Thoughts on Author Earnings #7, September 2015

Here’s the link.

If you’ve managed to never encounter the Author Earnings data before, the links on that site explain it.  Use ‘About’ and read about their purpose and methodology.  The short version is it’s a snapshot of Amazon’s Kindle store, and that data is used to extrapolate an estimate for the quarter.  People who are probably smarter than you (not saying, just that it’s likely) have already initiated arguments about possible issues with AE; those challenges and debates are on the site as well.  Again, short version, AE isn’t gospel from on high, but it’s a very good estimate that can be used for trends and a broad look at the industry.  But Data Guy (that’s his name) welcomes comments and shop talk about the report, so feel free to engage.

The Big Five that dominate the trad side recently finished implementing agency pricing.  That’s a pricing scheme where they set the price and do not permit discounting from that level.  The ‘old’ way books were sold on the trad side was publishers set a wholesale price (usually about half the listed cover price) that retailers (including Amazon) paid to stock the book.  This pricing format was carried over into ebooks.  And, as you probably noticed then and now, it permitted any retailer to ‘eat’ into their own expected margin by pricing below the cover price. So if the book was MSRP $7.99, and the retailer paid $4.00 per copy, they could price at the full MSRP and score $3.99 of retailer profit per copy; or price that same book at $5.99 and get only $1.99 of profit per copy.

Agency pricing came about from two main goals the trads are (foolishly) pursuing.  First, they wanted to stomp out discounting.  There are a lot of reasons they feel this is good, but it should be noted one of them is their hatred of Amazon.  They hated that Amazon always priced at a customer friendly margin that was razor thin; the trad side has been receiving a LOT of flack from the old-guard bookstores (including Barnes & Nobles) that are struggling to keep themselves relevant in a changing market.  I just remind people that Blockbuster had the opportunity to buy Netflix, didn’t see the point, and then folded while Netflix is now a dominant player in its space (video content delivery).  This point is a whole article in and of itself.  Let’s move on.

The trad side also feels book prices should be much higher.  They’ve demonstrated this with their new pricing as the Agency Pricing model has come into full effect.  Trad-side ebooks have soared into the double digit range.  Many are listing for $14.99 or more.  Unsurprisingly to anyone except the fools on the old guard, customers don’t like higher prices.  They’re not buying them.  This data proves it, if all the many many comments for the past several months about how people aren’t buying the titles because they think they’re too expensive weren’t clue enough.  Or, you know, common sense?  Again, this whole point can be it’s own article, so let’s keep moving on.

Now, however you may want to quibble with the AE data, it serves as a good snapshot of a single day’s sales AT A MINIMUM.  Again, the data is viable as a look at the entire quarter, and if you want to argue that it isn’t then follow the link and have at it.  I’ll just note that disbelieving something doesn’t make it not so.  You can hate something all you like and it’s still true.

What AE is showing us, especially in the most recent report (the one before was May 2015, this one is September 2015) is that the traditional side of the industry is seeing its market share retract.  For a couple of weeks now a lot of trad-side industry news sources have been reporting on stagnant or declining book sales, both print and ebook.  This threatens, yet again, to become its own separate article, but the short version on this point is the methodology and sourcing used by the trad side purposefully ignores anything that isn’t trad.  Meaning, if the title isn’t released by a trad source, the title is ignored in the data.  The problem is further compounded by the decline of modern journalism; today’s news sources just don’t dig into, question, verify, or fact-check anything they’re told about just about anything imaginable.  Whoever the ‘journalist’ in question is, they basically take whoever’s press release, accept it as on the level, and report on it.

That’s like those meme pictures from the early 90s, with the Iraqi Army press representative standing in front of reporters, assuring them everything’s okay and that reports of Allied victories are overblown, while in the background the city is in shambles. That’s what’s going on when Publisher’s Weekly (right up there with the New York Times in its biases being virulently pro-trad) and ABA and AU and AG take data from Nielsen’s BookScan and pontificate on how ebooks are definitely retracting, how they’re not resonating with consumers, and then starting to offer suggestions about where the industry goes from here as it refocuses on paper.

AE’s data shows, clearly, that ebooks are doing just fine.  It’s traditional ebooks that are declining.  They’re priced too high, windowed and restricted for too long, and go years between releases for individual authors.  Everyone except trads seems to understand this; book prices are too high.  Period.  You can not like it all you want.  You can disagree all you want.  You can argue about how movies and dvds and season sets of television shows and cups of coffee and a meal out are all more expensive than even a overpriced trad side ebook; but it doesn’t matter.  Customers make their own evaluations of what they’re willing to pay, and very few of them are willing to let themselves be talked into paying past that.

Further, nosing around on the web and talking to people in actual real life confirms this.  Forum after forum shows people mentioned the latest this or that from author him or her was too much.  This same theme, this same refrain, has been coming up over and over and over for months now; books, especially ebooks, are too expensive.  A reader checks and sees the ebook’s as or more pricey than the physical copy that’s out at the moment, and they don’t get the book.  Some of them wait for libraries to get a copy they can borrow from there; but even then trads have been waging war on libraries for years now.  Again, that becomes a whole other article, but the short version is trads are trying to force libraries to only buy expensive hardbacks by taking already expensive ebooks and applying a x7 or x10 or x15 price multiplier, and then further adding a ‘number of permissible lends’ to the license they sell the library; so your local library will have to pay $85 or $110 for the ebook, and only be able to loan it 20 or 30 times before they have to pony up another $85 or whatever.

If you think that’s bullshit, you’re not alone.  If you think book prices are too high, you’re not alone.

The only ones who don’t get it are the trads.  Maybe they’ll figure it out, and change, but they’re coming off about a three year span of outright open warfare with Amazon (a war the trads initiated and gleefully pursued even in the face of certain defeat) to have ‘won’ the right to overprice their books.  Now the data’s starting to roll in from that ‘victory’, and they’re reeling in shock.  “People don’t want to buy our ebooks at $10.99 $12.99 or $14.99?  They don’t want to pay $29.99 for a hardback?”  But they only say that in private.  In public, they talk about how the book market is ‘receding’ or how customers are ‘reading less’.

Bullshit.  Bullshit.  Bullshit.

People are reading as much as ever.  More, actually; it’s so easy to bring books when you have them on your phone.  In the ‘old’ days, only geeks and nerds typically hauled books around with them.  Cool people just showed up and hung out, looking slightly bored while they waited in line at the store or on the bus or at lunch at work.  Only social outcasts would pull a book out and read it.  Except, these days, we have technology.  You don’t have to be uncool and carry a book with you.  It’s just on your phone, or your tablet, or laptop, or even your work computer.  Boss comes by your office and you have a physical book open in your hands, it’s obvious what you’re doing.  But a ebook file on your screen, and you alt tab back to the spreadsheet?  You’re working.  And your device doesn’t just carry the one, it carries many.  Finish this one in a series, click and click, now you have the next one and are off and reading again.

AE’s figures prove this out.  Even if you naysay the multitude of comments from everywhere about how ebooks are too expensive and we hate it, AE’s data shows that it’s not ebooks or books in general that are down.  It’s just overpriced trads that are down.

Where is that market share going?  Indies.  AE’s report does illustrate that some of the lost trad market share seems like it’s being picked up by small presses, but a rather large chunk of it is going straight to indies.  And it makes sense, again to everyone except trads.

Thriller reader but balking at paying $14.99 for an international intrigue story?  Take your pick of any of hundreds of indie authors who have readerships and multiple books available, each priced from $2.99 to $4.99.  A nice friendly price.  Romance enthusiast?  Oh my God, the options are nearly endless.  Even the normally voracious consumption of the most die hard romance reader is hard pressed to be sated to the point of pushing back from the table with the buffet of indie romances available.  Science fiction, apocalypse, fantasy, mystery, pick your poison.  Name your vice.  Literally hundreds of thousands of books, more arriving every day, that are available at customer friendly indie price points.

Jeff Bezos has a famous saying that, especially, traditional publishing proponents hate.  They despise him, and especially this comment.  But, again and again, just because you hate something doesn’t make it untrue.  Just because you disagree doesn’t make it wrong.  Just because you want it to not be, doesn’t make it so.  Here’s the quote.

“Your margin is my opportunity.”

 

Business is business.  It’s never been about being nice.  Never.  Business is the art of war without actually shooting at people.  You might leave them paupered and penniless, without enough to even buy bread or soup, but you don’t actually do violence to them.  It’s war with a veneer of civility.  I don’t care about the politics or morality, and successful business people don’t either.  The trads sure as hell don’t when they take 90% of the revenue from books they don’t even create, when they leave authors applying for food stamps and burger slinging jobs.  So my sympathy is extremely limited; and by limited I mean “oops, where did it go, hmmm, I can’t find it.”

Trads say “we can’t afford to sell books, even ebooks, for less than what we’re trying to charge.  We have to have prices this high.”  A lot of physical bookstores say the same thing.

Guess what; don’t care.  Too bad, so sad.  Move on to the next opportunity.  You’ve lost this one.  You can pout and try to elicit sympathy, and some small bookstore owners have done exactly that, or you can evolve and create a new opportunity for yourself.

Ebooks don’t have to be priced at $14.99 to be viable.  Ebooks that have to support a huge inefficient company have to be that expensive, but the books themselves don’t.  And all those people, including executives and CEOs and boards of directors and uninterested stockholders, they’ve had their hands out for decades; taking and taking from every author’s revenue stream.  Guess what guys?

Times have changed.  Not are changing, not about to change; Have Changed.  We don’t need you.  We can write and connect our stories to readers, to customers, without having to pay your toll.  We can do it and support ourselves, God forbid even do well at it, and never wistfully want you to get involved.  AE’s report confirms it, just as the previous six already have.  AE #7 has some dramatic curves in the charts, some big jumps in the pie slice sizes, that make for a great story; but the change has happened.  The industry is never, never, going back to the old days where authors were ridden into the ground like broke-back mules, giving up all the revenue for the right to see their name in print.  If you, the traditional side, can’t find a way to stay alive in the 21st Century’s version of bookselling, that’s your problem.  Not ours.

Joe Konrath has a number of famous sayings too.  My favorite is this one:

“The only two groups required in a reader and writer relationship are the reader and writer.  Everyone else is a middleman that needs to prove his value.”

Michael Stackpole has one that applies to this too:

“You do not pay a royalty to anyone who is doing day labor.  All book production should be done for a flat fee … paying a royalty to someone for prepping an ebook is akin to paying the kid who cuts your grass a percentage of the purchase price when you sell your house.”

Indie price points support indies just fine.  And by support, I mean allow the author to live off the proceeds of their book income.  They write as a job, just like it’s supposed to work.  Indies are finding customers, we’re placing our books in the hands of readers.  Those books are being read.  They’re being bought and read and talked about and loved and shared and all the things that go with books.  It’s happening without the trad side, because the trad side isn’t needed.  Everyone between us and readers needs to prove their value.  If they can’t, they need to get out of the way.

I’m not quoted out just yet, so here’s one from Star Trek VI.

Harsh perhaps, but war always is.  Just because some of them might be nice people doesn’t matter; this is business.  Is it right for the creators, for the people without which there would be no product (books) to fight about in the first place, to go begging and scrambling to pay their bills?  Just so these big apparatuses can stay alive?  I say no.

If you’re a middleman, you have to prove your worth.  Whatever it is you want to get paid to do, you have to be able to do it better or cheaper than the person contemplating paying for it can either do themselves or get from somewhere else.  That’s just how it works.  That’s just how it’s always worked.  If you can’t do it better or cheaper, you’re extraneous.  You’re irrelevant.

You’re extinct.