% in 2009) of the British book market. The field leaders are still academic and professional publishers, whose sales doubled over three years, amounting to 72% of all digital sales. According to the PA, academic publishers were involved in digital publication before trade publishers, mainly because many of the bigger scholarly journal publishers are also the largest academic and professional publishers. The trade side started to take off only after the opening of a localized UK Kindle store in August 2010 and with the arrival of the Apple iPad in the UK (communication from the PA for this study).
In spring 2011, Penguin reported growth of 180% in global ebook sales against early 2010, constituting 14% of overall sales across the Penguin Group (21% in the US, and 8% in the UK) by late summer of 2011. Penguin offers nearly 6,500 ebook titles on their website (Penguin company information). Independent publisher Bloomsbury also benefited from the flourishing digital market and changes in consumer behavior. The company reported an increase in ebook sales from $131,000 to $2.3 million in 2010, with ebook sales running just under 10% of trade print sales. The success was mainly derived from Man Booker Prize_–winning novelist Howard Jacobson and the international bestseller _Eat, Pray, Love by Elizabeth Gilbert.