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Reconciling Data: Book Retail vs Book Publishing

filed under , 7 October 2010, 01:07 by

In previous posts, I’ve often conflated publisher revenue with book retail sales — after all, a book sold is a book sold whether it’s the retailer or the publisher banking the sale, right?

Actually, no.

Publishers sell books to bookstores (and others: warehouse club stores, supermarkets, Wal-Mart, Target… & libraries, don’t forget the libraries) and the retailer then stocks the book on a shelf and hopes it sells.

There are all kinds of reasons a book will sell [Oprah] and twice as many why it might not, but bookstores buy lots and lots of books and merchandise them every which way to get you, the book buying customer, to part with some hard-earned money.

It doesn’t always work. And sometimes we send the books back to the publisher, maybe 3 or 4 months after it was initially “bought” and listed as a sale on the publisher’s bottom line.

##

Since no one else called me on it, I’m forced to correct myself and illustrate the point with another handy graphic.

So far, I’ve previously posted two data sets:

Book Retail numbers from the Census Bureau

and Publisher Revenue as reported by the Association of American Publishers at publishers.org

In that big-picture publishing post, I also separated out the “trade” publishing from the overall book revenue by excluding sales of text books, which turns out to be a really profitable (and rather large) chunk of the business.

& given these three data streams, I can extrapolate a fourth:

Follow the green (money) line and compare it to the blue one: In this case, blue is Total Book Retail (including text books) and the green line is my best guess at the “trade” book number — adult and children’s paperbacks and hardcovers.

The spikes that result from massive text book sales in August and January are gone, so my formula must be doing something right, but I’m at a loss to explain the predicted drop in September/October — I know sales slow a bit in early fall but didn’t realise it was this drastic a drop. Since the bookstore is gearing up for the holidays during this time period, I’m more than busy (I’m typically exhausted) so I can’t say I’ve noticed this phenomenon before — and it may just be an artefact of the math.

The other 10 months look pretty close, though. I’m fairly confident in this estimate.

##

To guide you to some other points of interest: Comparing blue (retail) to pink (total publisher revenue) you can see first, the 35% or so margin retailers enjoy — total book retail is a good bit more than publisher revenue. You can also see retail lagging a month behind reported publisher sales (which only makes sense, as it takes time to ship things)

There is less of a correlation between trade book sales at retail and the corresponding trade book revenue reported by publishers.

You can see the bookstores ramp up orders in the Autumn, resulting in greater trade book shipments (& revenue) but the December spike doesn’t seem to trickle down to Publishers. At retail, we’re selling all sorts of books that have been in the store for 3 months, 6 months… or years — and we’re also selling board games & gift wrap & calendars & boxes of Christmas cards and all kinds of crap lovely and valued seasonal merchandise — so perhaps this disconnect should have been expected.

Graphing it out is kind of interesting, though. From a peak in Dec. 2006 (followed by expected, average sales through August of that year) it appears to me that trade books have been showing a general decline (unrelated to e-books, as this merely reflects prevailing economic trends) and while that single month of December is still a great time to be a retailer, the dips are getting deeper — and if you squint a bit you can see the trend, and it’s going down.

As a baseline, though: that first mark on the y axis above zero: That’s 500 Million Dollars — oh, sure, it looks like the market for books is bottoming out, but the downward trend isn’t all that drastic yet, and a half a billion dollars (per month!) is still a great business to be in.



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