Amazon’s 4th quarter: e-books outsell paperbacks

Amazon’s 4th quarter: e-books outsell paperbacks

Amazon just announced their 4th quarter 2010 results in this

Press Release

Financial, financial, blah, blah, blah…forget all that, it was huge!  ;)

Net sales increased 36%!

How are e-books doing?

They passed paperbacks!  Through the year, for every 100 copies of a paperback they sold, Amazon sold 115 Kindle books.  It’s important to note that they didn’t limit this to mass market paperbacks, or to books that were available in both formats.  They also are excluding free Kindle books in these figures.

They crushed hardbacks!   They sold three times as many Kindle books as hardbacks.  While e-books are somewhere around 10% of the US publishing market (and they may have gone up in December…we haven’t seen that yet), at Amazon e-books are 75% compared to just hardbacks. 

They also said that paperbacks sold more than they had.

That’s important…Amazon continues to grow, which floats all (or at least many) boats at the company. 

They also said millions of K3s were sold. 

I wasn’t able to listen to the webcast live, but it’s worth listening to the recording..  That’s where you’ll get the Q&A…rather than what they had planned to say:

Recorded Webcast for Q4 Amazon

For example, the question was asked if the Agency Model was a drag on sales…and they finessed the answer.  :) 

Bottom line: things look great, and e-books look better.  ;)

Feel free to tell me what you think…

This post by Bufo Calvin originally appeared in the I Love My Kindle blog

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4 Responses to “Amazon’s 4th quarter: e-books outsell paperbacks”

  1. Carole Jarvis Says:

    I bought the Kindle2 in May of 2009 when preparing to visit my daughter in Germany. While I immediately fell in love with it, I still continued to borrow hardbacks and trade paperbacks from the library. Now I almost entirely use my new Kindle3 because reading is so much easier, and I live for the end of the Agency Model. (I first wrote “death” but decided that wasn’t politically correct!)

    I mainly read backlist books and was shocked at how much their price increased under the Agency Model. The best way I’ve found to cope with this is to list many, many books under the “Kindle price drop” tab at eReaderIQ. My point is that I am now buying reasonably-priced eBooks rather than using the library so much.

    Thank you for all the time you put into your extremely helpful blog, Bufo.

    • bufocalvin Says:

      Thanks for writing, Carole!

      Thanks, too, for sharing that!

      I think what might be missed by some people is that those backlist books have also gone up in paper. As mass market paperbacks lose share, I’m noticing many backlist books that aren’t available in that format…but are available in trade paper.

      http://www.ereaderiq.com is great, for many reasons. :)

      Thanks for the kind words!

  2. Edward Boyhan Says:

    On the other hand this quarter (as for last quarter as well) Wall Street was disappointed. Operating expenses continue to rise faster than revenues so net profit rises but not as fast as the revenue does. Capital expenditures (primarily for fulfillment center construction) have risen markedly over the past year. Ironically, the more they sell, the more fulfillment centers they have to build, the more profits are depressed thereby. One of the main little stated reasons for the development of the kindle is that ebook sales require little, if any, fulfillment center involvement. Media (which includes books, music, video) is a declining fraction of total sales (non-media physicals have been the largest fraction of revenues for several quarters now). Their cloud service offerings are the fastest growing segment, and may someday eclipse media and non-media physicals. So Amazon has evolved far from the world’s biggest internet bookstore to today arguable the largest internet retailer, and one of the top 3 cloud service providers. It is not much of a stretch to imagine that someday soon they may be the world’s largest retailer period — passing Walmart.

    • bufocalvin Says:

      Thanks for writing, Edward!

      I honestly don’t think Wall Street gets Amazon…and never has. There were expenses, certainly, and foreign exchange rates hurt them (again). Wall Street tends to think very short run and Amazon tends to think long run. They didn’t make a profit for years…I had someone describe Amazon stock as a “Ponzi scheme” to me during that period. :)

      Those fullfillment centers make Amazon money, I would guess…Amazon sells fullfillment to other people. Even if Amazon was selling nothing physical (which wouldn’t happen…you can’t do digital windshield wipers…yet) ;) , their current model would have them having fullfillment centers.

      This quarter, for example, they are likely to close the LOVEFILM purchase. That’s going to be an expense…and the profit a few years down the road (after Amazon reshapes it a bit, and after Amazon potentially releases hardware that can play streaming video) will be much bigger than the first year, in my opinion.

      The cloud storage thing is a really interesting part of the company…and one that may not be appreciated by a lot of consumers. Their innovation, like the patenting of what I call “preturns” (“returning” something before you get it)

      http://measuredcircle.wordpress.com/2010/12/29/amazon-patents-preturns-of-gifts/

      is a long-term profit kind of thing.

      Apple’s reportedly about to make a huuuge move with NFC (Near Field Communication) chips in the next iPhone…you pay for things by swiping your phone. Of course, people may have less need to pay for things physically at all (grocery delivery from Amazon has a new pilot program), but that will make Apple a lot of money, most likely. While I do see Amazon getting into the tablet business, I don’t see them doing phones right away…so, while processing payments may be big business, I don’t think they’ll get a piece of that one.

      You are absolutely right that the market didn’t like Amazon’s results…the stock dropped something like ten percent.

      http://www.marketwatch.com/story/amazons-profit-rises-margins-fall-short-2011-01-27?siteid=rss&rss=1

      I’ll predict it will come back up after the knee-jerk reaction, though. It will be up more than it was before the drop within a week, I would guess…and certainly within a few months. I could be totally wrong, though…that’s happened before. ;)

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