Some other findings from the report, whose topline figures were released Wednesday:

• Adult fiction is the largest driver of ebook growth, but adult nonfiction and children’s/young adult titles also grew over 2011:

• Sales of hardcovers and trade paperbacks remained steady in 2012, but the mass market paperback continued its decline. This format is particularly affected by competition from ebooks, BookStats says, because ebooks are released at the same time as hardcovers while mass market paperbacks are released later.
• Online retail continues to grow as a sales channel, though BookStats cautions that, because its statistics reflect publishers’ net revenues from sales channels and not retailers’ revenue from consumers, these figures can’t serve as a completely accurate picture of the retail market.

• The total U.S. book market — including educational and professional/scholarly publishing — was $27.12 billion in 2012, BookStats estimates, down 0.9 percent from 2011.

Notes: BookStats is published jointly by the Association of American Publishers and the Book Industry Study Group. (In the past, the groups conducted separate annual surveys.) The report incorporates net sales revenue and unit data reported by nearly 2,000 U.S. publishers. It also estimates the size of the entire industry.

The charts illustrating this post were created by me, not by BookStats.

Photo courtesy of Shutterstock / Borys Shevchuk

Revenues for the total U.S. trade book industry — in which the AAP includes religious publishing — were $7.1 billion in 2012, up 6.2 percent from the previous year. Of that, $1.54 billion came from ebooks: $1.25 billion from adult fiction and nonfiction, $232.8 million from children’s/young adult and $57 million from religious books.

This data comes from the AAP’s monthly StatShot reports, which survey around 1,200 publishers on category and format sales. It’s different from the data provided by BookStats, an annual survey from the AAP and the Book Industry Study Group that aims to estimate the full size of the book publishing industry in the U.S. BookStats data for 2012 will be available in May.

Photo courtesy of Shutterstock / Borys Shevchuk 

In a letter addressed to ICANN and posted on the Guild’s website, President Scott Turow stated the group “strongly object to ICANN’s plans to sell the exclusive top-level domain rights for generic book-industry terms.” The Wall Street Journal reports the publishing group has similar objections. (Update: the AAP sets out the reasons for its objections in a letter here.)

The issue, which remains arcane for many outside of the domain name industry, arose as part of ICANN’s decision to open up the list of top-level domains to all comers. In practice, this means hundreds of new suffixes will join familiar ones like “.com” and “.org” as part of the internet. It also means companies that win the right to control names can choose between keeping the names for their own use or earning money when the names are bought and sold in the open market.

Both Amazon and Google have paid to obtain the right to run hundreds of new names though it’s still unclear what the companies intend to do with them. Google has indicated it will keep suffixes related to its core business, such as “.goog” or “.search,” for its private use while making others like “.store” and “.dog” open to anyone. Amazon, which also wants to run names like “.kindle” and “.movie” declined to respond to the Wall Street Journal’s request for comment.

Barnes & Noble has also objected that Amazon could abuse its control over the names to the detriment of the publishing industry. In theory, this could occur if Amazon agreed to to grant a “.book” or “.author” website to favored writers or publishers but not to rivals.

Google and Amazon are just two of hundreds of companies applying to run the new domain names. In some cases, there is only one applicant for the name while in other cases multiple firms have asked ICANN to run names like “.movie.” In the latter situation, ICANN will choose between the competing applicants. (You can see the full list of proposed names and applicants here).

The timing and the process for the arrival of the new names is unclear. In no small part, this is due to the murky operations of ICANN. The LA-based organization is nominally a nonprofit with a mission to run the internet’s naming system, but it has attracted controversy for failing to protect trademark owners who accuse it of facilitating “shakedowns,”  and for self-dealing among its members.

Last week, the CEO of GoDaddy, which is the world’s biggest registrar of domain names, predicted the first series of new names will arrive in June and that others will be rolled out in batches of 20 in the weeks that follow.

BookStats 2012 collects data from 1,977 book publishers in four sectors (trade/consumer, school/K-12, higher ed, and professional/scholarly). Some top-level findings:

• Ebooks made up 15 percent of trade publishers’ net sales revenues, or $2.074 billion, in 2011, compared to just 6 percent ($869 million) in 2010. Ebooks also account for 15.5 percent of trade publishers’ unit sales, with 388 million units sold — up from 5 percent (125 million units sold) in 2010. (Note: “Ebooks” here is defined as “all primary e-formats: ebooks, enhanced ebooks and paid mobile apps.”)

• Trade book sales are relatively flat. Trade publishers pulled in a total of $13.97 billion in revenues in 2011, compared to $13.90 in 2010 — a 0.5 percent increase.
• The total U.S. book market decreased slightly. Revenues from all book publishers were $27.2 billion in 2011, compared to $27.9 billion in 2010.
• Publishers are selling more books, though. While revenues were down slightly, unit sales were up 3.4 percent, to 2.77 billion books sold in 2011. (One reason for that could be more cheap ebooks.)
• Children’s/young adult books saw the highest growth of any category. Sales increased 12 percent in 2011, to $2.78 billion. The growth was driven largely by popular YA series like “The Hunger Games.”
• Bricks-and-mortar bookstores are still publishers’ primary sales channel. Physical bookstores accounted for 31.5 percent of publishers’ total net dollar sales in 2011 — but that was down 12.6 percent from 2010.

• Publishers’ direct-to-consumer sales nearly doubled, with revenue from direct sales hitting $1.1 billion in 2011 — up from $702 million in 2010, an increase of 58 percent. The AAP tells me that most of those direct sales were concentrated in the trade and higher education sectors.

Notes: BookStats is published jointly by the Association of American Publishers and the Book Industry Study Group. (In the past, the groups conducted separate annual surveys.) The report is the most comprehensive look at the U.S. book publishing industry to date, incorporating net sales revenue and unit data reported 1,977 U.S. publishers. The report tracks sales and units by format (physical, digital, bundles); category; and channel. The full BookStats 2012 report is available for purchase here.

The charts illustrating this post were created by me, not by BookStats.

Photo courtesy of Shutterstock / Borys Shevchuk

Here’s 1,191 U.S. publishers’ net sales for February 2012, compared to February 2011:

Hunger Games is selling so well, in fact, that Scholastic increased its earnings guidance this week. The movie was released March 23, so we’d expect to see even strong YA sales reflected in AAP’s March stats (which will be released next month).

The AAP notes that adult e-book growth in February 2012 appeared to slow (adult e-book sales were only 9.9 percent higher this February than last February) because February 2011 included “an unusual one-off retail revenue transaction” making sales that month “abnormally high.” The AAP was also collecting data from many, many fewer publishers last February (under 100 compared to 1,191 now) so it may indeed be true that adult e-book sales are flattening — but we’d need more than a month of data to deduce that.

Note that adult hardcovers sold well this February — a 25.5 percent increase over last year. And religious e-books continued to show strong growth, with those sales up 49.2 percent over last year, though the total sales are still relatively small at $7.6 million.

The AAP is beefing up its monthly reports with data from many more publishers — 1,149 for January 2012 compared to under 100 in past months — and more detailed reporting on specific genres: Children’s/young adult e-book sales are now broken out and religious book sales are divided by hardcover, paperback and e-books.

Here’s how January 2012 compared to January 2011. Overall, trade sales were up 27 percent compared to January 2011, and children’s/YA sales were up 80.5 percent compared to January 2011.

What accounts for the growth? The AAP notes that last January’s trade sales were negatively affected as bankrupt Borders began returning books to publishers. Children’s books have seen strong growth for a few months now — due in part to highly successful series like The Hunger Games, and also possibly due to “Shop Local” initiatives around the holidays.

On a panel called “Content Industries in Digital Transformation,” Attaway was speaking for himself and others: moderator and AAP president and CEO Tom Allen, Business Software Alliance’s Robert Holleyman and Recording Industry Association of America’s Cary Sherman, all of whom grappled over whether legislation or collaborative approaches are the correct response to piracy.

“Among my friends in Congress, there is some alarm about what happened [surrounding SOPA and PIPA],” said Allen, who was previously a Maine congressman. “The woman who replaced me in the first district of Maine got 800 e-mails in two days, every one of them opposed to the bills. How in this environment can our respective industries do more to defend the principles of copyright when we’re confronting this wave of the public that goes every day to the Internet and downloads and reads all sorts of stuff for free?”

In general, panelists came down on the side of collaboration — though not necessarily collaboration with the consumer.

SOPA/Pipa Protests: A “Digital Tsunami”

“Right doesn’t always prevail,” Attaway said of SOPA and PIPA. “This time, it didn’t, because our opponents were able to energize a grassroots response. In my view, and I think all of us would agree, [the protest against SOPA and PIPA was spread] primarily through disinformation and spinning their interest in a way that captured the attention of a number of consumers.”

He added “we’ve been rather successful in negotiating with ISPs and other best practices that help protect our content on [user-generated content] sites….I’m very optimistic about our future.”

The Business Software Alliance, however, did not support SOPA or PIPA. “There was a tremendous amount of opposition and we can discuss how it was or wasn’t generated,” Holleyman said. “Shared responsibility and working with other industries is going to be the best, and maybe the only, solution we have, at least for the next several years. I hope we can build a climate where the rhetoric can be lower.”

The RIAA’s Sherman hopes further copyright discussions will be more “rational” than the debate over SOPA and PIPA. “The digital tsunami we encountered with SOPA and PIPA — we’re not going to get the same kind of engagement when we talk about statutory damages or open works,” he said. “We’ll have the opportunity for a more rational discussion. At the same time, I think we actually need to engage. We have criticized the other side for just saying no. We have an enormous piracy problem, and any solution we propose, they just say no. We [also] need to engage and not just say no.”

No, You Can’t Do Whatever You Want With That Movie

The music industry’s Copyright Alert program, which addresses piracy on P2P networks, will begin operation in the second quarter of the year, by July at the earliest, Sherman said. The software crawls P2P sites for pirated content, then works with ISPs to send notices to subscribers alerting them that they’ve been identified as possible copyright infringers.

“This is a concrete example of where we could go, and we would love to be following in your footsteps,” said the AAP’s Allen.

“Education is key,” Attaway said. “It is absolutely ridiculous that a movie that cost $100 million to create, a copy of which you paid $20 for, to say that you own that movie and should make any number of copies you want to. The intellectual base of the Copyleft is pretty flimsy, and we need to do a better job of pointing that out to the public. We need to do it from a grassroots base of the millions of people whose livelihoods depend on copyright protection. [Paying $20 for a movie] doesn’t mean you have the right to make all the copies you want and share them with all of your friends.”

Here’s how December 2011 compared to December 2010.* Holiday sales will be more fully reflected in the January and February 2012 reports. Trade sales were down 2.9 percent compared to December 2010, while e-book sales were up 72 percent.

Note that format isn’t broken out for Religious books in the AAP stats, so it’s unclear from this data whether the growth in that category is primarily on the print or digital side.

And here’s how calendar year 2011 compares to calendar year 2010. It was a bad year for mass market paperbacks, down 35.9 percent over 2010. Publishers’ revenues from e-books jumped 117 percent for the year, with the heavier growth in the first part of the year and some slowing into December. (Take a look back at the July stats — for the first seven months of 2011, e-book revenues were up 153 percent compared to 2010.)

The November AAP data is provided by 77 U.S. publishers, with 26 of those additionally providing e-book figures (though not all of those are trade publishers). The AAP cautions that its monthly statistics should not be compared directly to BookStats, the AAP’s recently launched joint venture with the Book Industry Study Group, which will include data from nearly 2,000 publishers and will be published annually. Rather, the monthly numbers provide a general sense of broader trends in book publishing.

*Note: The AAP usually breaks out some other categories too — children’s paperback and physical audio. But it didn’t do so this month.

Faced with a proliferation of unauthorized book-sharing sites, the publishing industry is embracing some of the same legal tactics as their counterparts in the music and movie industry.

On Wednesday morning, an international coalition of publishers said they squelched two websites, library.nu and file.it. The industry described the sites as “one of the largest pirate web-based businesses in the world” and that the former site alone offered more than 400,000 copyrighted titles.

According to the release, the shut-down is the culmination of a long investigation in which the publishers struggled to identify who ran the sites. The site operators, who allegedly earned millions in advertising revenue, were finally located in Ireland. The publishers say they have commenced legal proceedings in both Ireland and Germany.

It’s not immediately possible to verify the claims, but the sites were down on Wednesday afternoon.

In the bigger picture, the announcement reinforces the publishing industry’s full-scale entry into a new phase of the copyright wars in which content owners are banding together to target foreign websites. The most dramatic recent example came last month when law enforcement seized the servers of file-sharing site Megaupload and arrested its owners in a dramatic raid.

Content owners’ recent success in taking down foreign websites also adds grist to the debate of whether new legal powers, like those in the failed SOPA bill, are actually necessary to target piracy.

The publishers’ aggressiveness overseas mirrors similar domestic efforts in the US. This week, publisher John Wiley launched a new series of “John Doe” suits to identify individuals who had downloaded its “For Dummies” books.

Note: An earlier version of this story stated that library.nu redirected to Google (NSDQ: GOOG) Books. The site is no longer doing so and it is unclear why it was doing so before. A Google representative said the company was unaware of the issue.

Apple announced this week that it is partnering with the three largest K-12 educational publishers to sell iPad textbooks. It will be entering an $8 billion industry where most of the funds are controlled by state governments and school districts, which can mean long and politically charged funding discussions. Unlike in the college market, startups in the K-12 market have struggled to gain venture capital. One reason, on top of the bureaucracy that companies have to deal with: the digital infrastructure in many K-12 schools is weak, with an average of three students for every device as well as more mundane problems like too few electrical outlets.

That said, there’s clearly some real opportunity: While many assume the K-12 market is largely controlled by the three big companies that Apple is partnering with, in fact, more than half of that $8 billion market isn’t. Here’s a look at some of the challenges and opportunities awaiting Apple.

How big is the K-12 education market?

The market is estimated at $8 billion. There are 50 million K-12 students in public schools in the U.S.

K-12 school publishing — including elementary and high school textbooks and other teaching materials — is the second-largest publishing category in the U.S. after trade. Net sales revenue was $5.5 billion in 2010, according to the Association of American Publishers. (K-12 publishing net sales revenue fell 12.4 percent between 2008 and 2009, but increased by 7.1 percent between 2009 and 2010. Overall, net sales revenue between 2008 and 2010 declined by 6.2 percent.)

How is the K-12 publishing market different from trade and higher-ed publishing?

The main difference is that state governments and school districts procure about 90 percent of the books. “It’s very much unlike the consumer market where we decide to go into Barnes & Noble (NYSE: BKS) and buy a book,” says Jay Diskey, executive director of the AAP’s school division. “A school district will decide it needs a new reading program for its elementary school students and will request proposals from publishers. If the state likes the proposal, the contract is negotiated.”

Publishers don’t always sell the books individually; a parent may not be able to buy a single textbook, for instance. The AAP notes the average net unit price of a K-12 title was $65 in 2010, but extensive pricing data is difficult to obtain because so many books are bought in bulk by state governments and school districts.

Textbook rental doesn’t yet factor into K-12 education the way it does in higher ed, although some private and parochial schools are trying it.

Who are the main textbook publishers?

The K-12 textbook market is often seen as being dominated by just a few big companies, but that’s not entirely accurate, says Diskey. It’s true that three companies–McGraw-Hill (NYSE: MHP), Pearson (NYSE: PSO) and Houghton Mifflin Harcourt, the same three companies that are partnering with Apple in its new digital textbook store — capture about 85 percent of the K-12 core textbook market, which is worth roughly $3.2 billion. (The rest of that core market is made up of books from niche publishers on subjects like foreign languages, art and music, and books for technical and vocational schools.)

With the whole market estimated at $8 billion, though, there is still about $5 billion up for grabs outside of core textbooks. That portion includes many players, publishers and technology companies. They publish supplemental materials like workbooks, encyclopedias, books for teachers and reference works, all in print and digital formats. “There is far more diversity in the market than I think a lot of people understand,” Diskey says.

What is the role of digital?

Digital products are becoming a more important part of the K-12 school publishing market. Revenues from digital products increased by 45.6 percent between 2008 and 2010, to $638.7 million, according to the AAP. (The market for print books is still much larger but revenues from print products declined 13.7 percent between 2008 and 2010, to $2.6 billion.)

Spending on e-learning as a percentage of overall K-12 education expenditure is small, according to the September 2011 White House report “Unleashing the Potential of Educational Technology” — it makes up just $0.46 of every $100 spent, for a total of $2.9 billion. (Expenditure on e-learning in higher education is over ten times greater: $5.60 per $100 spent, a total of $24.4 billion.)

K-12 publishers all offer digital products now, but school districts have to decide how to buy them. The digital products are often bundled with print, but “a lot depends on the digital infrastructure in the school district and whether it can support digital learning,” says Diskey. “Not too many states have one-to-one student-to-hardware ratios. In order to have full-blown digital learning, students should have access to their own devices in the same way you had access to your own textbooks when you were in school.”

In fact, the national average ratio of students to hardware devices is three-to-one (three students for every computer, tablet, etc.) “That makes learning very difficult,” Diskey says — and is another way K-12 is different from higher ed. About 90 percent of students arrive at college with at least one electronic device like a laptop. netbook or tablet. “By and large, K-12 students do not arrive with these devices,” Diskey says. This raises questions about who will pay for the devices — family or school districts.

School districts must deal with more mundane issues as well, such as whether there are enough electrical outlets to charge devices. “Behind all this, there’s the backdrop of schools providing textbooks,” Diskey says. In many states, schools are required to fund textbooks, but those mandates don’t always extend to digital materials. It will take “massive funding” to provide the 50 million K-12 public school students with hardware.

How will digital adoption change in the next year or so?

“I think you’ll see more partnerships between publishers and hardware producers such as Apple and others,” says Diskey. “For a long time at the K-12 level, content providers and hardware developers have operated in different silos, but they need to be partnered. (The announcement by Apple) is very good for publishers — new softwtare tools and applications being developed means that more publishers, particularly smaller ones, can get into the digital market at the K-12 level. But there’s still a hangup at the school level with funding and availability of devices.”

What will encourage more entrepreneurship in the area? The White House report reiterates the challenges of selling new products into the market:

An important feature of the market for K-12 educational technology products is the large number of institutional purchasers, each with its own distinct curriculum and procurement process. The school district is the relevant decision unit for most institutional purchases. Selling an educational product to a school district may require substantial contact with a diverse set of actors, including state and local procurement officers who oversee funding streams, academic consultants who advise districts, key school board members, and principals and teachers in individual schools. Moreover, decisions about purchases often involve an extended timeline.

Those barriers help explain why very little venture capital is spent on K-12 education: “In the last five years, estimates suggest that venture capital has totaled perhaps $200 million annually for education companies, backing an average of 25 new businesses per year. This venture capital investment compares to $4.4 billion for biotechnology, $3.0 billion for medical devices, and $4.8 billion for software.”

In a paper on K-12 entrepreneurship, Larry Berger and David Stevenson, the founders of K-12 tech product company Wireless Generation, describe some of the “relatively simple steps that districts, policymakers, foundations and entrepreneurs themselves could take to work around the barriers or dismantle them entirely.” They suggest that school districts and states could form consortia “in which they pool their resources and their expertise to help bring a new product or service to market.”

Berger and Stevenson also say states should comission more research and development instead of requiring a finished product. “When NASA wants a new spacecraft, it does not expect Boeing and Lockheed to build it on their own dimes in the hope of getting the contract,” they note. “It invites the industry to submit proposals and sometimes even funds the early development of competing designs — and then it picks a team with which it will work closely to bring a new product into existence.”

Finally, Berger and Stevenson note, “Entrepreneurship is often driven by the search for, and discovery of, ‘disruptive’ technologies and business models that transform a sector. It is not easy to figure out how the education sector should welcome disruptions and innovations that do not exist yet, but a simple first step would be to ask for them — to articulate the demands that would inspire entrepreneurs to try to create a supply.”

Sources:
– The Association of American Publishers, interviews and statistics
– National Center for Education Statistics
– “K-12 Entrepreneurship: Slow Entry, Distant Exit” by Larry Berger and David Stevenson. PDF here.
– “Unleashing the Potential of Educational Technology,” Executive Office of the President Council of Economic Advisers, September 2011. PDF here.