Something to think about

When folks talk about Barnes & Noble's horrible holiday sales, a common theme is complaints about the Web store.

While a lot of times people complain about companies that still sell well, in this case I think Barnes & Noble's bad Web site is really hampering them. According to Mike Shatzkin, their 13.1% increase in e-book sales is far below what it should have been, despite being the company's best number by far. (I can see that--it's way below the 34% growth reported by traditional publishers, and of course if Barnes & Noble experienced 43% growth last year....)

Barnes & Noble Web store's design has been taken apart pretty thoroughly. But instead of focusing on improving the layout of its virtual store, Barnes & Noble followed the strategy of getting Nooks into other brick-and-mortar stores.

At this point, that's definitely looking like a critical mistake (and given how holiday sales went, I bet many of those retailers wished they had carried the Kindle instead). I also would say that it's symptomatic of Barnes & Noble's habit of simply not taking e-commerce seriously. This is a company that, back in the day, revolutionized book retail, but they don't seem to be willing to do even basic and obvious improvements to their online retail outlet (and of course they're busily pulling books out of their brick-and-mortar stores, therefore losing the expertise they had).

Passive Guy argues (convincingly, in my opinion) that the bad Web store pollutes the entire brand. Even if it just pollutes the e-book buying experience, that has serious ramifications: It takes ten seconds on Google to figure out that you could be reading Kindle books on your Nook, and one click more to realize there is an entire cottage industry dedicated to allowing Nook readers to NOT buy their books from Barnes & Noble.

There's that other shoe!

Remember how Barnes & Noble said they were going to miss their numbers? They really did, badly. Holiday sales were very bad, worse than people expected even with the warning.

Mostly this is because of craptacular Nook device sales--although excluding the Nook, sales at the stores were down 3.1%, which is bad, but not as bad as the 10.9% decline you get when you throw the Nooks in.

The Nook business overall (devices + e-books) was down 12.6%, but sales of e-books and the like were actually up 13.1%. So the device is the real albatross around the neck of the Nook business, but the brick-and-mortar business is declining just fine on its own. (Apparently people don't bother to go to the bookstore any more. Gee, I wonder why?)

Over the past three years, the Nook business has lost $733 million. The main problem isn't that they're losing money (which is often the norm for a new business), it's that Nook sales are tanking as other tablet/e-reading devices are doing fine. So they are failing to compete effectively, which is Not Good, and the old cash-generating business is faltering, which is also Not Good.

Color me skeptical

I've gone back and forth on Barnes & Noble's prospects, but some news came out recently that really is making me down on the whole Nook business.

Namely, Pearson (owner of Penguin) is taking a five percent ownership share in the Nook business.

It's not just that I think Pearson is making a host of dumb decisions lately. Or that I think their rationale for doing this (securing better distribution for their educational materials?) is basically nonsensical, or that I think they're really shoring up Barnes & Noble because they're hoping nothing will ever change in bookselling.

It's also because Barnes & Noble also announced that holiday sales sucked for the Nook business (which, it should be noted, includes both e-books and e-readers), and that the company is going to miss its numbers. According to Publisher's Weekly, twice as many Nooks sold this Thanksgiving weekend than last--which parallels Amazon's report of stronger Kindle sales that weekend--but still, Barnes & Noble is not going to meet their revenue projections. (And I know it's not been a great holiday season for retailers in general, but Amazon isn't saying that they're going to miss their numbers.)

I've mocked Barnes & Noble for being rather creative in how they present themselves to the market, and I think you see the fallout from that sort of creativity here. Either Barnes & Nobles projections were bullshit designed to keep investors from running away, or the company has been doing a horrible job selling e-books and e-readers. Or both.

KDP Select and online advertising so far

I put Trang into KDP Select (Amazon's exclusivity program) December 1, and today was my first free day, which I promoted doing my first online advertising campaign. So I thought I'd post about how all that is going.

Lots of people get lots of different results with KDP Select, but there are two advantages to it: 1. People enrolled in Amazon Prime can borrow your books for free (you get paid for the borrows), and 2. You get to make your book free.

Some people make so much money off the borrows that they don't even bother with the free days, but nobody has borrowed Trang since I enrolled it, so I get the feeling that's one of those things (like sale pricing) that works if people already know about the book or the author. Certainly in my case it's not going to do the job all by itself.

But I wasn't going to let the free days work all by themselves--I was running an advertising campaign on Facebook!

Well, it turns out I have something to learn about pay-per-click advertising. My first glimmering of this came a couple of days ago when I was reading an old post about online advertising by Lindsay Buroker. She wrote:

With Facebook, I tried some ads to direct people to the free-ebook tab on my Facebook Author Page. It didn’t cost me much (a couple of dollars most weeks), and it did get some people to click the links on the free-ebook page....

Note the bolded bit. With a pay-per-click campaign, you pay only when people click on your ad. If nobody's clicking, it doesn't cost you much to run one--you know, just a couple of dollars a week.

In other words: Better-known author than me + free book = little interest on Facebook. Doesn't sound so good for me, does it?

Compounding the problem, I didn't bid enough for the ads, so for most of today (which is Day 1 of a two-day period of free Trang) Facebook didn't actually serve up any ads. I'm assuming the price is especially high today because there are a lot of post-Christmas promotions going on. Anyway, I bumped my bid up (which you can do mid-campaign--beat that, dead-tree advertising!), and now Facebook is showing to ad to people. But they haven't clicked on it.

Which, apparently, is par for the course with pay-per-click ads! The upside is that this ad hasn't cost me a thing (and of course I don't know that I'm not benefitting from getting my name out there--I just know that people aren't clicking). It definitely seems to me like pay-per-click is better suited to a long-term campaign--I might not get very far running one for only two days, but given the low cost, I could keep one (or many) going pretty much indefinitely. Good to know!

Anyway, despite the Facebook campaign being kind of a flop, the free book is doing OK, presumably helped by me finally getting around to posting about it on Kindle Boards and Tweeting about it. Trang has even spent most of the day in the top 10 among free books in the science fiction: series category!

I went to see how it was doing in the science fiction: space opera category, and...whoops! It's not there! Yoikes--apparently when I got the books put into the science fiction: series category (which requires special dispensation), they lost their other categorization. So I put them back in science ficiton: space opera, but they're not showing up on that list, presumably because I didn't do that until late in the day. We'll see if Trang shows up there later on--I'm assuming science fiction: space opera is a bit more competitive that the science fiction: series category, what with it having 7,419 titles instead of 326.

Surprise! The world isn't ending after all

You think this is about those silly non-Mayan predictions of apocalypse, but this is actually about some even sillier predictions of apocalypse, mainly the notion that the Department of Justice's antitrust settlement was part of an evil plot by Amazon to rule the world.

But it turns out that e-book prices aren't crashing after all. 

The real shock is that this admission is happening in the New York Times, which last April wrote:

The government’s decision to pursue major publishers on antitrust charges has put the Internet retailer Amazon in a powerful position: the nation’s largest bookseller may now get to decide how much an e-book will cost, and the book world is quaking over the potential consequences.

But who cares about that--that was last April! Its eight month later, plus it's Christmas Eve, when nobody except total nerds (like MEEEE!!!) reads the business section of the newspaper. So it's a perfect time to completely backtrack on that allegation, and imply that nobody ever really thought it was completely bogus!

From today's article:

The most extreme outcome went like this: Digital versions of big books selling for $9.99 or less would give Amazon complete domination over the e-book market. As sales zoomed upward, even greater numbers of consumers would abandon physical books. The major publishers and traditional bookstores were contemplating a future that would pass them by.

But doomsday has not arrived, at least not yet. As four of the publishers have entered into settlements with regulators and revised the way they sell e-books, prices have selectively fallen but not as broadly or drastically as anticipated.

Some of this article is hysterical--the Author's Guild is not available for comment, if you were wondering--but then it gets annoying again.

For one thing, the notion that e-books are somehow in decline pops up again:

Adult e-book sales through August were up 34 percent from 2011, an impressive rate of growth if you forget that sales have doubled every year for the last four years. 

I will remember that a 34% rate of growth is really not that impressive, not when you think about it. I mean, you've got to be forgetful as hell to think that a 34% increase is a pretty substantial increase--like, if your salary or the value of your home went up 34% in a year, that wouldn't impress you at all, unless you had Alzheimer's or something.

OK, fine, that bit was kind of hysterical, too.

But THEN they quote people who never expected the sky to fall--you know, the sorts of people they would never, ever have spoken to back in April. Those people. Non-traditional publishing people. People who know the first thing about e-books. 

Some say they never expected a price war at all. “The pricing war hasn’t happened because Amazon can’t afford it,” said Nate Hoffelder of the Digital Reader, a site devoted to e-book news and opinion. 

Now, what Hoffelder has to say is much less silly than what the New York Times was printing before, but what sticks in my craw is the wording: "Some say they never expected a price war at all."

Doesn't it sound like these people are coming up with painfully accurate predictions after the fact? "Some say they never expected it, but that's what they're saying now. Obviously they did not expect it, because if they were authoritative, we would have quoted them back in April!"

So, for the record: I EXPECTED THIS. I blogged about it here. I say this not to toot my own horn, but to point out that I think it's perfectly likely that Hoffelder looked at the same facts I looked at and came to the same conclusion waaay back in the spring. Because--and call me dogmatic--to my way of thinking that was the logical conclusion to draw, and I hope to God that I am not the only person on the planet who is capable of looking at facts and drawing logical conclusions.

Although that's not something the New York Times appeared capable of back in April.

But they do seem to be coming around these days, huh? First, they expressed skepticism of a publishing deal, and now, they're printing stuff like this:

Jordan Selburn, senior principal analyst for consumer platforms at IHS, said the migration from e-readers to tablets puts Amazon in “an interesting position” with e-book prices.

“Amazon does not make much off the hardware,” he said. “Its goal is to sell you content. When they sell you a Kindle Fire tablet, they are not just selling you books but movies, diapers, garden hose. It’s a portal into their entire store.”

But one day, Amazon must try to make a profit. . . .

Perhaps there will be loss leaders, but more likely each product will have to carry its own weight. In other words, this might be as cheap as e-books will ever be.

God, that's like--realistic or something! Wow!

Down with friction!

I just wanted to point out just as Amazon is successful in no small part because it makes it easy for people to buy books, authors need to think that way, too.

Someone is trying to give you their money! Don't make it difficult!

Even removing small barriers can make a big difference, which again, is something I think Amazon gets better than most other retailers--you want to make your books easy to find and easy to buy.

That can take some thinking. For example, when Brian S. Pratt began marketing his book:

I first looked around for a good place to advertise and found Project Wonderful. They suited my needs perfectly; ads would run on websites for pennies a day. I then created a coupon code that would discount my first book for free. I then created a series of ads stating that a free copy was available, all they had to do was copy down the code and go to Smashwords for their free copy. Well, that bombed and bombed badly. Came to realize that I was asking way too much of customer. In order to get my book, they had to go to Smashwords, create an account, put in the code, then download.

People are inherently lazy about shopping, especially in this world where everything is a click away. I pondered on the lack of success with my coupon code, then realized that if I just made the book free, they would only have to click the link in the ad, then download a free copy. Simple. (Keep it Simple-Stupid) I made it so easy for people to download my book, that downloads jumped. Subsequently, sales for books 2-7 jumped as well.

If it’s free and downloading is just a click away, people will do it.

Is it hard to redeem a Smashwords coupon? No. But that doesn't matter. You can't fall into the trap of thinking that people "ought" to be smart enough and diligent enough to figure out how to buy your book. They're looking for entertainment, not another hassle in their life.

That's why when I do back matter for my books, I link to the next book at the retailer where the first book was bought (although if the book is distributed through Smashwords, I don't know where it was bought, and I have to link back to Smashwords itself instead of the retailer--this is one reason I'll probably work with more retailers directly once I'm out of KDP Select). I don't link to the book pages on this Web site, even though I've got sample chapters and whatnot--I want the person to be able to go click, click and have their copy of Book 2 without having to think about it.

Likewise with advertisements--I mean, right now, that's a no-brainer because Trang is in KDP Select, and I'll be advertising the free days there. But even if that wasn't the case, I'd rather run multiple campaigns (TRANG FOR KINDLE! TRANG FOR NOOK! TRANG FOR KOBO!) than have one campaign (which isn't any cheaper if it's pay-per-click) that sends them to a page here, and then they have to find the links, and then figure out what edition they want, and then go over--oh, hey, Joe e-mailed me back! Yeah, Joe, I'd love to go for coffee! I'm heading out right now!

Oops. Bye-bye sale, have fun with Joe!

And while I just complained about how unrealistic it is for retailers to expect people to hack Amazon's cloud service, guess what? If ever I do wind up selling e-books on this Web site, I'm going to include instructions about how to do that, with them and with whoever else offers that kind of service.

Whatever it takes to make it easy to buy.

Not understanding Amazon

One of the issue I have with that smart/dumb Forbes blog post about Amazon is that the author doesn't really seem very familiar with the operations of any of the retailers, especially Amazon.

This is further demonstrated in the comments, when a reader writes:

“Manage my Kindle” is a market-driven, easy-to-use, feature-rich platform that syncs one book on any Amazon device I pick up. Free enterprise says they won’t share that system with anyone else. Others will have to crack the code and make something that works with Amazon’s devices or sit back and watch the market leader continue to dominate.

And the author completely misses the point when she replies:

Anyone can create and provide a Kindle-compatible ebook without going through Amazon’s Kindle store. Although Amazon is trying to create lock-in by providing a smooth end-to-end service, they are ultimately selling their Kindles at cost or at a loss in order to dominate the content market. That makes them vulnerable to disintermediation on content, which could then affect their Kindle hardware strategy.

Let's look at that logic: Amazon is making no money on its Kindles, because they want to promote e-book use. But their hardware strategy could be disrupted by competition by other e-books.

You know, their money-losing hardware strategy. It might be disrupted, and then they wouldn't lose money selling Kindle devices any more. Instead other companies would sell the many tablets, smart phones, and other devices that people would use to buy and read Amazon e-books, sparing the company the hassles of dealing with the hardware end of the business.

I'm sure that would break Amazon's little heart.

Another comment by this author show her to be very focused on Amazon's hardware, which I think is what happens when you read a lot of articles about Amazon, but you never actually buy e-books from them. That focus on the hardware end causes her to miss her reader's point: A Kindle e-book is substantially different from a Kindle-compatible Mobi file.

How is it different? To quote Diego Basch:

The Kindle is not a device; it's a platform. Besides the device itself, I use Kindle for Android, for the Mac, and even for the iPad sometimes. A great feature of the platform is that it synchronizes to the last page you've read on any connected device.

Yup! You just download a Kindle app on to your VARIOUS devices, and whichever one you use to buy an Amazon e-book, that e-book will be available on all of them, right where you left off reading it!

Take me: Let's say I'm sitting at my large desktop computer, and I realize that I'd like to grab a particular title. If I buy it on Amazon, it is automatically available on my cell phone, because I have a Kindle app there.

But if I buy it on Smashwords, or download it from Project Guttenburg, I have to e-mail it to myself to get it onto my phone. And then it's on the phone, taking up memory space. If I delete the book from my phone to free up space, it's gone, and if I want it again, I have to go find it.

In contrast, the Kindle e-book I purchase from Amazon is stored in the "cloud," available on any device I might have. It doesn't take up space on my phone until I download it there, and if I delete it off the phone, it's still right there in the "cloud." It literally takes me two clicks to get access to every single Amazon e-book I have ever bought, and they're not taking up any space on my little device.

That's pretty amazing. That is that "smooth end-to-end service" the author so readily dismisses.

And guess what? That's part of why when I try to give people my book on Smashwords, they'd rather pay for it on Amazon.

Update on 2012-12-23 21:16 by Mary Sisson

Someone pointed out to me that you can e-mail documents to the Amazon cloud, which I didn't know you could do. So, on the one hand, that might seem to obviate the advantage of Kindle e-books, if you ignore the fact that, you know, I didn't know you could do that--it's not something that's blatantly obvious. And if you are a retailer, and you are expecting customers to scroll through your competition's service details and sort out hacks that allow them to use the superior service your competition provides, well, then I think that makes my point for me, don't you?

Not an "either" or an "or," but an "and"

This (via PV) is a blog post at Forbes titled "Amazon Is Ripe for Disruption") that is both insightful (e-book retail has a relatively low barrier to entry) and kind of dumb (Google does a great job!--uh, no, not if you're a supplier, it doesn't. Amazon treats everyone like shit!--uh, not really, not any worse than the other retailers do).

At the end there's a little aside I feel deserves to be highlighted:

[W]ith start-ups like Publit, it’s not actually an either/or decision, because you can both sell through Amazon, retaining scale, and sell through your own shop, retaining data.

It's true that, as the writer notes, there are certain limitations when you sell through a retailer--any retailer, actually, although the writer likes to pretend these limitations are unique to Amazon. You don't get as much access to data, and I'll add that you are also at the mercy of that retailer deciding to slash your cut of the money or suspend your account.

That said, retailers like Amazon bring a lot to the party. They attract loads of people looking to buy books. If you are hoping to sell books, that's a very good group of people for you to meet.

Which is why you can do both! Lindsay Buroker is a big fan of reaching out directly to readers, but you'll notice that she hasn't pulled her books from the retailers. Other authors sell directly to readers from their own Web sites, but they also have their books available for purchase at places like Amazon.

You can do both. You don't have to choose. That's something I sometimes struggle to convey to people new to self-publishing. I think this concept that everything's an either/or decision is part of the mentality that there's One True Path to success in publishing, which there isn't.

You don't have to choose between e-books and paper books. You don't have to choose between one retailer and another. You don't even have to choose between indie and traditional publishing.

You can decide to prioritize one over the other, or you can decide to do one first and the other later. You can even voluntarily choose to make your book exclusive to Amazon for a short period of time. But you don't have to, and just because you make a choice now doesn't mean you can't change your mind later.

That kind of freedom is new. Back when I was looking for a publisher for Trang and had decided it was a small-press book, I knew that I had to send it to only one publisher at a time. That was what you had to do in those days, because if you sent a manuscript to multiple small presses, you would get blacklisted at all of them. It didn't matter if it took each small press years to get back to you, you just had to sit on your hands like a good little girl until they did.

That's how things worked--one mistake, one tiny violation of a capricious and self-serving code of behavior designed soley to benefit publishers, and you were done for.

Things don't work that way today, and thank God for it!

People still have that fear, though, that mentality that they've only got this one shot and if they fuck it up, that's it! It's all over! You'll never recover! You're screwed forever!

Not true. A single decision nowadays (unless it's a decision to sign a bad contract) means nothing. Mistakes are reversible, and it's totally fine to focus on one aspect of your career at a time (one format, one book) and then move on to the next when it's time. If one thing doesn't work for you, or if you are uncomfortable with the limitations put on you by one way of doing business (i.e. the retailer/supplier relationship), you can expand into another (i.e. selling on your own).

You can switch from one to the other, or you can do it all. It's totally up to you.

When is that going to happen?

It's no secret that I think the notion that e-book sales are leveling off is simply an example of what happens when you draw conclusions from bad data--i.e., surveys that count only publishers and not indie writers. (And if paper-only deals with publishers become the norm for successful writers, this bifurcation within the industry will become even more pronounced.)

So it was interesting when Passive Voice posted a projection of e-book sales that purports to show that they will soon plateau.

The first problem that I saw was that the actual data points show slow uptake, followed by faster uptake--no actual data shows a leveling off, that's all the "projection" part of things. Now, when I was a reporter, I had a policy of ignoring projections, because they're usually just bullshit invented to dupe the credulous. But I don't know that much about statistics, so I thought that maybe these guys were at least using some kind of respectable methodology. But someone with more expertise said, No, the leveling off is just bullshit.

Nice to know the world hasn't changed that much after all.

Anyway, other folks also stepped in on the comments section to critique this projection, and I think those comments are well worth the read. Jim Self pointed out that e-books are not devices (and in fact can be read on devices people have bought for other reasons), so expecting e-book adoption to follow the adaptation curve of new devices is a little silly. Another commenter points out that, if current pricing tends continue, a bare-bones e-reader may soon cost less than a hardcover book.

The projection also assumes what the author calls "a relatively stable publishing industry" over the next three to five years, which is amusing because the industry is anything but stable now. The only thing publishing is relatively stable to is the drama surrounding the brick-and-mortar book retail chains, and of course if more of those go under, that's going to rebound onto the publishers in a big, bad way. Any crisis in the traditional publishing/bookselling end of the industry is going to make paper books less available to readers, which will presumably motivate more people to figure out how to read stuff on their tablets and phones.

The other assumption of stability that I take issue with is that the overall market for books is static. That is simply not true. The introduction of the paperback drastically expanded the overall book market, and I think e-books have similar potential because they are so easy to buy.

Will e-books eventually level off? I guess--paperback sales did, after all. But that took decades! We have no idea where the ceiling is on this, and to be honest I feel that a lot of the "e-books are plateauing!" stuff is coming from people who are terrified that the authors they now exploit will run off and go indie just like Aunt Edna did. And I hope they do!

Biennial data dump: What sold when & where

I put Trang up in January 2011, so it's been almost two years since I began e-publishing. I recently decided to actually look at all my sales reports (a first for me). My sales have never been stellar, but I thought it would be interesting to break down what sold when and where. These percentages are on a per copy basis, not a revenue basis, but I did not count freebies.

These sales are limited to e-books, and for good reason--I have sold almost no paper books.

Untill this month, my books have been available on Amazon, Barnes & Noble, and Smashwords, which distributes to a variety of retailers (I've been on expanded distribution most of the time). The Smashwords data complicates things, because at least in the spreadsheets I downloaded, they don't tell you the exact date of when a sale through a retailer occurred--they just give you the year. So sales data within a year is approximate.

So what's selling where? Everything's pretty much selling on Amazon--89% of sales there; 11% on Smashwords (through a mix of retailers). Barnes & Noble has yet to sell a single copy.

Which title sells more? I have two titles out, Trang (which has been out since January 2011), and its sequel Trust (which has been out since June 2012). Trang accounts for the lion's share of my sales--fully 76% of copies sold are Trang, only 24% are Trust.

So Trust was kind of a bust, right? Oh, no. Before you decide that, you have to ask...

When did you sell your books? The short answer is: After June 2012. Obviously all of my Trust sales occurred after that date, since that was when Trust was released. But surprisingly, approximately 45% of copies of Trang were sold after June 2012, meaning that I have sold almost as many copies of Trang in the five months following the release of Trust as I did in the 17 months before the second book's release. I have also sold more copies of Trang since Trust was released than I have copies of Trust. Overall, approximately 60% of my sales have accrued since the release of Trust last June--and only about 10% of my sales took place in the first six months of 2012.

Well, what about promotions? Hard to say. I put Trust on sale in its first month of release and it did fairly well that month, but then again sales probably would have been relatively strong at release anyway. And its impossible for me to tease out the effect of promotion like con flyers (although sales were not particularly strong in July and August, when I did my most aggressive efforts) or putting a Smashwords coupon on Kindle Boards from the effect of simply having a second book out (which implies to readers that I'm actually going to finish the series). It's not like I did absolutely nothing to promote Trang before June 2012, but my focus was certainly different--I ran an ad and sought reviews (and while I don't think that particular ad worked, I still think reviews are important). I can say that putting Trang at 99 cents with no other promotion had a negligible impact--I didn't actually sell no copies during those five months, but I sold very few.

Business-y links

I had the kid today, but Passive Voice is totally on fire, so I thought I'd link:

Simon & Schuster is entering the vanity press business, partnering with none other than Author Solutions, now owned by Penguin and soon to be owned by Random House. So, that's like three major publishing houses deciding that straight-out ripping off the ignorant and naive is the proper way for a respectable publishing house to earn revenue nowadays, and if Simon & Schuster merges with HarperCollins, it will be four. [ETA: David Gaughran has an excellent post on just how bad Author Solutions is. If you want to work for a company that will refer to you as a "fucking asshole," I respectfully suggest that you take the tens of thousands of dollars that they will bilk you out of and invest it in therapy instead.]

Harlequin's authors are still suing it, and if you're wondering just how scummy Harlequin is, the original article lays it all out in loving detail.

(I'm going to link to my old "Trust the Process, Not the Publisher" post now. No reason.)

Anyway, last Christmas, everybody and their dog got a Kindle; this Christmas, the dog is getting two. And someone is getting tired of hearing Jonathan Franzen whine about it.

Getting away from PV for a moment (shocking, I know), I'd mentioned earlier that Lindsay Buroker was posting about diversifying away from Amazon. How has that gone for her? Pretty well! She says:

In these last few months, I’ve reached a point where I could make a modest living as an author even without Amazon.

She credits having free books available with goosing sales at other retail outlets, as well as international sites.

So it is possible to diversify, and I find it notable that the people who think it's really important to do so (Buroker, Kris Rusch, Dean Wesley Smith, me) are all people who have a significant history of self-employment and dealing with clients. And in an amazing coincidence, we all seem to think about this issue the same way--i.e. we all get REALLY REALLY REALLY nervous about being dependent on a single source of revenue. As Buroker writes:

I wasn’t too concerned about this until I started thinking about becoming a full-time independent author, AKA ditching the day job. I didn’t want to depend on one revenue stream, not if that money had to pay all the bills. As lucrative as Amazon can be, one never knows when they might switch the tables (dropping to a lower royalty rate or putting your account on hold for some reason or another), and then where would you be?

Update on 2012-11-28 03:17 by Mary Sisson

Oh, and I should add--I walked past the World's Worst Barnes & Noble today, and half if not more than half of their window signage was dedicated to selling Nooks. And the message wasn't even that the Nook is good for reading books: They're good for magazines, stalking Justin Bieber, whatevs. I thought that was very...portentous.

B&N's market share

This was on the Passive Voice yesterday--the original article is here, and it's a survey of e-book buyers by Bowker Market Research to find out what kind of device they use.

Barnes & Noble’s Nook devices had a 14% share in the second quarter [of 2012], a figure that has held steady since the fourth quarter of 2011, but was down from a peak of 22% in the third quarter of 2010

Now this is a different number from either number that appears here: This survey includes devices like desktop computers, smart phones, and iPhones. But 14% is a long way from 27%--a number that is supposed to also indicate the percentage of the e-book market controlled by Barnes & Noble, even though nobody knows how big that market actually is.

If the recent presidential election taught us anything, it's that my jokes have a strange way of coming true--I mean, it's that decisions made about what to measure can drastically affect results. So, deciding that a smart phone or a desktop computer is or is not an e-reading device, or deciding that e-books sold by Amazon don't count--how one chooses to define the "e-reading market" or the "e-book market," in other words--can drastically affect perceptions of how a company is doing. And just like there are various pollsters who make money telling presidential candidates exactly what they want to hear, companies that report data are serving a market that rarely consists of disinterested observers.

How Audiobooks Work

Things have been a little chaotic here--hopefully by Wednesday everything will have settled and I'll be able to write. Anyway, I did manage to read David Byrne's How Music Works, which was interesting to me on a lot of levels.

He has an entire chapter on the many different ways to distribute music nowadays (he uses examples from his own career, breaking out expenses and revenues--he's a very open guy). That section was of special interest because while I don't mind giving Trang away as a free podcast, I'd also like to have an audiobook that people can buy if they want, plus if I record the later titles I would want to do them as paid audiobooks and not as free podcasts.

A lot of the places he was talking about just do music, because the only way onto Amazon or iTunes if you are an audiobook is via Audible, and that means going through ACX. The issue with that is that they have pretty specific production requirements--I don't know if they are impossibly specific, though, mainly because I don't know what's involved in mastering. You also have no control over price.

The other option (actually, it looks like you can do both) is Bandcamp, which is a straightforward retail arrangement--no distribution included. They charge a percentage of your sales, but other than that it's free. You can set your price there however you want, which is nice.

Serendipitously, Erin Dolan of Unclutterer, a site I often read, has produced her own audiobook. In her case, she just put an E-Junkie shopping cart onto her Web site--a click on the link takes you right to PayPal.

That looks interesting, doesn't it? For $5 a month I could sell every e-book format plus the audiobooks directly from this Web site. Well, that's going into the Must Investigate in the Future pile.

Let's do it better!

Camille LaGuire made a good comment on the Passive Voice. The post was another one about the never-ending paid-review scandal, but LaGuire points out that "simple group behavior" can trip up an algorithm, too:

Let’s say there is a large forum frequented by authors who are all interested in promoting their books, along with some book bloggers who are into the same culture....

They all review more than your average reader. And everybody who reads their books and interacts with them on blogs or elsewhere hears again and again how important reviews are to authors, so they also have a “bubble” in their reviewing behavior. They also all submit to the same book bloggers. And they all have an overlapping readership, and even though they avoid mutual reviewing… the authors and their fans tend to read a lot of books from other authors in the same forum. And so their reviews are clustered in the same pool.

From the algorithm’s standpoint, it sure looks like a mutual admiration society, and in some ways it is. It’s not intentional, but people are using leverage to get an unnatural number of reviews, and the reviews are created with a different pre-conscious agenda than most reviews are.

And this pattern shows up really obviously in an algorithm....

Your best bet is to not to work against what the goals of the algorithm are. The goals of the algorithm is to NOT favor one book over another but to make every book equally available to the people who would most want it. Therefore, the best way to work with the algorithm is to work on good labeling, appropriate covers, titles, blurbs — and, of course, good content.

Or alternatively, you can just keep coming up with new leverage strategies when Amazon cuts off the old ones. That’s perfectly legit. Just don’t be all surprised when Amazon cuts those off too.

I liked this because I think there's a temptation for indies to revert to the clubby sort of reviewing that marks a lot of traditional publishing--after all, that's what we know and what appears to have worked for them.

But the clubbiness of that world actually limits the usefulness of those reviews--a lot of people don't bother with, say, The New York Times book reviews because they know that paper only reviews certain kinds of books, so if you like, say, potboilers or romances or erotica, you'll never find anything useful there. Amazon works as a retail outlet because it's good at getting things in front of people that they actually want--it doesn't worry about who's in the club, it just offers up the goods. And readers have clearly responded quite favorably to that, which benefits us all.

Filthy, filthy promotions!

Passive Voice has a great rant today inspired by a pretty silly post bewailing how indie writers are devaluing their work with the 99-cent price point and freebies and giveaways in exchange for a reader promoting the book in some way.

The original post is very over-the-top and contains the hilarious line, "Traditionally published authors aren’t stooping to these tactics." (You know, like sock-puppet reviews and selling cheap books.) And PG comes back in a way I think is awesome, pointing out that if you actually value literature and reading, then the rise of indie publishing should make you very happy.

The funny thing is, the original post was written by a bestselling author who works as a consultant for other indie authors. And the other day I met a bestselling author who works as a consultant for other indie authors who has embraced things like the 99-cent price point and giveaways with equal if not greater stridency. And of course I can think of two authors right off the top of my head who credit their success in large part to the savvy use of freebies. (So, you know, there's a lesson about blindly following "experts" here.)

But the thing that really struck me about the original post was the writer's clear discomfort with the concept of promotions.

Which is odd, right? I mean, no one writes articles in Retailing Today that say, "For God's sake, DON'T PUT YOUR STUFF ON SALE!!! NO FREEBIES!!! DON'T OFFER YOUR CUSTOMERS A CHANCE AT A GIFT CARD IN EXCHANGE FOR LIKING YOU ON FACEBOOK!!! YOU'RE DEVALUING YOUR BRAND!!!!"

Sure, a company can devalue a retail brand via promotions, but it has to be a VERY high-end brand for that to happen (or the promotions have to be so terribly mismanaged that they make people feel like they're being ripped off). To be vulnerable, the brand also has to thrive on recognizability--if I have an Hermès bag, you know I paid a freaking arm and a leg for it. That is a major reason why people buy Hermès bags. Hermès does not put its bags on sale.

I don't know how an author can possibly create that kind of brand. If I'm reading Stephen King on my Kindle, how the hell are you supposed to know? If I'm reading Stephen King in a hardback, it's not like you're going to look at that and say, "Ooooh, that's a Stephen King book! Gosh, I wish I could afford one of those!" You're not going to sneer if I got it on sale or--shudder--at an outlet. That is completely irrelevant to your perception of the book's worth. (It's true that books can be status objects, but they are supposed to be indicators of internal worth--I read poetry because I am such a sensitive soul, not because I'm mad flossing.)

All that is why book consumers are somewhat insensitive to price--for most readers, avoiding a bad book is more important than saving a couple of bucks.

As a result, if your book lacks reviews and recommendations, dropping the price probably won't help much. But it's also not going to hurt your brand--people might look at a dodgy 99-cent/free book, think "Looks dodgy" and avoid it. But they're not going to associate that with your name and refuse to buy all your books forever because six months ago one of your titles was 99 cents or free. (I know I've spoken out against always having books at 99 cents, but that's because I think it causes the writer to devalue the financial worth of their business, not because I think it causes the reader to devalue the literary worth of the books.)

If someone likes your stuff, or is curious about you because other people like your stuff, or otherwise thinks your book might be worth reading, doing a promotion can tip them over into buying. Which is a good thing.

Believe it or not, some people will argue that getting more buyers through promotions is not a good thing. These are usually big believers in finding your 1,000 True Fans, who apparently will give you all their money and will spend all their time promoting you and will carve your name on their foreheads with a screwdriver and will hide in your bushes chanting your book titles until the police come and haul them away.

I think it's fine to focus your attention on cultivating (non-scary) fans (who respect boundaries)! That's great! Read The Gift of Fear while you're at it!

But in addition to your True Fans, there are other audiences out there you can sell to. I wouldn't spend big hunks of my time chasing bargain-hunters, because your margins are going to be lower with them, but if someone will only buy your book if it is 99 cents, aren't you better off getting that 99 cents from them than getting nothing at all? For every tech company like Apple or Intel that make money catering to True Fans who will pay a ton of money for the latest thing, there are a dozen companies that make money catering to the more price-sensitive people in the mass market. And unlike a tech company, you can 1. tap into both markets, and 2. convert the tightwads into True Fans--there are very few people out there who won't pay more for a book they know they're going to like.

Do I smell opportunity? Or rotten fish?

Last night I met someone who is a big believer in the 99-cent price point. This person has had tremendous success with their own books, and feels the price point was a major factor in that success. (Don't worry--once the books started to take off, the person raised the price, thereby sparing me more cerebral trauma.)

Their further evidence in favor of that price point was the fact that they help writers with largish backlists put out e-books, and the 99-cent price point has been very helpful in driving sales for those people as well.

The person was very adamant about the virtues of that price point, which was odd to me, because 1. they were not John Locke, and 2. my experience with the 99-cent price point was much more negative. I had Trang at 99 cents for a fairly long time last year, and I don't think it sold a single copy during those months. And you have people like Elle Lothlorien who saw sales increase every time she raised her book's price. Enough writers have had similar experiences that there's even a whole theory that the 99-cent price point is actually harmful, tainting your work with the odor of off-price sushi.

But then I thought about how I respond to the 99-cent price point when books by an author I am interested in are offered at that price. I jump all over those suckers.

And that's what I think is happening here. The type of writer this person services has a backlist of several books. In other words, these are writers who have already done the work of building a fan base.

In that case, the process presumably goes something like this:

1. Author releases backlist as 99-cent e-books.

2. Author's fans go, "zOMG!! SQUEEE!!! That's a great price!" and BUY BUY BUY.

3. Author's books shoot up Amazon's charts.

4. Amazon's algorithms do the rest.

But I think for somebody new...eh. Then I think you do run the risk of smelling a little fishy. You'd need to get a lot of "this book is good"-type indicators before dropping things to 99 cents is going to move the needle.

Book discovery nowadays

This is an interesting article (via PV) on how book discovery has changed in recent years.

Of special interest: 

Two years ago, 35% of book purchases were made because readers found out about a book in bricks-and-mortar bookstores, the single-largest site of discovery. This year, that figure has dropped to 17%, a reflection both of the closing of Borders and the rise of e-readers.

I have to stop and say WOW to that one--the percentage of books discovered via bookstores has dropped that much in only two years!? Holy crap. I mean, I know things are changing, of course, but I am constantly amazed at how fast it's happening.

Anyway, the article goes on to say:

In the same period, personal recommendations grew the most, to 22% from 14%. . . . A problem for publishers and authors of new titles is that the vast majority of personal recommendations are backlist titles. Only 6% of books recommended personally have been published in the past half year--and just 2% were published within three months

Yeah, more backlist recommendations would be a big problem for publishers, because they are rapidly losing their ability to monetize those titles. That's an unpromising confluence of trends right there.

And if you don't want to spend all your time flogging social media, that article provides you with an excellent rationalization: "[D]igital mass media, including Facebook and Twitter, rose just to 4.5% from 1.9% as a place people learned about the books they have bought." Music to my ears....

Fairness, monopsony, and other unhelpful concepts

Some people are taking great umbrage at Amazon for forcing publishers to provide them with books they can actually sell. What apparently is at issue is not the basic concept that Amazon need saleable inventory (although that is a concept that seems rather lost on the publishers themselves), but the fact that Amazon is going to punish these suppliers by not selling ANY of their goods, rather than simply not selling the goods that arrived damaged.

This, it seems, is not "fair" and is an example of Amazon using its "monopsony power."

Yeah, that's a bunch of crap. I'll start with the idea that Amazon has a "monopsony." Just like Amazon isn't a monopoly because it can't shut out competing online retailers, it is not a monopsony, because it (say it with me) can't shut out competing online retailers. You can sell your books other places.

On to "fair." "Fair" is one of those terms that kind of drives me crazy, because it doesn't really have any agreed-upon meaning when you start talking about specific situations. Is our current tax system fair? Is the percentage of tax paid by wealthy people fair? If it is unfair, is it unfair because wealthy people pay too much in taxes, or because they pay too little?

I don't (NO I REALLY DON'T) want you to actually answer those questions. Why not? Because there are people who are completely, 100% convinced that the current system is unfair because wealthy people pay too little in taxes--and they have many long, self-righteous justifications "proving" that they are right. And there are other people who are equally convinced, and have equally tedious "evidence," that the current system is unfair because wealthy people pay too much.

That's "fair" for you--it means whatever you want it to mean.

But what does "fair" get you? Not much. Say you decide (what with your long rationalizations and your many friends who agree with you) that the tax system is unfair, and that it is specifically unfair to you, because you shouldn't ever have to pay any taxes. So you don't.

You can protest the unfairness of the system until you're blue in the face (and people do), but you will still get fined and perhaps even imprisoned (and people do). That's because the government has a different idea of what's fair, and unlike you, they have cops and prisons. (I once heard a young man on the bus discussing his many drug arrests, the latest which was felony weight. He objected bitterly it being classified as a felony, because it was--you guessed it--"not fair." Oddly enough, these magic words did not have any noticeable impact on his situation.)

What is Amazon? Amazon is a major retail outlet. If you sell books on Amazon, you are a supplier to that company. To be a supplier to Amazon, you must agree to their terms: You price your book a certain way. You get a certain cut. You use certain file formats. You can't put up certain kinds of material.

If you don't agree to their terms, there are other suppliers out there. (And, since Amazon doesn't actually have a monopsony, there are also other retailers out there who might be more accommodating to you.)

Now in book publishing, suppliers actually have a relatively large amount of power--larger than in most other industries. Stephen King gets really nice contracts because he is the sole supplier of Stephen King books, and people really want those and don't want anything else. It's a stark contrast to, say, supplying Wal-Mart, whose customers are so price-conscious that they'll happily switch brands if something cheaper comes along, which really puts the suppliers in a position of weakness.

Even so, the power of book suppliers has it limits, as those art-book publishers are discovering. Amazon is having such a problem with their stock that it's willing to stop selling their books altogether, which suggests that Amazon thinks readers won't really miss those books and will be able to find suitable substitutes.

And guess what? Amazon has a perfect right to make that call. It's not the government censoring people--you have no First Amendment right to force a retailer to carry your product.

People seem to constantly want to have some kind of reciprocal emotional relationship with Amazon, which makes them lose sight of the fact that it is simply a business and a retailer. If a business partnership is unprofitable, Amazon will drop that partner. This is how business works--it's about making money, and if pairing with someone doesn't make a company money, the company will terminate that relationship.

Is that "fair"? Hell if I know. I just know that's the way the retail business works, has always worked, and will most likely work in the future.

Is that scary to you? Well, maybe it should be, because if you've put all your eggs in the Amazon basket, then you are taking a risk. Amazon's not your mom, it's not your friend, it doesn't love you, and it's under no obligation to take care of you. It's a major retailer, you are a supplier, and that's all. If they don't like what you do, they'll terminate the relationship--and if you don't like what they do, you are free to do the same.

Who do publishers think pays for all this?

This just amazes me--Amazon is forcing publishers to ship expensive art and gift books in single boxes, because otherwise the books get messed up and can't be sold. (Via PV.)

Why does Amazon have to force publishers to treat their high-end products so that they can actually be sold to people? Well, God forbid the publishers produce saleable goods!

Seriously, read this and marvel: "One frustrated publisher said, 'Isn't it Amazon's problem if their customers want their gift book [sic] in each individual box? Isn't their problem [sic] to deal with?'"

Wow. If you are wondering how far publishers have removed themselves from their readers, read that again. It's Amazon's problem that they can't sell what you sold them? Because once Amazon pays the publisher the wholesale price for that book, well, hey, everything's finished. There's no additional step past the wholesale level of sales--Amazon mints money itself for no other purpose than to hand it over to publishers.

There's certainly no reader involved in this, no consumer who shells out $150 for a beautiful-looking art book only to receive one that looks like it got jumped after school for its lunch money. Seriously, have these idiots ever purchased anything on the high end? Have they seen how expensive purses get treated so that they have no nicks or scratches? When people shell out for luxury goods--especially a gift or something to ornament a living room--they want something that doesn't look like it got run over by a truck.

(I mean, come on. Why did I stop shopping at The World's Worst Barnes & Noble? Because the books were damaged. It astonished and infuriated me that they would sell damaged good for full price. I wondered if any of them had ever actually bought anything before, ever. You don't walk into a clothing store and see a bunch of shredded clothes on the rack, do you?)

Of course it is, in fact, Amazon's problem that it can't sell these goods, which is why Amazon is going to kick these particular publishers in the crotch until they give Amazon a product that it can actually get paid for. And how publishers respond? By calling up a reporter and whining about how much their balls hurt! Because that's how business partners resolve a business dispute, especially when the dispute arises from the fact that you are making it so your partner can't turn a profit.

Honestly, who are these clowns? Are they 12 years old? Have they never gone shopping? Is this their first foray into business? Capitalism? I cannot--I mean, my mouth is literally hanging open as I struggle in vain to understand what they hell they are thinking.

And these are the experts who will save you from the pit of self-publishing....

Just because it's unpleasant doesn't mean it's not true

(A note: I do seem to be getting better from that stupid sinus infection, but I'm still a little under the weather. Hopefully soon I'll be doing actual novel writing again instead of just blathering on here.)

Last night as I was lying in bed, blowing my nose, I started thinking again about the whole kerfuffle over Amazon's KDP Select exclusivity program. Some thoughts occurred to me, and I resolved to write a blog post about them in the morning. Then morning came, and Passive Guy also had some thoughts on the kerfuffle, so at least I'm not alone in thinking this topic could benefit from a little probing (which will hopefully not degenerate into the beating of a dead horse).

As I mentioned in my earlier post, one of the things that struck me about the comments were how upset people were that Kris Rusch challenged KDP Select (and challenged it mildly--she has books enrolled in KDP Select, so it's not like she's rabidly against it). And she notes, "The 'spirited discussion' . . . happens every time I write something even passingly negative about Kindle or Select."

Passive Guy touches on this in his post, where he notes that some of the comments on his site got "a bit heated," which he argues is "typical." The reason, he writes (emphasis added):

The certitude of small sample sizes leads authors to question or discount others who report much different sales experiences. If someone comments that 78.23% of their ebook sales happen on Nook, that person must be an outlier. Because, of course, I’m not an outlier. What happens to me must be what is happening to most authors.

And if I’m the outlier, I must be doing something wrong and I don’t like to think about that.

People don't like to think about the possibility that they might be doing something wrong. And they ESPECIALLY don't like to think about the possibility that they might be doing something risky.

So you wind up with lovely little logic tangles, like the comment on Rusch's post, "My short-term goal was to get to a place where I could reliably support myself and my family with my books."

Guess what? RELIABLY supporting yourself and your family is NOT a short-term goal, because you can't support your family really well for six months and then stop. That person made a gamble on KDP Select, it paid off, and now she's...wait for it...diversifying out of KDP Select (because she's not actually stupid).

Another wrote, "there is an objective way to measure the success of various approaches to self-publishing: revenue."

HOLY FUCK NO!!! God! That's like saying the "objective" way to measure the success of investing is by the percentage return on your stock. So if you have every last dime tied up in a stock with a P/E ratio of 2,000, you're in great shape because that stock has gone up 500% over the past three weeks! No problems there!

Remember--your time frame matters. A lot. Are you making lots of revenue now, but it's going to evaporate the next time Amazon changes its algorithms? (Sorry, kids, hope you ate your fill over the past six months!) Are you setting yourself up to have a broader, more stable audience, or are you setting yourself up to make a big SPLAT and wind up the centerpiece of a Wall Street Journal pity piece?

The question you need to ask yourself is, What happens if the plug is pulled on KDP Select? What if Amazon isn't available to me? What do I do then?

This isn't some cold-medication-inspired gloom-and-dooming. It's reality. Amazon will block books on the suspicion that there might be something funny with them--what do you do if that happens to you? Rusell Blake wrote about how, by simply altering its algorithm, Amazon dramatically reduced his sales: "Whereas I would see 150-200 books a day sold following a free promo in March or April, my May promos bumped sales to maybe 20-30 per day."

That's several hundred sales--gone! Poof! Hopefully Blake has other marketing strategies in the works and can make up those sales. Hopefully he wasn't expecting that revenue to "reliably support myself and my family."

Like I've said before, this is simply how life is when you own your own business. Depending entirely on a single source of income is always a huge risk. You may decide to take the gamble, but know that you are taking a gamble--if it pays off, your gamble paid off. That's all. Don't look back on it after the fact and say, "What I did was perfectly safe! Anyone who says it was a risky move shall taste my wrath!"

What I think people really don't want to think about when it comes to self-publishing is that it is largely dominated by a single player: Amazon. Like many if not most writers, I get almost all of my book sales through Amazon, despite not having made any kind of push there. (Of course, almost all of my income comes from the Illuminati, a proud example of a well-diversified secret society!) If Amazon stops selling self-published books, a lot of writers are going to be totally screwed. This whole little industry will experience some massive dislocation.

It's a very scary fact--it's the elephant in the room as far as risk is concerned. People really, really want to pretend it isn't there. When someone like Rusch points at it, even in passing, people freak out.

But it's there. It is there, and it is real. Ignoring this risk won't make it go away. Writing nasty notes to or about Kris Rusch and Dean Wesley Smith won't make it go away. Pretending that it's not really a risk because Amazon is so cute and user-friendly won't make it go away. The risk will still be there.

What can you do about it? You can take some of those lovely KDP Select revenues and start (say it with me) diversifying the hell out of Amazon. At the very least, diversify your marketing so that the next algorithm change doesn't gut your sales and bankrupt you. Diversify into non-e-book sales channels. Make serious, long-term efforts to build audience in other retail outlets. Don't act like Amazon is the be-all and end-all in publishing, and for you, it won't be.