US publisher upheaval ahead as print book sales see sharp decline

The Association of American Publishers released its US book sales figures for February 2011 and it looks like 2011 will be the year the trade book business has to finally confront serious declines in its core print business.

Up until now, print sales have largely held up while ebook sales boomed, giving the industry the pleasure of an exciting new market exploding without the pain of the old market’s decline. But the results of January and now February 2011 point to a drop in print sales that is serious and rapid enough that there’s nowhere to hide. The declines are too big to absorb easily so major restructuring of publishers’ businesses won’t be far away.

The good news first. February 2011 ebook sales were up 202% on February 2010, a tripling of this business. This propelled the ebook format into number one position among all book formats, more than hardback sales or any of the paperback formats. Year-to-date (January to February 2011) vs YTD 2010, ebooks increased by 169.4%.

Now the bad news. The hope that ebook sales would be additional to print revenues can be put to rest. Both January and February’s large, double digit declines in trade print sales show that digital sales are, indeed, cannibalising print.

• Adult Trade categories combined (Hardcover, Paperback and Mass Market) were US$156.8M, down 34.4% in February.
• All categories combined of print Trade books declined by 24.8% in February.
• This continues a trend set in January when the Adult Hardcover category fell -11.3%, Adult Paperback fell -19.7%, and Adult Mass Market declined by-30.9%.

It’s still possible that January and February are just abberations following strong Christmas sales of ebook readers, and certainly two months don’t make a trend. But the sad reality is that once the new digital media reach a critical mass, the fall in the old media happens big and fast. It’s when, not if. I’ve witnessed this first hand with trade magazines where the initial decline was slow. But when the switch came, it happened quickly and left businesses no time to make changes at a leisurely pace.

In the US market, that point has clearly been reached. With high fixed costs to deal with, declines of this magnitude can’t be absorbed without making big structural changes.

Despite ebook reader penetration being only around 10% of the population, it’s a much higher proportion of the heavy book buyers, explaining why many publishers have been reporting for a while now that digital sales are often up to half of their hardback sales for new releases. Owners of ebook readers read more than they did as print book readers. But their habits will become increasingly digital so these premium print book buyers will be first to leave print and won’t return.

It’s important, of course, to note that ebooks are affecting different sectors of the book market at different rates. Right now, it’s the Adult Trade category that is suffering the biggest declines, following moderate declines last year. This makes sense because it’s the category that most ebooks today fall into. The falls are understandably smaller (so far) in the Young Adult and Children’s markets. Educational publishing is more than half of the market and is yet to be significantly impacted by digital. Despite all the hype about digital textbooks, it will be years before schools can fund the universal access to eReading devices needed to make this a reality. The Higher Education sector will probably shift earlier because students will buy the devices themselves and lead the demand for digital texts.

American publishers — followed a year or three later by publishers in other markets — will have some tough years ahead. The ructions in the retail market, including the failure of the US Borders chain, will see its parallel in upheaval in the publishing sector. While some of the print book decline can be sheeted home to the Borders bankruptcy and the reduction of shelf space to sell books, this doesn’t reduce the role of ebooks. In fact, it points to the opposite as strong ebook sales are likely to have been the final blow to Borders, too. It’s a trend, alas, that only goes one way.