Why Selling Direct is Vital for Authors

News hit this morning that Google has decided to no longer sell ebooks through independent bookstores. Instead Google will focus on selling ebooks directly through Google Play. Their collaborative effort with bookstores had been an attempt by both parties to crack Amazon’s dominance of the ebook market.

Writers having their own websites and/or taking other steps to make their digital books available directly to consumers is becoming even more important. A recent survey by Pew Research Center’s Internet & American Life Project reported two very important numbers. First, 19% of Americans now own a ereader device of one sort or another, with the Kindle leading the pack. Second, 21% of Americans had read an ebook in the last year. If you click through to the article, you’ll find a chart at the end which notes that a lot of people find ebook reading preferential to print book reading in a number of categories.

So, the big takeaway is this: If your work is not available in electronic form, you are invisible to those readers.

Combine that with the Google story, and a second takeaway is this: ebook markets can be very volatile. Only by having work available from your own website can you guarantee that your work is available. (More on this in a bit.)

A third news story follows up on the investigations into whether or not the Agency Model of ebook distribution violated Federal anti-trust laws. Apple and a couple of publishers are resisting settlement offers which would scrap their agreement. The investigators allege that the Agency Model, which lets publishers set prices and limit discounting, allowed publishers to collude and set higher prices for ebooks than was the norm, hurting consumers.

What’s gone underreported in all this is the effect the Agency Model has had on Independent authors. Prior to Apple’s establishment of the Agency Model, Amazon paid indie authors 35% of the cover price of their books. Once the iBookstore opened, Amazon matched Apple’s payment rate of 70%. Barnes & Noble offers 65% of cover and Google—at least when they were selling through indie stores—offered 45-55% of cover price.

By way of contrast, books purchased through my online store return me 95% of cover price. I also turned around last year and, as an experiment, offered the Delux version of In Hero Years… I’m Dead on a data disk for $6—the same price as the download. That effort returned 65% of the cover price (less manufacturing costs, obviously). Manufacturing costs were low enough, in fact, that I could offer the disks to independent bookstores at a normal discount and still make a little money.

It would be really easy to read the above and draw the conclusion that I’m predicting a coming catastrophe, where the Feds force Apple to scrap the Agency Model, and Amazon turns around and uses its clout to go back to offering authors 35%. Apple and the other outlets would follow suit, maximizing their profits, and authors would find their internet income slashed effectively in half. Fact is, that could happen. I don’t expect it to, but I’d not be surprised if it did.

By setting up your own website store, by judiciously printing up CDs for direct sales at conventions or to independent bookstores, authors benefit either way. Let me provide another example. I have a trilogy of novels, the Fiddleback trilogy, which I sell for $5 each, or in an omnibus collection for $12. Because of Amazon’s pricing structure, which returns 35% of cover price for anything over $9.99, I don’t list the omnibus edition via Amazon. If someone comes to my website, I provide the book in the Kindle format (as well as epub). Amazon’s readers would actually be saving money if they could buy the omnibus edition, but Amazon’s lack of flexibility on this point means their readers pay more.

Corporations act in their own enlightened self-interest. (How enlightened it is can be a matter of debate.) Authors need to do the same thing. Right now, smart money has us driving sales to larger sites, like Amazon, because sales there help trigger that important “Other users also purchased…” sales offers. But as we build our audiences, as we bring them to our websites, we might as well benefit from their willingness to support us.

3,000 customers willing to spent $2 a month with an author will generate over $60K in revenue for that author when the author sells direct. I’ve been a writer for a long time, and $60K is a good chunk of change. And it doesn’t matter if you don’t have that many readers, or you don’t generate $24 worth of copy in a year. Every penny you make over what it costs you to maintain that store is profit. No one is stupid enough to refuse to pick up a $5 bill lying on the ground simply because it isn’t a $50 bill. Pick up enough $5 bills and you have $50.

Profit is the name of the game.

And if writers don’t start realizing that, corporations will be happy to profit off their ignorance for as long as it takes for writers to get wise.

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16 Responses to “Why Selling Direct is Vital for Authors”

  1. Mike, do you think there are enough outlets online now to protect writers in case Amazon did decide to go back to a lower royalty? Do you think places like Smashwords would be able to compete and continue to offer higher rates?

  2. Good question. The point of my essay is simply this: there is only one outlet authors can count on—their own website. There are dozens of places where we can sell our material, but only one place where readers will come to learn about us and our work, to sample our work, and see what’s new. That is the place where we should be selling.

    Let me reiterate: I don’t anticipate Amazon making any move to raise/lower the rates they pay content providers. The blogosphere backlash would be nasty and Amazon is sensitive to it. Amazon’s rivals would make a lot of noise about this. The simple fact is, however, that Amazon will do what is in its own best self-interest. Authors need to do the same thing. If authors do not, they will be hostage to what someone else things is good for them, not the authors.

  3. Mike, do you think that authors should be selling on their own websites and upload through the digital bookstores? I ask because I can’t imagine when I’m ready to publish my books and stories that many people will visit my site until I gain a following, but uploading on Amazon could quickly garner me a small following.

  4. It’s not a question of one or the other, it’s doing both. I sell from my website, I sell via Amazon and Barnes & Noble and other sites. The idea of selling from your own website (or a hosted store site) is that you make more selling directly and you have a presence in case something happens to one of the other sites. (Sounds absurd, I know, but then remember what happened to Borders.)

    Selling direct protects the author, and is a great way to capitalize on your audience-building efforts. If you think that just listing your items on Amazon will build your audience, you’re sadly mistaken. You need a website, you need an online presence so your audience has a place to find you. As long as you’re doing that, you might as well let them give you money, too.

  5. Mike, thank you. That helps a lot. I figured that both was the answer, but I wanted to get clarification on your thoughts. I am working on my website and hopefully things will take off once I populate it with stories.

    Now, do you believe that a brand new author should actually sell his stuff on his website, or should he offer some free stories and such to wet the lips of potential readers?

  6. Sampling is very important. Offer chapters for free, or a short story for free, but sell the novel. It’s a strategy that has worked in marketing other products for as long as products have been marketed. No reason to assume it won’t work now. :)

  7. Also, like Mike does, male sure all your ebooks, especially free ones, point readers back to your website. Hopefully readers only buy one of your ebooks from an e-retailer, and the rest direct from your own site.

  8. Thanks for pointing that out. I do it automatically, so I figure others do as well. Driving traffic to your site by whatever means is key! That’s how you build audience and stay in touch with them.

  9. I’m going to schedule my HOWTO post for Wednesday over at http://ideatrash.net. While I use e-Junkie, I’m writing it agnostically enough that anybody could use it.

  10. Michael, it was great to see you at LepreCon38 and have you moderate our panel. You have forgotten more about Indie publishing than most people will ever learn. Thanks for another inspirational talk.

  11. How many books would you recommend an author have for sale, to make a website store cost effective?

  12. The math on that is pretty simple: if the store costs you $20 a month, you need to be selling at least $21 a month. Whatever the mix you need to hit that volume is the key. It could easily be only one book say, at $2.99. I’d even expect, starting out, to run a deficit, but as the author includes more books, builds up a mailing list and audience, the situation will rectify itself. As it is, though, web stores are really fairly inexpensive.

  13. That panel was a lot of fun, and I think everyone got good info out of it. Thanks for adding your voice into the diversity of opinions and experiences.

  14. I was wondering about your opinion of the latest lawsuit vs Apple regarding ebook pricing.

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