I wish I could give you a clear answer, but after nearly a month of investigation into whether Apple or Barnes & Noble is now the second-largest ebook retailer in the U.S., this is the best I have: It depends.
Over the past month, I’ve spoken to over a dozen large, medium and small publishers of ebooks and a handful of important ebook distributors which cater to indie authors. Many of them have shared with me their ebook retailer market share breakdown for the past three months (December, January and February). At the same time, due to the sensitivity of the matter (no publisher wants to publicly acknowledge what percentage of revenue comes from Amazon, for instance), many publishers officially declined to share data with me.
That said, I have unofficial sources within publishers and managed to get some idea of ebook retailer market share at large, medium and small institutions. Ebook distributors that work with indie authors were more forthcoming.
While there is no consensus among my sources as to which ebook retailer is No. 2, some patterns have emerged:
Among the largest publishers, Barnes & Noble seems to still be solidly No. 2 behind Amazon, but both Apple and Amazon are gaining market share and B&N is losing it.
Barnes & Noble’s results over the past year inspired me to undertake this line of inquiry. Quarter-to-quarter, the company has continued to see digital content revenue decline. For instance, in its latest quarterly report in February, Barnes & Noble sold $57 million in digital content, a decline of nearly 27% over the same quarter a year ago. This was typical of the company in the past year.
At the same time, I tried to figure out whether Apple had increased its iBooks revenue over the past year. A company spokesperson declined to comment.
One surprise in looking at large publishers is that Google kept on coming up as a retailer that is gaining market share.
Among medium-sized publishers, Apple and Barnes & Noble are closer.
Among the medium-sized publishers I spoke with, some are making more money with Apple, and some with B&N. I was told that month-to-month, genre-to-genre and book-to-book it changes.
Among small publishers, Apple seems to have taken the market share lead.
I was told by small publishers that Apple has become very attentive to their needs while the opposite has happened at Barnes & Noble. Apple’s efforts, they told me, have paid off.
At a small publisher, one book can make a huge difference in retailer market-share over the course of a month. I was told several stories of how clever marketing by Apple for titles with momentum resulted in huge market-share swings in Apple’s direction over the course of a month or two. I was even told by one small publisher that for one book, Apple far eclipsed Amazon in sales.
Among indie authors, Barnes & Noble is likely the leader still, but it’s unclear.
One major distributor had Barnes & Noble in the lead, but not by much and with the margin shrinking. Another said Apple was far ahead.
“Apple is our No. 2 ebook retailer over the past year – and a strong No. 2,” said Matt Cavnar, co-founder of Vook, which distributes about 5,000 ebooks for authors, small- and medium-sized publishers and its own publishing operations.
According to Cavnar, Apple is paying a lot more attention to what Vook’s author and publisher clients are doing and capitalizing when possible.
“They have been extraordinarily diligent about merchandising and making sure they keep on eye on all the marketing – even the marketing we’re doing – and they manage it so closely and I think that’s paid off for them,” Cavnar said.
Among all categories, Amazon seems to be gaining market share.
Among all the groups we spoke with, the overall narrative seemed to be that Amazon and Apple were gaining market share and that Barnes & Noble was losing it.
The going thinking right now is that the shift away from agency pricing by the largest publishers has helped Amazon grow its ebook market share because it’s doing the most discounting. I don’t think that’s quite right. Amazon’s competitors are discounting, too.
What I think has happened is that because Nook, for instance, is now selling many, many titles without making a profit (or at a loss — I’m talking about best-selling titles from the publishers which were previously agency), the bleeding of 2011 and 2012, when the company was losing hundreds of millions of dollars a year, has turned to a full-on hemorrhage. And, in reaction, Barnes & Noble cut investment in other critical areas for Nook. B&N didn’t release a new tablet product last year and has cut a large percentage of its workforce.
The moves forced Barnes & Noble to discontinue investment in critical areas, like hardware and software — areas in which the company was already well-behind Amazon, and areas critical to maintaining and growing market share.
As book industry consultant and DBW partner Mike Shatzkin often points out, unlike Amazon, which sells many things, Nook needs to sell ebooks and devices profitably in order to survive; Amazon does not.
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At this point in the ebook game, it’s really impossible for any party to know ebook retail market share across the U.S. The industry is far too fractured between retailers, publishers, distributors and authors and publishers selling ebooks direct for any one party to have a handle on the whole market. Any retailer that says it knows its own market share even is likely being disingenuous. (Think about it. How would they know?)
There’s a rumor going around that a very well-known tracking organization (I’ll give you one guess) is making a hard push right now to create a product that measures ebook sales across the largest retailers — but this is an effort that has been ongoing for years.
We’ll likely never have a complete picture of this market. But, after going through the exercise twice in two years trying to get some sort of blurry image (I did the same thing last year), I’m fairly confident that Amazon is winning (by a lot) and that Apple is catching up with Barnes & Noble.
Our Best-Seller List
Part of the secret sauce of the Digital Book World Ebook Best-Seller list is a calculation of ebook retailer market share. Last year, we added Apple to our data-gathering operation, bringing you a more complete picture of ebook sales in the U.S. So, we needed to rejigger our market share calculations between the retailers.
With this new research and the disappearance of Sony and retreat of Kobo from the U.S. ebook retail market, we will again be updating our calculations. Stay tuned.