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.
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.