As publishers find their way through the digital wilderness, one sector is leading the rest toward a land where revenue from e-books might someday flow like milk and honey: Christian fiction.
From Q4 2010 through Q3 2011, e-books accounted for 30% of all Christian fiction titles sold, according to Bowker Market Research. That marks a six-fold increase from the previous year and dwarfs results from all other segments. The nearest competitor for digital penetration was general fiction, with 17% of titles sold as e-books. Among all books, 12% sold as e-books.
First the Good News
It was only in the past year that Christian fiction broke away from the pack. In the previous year, the genre’s e-book sales represented just 5% of units sold; for general fiction, it was 4%. This tremendous one-year increase for Christian fiction e-books has silenced speculation that religious readers would behave like everyone else in terms of digital migration. In fact, they’ve been early adopters on a massive scale.
“We can only deduce that the average price paid for Christian fiction e-books is less than the average price paid for other books,” says Bowker senior account manager David Campbell. “This could be due to a larger number of free books being acquired in the category and/or greater price discounting or lower unit prices in the category.”
The format accounts for only 11% of Christian fiction revenue, even though almost one in every three sales is an e-book. Thus with 89% of revenue coming from a diminishing format (print), publishers of Christian fiction are blazing new trails where they hope e-books—or e for short—will go hand-in-hand with profitability.
“The e has now come to a point beyond ‘that’s nice, it’s extra income,’” says Alan Huizenga, director of digital publishing at Tyndale. “Now we’re starting to budget for it. It’s become an integral part of revenue projections.”
Last year saw a blitz of promotions, from downloads offering bundled deals to backlist giveaways for buyers of new titles. Results have at times been dramatic. For example: in October 2010, Gina Holmes’s Crossing Oceans sold just 16 e-books. In November 2010, Tyndale offered it free for two weeks, and readers snapped up 80,000 free copies. By December 2010, Tyndale sold 10,000 e-book copies—not a bad increase from two months earlier.
But promotions only partially explain why Christian fiction has captured more e-readers than other genres. One theory holds that e-books are the only money-saving avenue for Christian fiction readers, who tear through new books and would like to spend less than $14.99 for a trade paperback. Readers of general fiction will find mass market versions in stores for $7.99, but Christian fiction isn’t sold that way. For these readers, e-books mark the lowest-cost option to readers seeking new titles, according to Don Gates, v-p of marketing at Zondervan. And with prices on reading devices falling as low as $79 for a Kindle last year, more can afford to make the upfront investment.
Mix in the fact that Christian fiction is a niche that doesn’t get much shelf space from general-interest retailers, and it becomes clear why readers are going online, where e-book offerings are vast. The challenge for publishers is to make sure the migration to e-books doesn’t come at the expense of profit margins.
Then the Not as Good
Publishers aren’t happy with everything the new numbers tell them. Baker, with its Revell and Bethany fiction imprints, has seen total fiction unit sales drop an unsettling 5%–10%, while e-book sales have grown to 30% of its fiction units sold, according to David Lewis, executive v-p of sales and marketing at Baker. Certain genres have been hit harder than others, notably historical fiction.
“In United States–based historical fiction, we used to sell a lot of units and make a lot of money in the big box accounts” such as Wal-Mart and Target, Lewis says. “But the historical seems to have lost readership. I don’t know where those buyers have gone, but they’re not buying as many digital books and they’re not buying as many print books.”
Others have been relieved to keep overall fiction sales steady. That’s critically important for the likes of Tyndale, which collects the same amount per book whether it sells in print or e-book form. Still, Tyndale also is watching numbers carefully. Digital offerings in children’s fiction haven’t drawn much interest, Huizenga says.
To make up for reductions in print sales, publishers are taking advantage of new opportunities that come with e-books. Baker and Zondervan are bringing back out-of-print books that still appeal to readers but didn’t justify ongoing print runs. Because they own the rights, the titles can be reintroduced at a nominal expense, priced cheaply (circa $4.99 from Zondervan) and generate revenue that would have never materialized in a print-only marketplace.
Baker aims to restore its fiction sales volume by capitalizing further on the voracious demand it’s seen for Christian romance. Books in this category consistently sell briskly, Lewis says, and rapid growth in Christian romance e-book sales hasn’t cooled readers’ desire for print versions. To seize the opportunities in both e-books and print, Baker is expanding its stable of Christian romance writers.
Making Course Corrections
E-book giveaways still happen, much to the delight of Christian fiction devotees, but they’re not as lavish as in the earliest days of e-books. Publishers are more selective about distributing freebies in an environment where e-book reading has exploded.
The marketplace is still rife with experimentation. Thomas Nelson increasingly ties giveaways to specific promotions that involve a purchase. Special deals from B&H Fiction only sometimes involve giveaways; deep discounts are also common, especially at big reading times of year. Tyndale went from offering monthlong giveaways in 2010 to weeklong giveaways in 2011. Abingdon gives e-books away now and then, but a staple promotion gives an Abingdon e-book buyer access to a free chapter from another title in the same series.
“We believe this is a great opportunity to introduce new readers to a new author, or to whet their appetite for coming attractions,” says Tamara Crabtree, executive director of marketing at Abingdon.
Revenue also comes increasingly from introductory pricing on new e-books. Thomas Nelson has decided low-cost pricing is more effective than zero-cost.
“Free e-books really don’t have the effect of dramatic readership growth, even when thousands of copies are downloaded,” says Allen Arnold, senior v-p and publisher at Thomas Nelson Fiction. “That’s because ‘free’ requires no commitment from the reader, and these titles, while downloaded, may never be read or a priority. Charging at least a minimal amount helps increase the odds that the reader is more interested in the content.”
Repackaging and selling content that had previously gone unsold isn’t the only ticket to boosting revenue, but it’s so far the most reliable one. So-called enhanced e-books, which sell for a few dollars more than ordinary e-books, try to create extra value for readers by supplementing text with video, audio, interactive images of a particular location—you name it. But generating lots of additional, high-quality content adds to the costs.
“Our enhanced e-books, which have the video within the books, are not going to start selling until an Apple or an Amazon invests to let the market know that this exists,” Zondervan’s Gates says.
While enhanced e-books are bringing some sexy sizzle to the world of religion publishing, the more exciting developments for increasing immediate profits come from the decidedly unsexy cost side of the ledger. E-books eliminate the need for wide swaths of overhead expenses, from materials to printing costs. Christian fiction publishers are nearing a critical mass in terms of demand for e-books. Some might soon trim initial print runs and take the savings to the bank.
They’re also squeezing expenses out of e-book production. Tyndale has brought e-book development entirely in-house. Others in the industry tend to outsource much or all of the technical work, Huizenga says. The returns on Tyndale’s up-front investment are already being realized, he adds, as the company gets to keep a larger share of every e-book it sells.
In what might be the trend with the most far-reaching implications for the industry, Christian fiction publishers have started releasing select titles as e-books only. They don’t come out in print, at least at first, and they might never exist as bound volumes. Thomas Nelson Fiction in December published Diann Hunt’s Bittersweet Surrender as its first e-only book. The company has no plans yet to release the book in print.
“Digital-only is the first step beyond the caveman stage of just taking what’s in print and putting it on an e-reader,” says Mark Kuyper, executive director of the Evangelical Christian Publishers Association. He notes that with e-only releases, a publisher can effectively “test” a book’s appeal and decide whether sales warrant a print run.
Even as publishers try to keep their bean counters happy, they’re closely monitoring how technology is opening up new possibilities. Apple’s January launch of iBooks 2, which reportedly sold 350,000 textbooks in its first three days, will soon lead to textbooks that can facilitate interaction and online collaboration among readers. Publishers of Christian fiction will be watching this trend with interest, Kuyper says, to see if similar technology principles can help fiction readers interact more easily with one another.
As Christian fiction publishers wade into the digital deep water, they’re discovering patterns with potential industrywide implications. So far, consumers embrace e-books not for their bells and whistles but for the low price points that leave extra dollars in their wallets. If publishers also begin to reap the savings bonanza, they might reach the promised land after all.