An Amazon warehouse. Photo by hnnbz on Flickr
It’s the London Book Fair this week, and I was kindly invited to speak at its Digital Minds session on Monday. These are the slides that I created for the talk. (Plus the CC-licensed photo, as above.)
Obviously, for book publishers the terror over the past few years is that Amazon is going to eat up everything, laying waste to the old book-buying system and forcing down the prices they can ask while at the same time everyone dumps paper books in favour of Kindles.
For publishers, that looks like the worst kind of lock-in.
But I prefer a data-driven approach: look at the numbers, and the numbers in a broader context. Amazon provides pretty clear financial results (with useful breakdowns by geography and segment), and there are also useful datasets from book publishers about the size of the UK market. (I focussed on the UK market because that’s what was available, but if anyone wants to pay me to do a bigger study relating to other countries, get in touch :-))
Here’s the presentation:
A few words to add extra context (since I did actually talk too – this wasn’t just a mime show). The numbers relate to the slide number.
5) and 6) yeah, Amazon does sell beer, but my more general point is that these declines in numbers (of petrol filling stations and pubs open in the UK) are due to structural changes in society, not something Amazon has done. If you ascribe changes to the wrong cause, you’ll come up with the wrong solution to it.
7) Clearly, the decline in independent bookshops (overlaid onto the right-hand chart, showing the growth in book sales and ebook sales) predates ebooks – though not Amazon itself. This doesn’t look at concentration of the industry; I didn’t look at the simple number of books published. I think that has gone up, even excluding ebooks.
9) figures taken from Amazon’s results, and using a four-quarter moving average. The international media sales (red line) actually went negative in the most recent quarter, while US media sales (blue line) went to just 1%. “Media” covers everything from books to DVDs.
10) data from the Pew Research Center in the US, which does very robust studies. They haven’t found any growth in ereader ownership since January 2014. There’s a natural ceiling on ereader desire-to-buy.
11) Ereaders are popular with people who read a lot of books. The difference between the median and mean numbers here tell us this is a skewed population – those who read a lot really read a lot. They’re likely to have an ereader. But not everyone will get an ereader. The eager buyers have bought one.
13) See? New sales of Kindles have pretty much halted. Other more recent stories confirm this.
14) 30m Kindles sold in total is a lot – but compare that to total population in the US+Europe of about 500m. It’s not taking over the world.
15) 16) Amazon turns out not to be so great at making hardware that people want to buy.
17) Even in tablets, the rest of the market is growing, but the Kindle Fire HD isn’t doing much. Total about 30m sold (my calculation), also throughout US and Europe – but doubt there’s a lot of book reading going on with them; they’re for other media.
20) You may be able to think of another ebook that a “standard” publisher was able to turn into a bestselling book that was then made into a big film. (The Martian is being made into a film with Matt Damon. Looking forward to that.)
22) Amazon’s FCF (free cash flow) is a hot topic, at least in some quarters. The company shows very little profit, but its FCF is great. Isn’t it?
23) Well, the use of capital leases means that – rather as with the Labour government and PFI – the spending is all being pushed off the balance sheet and into a sort of future reckoning. Great as long as nobody worries about it; bad if Wall Street does worry about it.
24) you can just skip to this one if you want the conclusions.
Thanks for reading. I’m happy to come and give speeches at all sorts of events on topics like this.