Wednesday, 22 June 2011

Compromise, and some bandwagon-jumping about Amazon

Amazon are, without doubt, the largest force in ebooks at the moment. Their market share is huge, their technology is the industry standard, and they are fast becoming a byword for the 'new' publishing industry.

That said, I'm starting to have some concerns. A couple of links: one and two. There was also an article I saw a month or two back about the capricious, unpredictable and opaque way Amazon have been censoring (by removal from sale) certain erotic novels - and whatever you think of the novels in question, the fact that they didn't even tell the authors in question that their books had been removed amounts to gross misconduct. I apologise for the fact that I can't find the article in question.

Anywho, there are a bunch of issues tangled up here. Top of the list is that Amazon are starting to show that they cannot be trusted, at least from an indie author's point of view. Their lack of transparency and seemingly arbitrary business decisions are a serious problem for anybody looking to enter a business relationship. Do I really want to trust my baby to that?

The thing that bothers me most, though, isn't corporate indiscretion on Amazon's part - though disappointing, given Jeff Bezos' previous willingness to support e-commerce, a certain amount of ruthless capitalism has to be expected of a company of Amazon's size. What bothers me is Amazon's drive to become industry standard for the new publishing.

Why? Because Amazon's royalty rate is 35%. I am under no illusions that the 70% royalty rate is anything other than a special offer, and I do not trust the company not to pull that particular rug out from under us as and when they see fit. Given the above complaints about transparency, do we have any justification in hoping for warning?

And even if Amazon keep the 70% band indefinitely, I judge it unsatisfactory, because of the restrictions it places on pricing. I want to go through a quick bit of maths with you.

I'm a fast writer. I doubt if 'Heaven Can Wait' took me as much as 120 hours to first-draft. It remains to be seen how much editing it requires, but let's say not more than the same again. That's 240 hours' work (albeit much of it very pleasant work). I'm a new writer with no particular qualifications besides charm and good looks (leave me my delusions), but writing is skilled work, so let's say it's worth at least as much - £25/hour - as I make teaching seminars at university. So my time spent writing HCW is worth (at least) £6000. I'm paying about £130 for a cover, so I'm looking to make a total of £6130 from selling the book. (Sidebar: this assumes I'm not paying any money for any of the beta reads and critique that friends have been willing to provide - I hope to respond in kind rather than cash).

The average indie book sells (I have been told) 4 copies a day. That's 1,460 a year, which means if I make a pound on every copy sold (and sales continue to average 4 per day for the time), it'll take a little over 4 years for me to make money back on the book. I'm pretty happy with that, so let's say I want to make £1 on every sale.

With Smashwords (which seems to me like it should be our preferred choice as authors for industry standard, minor technical issues notwithstanding), I can do that by setting my price at £1.18, which is less than the cheapest student bus fare on offer in my home city. Pretty damn cheap. At that price, I'd only have to attract a total of £7233.40 in consumer spending for the novel to have paid for itself.

Compare with Amazon. There's no way under Amazon's conditions to sell at a price that makes exactly £1 per sale. At the 35% rate, you have to sell at £2.86 to make £1, but (to the best of my ability to tell) in GBP the 70% rate kicks in at £2.12, at which price you make £1.48. So, I only need to sell 4,142 copies to make the cost back, but the total cost to consumers is £8780.81. Bit of a difference, huh? And that's if the 70% rate stays; if it doesn't, the total cost to consumers of paying me back for my work on the book becomes a whopping £17,531.80 - a premium to my readers of over £10,000, which could otherwise support a whole other book by me or a friend.

Sure, Amazon have bigger overheads than Smashwords, probably even for their Kindle services. And sure, at the moment they have a better reach and market penetration (hur hur). Is it worth imparting that staggering burden to readers?

The trouble is, of course, that it's hard to imagine many people becoming successful as an indie author at the moment without Amazon. We need that reach to get us established. Smashwords' biggest problem at the moment seems to be that it's much better known among authors than readers. And it's Amazon's bestseller lists that count, too.

There's a point of principle in the midst of all this, too. When you make an agreement with any distributor - be it trad publisher, Amazon or just the post office - you're employing them. You're buying a service. Amazon is offering a service which can be had elsewhere at a far better price, and yes, perhaps the service is of lower quality, but it doesn't have to be. We have a right as authors to buy at the best prices we can get.

Amazon's royalty policy serves Amazon's interests, not the interests of authors or - and this is very important - readers. In an ideal world, there'd be some way we could reach out to readers and get them to all switch to more reliable, author-friendly distribution platform. That way doesn't exist yet; we collectively and individually lack the clout and career security to make any move in that direction.

But just as Amazon's 70% royalty rate will change, so will the average status of indie authors. There will come a time when we *don't* need Amazon as much (unless they wipe out all competition, of which more in a moment), and we can simply leave them behind. I'm not talking industrial action to change Amazon's policies, just making the decision - as and when feasible - that their service is overpriced and borderline dishonest, and thus not deserving of your business.

For now, Amazon are too powerful to do without. There's a significant risk of them coming to dominate the market the way iTunes has with music - like Apple, they control both the premier device and the premier retail outlet for their field. But Amazon isn't all-powerful as long as Smashwords, and Barnes and Noble's PubIt, and the Sony and Apple outlets, and other smaller outlets still exist. As long as we keep sending business the way of these retailers (or at least, the ones who can offer competitive deals - I don't know what B&N, Sony et al offer by way of royalties, but we're free to pick and choose among smaller markets), they'll be there when we need them.

So that's my plan. For now, while it's unavoidable, I'll compromise with Amazon's dodgy corporate responsibility - still, in fairness, better than many corporations I could name - and overpriced services. But Mr. Bezos can consider himself on notice: as soon as I can live without Amazon's reach (and possibly sooner, if that 70% rate evaporates), I will be taking my business elsewhere.

I don't know if I'll have convinced you to do the same, but whether you're an author or a Kindler, it is in your best interests to take your business elsewhere as much as you can and to give as much support to distributors offering far better deals for all concerned.


  1. Meh. Not angry, not moved, none to excited either. I was a little excited there for a bit. "Here is a man with convictions and man with principals," quickly turned to "What a sell out".

    If you would have thrown your fist down, said I'm pulling my stuff, I would have joined you. Sounds great. Good reasoning. Start a revolution. Unfortunately your call to action, turned into a "I'm not going to do it yet..."

    History books aren't filled with people who said "maybe someday."

    Your public rant is dually noted, and Amazon is counting your profits in their coffers. Are they money hungry bastards? Perhaps. Do I agree with you? On quite a few of your points... except one.

    Amazon may actually lower their profit margin. They wouldn't be the first major corporation to do so. eBay did it not too long ago and it was advantageous for all involved.

  2. You misseed the part in the title that said 'compromise', then? Without wanting to sound shirty, I wasn't trying to write a call to action but a call to thought. I think starting a revolution against Amazon now - in the midst of a revolution they are leading - would be premature and counterproductive.

    My interest is in getting the best deal for indie authors like myself, not needless posturing. Right now, that means waiting. A 'revolution' now would fail.

  3. There is little escaping the corporate side of publishing. Amazon raised its rates for certain price ranges to 70% out of corporate competition with Apple and Barnes & Noble. The biggest self-publishing platforms have deeper corporate ties than the major publishing houses. There are big issues, but unlike the above (disconcertingly condescending) commenter, I'm glad you're finding some sort of compromise. I'll join you in fears that Amazon will yank the rug out from underneath us.

  4. Rik:
    Thanks for linking to my blog, I also wrote another more recent one with a similar theme about why I removed my book from Amazon all together here
    In that blog I was not as concerned about Amazon dropping the 70% royalty "loophole" as I was about them dropping self publishing altogether. I have decided to hedge my bets on Smashwords and one of their outlets exploding onto the market (apple anyone?). Unless you feel the absolute need to stand on principle (like me) I'd say keep selling on Amazon but please don't buy from there.

  5. Thanks for the link to my blog about Amazon. I understand your points, but for me the big issue is Amazon's 'price matching'. This little feature kills an indie author's control over pricing. Amazon have kindly sent me a 'we do not wish to discuss the matter further' email when I asked why they had reduced the price of my books too match another online supplier who had my books at a discounted price, but without my permission. Additionally, I do not publish with this suppliier, but they source my books from Smashwords. So I lose. A drop of royalty rate for nothing of my own doing.

    As for the two royalty rates, the $0.99 - 30% royalty model is killing the market. The author makes a pittance, and it devalues what a book is worth. Consider why Amazon's 70% rate only begins at $2.99. What happened to books priced at $1.00 to $2.98? It's because Amazon make a killing on selling $0.99 crud. And if they get a purchase from a non-US buyer, they get $1.33 on top for their theiving 'international delivery fee'. Not bad. For Amazon.

    Unfortunately, for the moment Kindle is king as far as selling books, so we're stuck with the situation. I had hoped Apple may have made some difference, but they have really fallen flat. Smashwords is only known by a small indie crowd and doesn't offer auto delivery. So, it's Amazon or nothing. With all of it's exploitive faults.