Kindle Review – Kindle Fire Review, Kindle 4 Review

Was just reading about some start-up that is drumming up total sales without disclosing actual profits and was reminded of what’s going on with eReader and eBook Figures.

There are only two sets of statistics that are relevant – value to users and profits. Roughly speaking –  

1. How much value customers are getting from your service i.e. how much are customers actually reading and at what cost?
2. How much profit you are making from your service?

Despite this we have companies drumming up meaningless things like page views and downloads and revenues (meaningless when compared with profits) and sales numbers (meaningless when compared with actual value to users and what percentage actually get this value).

Let’s start with the value customers get from a product.

Value to Customers is Incredibly Hard to Measure

Take a diet book -

1. Let’s say a million people buy it.
2. 20,000 of those who buy it review it.
3. 100,000 actually read it. 
4. 50,000 actually act on it.
5. 10,000 get good results.

Which of those figures do we look at?

1. Obviously not everyone who read the book got value from it.
2. The 100,000 who read it perhaps got joy or satisfaction or the feeling they were doing something good.
3. The 50,000 who acted on it at least learnt something and hopefully set up good habits.
4. The 10,000 who got good results are the real winners.

Yet, authors only talk about sales and we only get to see reviews from the people who write them.

Now, with ebooks, we can tell how many people actually read it. Even better – we can add an extra layer where at the end of the book users can rate it and review it.

We’re moving closer and closer to determining exactly how much value users get and what percentage of users get what amount of value.

It’s time we started seeing better statistics -

1. Sales, Total Revenue, Profits, Profit per Book.  
2. Reviews and Ratings from people who didn’t finish the book.
3. Reviews and Ratings from people who finished the book.

Would you rather read a diet book that helped 75% of people lose weight (out of those who finished it) or one that sold 2 million copies because of a celebrity with an airbrushed picture on the cover?

One of the best ways to measure value to customers is how much they’re willing to pay

In addition to reviews and ratings an excellent way to measure the quality of a book is how many people buy it and at what price.

The ‘at what price’ is why its terrible to rank ‘free’ books as bestsellers – People pay nothing for them and we don’t know what percentage actually read them.

It’s generally true that -

1. Customers are willing pay for products that add value.
2. Customers are willing to pay more for products that add a lot more value or add value very conveniently.

Any person who doesn’t pay anything to you is not your customer – it’s foolish to service these people.

Profits are the best, and perhaps the only, true indicator of a business’ success

Note: We aren’t talking about non-profits or companies that are pretending to be non-profits.

For any business, even an online business, there are certain statistics that should be thrown out the window -

1. Visitors who did not benefit.
2. Visitors who did not pay anything.
3. Page views or Eyeballs or whatever misleading  buzzword is being used to fool investors.
4. Visitors who left before doing anything on the site.
5. People who bought the product and never used it or benefitted from it. These show up in profits – However, these are usually not long-term customers.   
6. Total Revenues when some or most of it is shared with other companies. There should actually be a law against this.

It’s all misdirection.

If a company is a good company it makes a lot of money – Apple, Microsoft, Google, Amazon – they’re all making a ton of money every year.

If it’s not a good company then it hides behind other statistics – number of users, number of page views, total revenue, and such.

Why and How all of this applies to eReaders and eBooks

All of this applies to eReaders and eBooks because we are drowning in a sea of spin.

Here are a few things which would be nice to see -

1. Companies not drumming up products that are years away. Plastic Logic spent a year and a half running a dog and pony show – that’s way too long.
2. If they do demo a product they are clear about when it arrives. Liquvista has been playing the ‘perhaps in 2010, perhaps in 2011′ game with its color ePaper technology – Come out with a clear answer.
3. Companies are clear on what they are talking about – Cool-er put out a press release saying they’ve sold a million in eReaders without specifying whether it was $1 million worth of eReaders or 1 million eReaders.
4. No page view statistics – Almost every eBook site is guilty of this. No one cares how many times someone refreshed your page.  
5. eBook Sales figures always accompanied by revenue and profits. If you sold 1 million eBooks at $1 that helps no one.
6. No vague figures which are hard to understand and interpretable in a thousand ways.
7. No selective disclosure.

There are a few fundamental statistics that are crucial -

1. What percentage of dollar sales are eBooks? Sales Numbers don’t mean anything.
2. What percentage of dollar profits are eBooks? As mentioned earlier, Profits are perhaps the best indicator. 
3. What are eReader sales figures and what are profits per eReader?
4. Do people generate more profits from book sales after they buy eReaders?  
5. What percentage of people finish a book?
6. What are reviews and ratings from people who finish a book?
7. What percentage of people benefit significantly from an eReader or from an eBook?

The last is incredibly difficult to figure out – However, the others are pretty clear-cut.

There’s no reason for eReader and eBook companies to spin things – they have all the figures and people are smart now. Here’s to hoping for less spin and more facts.

Filed under: thoughts Tagged: | ebook sales trends, ereader sales trends