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Doing the Kindle Math — Does Amazon’s Opacity Conceal a Shameful Truth?

Yes, maths
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He said that Apple doesn’t see e-books as a big market at this point, and pointed out that Amazon.com, for example, doesn’t ever say how many Kindles it sells. “Usually, if they sell a lot of something, you want to tell everybody.”–Steve Jobs on the Kindle

While the publishing industry has been rightfully focused on e-books and the impact of new technologies, very few have seen fit to question the actual success of the current market leader, Amazon’s Kindle.  That may be changing, as Amazon’s steadfast refusal to release sales figures and reliance on convoluted statistics is wearing thin.  Blogger Mike Cane has gone so far as to  call the Kindle “an outright fraud”:

It’s well past time for Amazon to put up or shut up.
Honest
companies don’t continue to hide something like this.
Honest
companies show transparency.
Honest
companies understand that real numbers are related to real shareholder value.
What is Amazon’s game here?

Cane has called on publishers to start releasing e-book sales numbers, and suggests we’re going to be shocked at how low they are.  Two anonymous commenters on his blog post, claiming to work at major publishing houses (take with a grain of salt), are in agreement.

Given the lack of data, why is there a presumption of success here?  Certainly the passion of the Kindlenistas is a factor, and their enthusiasm for the device perhaps even surpasses that of the long-suffering Mac fanboy.  But there are three main datapoints most people use as evidence of the Kindle’s success:

  • Amazon’s announcement that the Kindle is the “#1 bestselling product across all product categories on Amazon.”
  • Amazon’s announcement that “On Christmas Day, for the first time ever, customers purchased more Kindle books than physical books.”
  • Jeff Bezos’ statement in the New York Times that, “For every 100 copies of a physical book we sell, where we have the Kindle edition, we will sell 48 copies of the Kindle edition.”

Taken at face value, those all seem impressive.  But what does each factoid really mean?

  • The #1 bestselling product across all product categories on Amazon

This one is fairly easy to see through, as Gizmodo did shortly after the “breathless” press release came out:

When Amazon tells you that the Kindle is the highest-selling product on Amazon, you’re supposed to think of it as you’d think of anything else: as a strong, reliable metric in gauging how well a product is doing in general. The thing is, there is no “in general” for the Kindle. There is only Amazon. Anyone who wants a Kindle and doesn’t normally shop at Amazon has to make an exception. Anyone who wants a Kindle and doesn’t normally shop online has to make an exception. The Kindle didn’t outsell the iPod Touch—not even close.

Simply put, since Amazon is the sole source for the Kindle, it’s not surprising that they sell more units than other products where they are merely one of a near infinite number of sources.  This tells us absolutely nothing about the device’s success or market penetrance.

  • On Christmas Day, for the first time ever, customers purchased more Kindle books than physical books

Also, not terribly surprising.  How many people go bookshopping on Christmas day?  Compare that with the number of people who received Kindles, iPod Touch’s, iPhones, PC’s, Macs, and any other device with Kindle software available.  Odds are, a lot of them went online and downloaded a book to try out their new toys, so no big deal.  The tricky part (see more below) is that there’s no mention of how many of these “purchases” were free books.

  • For every 100 copies of a physical book we sell, where we have the Kindle edition, we will sell 48 copies of the Kindle edition

This is the most convoluted of the statistics offered, and due to the prevalence of free books, probably the most meaningless.  Take a look at the Kindle best sellers list.  As of this writing, 16 of the top 20 books are free downloads (and one is a 99 cent manual for using the Kindle itself).  Fifteen of those 16 free Kindle books is also available in print.  The Kindle version of “The Adventures of Sherlock Holmes” ranks at #6, while the $5.99 paperback has a sales ranking of 512,641 in books.  Could these free offerings be skewing the numbers somewhat?  Should they really count as “purchases,” as signs of the platform’s success? Really, the only thing surprising here is that Bezos’ 100:48 ratio isn’t better, given the wide range of statistical tricks that can be encompassed under their vague announcements.

Is the Kindle a success?  Honestly, it’s impossible to tell given the flawed and biased data we’ve been given.  I’m waiting to see our final year-end numbers for Kindle book sales from my employer, but as of November, they were not impressive and came nowhere near Bezos’ suggested 2:1 ratio for print:Kindle sales. While I have no doubt that electronic reading will grow to dominate in the future, I have strong doubts about the potential success of dedicated e-reading devices, and Amazon’s word games and statistical chicanery make me even more skeptical.  This may come as a bit of a shock to those of us whose lives revolve around publishing for readers, but our customer numbers are not all that impressive, as Steve Jobs famously pointed out.  In particular, I think we need to temper our enthusiasm for the upcoming Apple announcement later this month.  If the mythical Apple Tablet (rumored to be powered by unicorn tears) does come into existence, book and periodical reading will not be it’s main focus. John Gruber (who, along with John Siracusa has written some of the more well-reasoned and believable tablet speculation) puts it this way:

Not enough people read to make it worth creating a dedicated device that is to reading what the original iPod was to music. (Everyone, for practical definitions of “everyone”, listens to music.) But e-reading as one aspect among several for a general-purpose computing device — well, that’s something else entirely.

Given the real world actual numbers that Apple regularly releases proving the power of its platform, that would be a welcome development for publishers, so don’t be disappointed if we’re not the raison d’etre for the device.  The dedicated e-reader is a niche product at best.  And if Amazon has the numbers to prove otherwise, perhaps they’re sealing the Kindle’s fate by not releasing them.

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About David Crotty

I am a Senior Editor with Oxford University Press' journal publishing program. Prior to that I served as an Executive Editor at Cold Spring Harbor Laboratory Press, and was also the commissioning editor for their book publishing program. Many years ago, I was a research scientist, receiving my Ph.D. in Genetics & Development from Columbia University, and doing postdoctoral research in neural development at Caltech.

Discussion

7 thoughts on “Doing the Kindle Math — Does Amazon’s Opacity Conceal a Shameful Truth?

  1. The main benefit of the tablet will no doubt be to enhance the gaming and video experience for many users, but I’m sure students will just love to have these in class to take notes and look up content while in a lecture. I can see the slate being the must-have toy on campus.

    Posted by Mark Lord | Jan 6, 2010, 12:01 pm
    • Video games are a far-too-often overlooked industry among serious publishers. Something like a Gameboy is a much more likely candidate for a widely adopted e-reader than a Kindle.

      Posted by David Crotty | Jan 6, 2010, 2:44 pm
  2. If it helps, All Things D did confirm that the “sales” figure for Christmas Day related to pay sales and did not include free books. And the Reuters story linked in the comments has had me baffled for days: you have the headline, then you have indication that Amazon stock is at all-time highs, then you find someone to worry, then you point out that Kindle sales, whatever they are, are a (too date) small component of the overall Amazon sales mix. The article does not make it clear why Kindle sales would be deciding factor for Wall Street.

    I’d personally love it if Amazon released sales data, but I’m not holding my breath. Most information is flowing from publishers. One publisher told a group of authors their Kindle sales had tripled over a quarter (this was a small press, digital publisher, and this information was more warning than cheering as their direct sales channel netted more money for the authors). Others are noting that some books are doing quite well, others not so much.

    Ebook sales in general are 5 – 6% of the market, rising steadily. Most people read on their laptops/desktops. The Kindle is a (probably) small component of the ebook mix, even as it garners the most press. Oddly, if the Unicorn is announced, it will boost Kindle sales as — if the unicorn hunters are reporting correctly — it will work with the existing Apple App store.

    To date, I haven’t heard a single publisher mention their talking to Apple about getting books into iTunes. I also haven’t heard much from publishers who are doing anything App-wise, beyond novelties and experiments. So, yeah, I think the Unicorn will be a lovely reading device…I’m just wondering what publishers are doing right now to prepare (c’mon, if it’s cool, start building the buzz now!).

    Posted by Kassia Krozser | Jan 6, 2010, 7:13 pm
    • Some of the trade publishers have specific apps for their bigger fiction releases. A notable one is Bunny Munroe by Nick Cave, which I believe features video and audio as well as the ebook text.

      Posted by Mark Lord | Jan 7, 2010, 6:49 am
    • I think you may see a short-lived burst of Kindle book sales due to the Apple “unicorn” if it follows the predicted form, but it will only last as long as it takes publishers to convert material to Apple’s new format. The idea is that Apple will be selling books and magazines in a file format that allows for things like color, layout and typography, all of which are lacking for the Kindle (not to mention non-book content like video). I would certainly choose to purchase a superior well-designed book over one that is strictly limited by e-ink technology.

      Even if all things are equal, Amazon will still be at a disadvantage, given the integration of Apple’s store with their devices. Amazon sells mp3 files, just as high quality as Apple’s iTunes Store and often for better prices. Yet Apple dominates the music download market (69% as of last August) with Amazon coming in a weak second with only 8% of the market. There’s seemingly great power in integration, hence all the moves to lock-in Kindle customers, which may end up rendered moot.

      Posted by David Crotty | Jan 7, 2010, 11:23 am
    • ..and of course amazon had far more orders for e-books than print books on christmas day. not that many people are going to sit down at the computer on christmas day and orders a bunch of books, even if they received a fistful of amazon gift cards. it makes sense that their traffic would increase with people trying out their new kindles, though.

      oh. and i live in a densely populated area, and have seen roughly a 50% increase in kindle ownership on my train line. meaning, i used to see about two other kindles; now i see 3, sometimes 4. sometimes 3 & a sony. anecdotal. i do look, but am not thorough ’cause i don’t want to get the stink-eye from my fellow commuters. i’m already one of the weirdos with a kindle.

      Posted by thorn | Jan 13, 2010, 5:00 pm

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