Annual assessments of the book publishing business usually focus on top-line results: how total revenue compares to the prior year. Unfortunately, total sales and one-year trends offer only a partial perspective on the industry.
We need to look a level deeper – uncovering shifts by category, format or channel – and over longer periods of time to understand the challenges and opportunities we face.
The most recent Bookstats* report shows 2013 sales totaled $27.0 billion, down a relatively modest 0.4% compared to 2012. Of interest: 2013 marked the third consecutive year of modest declines in total revenue.
Unit sales in 2013 fell 1.3% from the prior year. Unit sales are actually up 3.1% since 2009, not a huge gain, but a casual observation of the trends in revenue and unit sales might lead us to conclude that book publishing is a mature, stable business.
A look at performance of categories, channels and formats tells a different story:
- Between 2009 and 2013, the industry has seen a large (-14.6%) multi-year decline in K-12 publishing sales.
- Channels are also changing: driven in part by the drop in K-12 revenues, institutional sales are down 17.2% since 2009. For all the talk of a need (and desire) to sell directly to consumers, the channel is actually down slightly (-0.4%) from 2009.
- The most dramatic shift is seen in formats, with significant movement toward digital (+201%) and bundled (digital and print combined; +325%) offerings between 2009 and 2013. These gains have come at the expense of physical formats, down 23.8% since 2009.
Beyond revenues, the average price of an eBook fell 8.9% in 2013, as growth in eBook revenues (up just 0.3%) and units sales (up 10.1%) slowed significantly compared to prior years.
As for those challenges and opportunities:
- K-12 revenues dropped in the wake of the 2008 recession, after which state and local tax revenues remained under pressure. New standards (Common Core) and greater price sensitivity could provide a window for new entrants.
- Shifts in formats, particularly bundled offers, led us to ask, “Is service delivery the future of education?” Certainly the best options for using digital content are in their early stages of development.
- The drop in eBook prices could be taken as a sign that agency models are very much needed or that consumers are looking for better deals. We lean toward price sensitivity, a topic we’ll tackle in a future post.
While there can be different interpretations of the data, we need to regularly look beyond top-line results. This starts with an examination of multi-year trends in consumption by category, channel and format.
*Bookstats reports publisher (producer) revenue, not retail sales. The data set is extrapolated from publisher reports.