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E-book sales have traditionally soared after e-reader gifts are opened on Christmas Day, but that trend may be coming to an end. (Brian Snyder/Reuters)
E-book sales have traditionally soared after e-reader gifts are opened on Christmas Day, but that trend may be coming to an end. (Brian Snyder/Reuters)

Retail

Post-Christmas boom in e-books expected to fade Add to ...

When it comes to the business of books – a staple of under-the-tree gifting – there are actually two Christmas stories.

The first – for physical books – ramps up throughout December and ends by Dec. 25. In Canada, a typical week sees about 700,000 books sold. But, in the weeks before Christmas, that number jumps to two or three million, according to sales tracking data from BookNet Canada.

The second story – for e-books – begins Christmas Day in the hours after new e-readers are unwrapped.

“The most wonderfully insane time of year is from about 3 p.m. on the 25th, extending into January and February,” says Michael Tamblyn, who in November was named CEO of Kobo, the Canadian-founded maker of e-readers and seller of e-books. Kobo was sold to Japanese retailer Rakuten in 2013, but Mr. Tamblyn – a long-time employee – stayed through the transition, most recently as second in command to former CEO Takahito Aiki.

From the start, e-books have bucked the retail trend. Mr. Tamblyn recalls Kobo’s first big white-knuckle Christmas in 2009: “We came out of November and into December expecting to see that ramp, and it didn’t come ,” he says, able to laugh now at how the fledgling company contemplated doom. “And then on Dec. 25, people unwrapped their device, plugged it in for three hours to charge, and then the avalanche hit.”

But, this year, there were reasons for concern leading up to Mr. Tamblyn’s first Christmas at Kobo’s helm. First, e-book sales have been flat for the past 18 months to two years, according to Noah Genner, CEO of BookNet Canada, which tracks about 85 per cent of Canada’s book sales. Mr. Genner pegs e-book sales at about 17 per cent or 18 per cent of Canada’s book market. Second, the post-Christmas boost is under threat.

“The phenomenon of the e-book sales booming right after Christmas, that’s going to go away,” says Mike Shatzkin, a New York-based publishing consultant with 50 years’ experience in the book business. He notes sales of stand-alone e-reader devices have been growing more slowly in recent years as more people use their phone or tablet for reading.

“It’s a pipeline effect; people buy a lot more when they are new customers,” Mr. Shatzkin says. “You have three favourite books that you want to have on your device, you have the next three books you want to read, you have a couple that you may want as reference. At some point, your purchasing slows down to be approximately the same speed as your consumption.”

Reports out of the U.S. market suggest e-book sales have actually been falling, but Mr. Shatzkin points out the widely cited figures from the Association of American Publishers exclude self-publishing sales and subscription services such as Kindle Unlimited. The AAP is dominated by the big five publishing houses that have succeeded in fighting off discounting of e-books by Amazon in recent years with the agency pricing model.

Kobo, which has long avoided the U.S. market in favour of expansion in Europe and Mexico, has jumped on the self-publishing bandwagon – even though those e-books tend to sell for lower prices than the big publisher offerings.

“Kobo Writing Life [the self-publishing imprint] is now 15 per cent of all the books we sell,” Mr. Tamblyn says. “That’s larger on a units basis than any other tradition publisher, and globally it’s our third-largest source of sales.”

If the analysts are correct and the post-Christmas e-book bump is fading, it doesn’t signal a flight back to physical books, electronic publishing analyst Thad McIlroy says. “When you look at Indigo and Barnes & Noble, the percentage of sales of books is dropping at 2 [per cent] or 3 per cent a year,” he says, noting Indigo has been aggressively adding toys and lifestyle products to fill the gap. “In 2013, Indigo sales were 70 per cent books; 2014, 65 per cent. What happens when that number slips to 49? Then you have Indigo, which is no longer a bookstore.”

BookNet’s Mr. Genner says that while physical book sales appear to have risen in 2015 (final numbers will be tallied in January), they have been boosted by an unlikely source: adult colouring books – an area in which e-books don’t compete. That pattern won’t necessarily repeat in 2016, Mr. Genner says. Last year, nine of the top 10 books in Canada were Young Adult novels.

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