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Does Digital Cannibalize Print? Not Yet.

One of the big risk factors publishers think about when it comes to digital books is that they will cannibalize print sales. Factor in the lower prices we’re seeing for ebooks, and it’s a quite reasonable concern.

Looking at data on sales from our website, at first glance that would appear to be exactly what’s happening:


Over the past 18 months, we’ve gone from print outselling digital by more than 2:1 to just the opposite.

But that’s not the full story. If there really was cannibalization happening, you’d expect to see our print sales underperforming the overall computer book market, but that’s not what’s happening. Here’s a comparison of how our sales (as measured by Bookscan) stack up against the broader computer book market. The data here is normalized (the first period in the graph is set to 100, and subsequent results are calculate relative to that period):


Roger Magoulas, who heads up our Research Team (which is doing some way cool stuff with App Store data) put it this way in a recent backchannel email covering this as part of a larger analysis:

By looking at the data and these charts we infer that while O’Reilly physical book sales are down compared to last year, this seems more the result of the drop in demand for computer books since the financial meltdown than the impact of ebook sales. Since O’Reilly is a relatively prolific publisher of econtent we would expect that ebooks would affect O’Reilly’s physical book sales more than other publishers and we don’t see that evidence in these results. Even if ebooks are taking a bite out of O’Reilly physical book sales, we see no negative effect on O’Reilly’s slightly increasing share in the physical book market nor on how O’Reilly’s sales correlate with the overall market for physical computer books.

So, for now, if what we infer is correct, you can put away your exorcism crosses, ebooks seem more a legitimate expanded market opportunity than a projectile vomiting Linda Blair wannabe.

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Comments: 10

  1. Fantastic post.

    One question, Is the “risk factor” more that digital will cannibalize value of published works through forced lower retail prices and pirated content rather than that of securing “print sales”?

    I think most publishers are all about securing the value of content. The challenge of course is working out how to secure enough value to ensure that content QUALITY is secured. This before the wider community takes the option away.


  2. How about for an author? Does Digital Cannibalize Print?

  3. @Spiros — Value is ultimately defined by the buyer, not the seller. Customers pay for things that have value for them, irrespective of how much a producer thinks their produce should be worth (a very common situation in the real estate market). There’s a lot of heat and noise right now around pricing, but we’ve been able to sustain relatively high pricing (80% of print) along with the kind of growth you see in the first graph because we offer something that our customers find valuable — multiple DRM-free formats and free lifetime updates.

    As for piracy, you’re assuming that a pirated copy is equivalent to a lost sale, and I haven’t seen any compelling evidence to support that conclusion. Tim O’Reilly says it much better than I could in “Piracy is Progressive Taxation.”

    @Sophie — I’m sorry, Im’ not clear on what you’re asking.

  4. Sorry for my vagueness.

    What I ask is whether digital copies will affect an author’s income from his/her publishers.
    Does an author worry about digital copies (most in lower price) cannibalize the revenues of print copies?
    I know ebook copies might be outsold the print ones, but some authors complain they are not making good enough.
    Do you have the number or graph to show from authors’ view?

    It seems to me publishers want to have as many as possible ebook titles to sell, but authors take a wait-and-see attitude.

  5. Nice piece of analysis. What it suggests to me is that consumers move from print to e regardless of the title or subject. I know that’s true for me since I became an ebook reader for general fiction and non-fiction. I no longer consider a book that isn’t available as an ebook. So there may, indeed, be a “cannibalization” taking place: people are moving from print books to econtent. But there’s no way to PREVENT that shift from taking place by withholding your content.

    If that’s right, the publishers who hold ebooks back to boost print sales are engaged in a futile effort.

  6. are the publishers who pay attention to what o’reilly says
    really so brain-dead stupid that they are still wondering
    if e-books will “cannibalize” print sales? really? seriously?

    it strikes me as trying to raise a house full of retarded kids.

    the dinosaur publishers are missing out on “the golden age”,
    when e-books _stimulate_ sales of their print counterparts…

    the best way to sell p-books is to put out e-books for free,
    as paulo coehlo has proven to anyone with the eyes to see…

    the people who start reading a book in electronic-form, and
    love it, will turn around and buy it in print form to continue.
    so you can stimulate print sales by giving away free e-books.

    really, today, the best way to sell 50,000 p-books would be to
    find a way to give away 250,000 e-books, and rake in the cash.

    but that’s an artifact of a population raised on print-books…

    today’s kids will come to prefer e-books over p-books, and
    this golden age for publishers will fade to a distant memory.


  7. Does a digital format need to be exclusive? Authors are paid for their work regardless of what the final product becomes–printed or digitized.

    When considering the costs of a book, the factors (author’s fees, production, printing, marketing) can be cut in half if publishers reduce production and eliminate printing for digitized books.

    Authors still make the same amount of money. Marketing costs remain the same. But production goes down because once the book files are created electronically, printing, digitized, downloads, etc. are interchangeable. And the electronic files are easy to update when needed.

    Print-on-demand (printing each book only when a copy is ordered) is the way to go. The book looks the same as offset printing (unless you are a printing company, then you would disagree). The initial print-on-demand costs are high but lessen as more books are sold.

    So, where is the downside?

  8. @Sophie —

    Thank you for clarifying your question. This data suggests that digital sales do not cannibalize print sales. Since authors and publishers have a mutual interest in maximizing sales (because it is a revenue share arrangement), this data applies to us and to our authors. It is true that digital sales are often at a lower price, but there is also much lower marginal cost of production and distribution. Assuming that the digital sales don’t cannibalize the print sales, then digital sales where marginal revenue exceeds marginal cost are a positive for both publisher and author. While some authors may be concerned about their royalties on digital books, the publisher is no less concerned, since again it is a revenue share agreement. In other words, the graphs and numbers shown are as much from an author point of view (I am an author myself) as from a publisher point of view.

  9. I don’t agree that giving away free e-books is good for business. However, something like Amazon preview (or inside the book, I forgot what its called) where one can see a few pages of the book and can then decide whether the book or not is a much better idea.

    e-books, even if they cannibalize hard copy sales, they provide alternate source and often incremental revenue. So, from my perspective, publishers should welcome it instead of wondering whether its cannibalizing or not. Old time readers would continue to prefer a real book over an e-book though.

  10. ryan said:
    > I don’t agree that
    > giving away free e-books
    > is good for business.

    except it’s not an opinion contest,
    ryan, it’s an empirical question…

    and the preponderance of evidence says
    yes, indeed, it _is_ “good for business”…

    but hey, all the mammals know it already,
    and the dinosaurs will _never_ be convinced,
    so it’s really a waste of time thinking about it.


    p.s. and, just so nobody gets confused here,
    the mammals aren’t even trying to sell p-books,
    at all, they’re trying to make money off e-books.
    and — since the marginal cost of digital goods is
    zero — the best way is to move a lot of units…