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A peek into the most disrupted industry of our age - Books

Updated: Dec 22, 2022

It's almost three decades since Amazon was founded 'out of a garage' to sell books online and - it's still too early to say the rest is history. As both a lover of books and a strategist specialising in digital disruption, I find that the tale of the book industry has plenty of lessons for those who are feeling, fearing and driving disruption. There are some who will take comfort in the knowledge that disruption takes time. There are others who will be bemused to find that disruption requires the willing participation of large industry incumbents to gain pace; industries don't get disrupted, they self-disrupt. The majority will find it heartening to see that whilst disruption causes much carnage, it also catalyses resilience and reinvention of a kind that transcends technology and the reaches of capitalism. Here's an overview of the state of the book industry, twenty seven years post Amazon.

A crowded marketplace with not nearly enough stories...

There are over 30 million titles (ie unique books) available for sale at any given point in time. Each year over 4 million new titles are added to the list, with most being self published.

No other product category in the world offers so much choice.

The perennial challenge for authors, publishers and booksellers is cutting through the crowds to find 'their' readers. This isn't easy and for the most part, average books sales have been falling. Many in the industry feel that there simply isn't a market to absorb all the books being produced these days.

The strategist in me, looking at this highly saturated market, can't help but concur and very logically question the need to write another book - ever.

The inner poet wisely advises that the human spirit's appetite for stories is vaster than all the stories that can ever be written.

There are 7.9 billion of us in the world today and think it's fair to say that everyone loves a good story. We grew up with them. In Margaret Atwood's words, “In the end, we’ll all become stories".

Books maybe a saturated market, but they continue to sell, best-sellers continue to emerge and books go on to shape the stories we consume through other media - film, television and games.

Large, stagnant, but starting to grow

Global book sales are reported to range between $120 - $130 billion (USD) annually.

This likely understates the full value of the industry as eBook and audio book sales data are often incomplete and it probably hasn't captured the full extent the book trade in developing markets, the second hand book trade and the international rights trade (which is notoriously opaque).

Growth in mature markets over the last five years has been largely stagnant. This isn't 'bad news' though as after 'peaking' in late 2000's, book sales had been steadily declining. Many still fear that books are falling out of favour.

The industry has however seen a surge through COVID, with print book sales in the US achieving double digit growth in every age category from 2020 to 2021.

Similarly, the Australian book industry recorded sales growth of between 7-12% across categories over the same timeframe.

With all the lockdowns in place, it seems people had time to read once again and similar to other trends like gardening, cooking and baking sourdough, they went 'traditional' and opted for print.

Whether this habit 'sticks' post COVID is yet to be seen. The optimist in me hopes the 'new-book smell' did the trick and has hooked a whole new generation to the love of reading 'real' books.

The US and then everybody else

The US is by far the largest market accounting for 30% of global book sales.

The next three largest markets, China (10%), Germany (9%) and Japan (7%), are around a third of the size of the US market.

The Australian market whilst sizeable in it’s own right at ~$1 billion, is a dwarf on the world stage.

The trends and insights we talk to in the rest of the post have been gleaned from the US market. These can (for the most part) be generalised across other mature Anglo-Saxon and European markets. Asia is a different beast.

Self-disrupted and self-disrupting ...

The book industry ‘self-disrupted’ about three decades ago when publishers handed over their hard-earned titles (or rather authors' titles that they had distribution rights to) over to Amazon to sell online at whatever price it chose...

Flush with venture capital looking for growth rather than yield, Amazon played the price game, discounting heavily to drive sales and gain market share.

It became unsustainable for many self-funded indie bookshops and yield-focused chain bookshops to compete, with many folding. Publisher returns suffered, driving consolidation, with the top five (soon to be four) commanding 80% market share. Ultimately it was authors who paid the price, with most lucky to see ~10% of their books' sales today.

In many ways (and perhaps speaking with the benefit of hindsight), online retail was always something that was going to happen to the book industry. Others have followed and made headway in markets where there was no Amazon e.g. Booktopia in Australia and Fishpond in New Zealand.

What sets Amazon apart from these fast followers though is the moves it made after online retail (and their less than savoury conduct but more on that later).

Amazon's foray into eBooks and self-publishing, via Kindle and Kindle Direct Publishing, were seen to be the next ma