Wednesday, October 26, 2016

How Indie are Indie Publishers?

The recent Author Earnings October report, that tracks Amazon book sales, showed a steep drop in the market share and earnings of indie published books. This is the first time in the nearly three years they been reporting indie published ebooks have declined and came as a shock to many indie publishers. No one knows why sales declined. Nor if this is just a one quarter bump in the road or the shape of things to come. However, several reasons have been suggested for this drop in sales. Some indie authors believe Amazon is miscounting pages reads in its Kindle Unlimited program, not only reducing author earnings for books in that program, but because page reads also factor into the sales rank charts, fewer page reads can depress a book's ranking, making it less visible which results in fewer sales. It has also been suggested that other tweak in the way Amazon promotes books have recently favored traditional publishers' books. Others suggest that traditional publishers, large, medium, small, and Amazon, are now more effectively competing with indies published titles – using social medium and special sale prices more aggressively. One last suggestion is that the book promoting newsletter BookBub is featuring many more traditionally published books than it did in the past, and that it now too expensive for indie publishers to place paid ads in the newsletter to promote their books. I gather that BookBub was a major selling engine for indie publishers. However, no one knows for sure. We'll have to see how it all pays out. Still, it did get me to thinking about just how independent indie publishers really are that minor changes in their retail channel or promotional opportunities can cause a 20% dip in sales.

The short answer is not very. When you come to think about it, how independent can any ebook publisher be when they do 73% to 100% of their business with one retailer? Amazon controls about 73% of the ebook market, with iBook, Barnes & Noble, Kobo, Google, and Smashwords dividing the remaining 27%. So even if an indie publisher puts their books for sale in all the viable ebook stores, they still are relying on only half a dozen retailers – a very narrow base to build a business on.

But their dependence goes deeper than just the limited retail channels. It goes right to the heart of their product. Indie publishers produce a digital file on a hard drive which has little to no intrinsic value. It may have potential value, but no commercial value until it is placed in its retail container – an ebook format – which is owned by the retailers via either a proprietary format or through their DRM software, and then sold exclusively in their stores. In essence, indie publishers are simply content providers for a handful of retailers. And indeed, they actually provide this content for free, in exchange for a cut of any sales their content might generate, though they have no say in how their content will be sold. Amazon, for example, displays competing books on every book's product, and will gladly sell ad space on a book's product page to competitors as well. Amazon is simply selling books. What book it sells doesn't matter to Amazon and the more books it has to offer – the more competition the book producers must face – the better it is for Amazon.

Amazon's Kindle Unlimited program perfectly illustrates how little clout indie publishers have with Amazon. To get in the program – which allows subscribers to read an unlimited number of mostly indie published books for free – publishers must agree not to sell their ebooks in any other ebook store. In return Amazon pays these publishers each month for however many pages it determines have been read in each book. The entire process is a black box, completely opaque to publishers in the program. Not only does Amazon alone decide what rate they'll pay out each month, but publishers have no idea how Amazon counts their pages read – the sort of deal you get when you have no negotiating power at all.

The bottom line is that indie publisher' business is dependent on Amazon and a few smaller retailers. Amazon can promote and sell the products they carry however they like. And even if indie publishers expand their offerings to paper books and audio books, Amazon is still the major seller of these versions as well, commanding about 50% of the print book market. And since it is extremely hard for indie publishers to get their paper books into brick and mortar stores, Amazon would likely sell upwards of 95% of any paper and audio books produced as well. In short, indie publishers are simply Amazon suppliers of a commodity that is not, and unlikely ever will be, in short enough supply for indie publishers to have any control of their market, or indeed, commercial product.

I suppose it can be argued that this has always been the case. Authors may have many more options to sell their work to big, medium and small traditional publishers, but seeing that they pretty much have to crawl through the eye of a needle to get anything published, they are just as dependent on the whims of large corporations as indie publishers. But at least the select few who do sell their work are paid up front for their work, and, at least in the past, offered a contract that provided some financial security – something indie publishers completely lack. The truth is that being an author is a poor business choice. That, however, has never kept people from writing, nor is it likely to prevent authors from self-publishing.







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