As regular readers will know, I try to focus on the business of independent writing and publishing, rather than the creative side. There are two reasons. First, there are plenty of good creative-focus articles and sites out there: and second, there aren’t enough focusing on the fact that writing is, essentially, a business for all of us except those who are doing it as a hobby – and I don’t think there are many of those here.
Be that as it may, I’ve been noodling over the state of the industry for a while now. I’m seeing a stratification emerge, and I think it’s going to affect how we work as independent authors and publishers. I’d like to put my (admittedly incomplete) thoughts out there, and ask for your input in Comments as to how you see things. You may figure I’m completely wrong, or partly right, or whatever. That’s fine. I’m trying to get a discussion going, so we can all learn from it.
To begin, I’ve said many times, in these pages and elsewhere, that we’re not addressing the book market, but the entertainment market. Readers have a limited number of dollars to spend on entertainment, and they have many choices where they can spend them – restaurants, movies, video, books, and so on. Many of those choices are now in the digital realm, too: when was the last time the average person went to a movie theater, versus streaming a video of the movie at home? How many readers can still afford to consume books on paper, versus e-books? (Yes, I know publishers are trying to drive up e-book prices to “balance paper prices, but that’s where indie authors have a major advantage.)
OK, then. The entertainment market being increasingly electronic, let’s look at the “layers” within that market.
- First are what I’ll call content producers. These are movie- and TV program makers and their ilk, and also include authors, because books are part of the same entertainment stream.
- Next are content vendors or aggregators. These are the people who package movies or TV programs (or other content) into packages or channels, and sell them to consumers like you and I. Increasingly, big studios and producers are trying to cut out the middleman and establish themselves as aggregators as well, controlling their own channels of distribution rather than relying on others (who want their cut of the proceeds).
- Finally, there are content consumers. That’s you and I.
It’s interesting to see the market differentiation between those strata. For example, for many years cable TV companies saw themselves as vendors or aggregators, selling packages of programs and channels to consumers. That was their primary business. The hardware itself – the cable over which the product was supplied to us – was secondary. Nowadays, that’s changing rapidly. Given the number of people who are “unplugging” from cable subscriptions, but still need high-speed internet access, the latter is where the money is to be made. A recent report discussed one company that’s concentrated on that part of its business for several years, and is doing very well. It’s no longer trying to sell its own packages of channels; it’ll happily allow you to use whatever content provider you want, just so long as you use (and pay for) its cable network to receive that content.
If “middlemen” – content vendors or aggregators – are no longer going to make much money from that, what incentive do they have to support and publicize indie authors such as ourselves? Right now, Amazon is becoming an aggregator in its own right, where its main income is driven by traffic more than content. Amazon Video can afford to spend hundreds of millions of dollars a year on original content, but it doesn’t produce the content primarily to make money off its sale. Instead, its content is designed to drive traffic to its Prime network of shoppers. Prime subscribers get free access to such content, but Prime subscribers also spend a lot more money at Amazon than non-Prime shoppers. Amazon makes its money in that way – recruiting more Prime subscribers through its enticing, and free, TV offerings – rather than by selling entertainment. Its video programs – even, to a certain extent, its other entertainment offerings such as Amazon Publishing – might be described, from that perspective, as “loss leaders”, designed primarily to bring people into the Amazon environment, where they’ll spend more money on other things. It may be that its expansion into physical stores with Amazon Books, Whole Foods and future operations will have the same effect; and, if it does, I’m sure it’ll be by design.
In the sense that indie authors provide content that aggregators like Amazon can use to drive traffic to their channels, we have a certain amount of “job security” – but that will last only as long as the traffic we bring to those channels justifies their investment in a hospitable environment for us. I submit that if Amazon, or any other major sales “channel”, decides that it can derive a more profitable return on investment by reallocating what it spends on us to something or someone else, it will do so in a skinny minute.
Is there any way in which we, as indie authors, can take a more businesslike approach to this issue? Is there any way we can set up, or encourage, independent business channels through which we can funnel our offerings, so that we – on a smaller scale, of course – imitate the giants like Disney, Netflix, Amazon, etc. in providing our own content through our own channel(s)? Is this even worth thinking about?
I freely confess that I don’t know the answer. I’m looking at the business in which we operate, and trying to figure out how we can continue to make a living in so rapidly changing and evolving an environment. This article is very much a work in progress. I’d like to hear from you what you think of the subject, so that together, in future articles, we can explore our options and (hopefully) find some answers.