Why the Flight to Amazon?

Before I start, I should make something plain:
I like Amazon–they’ve been incredibly, uncharacteristically work-with-able on a level that’s unprecedented in the publishing industry. I am delighted to have my books available in their store, I’ve had an excellent time working with CreateSpace for POD books, and very much enjoyed access to what is currently the biggest online storefront in the world.

I need to get that straight right up front, because I’m seeing other authors do something that I think shows a fundamental misunderstanding of both their relationship with Amazon, and the business model of the independent author.

You see, Amazon has started offering KDP select, where an author enrolls their books for renewable periods of 90 days on an exclusive basis. In exchange for the exclusivity (and for allowing Amazon to lend your book to prime members at rates yet-to-be-determined), the author gets the promotional tool that everyone’s been gagging after for two years now:

The ability to price their book for free (for an author-selected 5 days out of every 90) to goose sales.

And it seems to be working, at least for some authors, in a spectacular fashion. They list their book for free, the curiosity boosts their popularity ranking, helps them crack some also-bought lists, and leapfrog into the recommendation engines that Amazon’s servers have running behind the scenes.

Sounds great, right? It’s been treating some of my friends astoundingly well over the last month and a half.

It also gets around a problem with the Amazon KDP agreement: Amazon guarantees a low price, and when you sign up you warrant that you will not sell through Amazon competitors at a lower price. If you do, Amazon may pull your book or close your account. If another retailer discounts you without your permission (for example, because they don’t follow the agency pricing model), Amazon reserves the right to discount your book to match, without your further permission.

This means that setting something free through Smashwords while charging for it at Amazon puts you in a tenuous legal position, which leaves some authors uncomfortable (and some of us unwilling to play system-gaming games in case someone at Amazon decides to make an example of us).

When you put these factors together, you get the recipe for a judgment call summed up by LJ Sellers in her recent blog post: She’s pulling her books from all other retailers, except Amazon. And who can blame her? The bulk (between 70 and 95%) of most indie author’s income currently comes through Amazon, so why not capitalize on it? Why not remove the risk that Kobo will discount your books and cut into your income? Why not put yourself in a position so you can rotate your books on promotion?

The Context of Doing Business
Capitalism is an amazing thing, and among its most amazing qualities is that it makes allies out of people who might never have spoken or met before. The guy that runs the hot dog stand on the street corner, or who drives your taxi, is in your life because they can do something you want better, faster, cheaper, or more conveniently than you can do it yourself. You value the service and products they give you more than you value your money, so you buy, and everybody wins.

In this sense, an economy is very like a biosphere. Symbiosis is as much a part of it as predation, and creativity results in destruction and spurs greater creativity, and thus are industries forged.

But like a biosphere, a healthy industry needs diversity for the free exchange of energy and information to continue. From the point of view of an author, in the book industry, retailers are our allies–they help put our books and other products in front of customers who might want them.

But unlike with the local butcher, who might become your friend if you chat with him while you do business, a corporation is incapable of having friends. It’s not human, it has no feelings. It is merely an ally, and when the ecosystem (or economy) changes, the alliances within it change.

Amazon Is Not Your Friend
Amazon is a corporation, and it has (on the whole) behaved astonishingly well by its indiependent authors. Its dynamism and creativity make it one of the worlds most powerful, best-growing companies.

If you’re a small supplier, this dynamism is a two-edged sword. Today, you’re on the cutting edge because the strategic needs of the business dictate that you’re a good ally. Tomorrow, you might wind up on the bleeding edge, when the industry changes. This isn’t just true of Amazon, it’s true of any company. While you may benefit handsomely and for a long time when your interests are aligned, you must always remember:
They are not in business for your benefit, they are in business for their benefit.

You, as a businessperson, must take a similar view.

Short Term, Short List Thinking
If you’ve got only a book or two out, chances are you’re chasing sales, or audience, or eyeballs, etc. I did when I had only two out. Everyone I’ve known has. You have one egg, so you try to find the basket that’ll do the best by it, and watch the basket. You go out and try to get everyone to come check the basket out. In the short term, it feels marvelous.

The trouble is, eventually the rate at which you find people who want that egg will slow to a trickle, and you’ll pour more time and money into the effort of continuing the build, when, in the long run, you’ll do better by laying more eggs. And if someone comes along, without malice, and steps on your basket cause it’s in your way? Well, then you’re pretty much screwed.

Leverage
Successful business works on leverage: one bit of promotional energy creates multiple opportunities. One new product creates geometrically greater exposure. Here’s how it works:

If you have 15 storefronts, and one new product, you have 15 streams of income (of varying sizes). If any one of them dries up, or goes dark for a while, you might hurt, but it won’t sink you.

But if you have one storefront, you have one stream. If that stream dries up, you’re screwed.

Similarly, if you do any promotion, advertising, book tours, speaking tours, etc. on that one stream of income, all that effort only makes the one stream swell. And, best case scenario, if you catch one customer, you get one sale.

However, if you have 15 products in 15 storefronts, you’ve got 15×15 (read: 225) streams. Now, every time you do any promotion work, you have a better chance of making one or more streams burst their banks. But better than that, anytime someone falls in love with one of those books, they have another 14 they can go through. Catch one person, get 15 sales.

Every time you add one book (or audiobook, or film) to the inventory, you’re geometrically increasing your income potential. Every time you catch a new customer, you’re increasing the likelihood that you’ll move from their “that was a cool book” list to their “I can’t get enough of this author” list, because there’s enough of your stuff for them to really gorge themselves on.

Short Term, Short List Thinking
Some of you have asked me why 2011 was a quiet year for me, podcasting-wise. What you just read is the reason. I podcast two novels, and I had only two novels to show. I was giving it away as fast as I could produce it. I had nothing around that you could tell your friends about, and many of you got frustrated waiting for the next book in the series, or the next thing from me.

But many more of you (perhaps these ones aren’t reading) liked my books, but couldn’t find anything more, so moved on to fresher pastures. And that’s a crying shame, because my livelihood depends on entertaining the hell out of you.

So I took a year off, to get my house in order, and now I’m back in the studio recording more audiobooks–but not at the expense of writing more other books. I intend to keep this going for a long time, so I have zero incentive to pull my books from markets just to take advantage of a sales-goosing opportunity in a single market.

The Unseen Markets
A year and a half ago I started building a spreadsheet list of what rights I’d licensed out to stories, so I could keep track of what I could legally put on the market. I started with the rights I could license from a single story, intending to code a quick listbox. After all, there are ebook rights, serial rights, hardcover rights, trade paper rights, and MM Paper rights.

Then, I got to thinking. I’ve worked in film. So I know there are film rights, TV rights, Radio rights, audiobook rights, full cast audiobook rights, video game rights…

I kept listing them. When I ran out of ideas I called another writer friend, who listed more. Between the two of us, in under an hour, we had a list of marketable rights for a single short story that topped four single-spaced pages (at one right per line). At that point we stopped because we both had prior appointments. One of these days, I’ll finish that list–I wouldn’t be surprised if it goes to 8 pages, or more.

What does this mean for you? It means that when you go exclusively through one retailer for one book, then you concentrate on goosing the sales on that one book, you’re leaving most of your medium-and-long term money on the table. It means that in limiting your exposure (even without an exclusive agreement), you’re reducing the odds that someone who might see it who wants to license a film deal, or a video game, or a graphic novel adaptation–not just here, but around the world in places where Amazon isn’t a strong presence, but Apple or Kobo or Sony is.

Rushing to narrow your niche in order to spike your sales on one or a few titles also narrows your opportunities to exploit each property to its full value. And with all respect to my friends who are currently doing this (all of whom are, at the moment, selling better than I am), it’s bad business.

Short term cash is nice. Long term dependable income is my goal. We are in the intellectual property business, entertainment and information division (i.e. not inventions). In this business, the only sustainable model is the long-term one, because it is the only one that dependably creates passive income.

Something to think about before you go pulling properties from existing markets in order to take advantage of today’s bright and shiny promo tool. Trust me, the business world never sleeps–there will be another tool like this tomorrow, when you’re in a better place to exploit it without screwing yourself over in the medium and long term.

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4 Comments

  1. This is one of the best articles I have read in ages. Thank you!
    Pat Browning
    Author of ABSINTHE OF MALICE
    Working on Book #2

  2. Came over from Kris Rusch’s blog.

    You know, I really need to keep reading sensible, unemotional posts like yours and Kris’. When I heard about Select, my initial reaction was no way, don’t want to put all my eggs in one basket.

    Should have stayed with that.

    But I started reading other blogs, a couple of threads on Kindleboards that talked about Select (from out of nowhere, it seemed to me, because I avoid pricing threads like the plague), and suddenly, I was beginning to doubt myself. What if I pulled all my stuff (all of 4 titles, lol, at this point) off Smashwords? What if one or all of my books (3 novellas in a fantasy series, 1 mini collection of shorts) were downloaded like crazy?

    But again, after reading these 2 posts, I realize I was being silly. I only have 4 books uploaded; I’ve still got more to write. It’s all about the numbers, as you said above: if you have 15 products in 15 storefronts, you’ve got 15×15 (read: 225) streams. Now, every time you do any promotion work, you have a better chance of making one or more streams break their dams. But better than that, anytime someone falls in love with one of those books, they have another 14 they can go through.

    This confirms my original thought. Thanks!

  3. Nancy —

    Trust me, I to feel the pull of the siren song every so often, and I’m not saying I’d never take advantage of the program, for example, with a new title that wasn’t up anywhere else yet. A period of exclusivity (a short one, for 90 days) for advertising purposes, can be good business. But pulling existing titles from their channels? Hell no–look at what’s involved:

    1) It takes about 90 days for a new title to become fully vested in all the storefronts through smashwords (since some stores only update inventories quarterly).
    2) Similarly, if I pulled a title, it would take up to 90 days (less, if I timed it right) for it to come down everywhere.
    3) At THAT point, I could enroll in KDP Select for 90 days
    4) Once the exclusivity peroiod is over, I’d need to re-stock the distribution channels, which can take up to another 90 days.

    Suddenly, I’m out 9 *months* of exposure for the chance to play free-days games for 5 *days* over all. Seems pretty steep to me.

    Contrast that with using KDP Select for your opening gambit:
    1) New story to KDP Select for 90 days.
    2) After 90 days, new story goes up everywhere else, which takes up to 90 days.

    Now, all you’ve lost is 3 months or so, in exchange for a chance to game your numbers a bit (and if you’re like me, you’ve already got a lot of titles kicking around). This makes some sense as a strategic move.

    Thanks for your stopping by and sharing your thoughts 🙂
    -Dan

  4. Yup, all of it is true. My sales took a hit when Amazon opened up the library feature (public libraries). They took another hit when they opened the gates to this exclusive deal and letting authors go free. I’ve put a duo of shorts into the Prime Amazon exclusive program to have a hand in (Black-Tie Bingo). But. I don’t think what Amazon offers in exchange for exclusivity is really a good deal long-term for authors.

    There’s a large audience getting used to downloading tons of free books. That audience (and I am part of it) sees a book in prime and assumes/hopes it will go free eventually. So I don’t buy it. Maybe others do. I’m sure some do. That ups visibility again and the wheel continues to turn.

    But as an author, I don’t want to close out my Nook fans, by Sony fans or my international fans. Yes, it’s important to get the word out and have people ‘try’ my books. And I’m losing market share and standing here on a rock that really isn’t paying off. Not right now. I have to hope it pays off later.

    The program is working for authors right now, although I don’t know that they are making *more* money from the venture. Are they temporarily increasing sales/ranking? Yes. BUT will they make more money? Some will. Some won’t. So the jury is still out.

    I love working with Amazon. I’m just not a big fan of this program. I don’t think it helps authors long-term.

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