The term “sea change” means “a metamorphosis or alteration“. That’s what we’re facing right now in the publishing market – not just traditional publishing, but indie publishers and authors as well. I’ve mentioned it several times in previous articles, but it’s becoming so clear and so powerful that I think it deserves an article all to itself. Some of you may disagree with what I’m going to say, but I think I can provide abundant evidence for my arguments. We’ll see who’s right over the next year or two.
The “sea change” is our ability to make a living as authors; and that, in turn, is driven by the changing nature of the market. Book sales continue to decline in traditional markets, even though supplemented by “officially unrecorded” sales of independently published books that don’t use ISBN’s or other traditional tracking measures. What’s more, traditionally strong markets such as children’s books are also suffering – see, for example, Scholastic’s poor results.
What’s more troubling – nice for independent authors right now, but troubling for the future – is where book sales are happening. Author Earnings pointed out, in its keynote address to Digital Book World earlier this year:
There’s a reason why Amazon’s dominance is a potentially worrying factor. We’ll come back to that shortly.
Last Monday, in his weekly article here at Mad Genius Club, Dave Freer wrote:
Given that the current is running counter to the direction traditional publishing and much of the establishment direction [are taking] … the issue for the working writer … is ‘how best do I survive?’
. . .
The answer to failing appeal is not more failure, any more than the answer to communism’s failure is more communism. Swimming harder against the tide, kicking swimmers going across or down would be futile, exhausting, and make those swimmers ready to drown you.
On the other hand if you are in this situation… you can 1) learn to swim with the current or at least not straight against it … It’s that, or find a rock to cling to. There will be some rocks … But the rock or rocks will be small – and the biggest ‘names’ are going to claim most of the space. 3) Swim across the current. Build yourself an independent brand, try not to alienate too many people in the process. 4) Catch the wind – use Patreon and Indigogo and the likes to find like minds and fund you to push you against the current.
I was pleased to see that Dave’s also aware of the “sea change” we’re currently experiencing. It makes me feel less out on a limb, if you know what I mean! Thanks, Dave.
Let me provide a few more examples of the “sea change” that’s washing up against authors’ shores right now. The first comes from the music industry, where “Gold Records [are] a Thing of the Past as Streaming Is Now 51% of All Sales, Passing CDs and Downloads“.
Streaming from Spotify, Apple, Pandora, even Tidal now accounts for 51% of all music sales according to the RIAA.
The gold record? A thing of the past. There is nothing to frame for the walls of rock stars. Maybe you get a digital wall now, too. In a virtual mansion.
. . .
There are 22.6 million paid streaming subscriptions. (This means everyone else is listening to ads.)
But the bads news is for the artists. Royalties on streaming sales are much lower than downloads or CDs. The artist is suffering. The execs are not. So the Industry is happy.
Note that bit about streaming services and royalties. It’s already affecting authors like us, as we’ll discuss shortly.
Next, Captain Capitalism points out that “You Will No Longer Be Able to Make a Living Off of YouTube or Amazon Affiliate“.
Last week the content creator community of YouTube went into full sperg mode when they found out YouTube was demonetizing their videos, among other things such as throttling traffic, taking away subscribers, and other behind the scenes digital media hanky panky. Amazon affiliates were also treated to similar news as they heard Amazon was lowering the commission they’d make from around 6% to 2-5% on various products. But regardless of which company was doing what, the result was the same – it was increasingly harder, if not impossible, for people to make a living on YouTube or Amazon affiliate.
. . .
But as bad news as this is for the thousands, likely, millions of people who derive some kind of income from this new economy, there’s some vital economic lessons to learn from this “YouTube/Amazon” bubble bursting. Because if you don’t learn these vital economic lessons, you’re life is going to be infinitely worse going forward.
First, understand the days of making a living on YouTube or Amazon’s affiliate program was a bubble. Just like the Bakken oil field, just like the gold rush of 1849, just like the Dotcom bubble, there was the boom and then the bust. The good days are OVER. You may not like this fact, but it’s reality. This new digital economy is not immune to the natural forces and laws of economics that all of human history has been subjected to, so you must come to grips with reality and accept this.
. . .
Amazon, and especially YouTube, are responding to changes in the economy so that they may (in YouTube’s case) remain profitable and thus in business. Matter of fact, if you bothered to look at their income statements (they are available) both YouTube and Amazon operate on negative/razor thin margins. In other words, this current business model was not sustainable.
. . .
… since YouTube and Amazon are monopolies they can literally do whatever they want because you have no other option. The real issue is whether you’re going to accept this and realize it.
You can protest, argue, write letters, and make all the videos in the world, but none of that changes the fact YouTube and Amazon have all the power in this relationship. And if you don’t realize that, you’re going to waste more time trying to change the inevitable, which is wasting precious time, energy, and resources you don’t have.
Captain Capitalism points out an uncomfortable truth, which many of us have been reluctant to accept. Whether we like it or not, Amazon is effectively a monopoly. Oh, yes, I know it doesn’t fit the traditional definition of a monopoly, and if an effective challenger came along tomorrow, it could conceivably be dethroned; but the simple fact remains that today, and for the foreseeable future, it’s the only game in town for independent authors. All – and I do mean all – other outlets for our work, combined, pale into insignificance compared to Amazon.com. That’s reality.
Amazon has just exercised the power of its position to reduce – sometimes drastically – the income that its Amazon Associates partners earn by referring customers to its products. It did so because it’s so big, so powerful, with so many Associates, that it can do so without fear of the consequences. It’s effectively saying to its Associates, “We want to keep more of the profit from each sale for ourselves. Take it or leave it. If you don’t like it, there’s the door. Don’t let it hit you where the good Lord split you.”
If anyone thinks that Amazon won’t do the same to independent authors like us, one of these days, there’s a bridge in Brooklyn, NYC that I’d like to sell you. Cash only, please, and in small bills. I have little doubt that in the fullness of time, our payouts from Amazon are going to decrease. We’ve grown accustomed to 70% royalties in the KDP Select program, whereas authors contracted to Amazon’s own publishing imprints make 35%. I expect first a reduction in KDP Select payouts, probably to 50%, and possibly, in due course, equalization with Amazon’s imprints at 35% across the board. I hope – oh, how I hope! – that I’m wrong… but I’m pretty confident I’m not.
Amazon has the power, and we have no realistic alternative to Amazon whenever it decides to use that power. It’s Amazon’s playground, and if we want to play there, we have to play by Amazon’s rules, like it or not.
Not only can we expect a reduction in royalties, there’s also the “double whammy” of more lower-revenue subscription readers and fewer higher-revenue purchase readers – just as the music industry has experienced with listeners who stream, rather than purchase, songs. An excellent example of this is Amazon’s launch of its Kindle Unlimited subscription library service. It already appears to have at least 2½ million subscribers, who between them are reading up to 12½ million average-length novels every month. That’s 12½ million books that are not earning a traditional ‘royalty’ or payout for their authors, but instead a reader ‘fee’ that’s typically half or less than half of what the author would have earned from a sale.
Furthermore, there’s no guarantee that Amazon will keep the payout for KU reads at their present levels. It can adjust the payout as and when it pleases – and I expect, as it seeks more profit opportunities, it’ll do so at authors’ expense. KU is already big enough and popular enough to make its own rules, whether or not we like them. We can register our dislike by not entering our books into the KU program, if we wish – but that also means we have to forgo some of the other benefits of the KDP Select program. Amazon can make such abstention more difficult (and more costly) in future, simply by changing the rules – which it has every right to do. It’s Amazon’s playground, remember?
Those music industry figures I referred to above? More than half of all pop music sales now take the form of music subscription libraries, either paid for by the listener, or funded by advertising. What makes you think that book sales – particularly fiction – aren’t going to follow the same trend? We’re not there yet, but every year, we get closer. Consumers who grow accustomed to free and/or low-cost streaming of music and video media are going to look for the same benefits in their consumption of reading matter, whether we like it or not. After all, their dollars are spent, not on books, or music, or videos, but on entertainment. Books are just one element of that, and they have to compete against every other element. If they’re too expensive by comparison, they’re going to lose. Why do you think Amazon established KU in the first place? It knew that, because it listened to its customers.
(Oh – and please don’t try to tell me that I’m being unduly alarmist, and that there’s no evidence Amazon is planning anything of the kind. I daresay Amazon Associates program members would have said precisely the same thing… right up until last week. The evidence is as plain as a pikestaff. Amazon will act in its own interest, and/or the interest of its customers, before it considers our interests. We aren’t its priority. Its customers are. That’s simply the way it is.)
Written Word Media offers some thoughts about KU’s implications for authors like us.
- The KDP fund just keeps growing. Month over month the KDP fund gets bigger, which means that plenty of readers are actively reading the enrolled titles. If you can sell your book to this audience, then you’ll get a portion of that pot. The growth of KU means it’s here to stay, it’s no longer an experiment.
- Romance authors benefit greatly from KU. It’s hard to argue with the fact that 88 of the top 100 romance books on the bestseller charts were enrolled in KU. Romance readers are avid, and will gladly read through enough books in a month to make the $9.99 subscription fee worth it.
- KU readers are incredibly active. KU readers read more books and review books at a higher rate. It’s safe to assume they are more active generally than their Non-KU counterparts.
- You can use KU enrollment strategically. There is an opportunity to use KU enrollment as a strategy to acquire readers who then purchase your other books. If 77% of KU subscribers go on to purchase books outside of the program, then one reader acquisition strategy is to put some titles in KU, allowing those readers to read them for “free”, and then converting those readers into paying customers on your other titles.
Those are all positives. The negative – and it’s undoubtedly a negative – is that we’re going to make a lot less money, per book, from subscription readers of our work than we’ll make from buyers of our work. Remember, too, that we’ll make less from buyers as well, if Amazon’s royalty rates are reduced (as I expect they will be, in time). We need to begin planning right now for how we’re going to address this “double whammy”, and change our way of offering books to potential customers so as to maximize revenue opportunities.
One way is to play to KU’s strengths. If we publish longer books, the KU revenue from each ‘rental’ will be higher, per book, than for a shorter book. On the other hand, if we offer lots more shorter books, we’ll make less money off each one, but make more money through more of them being rented out (provided, that is, we write well enough to make our readers want to rent more of them!). We can also use our books in the KU program to offer non-KU titles to our readers, in the hope that they’ll click on the links we provide.
There are other options. We may seek to monetize our blogs or social media accounts in one way or another – but this runs the risk of alienating those who’ve come to regard them as free until now, or who resent the increasing commercialization of everything in sight. (I’m among those who feel that way, which is why I haven’t monetized my blog at all, and probably won’t.) We might also look to Patreon and similar services to generate a supplementary income stream from our strongest supporters, as some authors are already doing (for example, N. K. Jemisin or John C. Wright). Trouble is, we have to have enough enthusiastic followers to make this a viable proposition.
We’re in the middle of a “sea change”, folks. Whether we like it or not, it’s going to be thrust upon us sooner rather than later. Are we going to be ready for it? Are we going to be proactive in preparing for it, and learn to ride the tide of change as it swirls around us? Or are we going to be like traditional publishers when they first noticed the rise of independent author-publishers like ourselves? They dismissed us as a passing fad, of no real interest or importance. We all know how well that worked out for them…
We can no longer count on making a living from independent book sales alone. We have to contend with the ‘streaming economy’, whether we like it or not. If we don’t do so right now, before it’s too late, then the ‘streaming economy’ will contend with us. Depend upon it.