July Author Earnings report surveys DRM, genre sales
July 18, 2014 | 3:34 am
Hugh Howey and Data Guy have done it again, producing another interesting report on a sample of data scraped from Amazon. The July report re-runs the numbers for their main chart based on the new data, then branches out into a couple of interesting new measurements—including one that I specifically asked for back in May.
The main measurements show basically incremental change from the last few reports, In terms of daily revenue to authors (taking into account royalty percentages from publisher sales and Amazon revenue percentages from self-published works), Big Five authors take 37% of total Amazon daily revenue from e-books. But for the first time since Howey and Data Guy began their measurements, self-publishing authors are outranking Big Five all by themselves—39% of revenue. (In February, the split was 39% Big Five, 35% self-published.)
Of course, it could just be a quirk of statistics—perhaps if they’d chosen another day, the Big Five sales would outpace independent sales instead. Still, it certainly looks like a trend considering the percentages from the last two charts.
Does DRM affect sales?
I was moved to ask this question back in May, in the comments on the prior Author Earnings report. The idea intrigued Data Guy, and so this next run attempted to collect some figures in that regard. Given that “practically 100%” of Big Five titles have DRM, they had to run the comparison strictly between indie titles that do and don’t have it, as they come out about half and half.
As Howey reports, the statistics seem to suggest that titles without DRM sell twice as many copies as ones with it. This was true at almost all price points, and for the two price points where DRMed titles outsold those without, the difference was accounted for by “3 outlier DRM titles published by only two authors.”
This seems like a welcome conclusion for DRM opponents, but is it the whole story? A commenter posting as “David” did his own analysis on the raw data (which, as with all prior surveys, the Author Earnings people provide). If only a couple of outlying titles are enough to affect the data so profoundly, David wondered, how robust could the results be? When he excluded the top 1% of indie titles, he found “no observable sales impact of DRM” for the bottom 99% of titles.
The fundamental problem is that the top 1% of indie titles is only about 300 titles, but those titles earn about 40% of author earnings. This makes “average” earnings-per-title absurdly sensitive to the performance of just a few titles. Thus what appears at first to be a broad-based consumer behavior is in fact just noise, driven by a very low sample of decisions of just a few authors.
Update: However, Data Guy has followed up:
Had a chance to check the effect of outliers. Eliminating the top 1% of all titles as suggested has an unintended consequence of unfairly skewing the averages against non-DRM titles, because there are more non-DRM titles than DRM titles in that top 1%.
A far fairer way to eliminate outliers in each category is to separately eliminate the top 1% of each.
After doing so, we still see the non-DRM titles outearning the DRM titles by 55%.
The remaining Non-DRM-enabled indie titles are also selling better than the remaining DRM-enabled indie titles at every price point.
He also broke it down by publication year, and found the same results all across the board.
That certainly seems to be conclusive: DRM-free titles sell better and earn more. I wonder why that is? I firmly believe most people don’t know or care whether what they’re buying has DRM. All the same, the figures don’t seem to lie. It appears DRM isn’t just annoying, it’s actively bad for business—at least if you’re an indie publisher.
Breakdown by genre
The other interesting new chart in this report divides author earnings up into the genres of Romance; Mystery, Thriller, & Suspense; Nonfiction; Science Fiction & Fantasy; Childrens; and Literary Fiction, and compares what percentage of each genre each type of publisher comprises. The results are instructive: self-publishing rules the roost in romance (66% of earnings) and science fiction/fantasy (56% of earnings). It makes up a quite respectable 23% of mystery/thriller/suspense and 26% of nonfiction, comes in at 21% of childrens but only 13% of literary fiction.
The chart also notes that romance, mystery/thriller/suspense, and nonfiction are the three best-selling categories of e-books; SF sells respectably well but not quite in their league, and childrens and literary fiction are hardly even on the chart. Clearly, if you’re going to go into self-publishing, some genres are more lucrative than others.
While Howey and Data Guy’s conclusions are often more than a little controversial, they represent a lot more data than we’ve ever had available before. It’s great that writers are now able to make more informed decisions on how and where to publish their works.