Did the average eBook really earn just $297 in 2012?

income-graphicAs a small publisher this is obviously an important question: both for us, and for our authors. The question being, of course, how well is an author doing compared to their peers.

Unfortunately this information is difficult to obtain, as from the publisher's perspective it is often commercial in confidence. Alternatively the information may rely on a small, non-representative sample of self-disclosing authors. What information is around seems to indicate, however, that the goal of earning enough to get a cookie and a mug of chocolate each week on the royalties from eBook sales is probably going to be well beyond the experience of the average author.

Back in May 2012 The Guardian ran an article with the headline 'Stop the press: half of self-published authors earn less than $500'. The article was based on a survey of 1,007 self-published writers that was originally published by the website Taleist.  Unfortunately I was unable to view the results from the original survey from the Taleist site due to its age, so this information is gleaned from the Guardian article.

What the survey shows is that  the average amount earned by self-published authors in 2011 was just $10,000, with half of those responding making less than $500. While self-published superstars such as Amanda Hocking and EL James raked in enormous sums of money (Hocking attained sales of $2.5 million), the overall figure  is significantly skewed by the top earners, with less than 10% of self-published authors earning about 75% of the reported revenue, and half of writers earning less than $500.

Interestingly, given our own area of genre specialisation the survey found that science-fiction writers earned 38% of the $10,000 average, fantasy writers 32%, and literary fiction authors just 20%. On the other hand romance authors earned 170% more than their peers, so perhaps I'm in the wrong business.

In April of this year Mike Cooper calculated that the average e-book earned just $297 last year. Once again this is the average, with Mike warning that the figure was pushed higher by a small number of very, very successful books. While I'll explain the background to his figures below, any discrepancy between the two figures could be accounted for by the Taleist figures being based on an author's total income across all their books, while Mike's figures are for individual book sales. In addition Mike's figures are based simply on Amazon, and disregard sales from Apple, B&N, and Kobo which, if added it, could add significantly to an eBook's earnings.

And now to explain how Mike calculated this figure given the notorious secrecy of Amazon when it comes to actual figures. (And yes I was impressed, after having worked in the Australian Bureau of Statistics for over ten years these real world figures just blew me away!)

First of all Mike calculated the US share of worldwide book sales based on 2011 global book sale figures of $27.2bn (Association of American Publishers, AAP) and US sales of $6.7bn (also AAP), giving the US 24.6% of the total.

2012 US book sales were $7.1bn (AAP), so extrapolating Mike came up with a 2012 worldwide number of $28.8bn.

Then Mike calculated how much money Amazon made from “officially counted” printed books.  Bowker Market Research reports that AMZN has a 27% market share, of a total pie that is 78% printed (non-ebook).  Applying these percentages to the total $28.8bn above, Mike estimated Amazon’s total (worldwide) 2012 revenue from printed books at $6.07bn.

Now, one of the very few statistics Amazon actually reports is “total media sales,” and in 2012 they amounted to $19.9bn.  However, this figure includes DVDs, CDs, music and streaming media.  After some further calculations, however, Mike establishes that  total Amazon book sales in 2012 are an estimated $6.98 billion. And given that Amazon’s printed-book revenue had previously been calculated to be $6.07bn this means their 2012 Kindle book revenue is  $910 million.

The determine the average sales per book, however, Mike had to do some further calculations. At the time he did his calculations there were 1,933,163 ebooks in the Kindle store (of which 59,720 were "free ebooks”).  For the purposes of this analysis Mike needed to ignore the free books, so that means a total of 1,873,443.  Divide this into total revenue (again, $910m) and we get an average revenue per Amazon ebook in 2012 of $484.

The last step was to estimate out how much authors are making from these sales.  At the time Amazon paid royalties of 35% for books priced < $2.99 and 75% for books priced $2.99 or more. By counting the number of <$2.99 books in the Kindle Top 100 Mike calculated that approximately 25 per cent were receiving the lower royalty rate. Which means that for the average of $484, Mike estimated that the author is getting $297. For Australian authors this figure will be even lower that Amazon only pays 35% for sales made to Australia.

Sure, the figures may seem a little fuzzy, but the logic appears to hold up, and for the moment these are the best figures I've been able to come up with.

If you want to have a closer look at his calculations Mike has made his spread-sheet available here.

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