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Random House CEO expects US e-book revenue to pass 10% next year
August 2, 2010 | 6:01 am
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By Chris Meadows
Markus Dohle, chief executive of Random House, was interviewed by German magazine Der Spiegel about the changes he sees e-books making to the book market. (Reuters has an English translation.) In terms of e-books as a percentage of Random House’s total bookselling revenue:
"We’re at 8 percent in the United States currently, it rose by leaps and bounds," Dohle told Der Spiegel. "I could well imagine that we get beyond 10 percent next year," he said.
However, he doubts e-books will “overtake” printed books within the next five years, dismissing Amazon’s recent hyperbole as “hype”. He predicts between a 25% and 50% overall e-book market share by 2015.
Dohle also expanded on why Random House alone among the “Big Six” publishers does not have its books for sale in Apple’s iBookstore, which originated the agency pricing model where publishers get to set their own retail prices. He feels that publishers may not have any business setting the retail price on their books themselves.
"We’ve got to think very hard about whether we want this drastic change in our business model," he said. "The question is if publishers know how to find the right retail price… This hasn’t been our job in the past."
Of course, it’s also worth noting that foregoing agency pricing means that Amazon is still subsidizing a lot of $9.99 Random House e-book sales. And given how much of the e-book market Amazon owns (more in this case, given that Random House e-books aren’t available from Apple), that may cause a little bit of skew in terms of revenue percentages.
(Found via The Bookseller.)
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Comments:
Dohlan’s estimate was for the entire book market, which includes textbooks and other specialty pulications. Bezos’ estimate was for book sales through Amazon which is strongly skewed towards fiction and consumer books. And where Amazon is an aggressive retailer, RH is a very conservative BPH so you can expect RH ebook share to somewhat underperform the market compared to more smaller, more aggressive independent publishers.
They can both be right.
The real take-away for me is that ebooks are being mainstreamed in a major way, even among the BPHs, and that 25-50% by 2015 is pretty darned good.
Even at 10% of the market they are a force to be reckoned with, hence the disruptions trailing their wake. With more to come.
So, what sort of facts do we have for the statement “Amazon is still subsidizing a lot of $9.99 Random House e-book sales”? And, if a bookseller wants to have a few deals as you enter the store, is there anything new about that?
Let’s try to keep straight the metrics that have been put out there.
Amazon stated total (paid) e-book sales have recently overtaken total hardcover sales — the metric was unit *sales*.
Random House said 8% of US sales *by revenue* recently were for e-books. I find that a sobering number given 330 million Americans available to buy pbacks and hard covers and possibly 4 million e-readers in hand to buy e-books.
Dohle of Random House believes pbooks won’t be overtaken by e-books before, perhaps, 2015 … *by revenue*.
Bezos of Amazon posited Amazon — on the forefront of e-book sales — might surpass pbooks in a years time … *by units*.
And, Amazon has floated some impressive sales like 1 million Steig Larsson e-books sold to date and nearly as many James Patterson. It is pointed out that the pbook sales of these authors dwarf either of those numbers … but the Amazon e-book number refers to Amazon alone and the dwarfing pbook numbers are worldwide sales from every possible seller.
Amazon has not released Larsson-to-Larsson e-book-to-pbook revenue or unit sales stats. I’d be willing to bet Amazon’s figs are a lot closer than the 1%, 3% or 6% sometimes attributed to e-book share vs pbook.
But, we only know the “facts” at hand; so it’s helpful to stick to meaningful direct comparisons. There rest is what it is. In my view, Amazon’s e-book numbers are impressive for Amazon. And Random House’s revenue split of 8%+ for e-books for the entire company is equally impressive.
@Alexander Inglis: Good points all.
Plus, Amazon as a low-margin discount retailer routinely lives and dies by the *volume* they generate. Their public metrics as volume-based as their margins and numbers of customers are competition sensitive.
RH, as a publisher, pays off to its authors on a revenue basis so their metrics are going to be revenue-based. Plus, as they are in ongoing royalty disputes over ebook rates they need to temper expectations of how much revenue they derive from ebooks. That they’ll admit to 8% is impressive enough. And probably sufficient to forstall audits for now.
It’s not that one side or the other is lying; they just live in different worlds. It’s the “blind-men-and-the elephant” time. Everybody reports *their* view of the market. It is up to interested parties to read the tea leaves and make guesses as to what the pronoucements add up to *in aggregate*. That’s what makes the game fun.