[Reader-list] Free digital editions increase sales of paper editions...

[Kshmendra Kaul]

Thanks Vivek. Very interesting.
 
K

--- On Fri, 3/5/10, Vivek Narayanan <vivek at sarai.net> wrote:


From: Vivek Narayanan <vivek at sarai.net>
Subject: [Reader-list] Free digital editions increase sales of paper editions...
To: "sarai list" <reader-list at sarai.net>
Date: Friday, March 5, 2010, 9:33 PM


See: 
http://quod.lib.umich.edu/cgi/t/text/text-idx?c=jep;view=text;rgn=main;idno=3336451.0013.101 
for formatted tables.

The Short-Term Influence of Free Digital Versions of Books on Print Sales

John Hilton III and David Wiley
This paper was refereed by the Journal of Electronic Publishing’s peer 
reviewers.
Abstract
Increasingly, authors and publishers are freely distributing their books 
electronically to increase the visibility of their work. A vital 
question for those with a commercial stake in selling books is, “What 
happens to book sales if digital versions are given away?” We used 
BookScan sales data for four categories of books (a total of 41 books) 
for which we could identify the date when the free digital versions of 
the books were made available to determine whether the free version 
affected print sales. We analyzed the data on book sales for the eight 
weeks before and after the free versions were available. Three of the 
four categories of books had increased sales after the free books were 
distributed. We discuss the implications and limitations of these results.
The Short-Term Influence of Free Digital Versions of Books on Print Sales
Introduction

A growing number of authors and publishers freely distribute their books 
electronically to increase the visibility of their work. These books, 
for both academic and general audiences, cover a wide variety of genres, 
including technology, law, fantasy, and science fiction. Some authors 
claim that free digital distribution has increased the impact of their 
work and their reputations as authors. [1] But beyond increased 
exposure, a vital question for those with a commercial stake in selling 
books is, “What happens to book sales if digital versions are given away?”

One answer may come from the National Academies Press (NAP), which makes 
the text of all of its publications freely accessible. “Consequently,” 
reported Michael Jensen, Director of Publishing Technologies at NAP, “we 
are very well indexed by search engines.” [2] Jensen wrote that as a 
result of this indexing they receive many visitors, a small percentage 
of whom purchase books. Jensen reported that NAP’s 1997 publication 
“Toxicologic Assessment of the Army’s Zinc Cadmium Sulfide Dispersion 
Tests” had 11,500 online visitors in 2006. Those visitors “browsed 
approximately four book pages each. Of those, four bought a print book 
at $45, and two bought the PDF at $37.50. So 0.05% of the visitors to 
that particular book purchased it, even though they could read every 
page free online.” [3] Thus, a nine-year-old out-of-print publication 
that otherwise would likely have been inaccessible was viewed 11,000 
times and purchased six times.

The Oriental Institute at the University of Chicago digitally 
distributes free copies of its books, and recently reported that print 
sales have not decreased. Specifically they noted that “[a]fter the 
complimentary distribution of twenty-one titles in 2008 that had for 
many years only been available in print, sales of these titles increased 
by 7% compared with the previous two years.” [4]

The question of how freely distributing an electronic version of a work 
affects print sales is difficult, if not impossible, to answer 
experimentally because there is no way to simultaneously release and not 
release free versions of a book. It is not possible to determine 
causation; nevertheless, the effect of free distribution on print sales 
is an important issue to examine.

In the present study we explored how free digital book distribution 
influenced book sales in the short term by examining a series of books 
that were released in print at one point in time, and then later 
released in a free digital format. Our specific question was, “Are book 
sales in the eight weeks following a book’s free digital release 
different from the eight weeks prior to this release?” Because most 
books have a pattern of declining sales as time goes by, our assumption 
was that sales would decrease slightly in the eight weeks following the 
free release.
Method

We followed the lead of Tim O’Reilly in using Nielsen BookScan to track 
the data on book sales before and after free versions were available. 
[5] BookScan tracks point-of-sales data from most major booksellers, 
meaning that it tracks the number of books actually sold to customers, 
as opposed to books sold by distributors to retailers. Notable 
booksellers that BookScan does not track include Wal-Mart and Sam’s 
Club. [6] In general, BookScan estimates that it tracks approximately 
70% of all book sales in the United States.

Because BookScan tracks sales by week, we had to exercise some judgment 
in designating which weeks were “pre” and which were “post.” For 
example, if a free digital version was released on a Friday, some of the 
sales that week would be when the book was freely available and others 
would not be. If the release date of the free version was such that five 
or more days of the week fell into either a “pre” or “post” category, we 
assigned it to that category. In instances where the free version was 
released in the middle of week we did not count that week at all in our 
analysis; rather we tracked the eight weeks before and after the week 
the free version was made available. To protect BookScan’s proprietary 
business information, we did not link the sales figures with specific 
book titles in this paper.

We organized the books we studied into four different groups. The first 
group consisted of seven nonfiction books that had digital versions that 
were released at various times. The second group consisted of five 
science fiction/fantasy titles that had digital versions that were 
released at various times. The third group consisted of five science 
fiction/fantasy books that were released together by Random House. The 
fourth group consisted of 24 science fiction/fantasy books released by 
Tor Books. The Tor group was different from the previous three in that 
Tor ran a special promotion in which they released a new book each 
Friday. The book was available for free download only for one week and 
only to those who registered for Tor’s newsletter. With the other three 
groups, once a book was released in a free digital format it remained 
available, at least for several weeks, and in many cases, indefinitely.

It is important to note that some publishers, such as the National 
Academies Press, allow readers to view only a page at a time, and make 
the downloading of an entire book difficult. This was not the case with 
the specific books we studied. With two exceptions all of the books were 
available to be downloaded as entire PDF document. The two exceptions 
were Cult of iPod and Cult of Mac. Rather than making PDF versions of 
these books available to download from a static site, the author of 
these two books used BitTorrent to encourage the spread of the book. [7]

Some books were available free in digital formats beyond PDF. All of the 
books released by Random House were available in Stanza, an e-book 
format commonly used on the iPhone, Kindle, or at Scribd.com, the social 
publishing site that allows anyone to post a work. Several of the Tor 
books were made available in additional formats such as Mobipocket, a 
format used on some “smart” cell phones and personal digital assistants. 
At a minimum, all books except the two previously described were 
available as complete PDF downloads.
Results
Non-Fiction Books

The non-fiction books that we studied were:

* Blown to Bits (Hal Abelson, Ken Ledeen, and Harry Lewis)
* Cultural Software (Jack Balkin)
* Cult of iPod (Leander Kahney)
* Cult of Mac (Leander Kahney)
* The Future of Ideas (Lawrence Lessig)
* Trigger Happy (Steven Poole)
* The Access Principle (John Willinsky)

Table 1 summarizes the results of the BookScan data for these nonfiction 
titles.
Table 1: Sales of Nonfiction Titles
Books sales 8 weeks before free digital release Books sales 8 weeks 
following free digital release Net difference (post sales–pre sales)
Title 1 33 46 13
Title 2 322 338 16
Title 3 6 17 11
Title 4 13 20 7
Title 5 134 86 –48
Title 6 115 139 24
Title 7 22 33 11
Total 639 662 34
Science Fiction/Fantasy Books

The science fiction/fantasy books that we studied are:

* Seaborn (Chris Howard)
* Caught Stealing (Charlie Huston)
* Magic for Beginners (Kelly Link)
* Spaceman Blues (Brian Slattery)
* The Crooked Letter (Sean Williams)

Table 2 summarizes the results of the BookScan data for these science 
fiction/fantasy titles.
Table 2: Sales of Fiction Titles
Books sales 8 weeks before free digital release Books sales 8 weeks 
following free digital release Net difference (post sales–pre sales)
Title 8 45 18 –27
Title 9 16 12 –4
Title 10 252 272 20
Title 11 160 163 3
Title 12 40 181 141
Total 513 646 133
Random House Books

On March 4, 2009, Random House announced that it was releasing free 
digital versions of five science fiction/fantasy books. These books are:

* Assassin’s Apprentice (Robin Hobb)
* His Majesty’s Dragon (Naomi Novik)
* Blood Engines (T.A. Pratt)
* Red Mars (Kim Stanley Robinson)
* Settling Accounts: Return Engagement (Harry Turtledove)

Because March 4 was a Wednesday, and BookScan tracks sales by weeks, we 
did not use sales from the week of March 2–8. Thus the dates of the 
eight weeks prior to the release of the free versions were January 
5–March 1, and the dates for the eight weeks after release were March 
9–May 3. Table 3 summarizes the results of the BookScan data for these 
Random House titles.
Table 3: Sales of Random House Titles
Books sales 8 weeks before free digital release Books sales 8 weeks 
following free digital release Net difference (post sales–pre sales)
Title 13 316 252 –64
Title 14 1812 2153 341
Title 15 1612 1677 65
Title 16 413 508 95
Title 17 796 817 21
Total 4949 5407 458
Tor Books

To promote an upcoming website, Tor Books began releasing a series of 
free e-books on February 15, 2008. To claim the free e-book, readers 
needed to register for a newsletter that was sent out each week 
announcing the location of the next free e-book. Each Friday for the 
successive 24 weeks a new book was released, and the previous week’s 
book was then no longer available. The books released by Tor were:

* Mistborn (Brandon Sanderson)
* Old Man’s War (John Scalzi)
* Spin (Robert Charles Wilson)
* Farthing (Jo Walton)
* The Outstretched Shadow (Mercedes Lackey & James Mallory)
* Crystal Rain (Tobias Buckell)
* Lord of the Isles (David Drake)
* Through Wolf’s Eyes (Jane Lindskold)
* The Disunited States of America (Harry Turtledove)
* Reiffen’s Choice (S. C. Butler)
* Sun of Suns (Karl Schroeder)
* Four and Twenty Blackbirds (Cherie Priest)
* Spirit Gate (Kate Elliot)
* Starfish (Peter Watts)
* Touch of Evil (C. T. Adams & Cathy Clamp)
* A Shadow in Summer (Daniel Abraham)
* Orphans of Chaos (John Wright)
* In the Garden of Iden (Kage Baker)
* In the Midnight Hour (Patti O’Shea)
* Battlestar Galactica (Jeffrey A. Carver)
* Flash (L. E. Modesitt, Jr.)
* Soul (Tobsha Learner)
* Darkness of the Light (Peter David)
* Three Shadows (Cyril Pedrosa)

Table 4 summarizes the results of the BookScan data for these books.
Table 4: Sales of Tor Titles
Books sales 8 weeks before free digital release Books sales 8 weeks 
following free digital release Net difference (post sales–pre sales)
Title 18 385 260 –125
Title 19 4,178 2,561 –1,617
Title 20 2,710 2,645 –65
Title 21 1,490 1,518 28
Title 22 440 296 –144
Title 23 1,594 1,445 149
Title 24 79 76 3
Title 25 240 210 –30
Title 26 843 735 –108
Title 27 294 218 –76
Title 28 77 34 –43
Title 29 240 152 –88
Title 30 99 95 –4
Title 31 1,270 1,096 –174
Title 32 150 339 189
Title 33 188 136 –52
Title 34 207 250 43
Title 35 662 695 33
Title 36 137 95 –42
Title 37 136 106 –30
Title 38 100 35 –65
Title 39 75 37 –38
Title 40 6,211 2,778 –3,433
Title 41 19 744 725
Total 21,824 16,556 –5,268
Discussion

Perhaps the most significant finding of this study was the contrasting 
results received by Tor and the other three groups studied. With one 
exception, sales of the nonfiction titles increased after a free digital 
release, and when the sales of the books were combined, sales were up 
5%. The majority of the fantasy/science fiction books that were not part 
of a group release also had increased sales, and as a group their sales 
increased 26%, largely as a result of “Title 12.” Four of the five 
Random House books saw sales gains after the free versions were 
released; in total, combined sales of those five books increased 9%. 
These three groups were in contrast to our initial hypothesis that book 
sales would decline. Although we cannot say that the free e-books caused 
sales to increase, a correlation exists between a free e-book and 
increased print sales.

The results of the Tor book sales were quite different. Only four of the 
twenty-four books saw increased sales during the eight weeks after the 
free version was made available. Two of these books (titles 32 and 41) 
both had releases of paperback editions that preceded the free book by 
only a few weeks. Thus for the majority of the “pre” weeks, a paperback 
version was not available. These newly released paperback versions could 
easily explain why the “pre” sales of these titles were less than the 
“post” sales.

The book with the most dramatic pre–post difference (title 40) was 
released just ten weeks before the free digital version was released. It 
is possible that what was measured with this title was the natural 
decline of book sales over time instead of a result of a free version 
being made available. But even when these three books were excluded from 
the analysis, combined sales of the remaining 21 books decreased 18%.

Why were the results from Tor so different from the others? This 
question cannot be answered with certainty. The only thing we know is 
that Tor’s model of making the books available for one week only and 
requiring registration in order to download the book was substantially 
different from the models used to create free versions of the other 
books we studied. Further research is necessary to determine if the Tor 
results were related to their model of free book distribution, a natural 
drop in sales, or if other factors account for the decreased sales.
Conclusion

The present study indicates that there is a moderate correlation between 
free digital books being made permanently available and short-term print 
sales increases. However, free digital books did not always equal 
increased sales. This result may be surprising, both to those who claim 
that when a free version is available fewer people will pay to purchase 
copies, as well as those who claim that free access will not harm sales. 
The results of the present study must be viewed with caution. Although 
the authors believe that free digital book distribution tends to 
increase print sales, this is not a universal law. The results we found 
cannot necessarily be generalized to other books, nor be construed to 
suggest causation. The timing of a free e-book’s release, the promotion 
it received and other factors cannot be fully accounted for. 
Nevertheless, we believe that this data indicates that when free e-books 
are offered for a relatively long period of time, without requiring 
registration, print sales will increase.

Although this article has focused on print sales, it should be noted 
that in addition to print sales, publishers and authors may have other 
reasons for releasing free electronic versions. As Anderson has pointed 
out, there are many ways to make “free” profitable. [8] Increasing 
electronic sales may be an additional motive. For example, it is 
possible that Kindle book sales of second and third books in a series 
increased dramatically when the first book was available for free. We 
cannot determine if this happened, because Amazon does not release 
Kindle book sales figures. In addition, publishers and authors may have 
motivations indirectly related to sales. For example, although Tor may 
have lost sales as a result of their free e-book promotion, the customer 
information harvested and the publicity gained may have been more 
valuable than sales they perhaps lost.

Another factor that we did not analyze was the differences in the size 
of the audience for the books we studied. Even within the four groups 
there were large differences in total sales of specific titles. Some of 
the fiction books had sold several hundred thousand copies, others fewer 
than five thousand. Future studies might examine relationships between 
the potential audience for a book and the impact of free digital 
distribution.

In addition, we did not study how free books affect the sales of other 
titles by an author. For example, all the books released by Random House 
were the first books in a series. Future analysis needs to be done to 
determine whether sales of other books by an author (e.g., later books 
in a series) are influenced by making one of an author’s works freely 
available.

As books increasingly become available in digital formats, the effects 
of free distribution may rapidly change. The explosive growth of Kindle 
and other e-book formats could dramatically impact how free distribution 
affects for-profit sales and even alter the relative importance of print 
sales. As the electronic publishing industry matures it will be 
increasingly important to research the effects of free distribution of 
electronic books.
[missing figure]

John Hilton III received his M.Ed. from the Harvard Graduate School of 
Education and currently is a Ph.D. student in Instructional Psychology 
at Brigham Young University. He is interested in researching open-access 
issues, particularly the creation and use of open educational resources, 
and looking at how free digital book distribution affects print sales 
and the impact of books.

John can be contacted via his website at http://johnhiltoniii.org.
[missing figure]

David Wiley is an associate professor of Instructional Psychology and 
Technology at Brigham Young University. His previous appointments 
include the director of the Center for Open and Sustainable Learning, a 
nonresident fellow of the Center for Internet and Society at Stanford 
Law School, a National Science Foundation–funded postdoctoral fellow, 
and a visiting scholar at the Open University of the Netherlands. He is 
also the recipient of the National Science Foundation’s prestigious 
Young Researcher/CAREER award.

Email: david.wiley at byu.edu

Website: http://opencontent.org
Notes

1. James Boyle, “Text Is Free, We Make Our Money on Volume(s),” 
Financial Times, January 22, 2007, retrieved February 2, 2009, from 
http://www.ft.com/cms/s/2/b46f5a58-aa2e-11db-83b0-0000779e2340.html. 
Cory Doctorow, Content: Selected Essays on Technology, Creativity, 
Copyright, and the Future of the Future (San Francisco: Tachyon 
Publications, 2008). James Hilton and David Wiley, “Free: Why Authors 
Are Giving Books Away on the Internet,” Tech Trends (in press).

2. Michael Jensen, “The Deep Niche,” The Journal of Electronic 
Publishing 10, no. 2 (Spring 2007), retrieved May 13, 2009 from 
http://dx.doi.org/10.3998/3336451.0010.2066

3. Ibid.

4. The Oriental Institute, “The Electronic Publications Initiative of 
the Oriental Institute of the University of Chicago,” April 6, 2009, 
retrieved May 13, 2009 from http://oi.uchicago.edu/research/pubs/epi.html.

5. Tim O’Reilly, “Free Downloads vs. Sales: A Publishing Case Study,” 
O’Reilly Radar, June 1, 2007, retrieved February 2, 2009, from 
http://radar.oreilly.com/archives/2007/06/free-downloads-vs-sales-a-publ.html.

6. Kurt Andrews and Philip M. Napoli, “Changing Market Information 
Regimes: A Case Study of the Transition to the BookScan Audience 
Measurement System in the U.S. Book Publishing Industry,” Journal of 
Media Economics 19, no. 1 (2006): 33–54.

7. “BitTorrent is a peer-to-peer file sharing protocol used for 
distributing large amounts of data.” "BitTorrent (protocol)," Wikipedia, 
The Free Encyclopedia, 
http://en.wikipedia.org/w/index.php?title=BitTorrent_(protocol)&oldid=311471813 
(accessed September 2, 2009).

8. Chris Anderson, Free: The Future of a Radical Price (New York: 
Hyperion, 2009).

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