Don't Be Confused By Amazon's Ebook Sales Claims

from the not-as-big-as-you-might-think dept

Amazon seems to have a way with presenting information about its ebook sales in a way designed to mislead people into thinking it's more significant than it really is. You may remember last year, when Amazon announced that on Christmas day, for the first time ever, ebooks outsold regular books. That got a lot of press coverage. But it was somewhat meaningless. That's because on Christmas, plenty of people who received a Kindle probably decided to buy an ebook or three. And it's also a day when fewer people have reason to go to Amazon and buy a physical book, since they may have just received some books as gifts (though, to be fair, some may have received Amazon gift cards too, but you don't necessarily need to use them that same day).

The latest is Amazon's recent claim that ebooks are outselling hardcover books 180 to 100. Another nice headline that the press picked up, with various stories suggesting that ebook sales are now really significant. This bothered some folks who dug much deeper into the numbers over at the MeAndMyKindle blog:

So what happens if you ask how many "printed books" Amazon sold, instead of using the smaller number of "hardcover books"? Following the same ratio, Amazon would be selling approximately 334 paperbacks for every 100 hardcover books -- or a total of 434 printed books for every 180 ebooks. That would mean over 70% of the books Amazon sells are still printed books -- 180 out of 614 -- with ebooks accounting for just 29.3% of all the books that Amazon sells.

Add to that the twin facts that Amazon covers 90% of ebook sale and that it only represents 19% of the overall book market, and you get an estimate that ebooks represent about 6% of the total market. This is certainly a non-zero number, and there's no doubt that it's growing, so it's a trend to watch out for. But we're a long, long way from ebooks really being a majority of the market. As the blog points out, even Amazon admits that no ebook has sold more than a million copies:

According to Amazon's own figures, no ebook has ever sold more than one million copies. (Though Stieg Larsson's three ebooks, added together, total one million in sales -- an average of just 333,333 per book.) PC World reports Stephenie Meyer is close to selling one million ebooks -- though she's sold over 100 million printed books.

This isn't to say the ebook market isn't important, but Amazon's statements promoting ebook sales seem purposely designed to pump up the significance of ebook sales, which still represent a much smaller proportion of the market than the company would have you believe.

Filed Under: books, ebooks, kindle, sales
Companies: amazon

Eminem Wins Appeal Over Universal Music: iTunes Downloads Should Be Accounted Differently Than CD Sales

from the uh-oh-universal dept

Well, well, well. A few years back, we noted that Eminem's publisher was upset about the royalty cut they were getting from sales on iTunes, and they eventually sued both Apple and Universal Music over this (though, I'm still confused why Apple is involved). The issue is a contractual one: as is standard in lots of recording industry deals, musicians make very little money from each album sold. However, when their music is "licensed" for other things -- such as a commercial, movie or video game, they make a much larger percentage. The reasoning, of course, is that there are a lot more "costs" that go into making and selling a CD, which the label is taking on.

But here's where it gets tricky: what is a sale via iTunes? Is that a "sale" like a CD (meaning a small percentage royalty)? Or is it a "license" like for a movie (meaning a much bigger royalty)? Conceptually, you can make a reasonable argument for either side. After all, from the consumers' perspective, it's very much like buying a CD. But... from a technological perspective, it's really a lot more like licensing, since you don't have the same production, physical goods, shipping and distribution costs. A jury originally sided with Universal Music, saying that it's really just like a CD sale, and thus, the lower royalties should apply.

However, the 9th circuit appeals court has just ruled the opposite way, saying that the contract is "unambiguous" that iTunes sales count as a license, for which the higher royalties apply: This could have a major impact on how much Universal has to pay out to musicians for iTunes sales. Of course, Universal Music is downplaying the ruling, saying that it's unique to Eminem's contract, and that the company plans to fight the ruling. However, Universal Music (and others, potentially) may be in bigger trouble than they care to admit over this ruling. There are other, similar cases underway as well. While I'm sure its more recent contracts are quite specific on this point, for large segments of the back catalog, Universal could be looking at actually having to pay out significantly more in royalties. Of course that assumes they have accurate records somewhere -- which certainly is no given.

Filed Under: eminem, licenses, royalties, sales
Companies: universal music

Connecting Authors To Tangible Goods They Can Sell?

from the business-models... dept

When we talk about business models for content, one question we get asked a lot is how these business models could possibly apply to authors. We're always told that such business models might work for music, but couldn't possibly work for authors. To be honest, I find this sort of response incredibly uncreative. If you look around, it's actually not hard to find authors who are making use of new and innovative business models, and even publishers who are willing to embrace that kind of thinking. This is definitely a good thing, but we're always interested in hearing new and more examples of this happening.

Ross Pruden alerts us to an LA Times story about a company called OpenSky that is apparently helping authors implement additional business models by helping them find tangible products they can sell in association with their books. Indeed, the whole concept seems to fit in with our concept of using infinite goods to make scarce goods more valuable:

A cookbook author, for example, not only sells books through OpenSky but also hawks a favorite barbecue sauce and grill. The author pockets 50% of the profit, with the rest going to OpenSky and others involved in the transaction.

[...]

David Hale Smith, a Texas literary agent, was about the only one who hadn't morphed roles since Naples last saw him. After they sat down at a table near that escalator, Smith immediately handed her a copy of a client's newest novel: "So Cold the River" by Michael Koryta. Smith mentioned that it's set in an old hotel in central Indiana known for its Pluto Water, believed to have healthful effects.

Naples lit up: "If [Koryta] was on OpenSky, the novel could be tied to a promotion of the hotel. He could have a button on his site for readers to buy the book and the water." (OpenSky would find a supplier to bottle and ship it.) She described other commercial possibilities: a sneak-peak download of a chapter of his next book, a "webinar" with him discussing his stories.

I can already hear the critics complaining about this sort of "crass commercialism" that I'm sure is "destroying" the concept of "art for art's sake," but I find it odd that those who focus on the whole "art for art's sake" argument are the same folks who also complain that the changing marketplace means content creators can't make money any more. No one is saying anyone has to adopt these models -- just that for those who feel comfortable doing so, it's now easier than ever to embrace infinite concepts -- and use them to make scarce goods more valuable.

That said, after reading about all of this, I went and looked at OpenSky, and I don't see any of this on their website. Instead, it looks like a plain old store. If they're really focused on helping content creators, it seems like they would be a lot better off promoting content creators on their site as well.

Filed Under: authors, business models, sales, scarcities, selling, tangible
Companies: opensky

Old Spice Man Gets Backed Up With A Few Numbers, Sales Up 107 Percent

from the silver-fish-catch dept

With all of the buzz lately around the fantastically successful Old Spice campaign, some numbers are finally starting to trickle in about whether or not the campaign actually translated into more sales of the body wash. Although initial reports suggested that the ads did little to boost sales, according to Nielsen, sales of the body wash rose 107 percent in the past month. That said, the increase cannot be necessarily attributed entirely to the social media campaign, since a coupon campaign for the body wash was also running at the same time. In an age, driven largely in part by the supposed traceability of online advertising, where there has been a large push to track ad spends all the way down to individual purchases, this ad campaign reiterates the adage attributed to John Wanamaker: "Half the money I spend on advertising is wasted; the trouble is I don't know which half." Since this campaign was very much a branding campaign, just because it happens online does not necessarily make it more traceable, so it's difficult to say what percentage of the increase can be attributed to the campaign. That said, at least for me, I know I considered buying some Old Spice body wash when I was at Walgreens last week, and apparently I was not alone.

Filed Under: marketing, old spice, sales

The Rise And Fall Of The RIAA

from the predicting-the-end dept

We recently had a post questioning whether the RIAA's legal campaign was a success or not. It seemed like there was plenty of evidence that it has been an incredible failure. Separately, we had a post about Radiohead's Thom Yorke, suggesting that the major record labels were going out of business in a matter of months. While we felt that was a bit of an exaggeration, one of our commenters, Ccomp5950 compiled data on RIAA label sales, along with some helpful notes about what other factors were going on at the time:

Year: $ in Millions
1992: 9024
1993: 10046.6 (CD players started to get more affordable towards mid-year)
1994: 12068
1995: 12320.3
1996: 12533.8
1997: 12236.8
1998: 13723.4
1999: 14651 (Work made for hire controversy)
2000: 14404 (Napster sued into bankruptcy)
2001: 13700 (Ipod came out October 2001)
2002: 12,614.2 (Price Fixing lawsuit hits RIAA)
2003: 11,854.4 (Grokster lawsuit, "induced infringement" introduced) (Mass lawsuits by RIAA start(AKA: The education campaign))
2004: 12,345.0 [Revenue Physical / Digital] (BMG gets out of the music business, sold to Sony later on: Big 5 becomes Big 4 for RIAA)
2005: 12,296.9 [91%/9%]
2006: 11,758.2 [83.9%/16.1%]
2007: 10,370.0 [77%/23%]
2008: 8,768.4 [66%/34%] (RIAA declares it's going to stop mass lawsuits with member money problems and EMI almost bankrupt)
2009: 7,690.0 [59%/41%] (Massive layoffs hit RIAA around Febuary: Blames piracy)

Sources:
http://www.azoz.com/music/features/0008.html (statistics from 90's to 2001)
http://76.74.24.142/81128FFD-028F-282E-1CE5-FDBF16A46388.pdf (Statistics for 97 to 2007)
http://76.74.24.142/A200B8A7-6BBF-EF15-3038-582014919F78.pdf (2008-2009)

It's a great list, but I felt it could be even more powerful as a graph, so I just threw the following together, based on the info above: And, that, right there, does a nice job painting a picture on the decline and fall of the RIAA and the major record labels. A few points are worth highlighting:

• If you're not familiar with the "works for hire" scandal, you can read the full background here. Basically, a Congressional staffer by the name of Mitch Glazier snuck a tiny unnoticed amendment into a much larger bill in the middle of the night -- supposedly at the request of the RIAA -- without telling anyone. It effectively changed the definition of music recordings into "works made for hire," which was really important, because it meant the RIAA labels could hang onto musicians' copyrights for much longer, avoiding termination rights that let musicians reclaim their copyrights. Just a few months later, Glazier left his low-paying Congressional staffer job for a $500,000 job with the RIAA, which I believe he still holds ten years later. Thankfully, people quickly recognized what he had done and Congress had to go back and fix Glazier's sneaky wording. However, it is worth noting that the peak of this chart is right when Glazier inserted his infamous four words.
• As we discussed last fall, now that musicians do have termination rights, they're lining up to use them and take their copyrights back from the labels. They can start getting the copyrights back in 2013. If you're looking for a date when the bottom totally falls out for the RIAA labels, that may be it. When the rights to their back catalog starts to drop out, this chart looks even worse. The RIAA won't give up easily, of course. The latest stunt they're trying to pull is to "re-record" albums, claiming that it creates a brand new copyright, that gives them another 35 years before termination rights are applicable. That is, of course, ridiculous, but the RIAA will likely try to fight it out in court for many years to extend that 2013 deadline by a few more years. Of course, all that money on legal fees could have gone to innovating, but that's just not the RIAA way.
• Note that digital music sales is not even close to being a savior. The total is still dropping rapidly.
• Of course, many have argued that the rise and fall may have a lot more to do with CD replacements of previous formats -- and this chart certainly suggests that could be an explanation. The big jump happened right when CDs became affordable, and people needed to go out and replace their vinyl and cassette (and 8-track!) collections. After a few years of that, it makes sense that the market should drop anyway.
• Once again, it's important to point out that the chart above is not the entire music industry, but a limited segment of it: the RIAA record labels, mainly comprised of the big four record labels. It doesn't take into account all of the other aspects of the music business -- nearly every single one of which has been growing during this same period. It also doesn't take into account the vast success stories of independent artists and labels doing creative business models and routing around the legacy gatekeepers.

Filed Under: record labels, recording industry, sales
Companies: riaa

Even More Evidence Of How Free Ebooks Can Increase Sales Of Physical Books

from the but-free-doesn't-work!!!! dept

We've noted in the past the various stories of individual authors like Paulo Coelho and David Pogue, who showed that free (non-DRM'd) versions of their ebooks helped increase physical book sales. Then, in February, we wrote about some actual research that showed that when unauthorized ebooks get out into the wild, there is a "significant jump in sales" of the physical book. And, now there's even more evidence to support this. A recent paper by a PhD. candidate noticed that free ebooks tend to increase sales of physical books. In this case, rather than looking at "unauthorized" ebooks, it looks like they focused on authorized free ebook versions. Not all of the books increased in sales, but you can see that there are lots of variables that impact this (how are the ebooks offered, how are the physical books offered, what types of books are they, etc.). Either way, though, it seems like there's increasing evidence that when done right free ebooks can certainly increase the sales of physical books -- despite claims from companies like Attributor that unauthorized ebooks are costing publishers money.

Filed Under: business models, ebooks, pricing, sales

Research Shows Unauthorized Digital Books Leads To 'Significant Jump In Sales'

from the well,-look-at-that dept

We've seen this before, with individual authors like Paulo Coelho and David Pogue, who both found that as more people were able to get unauthorized copies of their ebooks, their sales actually increased. So, this shouldn't come as a surprise, but some new research looking at the impact on sales of unauthorized files getting out found a "significant jump in sales" (found via Michael Scott):

Brian O'Leary discussed his firm's research on the effect on sales when a title finds its way into an unsanctioned online market. The findings -- a significant jump in sales -- have surprised many in the business.

To be fair, he does go on to say this doesn't mean just "don't worry about" unauthorized access. Instead, he says it's important to figure out what kind of unauthorized access helps sales and what kind hurts -- and that still needs to be studied. But, the early results certainly suggest that the stuff that helps quite often outweighs the stuff that hurts (sometimes by quite a bit).

Filed Under: books, ebooks, sales, unauthorized

Unsubstantiated Claim: iTunes Success Makes It Harder To Discover New Music

from the say-what-now dept

Michael Manning points us to a writeup of a new study by Harvard professor Anita Elberse (who has long been a critic of things like "the long tail" concept) concerning the "iTunes effect" on music sales. Most of the article focuses on the fact that (*gasp!*) given the opportunity to just buy the songs people like, rather than an entire album, many will do just that. Shocking. But the writeup seems to suggest that this is the fault of iTunes, rather than the fault of the recording industry for putting out album after album where only a couple of songs are worth buying. There's no cosmic law that says people need to buy albums, and to blame iTunes for it, rather than the industry for not creating products worth buying seems incredibly backwards.

Of course, it then gets even more ridiculous:

Not all of that lost revenue was profit. That album revenue was partly subsidizing the discovery and publishing of new music, which in turn created new buyers of music, tour tickets, posters, t-shirts, and so on. That revenue in turn helped develop that artist's next venture, and discover yet other artists. Significantly decreased revenues breaks the cycle that helps find new talent that will generate more revenue.

And yet, as we've seen more new music is being made today than ever before in history, so it's not like this is really harming the production of new music. And this totally ignores how the internet has totally changed the economics of discovering, publishing and distributing new music -- such that you don't need to rely on the major record labels to seek out new music for you. And, even if you do rely on major labels to "discover" the next big thing, new technologies have made that much cheaper for the industry as well. They now have the internet to help them find bands and judge their buzz and sound even without having first found them at a club as was often done in the past. To ignore all of those other impacts seems highly questionable, and puts a cloud over the research as a whole. Besides, just thinking about it logically makes it ridiculous to think that iTunes has somehow limited new music discovery. For many, many, many people, it seems likely that it has increased new music discovery, and done so by taking the record labels somewhat (not entirely) out of that loop.

Filed Under: anita elberse, itunes effect, music, sales

Finding The Long Tail In Music

from the it's-out-there dept

In the past we've had an ongoing discussion with some folks on this site concerning whether or not it's now a better time to be a musician than before the internet became central to everything music-related. We've argued that today there are more options and more opportunities for bands than ever, and that's only a good thing. It doesn't mean that every band will be a success or can make a living. That's never going to be true (and has never been true, either). Many will still fail, but there are more tools and opportunities that if you learn to embrace them, you can absolutely do much better than you ever could under the old system -- which required massive backing to become successful. It was the golden lottery ticket story of musical stardom.

Last week, we wrote a post about an interview with Tommy Boy Entertainment boss, Tom Silverman, claiming that just 14 unsigned artists "broke the obscurity line," -- which was defined as sales of 10,000 albums. Amusingly, three days after this post, I met Silverman on an airplane over the Atlantic... and only realized it was him when he started talking to the guy seated next to me about my post not realizing who I was (small freaking world). We had a brief, but quite enjoyable conversation, and while I see his point, I'm still not convinced his conclusion is correct on the issue of breaking artists (his view of business models, however, seems right on). Meanwhile, in the comments to our post, Peter Wells from TuneCore disputed Tom's numbers. Since then, both have expanded on the discussion.

Tom provided more details on the number of totally independent success stories (decreasing the sum from 14 to 12 due to the fact that they had mischategorized 2 of the bands) over at the MusicianCoaching.com site. He then went on to claim that the long tail doesn't seem to be working for the music business:

Clearly the ease of making and distributing music does not benefit "breaking" music. Breaking music requires mass exposure which requires luck or money or both. I can say with great authority that less new music is breaking now in America than any other time in history. Technology has not helped more great music rise to the top, it has inhibited it. I know this is a bold statement but it is true.

Certainly bold words, though they did not address my original criticism with the point -- which is that number of albums sold is a poor measure of "obscurity" (or non-obscurity, as the case may be). As I said then: "You don't have to sell albums to become well known, and just because you're well known, it doesn't mean you sell albums. It's not the best proxy for figuring this stuff out." This week, at Midem, musician Hal Ritson of The Young Punx put it much more succinctly: "Sales are not how you measure success any more. You figure out how to get as many people as possible to hear your music, and then you figure out if you're profitable." Also, I still think it's wrong to only count totally independent artists in this list, because many artists signed to labels (both indie and majors) may use new technology to help breakout (with or without massive support from their labels).

Either way, even beyond that, it looks like Silverman's numbers may be suspect. Peter Wells Jeff Price (from Tunecore) followed up Peter Wells' comment on our site with a super detailed post about the problems with Silverman's numbers -- which rely on Nielsen SoundScan data, which Wells Price notes is massively incomplete. He quickly names multiple artists who sold hundreds of thousands of tracks, which aren't measured by SoundScan, and suggests the real issue isn't that new artists can't break, but that the measuring system doesn't take into account how they break these days.

I have to say that Wells' Price's post is quite convincing. It's incredibly well-detailed and provides multiple examples of clearly successful (and hardly obscure) artists that aren't counted by Silverman's method. I still think that the points raised by Silverman about new business models in his original interview were dead on (and even he made the point that sometimes it made sense to release albums totally for free and use other ways of getting money -- which under his own definition would have made them impossible to "break out."). But it seems like there's an awful lot of evidence that our original assertion is still true: there are plenty of artists that are, in fact, breaking out thanks to new technologies -- and many are able to do so without a label. Whether or not it's "harder" to break out today due to increased competition may be another issue, but I'm not yet convinced this is a real problem.

Filed Under: breaking artists, data, long tail, music, peter wells, sales, soundscan, success, tom silverman
Companies: nielsen, tommy boy entertainment, tunecore

Warner Bros. Gets Netflix To Delay Movies; You Don't Save Your Business By Pissing Off Your Customers

from the this-is-a-mistake dept

While not a huge surprise, it's worth discussing just how bad an idea it was for Warner Bros. Studios to get Netflix to delay renting DVDs of its movies for 28 days in order to offer up more streaming content. To recap, the very, very, very confused movie studios seem to think that the way to deal with increasing competition is to just add more windows to releases -- and one way to do that is to delay when you can rent a movie. In the studios' incredibly short-sighted thinking, they believe this will make more people buy DVDs -- the one area of the movie business that has been on the decline of late. At the same time, the studios have been pissed off at Netflix for routing around them and getting rights to stream movies from Starz, and as such, have been denying requests to stream more movies.

So, the compromise is getting Netflix to delay the rentals in exchange for more streaming content.

It's hard to express just how bad an idea this is for Warner Bros., and how far out of touch with their customers they must be to think this makes any sense from a business standpoint. What they are saying is that they are not going to give in to customer demand and offer them what they want, but actually make it more difficult, more annoying and more confusing for them to get what they want -- and (at the same time!) screwing up basic marketing plans as well. Now, when movies are released on DVD and the large group of people who prefers renting to buying goes online to their Netflix account to do so, they won't be able to. Four weeks later, they'll be looking for something else. And, for those who simply want to see it right away, they're now more likely to get it in an unauthorized manner.

Under what set of logic would it ever make sense to give the customer less of what they want in an era when increased competition from other sources is causing them to already wonder if they should buy your product?

Filed Under: business models, dvds, hollywood, movies, rentals, sales, streaming, windows
Companies: netflix, warner bros.