Amazon

The True History of Paperbacks: A Small Correction to Hachette CEO’s Response to Amazon

Yesterday, Amazon touched off something of a firestorm by emailing hordes of readers and KDP authors for help, requesting authors email Hachette CEO Michael Pietsch to explain why lower prices are better for readers and the publishing industry.

Today, Pietsch has been responding to everyone who’s emailed him. I find his response reasonable enough — for the most part, he claims, Hachette’s ebooks fall beneath Amazon’s preferred $9.99 cap — but there’s one part that stuck out to me.

“The invention of mass-market paperbacks was great for all because it was not intended to replace hardbacks but to create a new format available later, at a lower price.”

This is false.

Well, technically, it isn’t false — it’s true that mass market paperbacks weren’t invented to replace hardbacks. But they weren’t published in the modern fashion, with a publisher releasing them months after the more expensive hardback. Rather, paperback rights were purchased by competing publishers who were able to sell their paperbacks for 10% of the price of the original hardcovers.

In other words, they were invented to disrupt the hardcover industry.

In 1939, the average hardcover cost $2.50-3.00 — the modern equivalent of $40-50. The new paperbacks cost $0.25 — a little over $4.00. Presumably, the first paperbacks were reprints in order to ensure the audience for those titles was already in place and minimize the paperback house’s risk of printing a dud. However, paperbacks blew up the market so well that by 1950, publishing houses were publishing paperback originals. It was feared these paperback originals would “undermine the whole structure of publishing.”

And they might have.

For more than twenty years, paperback prices held steady. They even declined; in 1961, some paperbacks cost as little as $0.35, just $2.79 in modern dollars. Then a funny thing happened. Starting around 1966, costs climbed to an adjusted $4-5. By 1975, they hit $6-7. And by the mid-1980s, mass market paperbacks cost the equivalent of $7-9.50. They’ve hung around $7.99-9.99 ever since.

After 25 years of steady prices, what happened to cause paperback prices to triple over the next twenty years?

When I first did this research two years ago, I stumbled onto the fact that this timeline coincided precisely with the conglomeration of the publishing industry. Beginning around 1958 and accelerating in the ’60s, small and medium publishers were gobbled up by the majors, culminating in today’s environment of the Big 5 (formerly 6). I assumed that the decrease in competition allowed the major houses to increase prices.

However, I think that’s only part of the puzzle. I am now entering the realm of speculation, so take the following with grains of salt. But I believe two more factors are at play.

First, most of the independent paperback publishing houses were bought up by larger houses. In other words, not only was competition decreased, but in many cases, it was gone. Meanwhile, tenfold disparity between the price of hardcovers and the price of paperbacks may have felt like far too much. Undermining the value of literature, if you will.

Second — and this is pure intuition; more research is required here — I expect that major publishers quit selling off their paperback rights. Likely, they used their newly acquired paperback imprints to handle publication of that format. No longer did you have two different publishers competing on price for the exact same title. Rather, you had a single company whose interest, obviously, was that these two separate editions wouldn’t compete at all.

That, I expect, is when Pietsch’s model finally came into play: a company releases a new book in hardcover, selling to all those who prefer the format or can’t wait to read it. Sometime down the road, months or even a year later, a paperback format is released, picking up a second market of readers.

Whatever Hachette would like us to believe, this is a radical change in intent from the paperback’s original role.

As a result, rather than selling a hardcover for $50 and a paperback for $4, they’re selling the hardcovers for $25-36 — often discounted by Amazon to $15-20 — and the paperbacks for $8-10.

Meanwhile, ebooks are lodged messily in the middle. It’s 2014. You can’t delay the ebook release the way you can delay the paperback release. You’d lose out on all those readers who now primarily or solely read ebooks. But so long as it is less than the hardcover, it’s still a bargain. Sort of. $8-15 is less than $15-20, right? Just make sure to drop it to $6-10 when that $8-10 paperback is finally made available.

It’s no wonder traditional publishers and Amazon are at loggerheads. Like Penguin and Pocket Books in the 1930s, Amazon essentially invented a new format of book. One that, with no per-unit production costs and negligible returns, could be the cheapest format yet. A format capable of opening up a new market of readers.

Or, more accurately, of resurrecting it.

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A Brief Note on Hachette v. Amazon

Right now, it’s hard to get through the day without stumbling over a new story, opinion, or petition regarding the ongoing dispute between Amazon and Big 5 publisher Hachette. For the most part, I don’t have a “side” on the issue — I largely agree with David Gaughran, who cautions against leaping to conclusions about business negotiations between two behemoths when we know virtually nothing about the terms either side is asking for.

Well, it turns out one of the reasons we don’t know much about those terms or the negotiations is that, according to a letter from Kindle VP David Naggar, Hachette didn’t even respond to Amazon’s request to discuss things until after their contract expired in March.

Actually, strike that — Hachette didn’t even respond then. Per the letter, Naggar says that:

We reached out to Hachette for the first time to discuss terms at the beginning of January for our contract which terminated in March. We heard nothing from them for three full months. We extended the contract into April under existing terms. Still nothing. In fact we got no conversation at all from Hachette until we started reducing our on-hand print inventory and reducing the discounts we offer customers off their list prices. Even since then, weeks have gone by while we waited for them to get back to us.

In other words, big, bad, bullying Amazon didn’t start leaning on Hachette over disagreements in terms. They only started leaning on Hachette after Hachette had spent months ignoring Amazon’s attempts to negotiate.

Hard to negotiate when one side refuses to talk.

Even so, and even as a self-published author, I’m not especially interested in defending Amazon. Nor even of criticizing Hachette. For all I know, Hachette was stalling negotiations because it was the only way they could divert a gigantic meteor on a collision course with Earth.

What I’m interested in are the facts. The fact that there weren’t any facts at all only goes to illustrate that authors haven’t been rallying behind Hachette because Hachette is a guardian of literature and Amazon is a gold-grubbing Smaug.

They’ve been doing so because Hachette is the one in control of their paycheck*.

Otherwise, how can you accuse Amazon of not playing fair when Hachette is refusing to step foot on the field?

*You can argue the same thing goes for indie authors backing Amazon. Most of indies’ talk, however, has been in response to the rather one-sided media coverage of this whole affair. Completely different context, in my opinion.

Additionally — I readily admit there’s a danger in taking Naggar’s account at face value. He is one of Amazon’s biggest dogs, after all, and there’s an obvious risk that he’s spinning or omitting the details. If it’s a lie that Hachette’s been so unresponsive, however, it’s a bold one — and only supports the idea that we have no damn idea what’s happening between the two of them, and might form our opinions accordingly.

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Followup: Self-Publishing’s Share of the Kindle Market, by Genre

Two months ago, I took a look at how many of the bestselling Kindle genre titles were self-published. I had two purposes in mind: first, to see whether there were any differences in the success of self-publishing between the big four genres (Romance, Mystery/Thrillers/Suspense, Sci-Fi, and Fantasy).

The second purpose was to provide some more data for the initial Author Earnings report. The report indicated that self-publishers were doing incredibly well within genre ebooks, but one of the more widespread criticisms was that the report was just a snapshot that might not represent anything more than that moment in time.

I thought that was a valid critique, but I also suspected it would prove false — Amazon is amazingly consistent from day to day and month to month, and the AE report looked at a substantial chunk of data. I was betting that later studies would show similar results.

Among the report’s conclusions was that genre fiction accounted for about 70% of all Kindle ebook sales, and that self-published titles accounted for roughly half of that. I used a different methodology, and a worse sample size, but when I checked in February, self-publishing’s share of the bestselling Kindle titles was as follows:

Romance: 49%
Mysteries/Thrillers/Suspense: 11%
Science Fiction: 56%
Fantasy: 49%

Three of the four genres were roughly 50% self-published, with the glaring exception of the thriller market. Meanwhile, here was each genre’s overall share of the Kindle market (methodology explained in the original post):

Romance: 40%
Mysteries/Thrillers/Suspense: 20%
Science Fiction: 5%
Fantasy: 6.33%

This added up to 71.33% of all Kindle ebook sales. I pulled my numbers a few weeks after the first Author Earnings report collected its data, yet my conclusions mirrored theirs: about 70% of all Kindle sales were in these four genres, and of those sales, close to half were of self-published titles.

It’s been two months since then. How do things look today? First, here are the four genres broken down by method of publication — self-published; through a small or medium press; Amazon publishing imprints; and by the Big 5, which includes major genre houses like Harlequin and Baen, where appropriate.

ROMANCE

Self-published – 59%
Small/medium – 3%
Amazon – 12%
Big 5 – 26%

MYSTERY/THRILLER/SUSPENSE

Self-published – 26%
Small/medium – 1%
Amazon – 15%
Big 5 – 58%

SCIENCE FICTION

Self-published – 53%
Small/medium – 7%
Amazon – 12%
Big 5 – 29%

FANTASY

Self-published – 45%
Small/medium – 6%
Amazon – 8%
Big 5 – 41%

There are a few differences between the first grab and this one. The percentage of bestselling self-published romance titles is up by a good percentage. Thrillers are way up, more than double the initial look. Meanwhile, self-published sci-fi and fantasy titles are slightly fewer. Amazon’s publishing imprints are up, representing just under 12% of the total, compared to a little over 9% the first time.

I wouldn’t draw too much from any of these changes, though. You can hardly conjure a pattern out of two whole samples drawn from a methodology that’s prone to variance. What’s most interesting to me here is how little is different: in three of the four major genres, self-published titles still represent about 50% of the bestsellers. Thrillers continues to lag behind, but this month’s look suggests it’s not quite as tough for self-published titles to compete as the original breakdown suggested.

Okay, so what about the genres’ overall market share? Here’s how it breaks down this time:

Romance – 35.2%
Thrillers – 26%
Science Fiction – 5.4%
Fantasy – 6.4%

This adds up to 73% of overall Kindle ebook sales. Crazy.

Compared to February, sci-fi and fantasy are essentially the same. Romance is somewhat smaller, but thrillers are up by a decent percentage. As before, however, I wouldn’t try to read patterns in the differences — I’m not at all sure that romance sales are actually down. The sample sizes involved make this part of the data prone to a fair amount of variance.

Again, what’s most interesting to me isn’t the differences. It’s how similar these numbers are a full two months later — these four genres continue to comprise ~70% of Amazon’s ebook sales, and roughly half of those sales are of self-published books.

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Self-Publishing’s Share of the Kindle Market by Genre

Inspired by the Author Earnings report, I’ve taken a quick whack at looking at what percentage of Kindle ebook sales self-publishers represent by genre. To get there, I simply look at the top 100 bestsellers in each genre—romance, mystery/thriller/suspense, science fiction, and fantasy—and split them up by method of publication. Note that, unlike the Author Earnings study, this is merely a breakdown of the raw number of self-published titles on the bestseller lists, not the number of total book sales within each genre.

Also, instead of five categories of publisher, I use four: self-published, small/medium press, Amazon Publishing, and Big 5 (including, where appropriate, major genre publishers like Harlequin and Baen). For books where the publishing method was unclear, I did a search of the house. If the house published only a single author’s works, I listed it as self-published. If the house published multiple authors, even if it was obviously an author collective, I listed it as small/medium.

Okay! Without further ado, the numbers:

ROMANCE

Self-published: 49%
Small/medium: 11%
Amazon: 9%
Big 5/Harlequin: 30%

MYSTERY/THRILLER/SUSPENSE

Self-published: 11%
Small/medium: 5%
Amazon: 16%
Big 5: 68%

SCIENCE FICTION

Self-published: 56%
Small/medium: 9%
Amazon: 5%
Big 5 (plus Baen): 30%

FANTASY
Self-published: 49%
Small/medium: 7%
Amazon: 7%
Big 5: 37%

One of these things is not like the other! At an immediate glance, one thing is clear: if you’re publishing in romance or SF/F, self-publishing is an extremely viable method. Roughly half of all the bestselling books in each of these genre is self-published. That’s pretty remarkable.

For mysteries and thrillers, however, it’s a different story. Of course you don’t have to be a bestseller to make a living as an independent author, but it’s equally remarkable that just 11% of the top 100 mysteries and thrillers are self-published. That suggests two things. If you’re a thriller author, you may want to keep querying agents. Or that there’s a market inefficiency in thrillers, where there aren’t enough good indie titles to meet demand. It’s also possible that both of those things are true! I couldn’t say.

Also, it should be said that this is just a look at the top 100 in each genre out of hundreds of thousands of total books. It’s quite possible, perhaps even likely, that a broader look at the data would present different trends. However, it does match up well with the Author Earnings study of these genres combined, so I’m not sure a bigger sample would be that much different.

Of course, there’s one more big factor here: each genre’s total share of the Kindle market. Fortunately, that’s really easy to ballpark. By looking at the #100th-ranked book in each genre and dividing that by its overall Kindle rank, we get an estimate of what percentage of the entire Kindle market each genre represents. For instance, if the #100 book in Romance were #1000 in the Kindle store, we could figure that 1 in 10 sales, or 10%, are of romance books.

Here’s how it shakes out:

Romance: 40%
Mysteries/Thrillers: 20%
Fantasy: 6.33%
Sci-Fi: 5%

You’ll note that adds up to 71.33%. Hugh Howey’s much bigger and better sample suggested these four genres comprise 69% of total Kindle sales (though it didn’t break it down by genre). To me, this means the above numbers should be pretty accurate, despite the crude methodology used to determine them.

Obviously, romance is the runaway winner. There is a huge market for it and self-publishers do very well there. Fantasy and science fiction are about neck and neck: fantasy is a little bigger, market-wise, but self-publishers have more share of the science fiction market. Mysteries and thrillers have a very big overall market—half as much as romance, and a fifth of all Kindle sales—but taking advantage of the size of that market appears to be a challenge for self-publishers.

Also, if the Author Earnings report didn’t already make this perfectly clear—holy shit self-publishers sell a lot of books. I knew we’d taken over a big part of the market. I didn’t know that, within three of the four most popular genres, we’d taken half of it.

Quick edit: I should make it perfectly clear that these percentages are very preliminary. Where the Author Earnings report samples nearly 7000 books, including about 2600 of the top 7000 titles in the Kindle store, I’m only sampling the top 100 in each genre. In a sample that modest, even a small variance from the norm might throw things out of balance. For instance, if just five of the books in fantasy were switched from self-published to Big 5, the numbers of each would be nearly equal. I will try to remember to run this again in another month or so and then again later in the year to see whether the results hold.

That said—there are several signposts the data’s pretty accurate. For one thing, among three genres, the percentages are pretty similar across the board. For another, although I divide things up differently, and am only measuring number of titles instead of number of sales, my results are pretty close to those of the Author Earnings survey—which was taken, to my knowledge, 2-3 weeks ago. The lists I looked at today were certainly comprised of many different titles, yet the number of self-published titles on both studies is pretty close. This makes it less likely that either study is an anomaly.

Ultimately, though, time will tell.

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Author Earnings: The Report

In conjunction with an anonymous data hound, indie author Hugh Howey has put together an analysis of book sales on Amazon, breaking down the sales and earnings of genre fiction authors. The part that makes it two scoops of awesome? It’s broken down by how they were published—Big 5, small/medium press, Amazon Publishing, or self-published.

At the moment, the site is dealing with server crashes, but you can—nay, must—read it here.

Now, there are a number of caveats to deal with the results, many of which are addressed within the survey. For one thing, it’s all based on Amazon sales, which are going to skew toward ebooks. Probably to indies, too; while self-published authors also have a strong showing on Barnes & Noble and Kobo (as high as 25% or more), I think we have our biggest share of the market at Amazon. Additionally, the survey is limited to genre fiction: mystery/thrillers, romance, and sci-fi/fantasy. It is widely believe that these are the genres where self-published authors do best. And for perspective (as well as identifying potential market inefficiencies!), it would be nice to know what percentage of the overall adult/YA fiction market these genres represent. (ETA: Oops, those numbers are actually provided! And they are a majority of all Amazon book sales, to the tune of 69% of the sample. Next time, I’ll read the footnotes before posting. Maybe.)

That said, though? This is a big ol’ slice of data, based on the biggest bookseller in the world, and covering many of fiction’s most popular genres. This may be a snapshot, but it’s an expansive one.

And some of the findings—like the fact that self-published authors are outselling the Big 5—are insane.

P.S.: Awesomely, Hugh has made the raw numbers available for download. I don’t have the time to dig into them this second, but I can’t wait to take a peek and see if anything more pops out.

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Kindle MatchBook: Right On, Amazon.

Big news today: next month, Amazon is rolling out the Kindle MatchBook program.

What is MatchBook? Well, why don’t I just lazily quote their FAQ:

“The Kindle MatchBook program offers customers who purchase, or have previously purchased, a print book from Amazon.com the option to purchase the Kindle version of that title for $2.99 or less. If you have a print version of your title and enroll the Kindle version in Kindle MatchBook you can earn a royalty from Kindle Direct Publishing (KDP) based on the Promotional List Price (choose from $2.99, $1.99, $0.99, or free) for any Kindle MatchBook sale.”

Boiling it down for readers: buy the paperback, and you can buy the ebook of enrolled titles at a steep discount–even for free, in some cases.

Boiled down for writers: if you’ve got a paperback version of your book, and someone buys it, you can choose to offer them a discount on the ebook as well.

I don’t see a single objectionable part of this program, but since it involves money and ebooks, I’m sure someone will be up in arms somewhere. In that case, I offer two ways to look at this. First, look at it from a reader’s perspective. If you bought a physical copy of a book, and the publisher offered to bundle it with the ebook version for an additional $0-2.99, wouldn’t you be high fiving them so fast the resulting wind would blow open the pages of your new paperback?

For readers, this is awesome.

The second way to approach this is via analogy. If you buy a CD, you have effectively bought both a physical and a digital version of that album; anyone with a computer can convert a physical CD into mp3s. You’re paying for a work, not for a format.

Is there a problem with that? No? Then what’s the problem with offering an equivalent service with books and ebooks? The only difference I can see is that consumers can rip their own mp3s, but they can’t rip an ebook from a paperback. Publishers have to convert the manuscript into the digital format for consumers.

But let’s be real. Unless you’re formatting a book with all kinds of fancy non-text elements, ebook formatting is not hard. I literally formatted a full novel yesterday, with discrete versions for Amazon, Kobo, and B&N. It took me about 90 minutes. And that included uploading times and a few rounds of tweaks, because I’m a caveman who writes in a non-Word word processor and who doesn’t use any automated formatting scripts. Formatting is a non-issue.

Meanwhile, you can still charge $0.99-2.99 for the bundled ebook. If somebody’s already paying $8-25 for a physical copy, I think $1-3 enters the impulse purchase zone for a great many people. What section of the market regularly pays full price for both formats? I hate using anecdotes as evidence, but the only time I’ve bought the ebook version of a book I already own in hard copy is when that ebook has been listed at an extreme discount (like when Orbit slashed Consider Phlebas to $0.99 for a little while, or when one of Neal Stephenson’s books has been dropped to $1.99). If this causes many paperback purchasers to spend $1-3 more on the ebook format, that’s far superior to the $0 they’d usually be spending.

Not to mention this may be a way to help entice paperback readers into reading more ebooks. Which might actually cause publishers to hesitate, heh.

And if they do, that’s just one more area where indies can offer similar quality for lesser cost to readers.

Anyway, enough defense of a program that’s brilliant on its face (and for all I know, I’m flailing at strawmen anyway). I love this as a reader and I love it as an author. I’ve already enrolled all my eligible books in the program. Right on, Amazon. Right on.

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Getting Your Start as an Indie Author in 2013, Part 1: Where We’re At Today

Last year, I wrote a series of posts about what I would do if I were just getting my start as an indie author. It was intended to be a modest and simple way to get your foot in the door even if, like me, you’ve been on Facebook 18 months but still find yourself terrified that one wrong click will announce to the world that it’s been nine days since you last put on pants.

But the problem with last year is that it was last year. In the timescale of indie authors, “last year” is like another epoch. I may as well have written a guide on the best way to trap an allosaurus. Interesting, perhaps, as a historical document, but not all that relevant in this brave new world of “mammals.”

That right there is the problem. My advice, at the time, was (hopefully) relevant, because I had just graduated from indie-hobo to making a living at this (by my comically low standards). Then things changed. And they changed some more. And they changed again. When the landscape changes this fast, as soon as you take off, you no longer have a clear view of what’s happening down on the ground. By the time someone’s an expert, they’re obsolete.

That’s maybe a bit harsh. But it is absolutely critical to understand that nobody is offering bulletproof advice. And that, perversely, people with less authority–indies with little to no track record–may be in better position to offer quality advice than people who’ve sold hundreds and thousands of their books.

I don’t know where that leaves me exactly, and you know what, I’m not going to bother to figure it out. A couple weeks ago, someone asked me how to get started here and now. I’m not sure I’m qualified to answer that anymore, but it’s an interesting question. So here’s some advice and analysis! Some or all of it might be worthless! Enjoy figuring that out for yourself.

Okay. To understand what you might do differently in 2013, we should probably look at what is different. What’s changed over the last year?

First, the biggie: Select sucks. The way Amazon treats free giveaways has changed repeatedly. Right now, even people who are giving away as many as 40,000 copies of their books during a free run are often seeing just a few dozen sales afterwards.

I don’t know the exact mechanics of the latest algo change, but the results aren’t there anymore. It isn’t just about the algos, either. Back in February, Amazon changed their affiliate agreement in a way that diminished or destroyed a lot of the freebie-advertising affiliate sites. Select isn’t dead for all books and strategies, but it’s been reduced to a fraction of its former power. It’s no longer the no-duh choice for anyone, let alone new authors.

Now, some good news: Kobo threw open the doors to self-publishers, joining Amazon, B&N, and Apple as markets we can directly upload our work to. Kobo got a lot of early hype as this was happening last summer. A lot of indie gurus painted them as the next big thing, particularly in international markets.

That hasn’t exactly happened yet, so here’s my assessment of Kobo: they’re a cool company whose self-publishing wing (Writing Life) is run by great people. So far, they’ve managed to capture a few percent of the various English-speaking markets, except Canada, where they’re Godzilla. Currently, they are probably the fourth-largest market for self-published authors, who make up some 25% of their total sales. A new store is a new opportunity to be discovered.

On the distribution side, Smashwords has made a couple cool improvements, allowing you to upload epubs and to set up preorders at B&N, Kobo, and Apple. They also seem to have made modest improvements to the quality and speed of their distribution process. Bigger yet, the first real alternative to Smashwords popped into being: Draft2Digital. While they don’t publish to as many venues as Smashwords, they cover the major outlets, and generally seem to be much speedier and more responsive. It’s now significantly easier to reach the big markets like B&N, which non-US residents can’t publish to directly, and Apple, which has a steep learning curve.

In terms of advertising, BookBub exploded on the scene and is hands down the best mover of free and discount books (although that means their ads are expensive and can be hard to book). Kindle Books and Tips converted from a freebie site and now runs discount books. Their results can be a little inconsistent, but are often in the same tier as ENT and POI–pretty great, in other words. BookBlast opened up, too. Operating on the BookBub model, it isn’t yet large enough to be the cornerstone of an advertising campaign, but their rates are very fair, the results are there, and they’ve been growing steadily. There still aren’t enough ways to advertise to non-Amazon readers, but we have a few new tools at our disposal. And as long as there’s money to be made, effective advertising options should continue to grow.

Eight jillion other things happened, too, but these are the ones that feel significant to me. And they all pretty much point in the same direction: away from Select freebies and toward wide distribution bolstered by $0.99 sales.

But success with that model generally means having multiple books and building an audience in multiple markets. Which, by definition, excludes brand-new authors. So now that the easy button of Select has been disconnected, what should new authors do instead?

Well, I’ve got an idea. It’s pretty simple and obvious. But before I get to that, I want to look at an idea that’s kind of its opposite–and which is becoming an increasingly popular piece of advice. Part 2: Don’t Wait.

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eBooks and the Myth of the "Summer Slump"

Books don’t sell in the summer.

Traditionally, the seasonality of book sales is decidedly Southern Hemisphere. Better sock away those December riches, because come July, it’s going to be slim pickings. Back when I was querying agents, summer was advised as both an unusually good and an unusually bad time to do so, because the publishing industry supposedly shuts down until adults come back from beaches and kids go back to school.

Dean Wesley Smith chronicled the “summer slump” here, stating publishing houses punted summer because “it was known that the lowest time for buying books by customers was May through the middle of September.” Despite the ebook/indie revolution, “That has not changed.” Just last week, Digital Book World led an article with “Typically July is one of the slowest months in book publishing.” Google “summer slump” and “book sales” and you’ll find dozens of indie authors advising other indies how to make it through the doldrums without losing hope even as sales (and incomes) slide away into the ooze.

I ran into this same phenomenon myself last year. Great May/June, okay July, then a long, steady slide, until my October was so bad–about $860, as my primary job–I was starting to wonder whether I could keep doing this. Thankfully, a new release turned things around.

Yesterday, someone on KBoards asked whether, in order to avoid the summer slump, they should wait to release their next book until fall. Given what we know, it’s a good question. There’s just one problem.

Books sell just fine in summer.

eBooks do, at least. If you compare the number of sales needed to sustain a given rank on Amazon’s Kindle store, to my eye, it’s the same in July as it was in February. As per the quick and dirty formula I tossed out in that post, to determine how many copies a Kindle title is currently selling, take 100,000 and divide it by its sales rank. Or, to put it another way, rank x sales = 100,000. This rule of thumb comes close whether you’re selling 1/day or 1000/day.

Let’s look at the rank and daily sales of several titles from this July and see how they compare to the numbers from February.

Rank x Sales = Score ; Estimated February Rank

#95,000 x 1 = 95,000

#12,000 x 10 = 120,000
#2429 x 50 = 121,450
#852 x 120 = 102,240
#819 x 136 = 111,348
#767 x 148 = 113,516
#325 x 280 = 91,000

All right, whole bunch of numbers. What are we actually looking at? An easy way to conceptualize this is to go to the extremes. If Amazon sold so few books that all it took to rank #100 was 1 sale/day, you’re looking at a score of 100 (#100 x 1). By contrast, if it was selling so many books that a rank of #100 required ten million sales/day, your score is 1,000,000,000 (#100 x 10,000,000).

To put it another way, say that it took you 100 sales yesterday to rank #1000. If today it took 200 sales to stay at #1000, that would mean all the books above you were suddenly selling much more, too. Yesterday, your hypothetical score was 100K; today, it’s 200K.

Thus a lower “score” is indicative of lower storewide sales volume while a higher score means more ebooks are being sold on Amazon each day.

Across a broad range of ranks, the average score of those seven books above is 107,793. If anything, more Kindle books are selling right now this summer than were selling in the weeks immediately after the Christmas boom had calmed down.

For ebooks, the “summer slump” is a myth.

Of course, it isn’t quite that simple. While the sample size leaves something to be desired, the most obvious qualification to this methodology is that the “100,000 formula” isn’t a real formula, but more of a rule of thumb. It’s imprecise. Back in February, for instance, it was also true that 10 sales/day would sustain a rank of #12,000, and 120,000 ≠ 100,000.

So if you think I had my original score wrong, and you believe 120,000 was “normal,” then our current score of 108,000 would indicate sales are down by 10% from February.

For most ranks I was looking at in February, however, the score was closer to 100K. Largely in the 95-110K range. To my eyes, the current score of 108K is virtually identical to February. And the number of sales needed to sustain that #12,000 rank was the same in February as it is right now in late July.

That, to me, is the key takeaway: Amazon ebook sales may be down for the summer, but it is not immediately obvious. It’s even possible they’re up. If the slump is so small it can’t be detected, I don’t think it can be called a “slump” at all.

ADDENDUM

The above table is probably a little confusing, since the “score” is pure abstraction. So here’s another way to think about it. Below, here are the same books above translated into estimated February ranks vs. actual July ranks.

February – July – “Winner”

#100,000 – #95,000 – February

#10,000 – #12,000 – July

#2000 – 2429 – July

#833 – #852 – July

#735 – #819 – July

#676 – #767 – July

#357 – #325 – February

If the July rank is worse, that means it would take more sales in July to have climbed as high as it did in February, and thus volume is up now (and vice versa). “Winner” indicates which month seems to have seen higher sales.

Two notes here–I can tell you the February estimates are wrong for the ranks of #10,000 and #2000. The real numbers were more like #12,000 and #2200-2400. Meanwhile, in July, that works out to a rank of.. #12,000 and #2429. Again, it looks like ebook sales volume is heavier in July 2013 than it was in February 2013–but they’re close enough to look pretty much the same.

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Quick and Dirty Math: How Many Self-Published Authors Are Making a Living?

A couple days ago, Passive Guy suggested Amazon should make a bigger deal out of the success of KDP and its self-publishing program. In it, he included a made-up press release as an example of how powerful such a thing would be, including these (again, fictional) numbers:

The top-selling 50 authors publishing through KDP received an average of over $110,000 in monthly royalty payments.

Over 20,000 KDP authors earned monthly royalty payments of more than $10,000.

Over 60,000 KDP authors earned monthly royalty payments of more than $5,000.

Just to be perfectly clear, these numbers aren’t the real ones. They’re just an example of how startling they might be. But it made me wonder: is there a way to guess what the numbers might really be?

Well, I’m about to try. My process will be quick and dirty, but I think we might be able to ballpark it.

First off, David Gaughran has estimated indie books make up 30% or more of Amazon’s numerous bestseller lists. His work was indirectly backed up by a press release from Nook Press that 25% of their sales were indie. Another recent quote from Kobo put their indie authors at 20% of total unit sales, but they’re the new kids on the block and their discoverability isn’t all that great yet. I’m sticking with 25%.

Next, let’s look at potential earnings. How many sales does it take to earn, say, $1000 a month? For a $4.99 book (a little on the high end, for indies, but common enough), your royalties at 70% are going to be $3.50. Not all sales are at 70%–some are to markets that only pay 35%, like Australia. Up to 10% of my sales are to 35%-royalty territories. Treating that as a rule of thumb, we need to adjust our $3.50 figure, multiplying it by 0.95. In other words, for every sale of a $4.99 book, the author can expect to take home about $3.33.

Neat how that works out, because $1000 / $3.33 = 300 sales/month. 10/day. On Amazon.com, selling 10 books/day will give you a Kindle rank of about #12,000.

So at any given moment, 12,000 books are hitting that baseline of 300/month. And maybe something like 25% of those titles are indie. Meaning, at any given moment, something like 3000 indie books are earning $1000+/month on Amazon.com.

Upping it to $2000 means 600 copies/month, or 20/day, or a rank of #6000. 25% of 6000 = 1500 indie books earning $2000+/month.

To make $5000 at $4.99, a book has to sell 1500/month, or 50/day, or maintain a rank of about #2200-2400ish. So maybe something like 600 indie books are earning $5000 or more during any given month.

Note I’m saying “books,” not “authors.” That’s because translating this from books –> authors is very complicated and I’m not sure I can take a reasonable stab at it. But let’s pretend, for the moment, the two are equivalent.

Now, the numbers above are just for Amazon.com. Amazon UK is something like 15% the size of the US store. Amazon DE is an order of magnitude smaller, and the other stores barely register (for indie English-language sales, anyway), so let’s lump them all together and call it an extra 20%. That gives us the following numbers:

~3600 KDP books might make $1000+/month

Of those, ~1800 might make $2000+/month

And ~720 indie titles might make $5000+/month

These numbers look a lot smaller than PG’s, both in quantity and in income brackets, and this is with a price of $4.99, which is higher than most indie books. But here is the giant, messy, complicating favor that I have so far avoided like the plague: most successful indie authors have more than one book. Most have three or seven or twenty. That means the 3600 books capable of making $1000/month are unlikely to be doing so for 3600 different authors. The real number is more like, I don’t know, 1500-2500 authors.

But this also means many indie authors are capable of making nontrivial money with ranks much worse than #12,000. They just have to have more than one book.

Taking a stab at all that is.. daunting. But before I see if I can do that–which will require another post–let’s work with the numbers we do have some more. Because Amazon isn’t the only game in town.

In fact, conventional wisdom says they have 60% of the US ebook market. If so, by comparison, B&N has maybe 10-12%. I don’t know how many indies make up the remaining ~30%, but let’s pretend that indies have a quarter of those markets, too. Probably generous, but what can you do. Research, I guess.

So if Amazon is 60% of the US market, let’s take our Amazon.com number of 3000 indie books earning $1000+ and prorate that across the rest of the market by multiplying by 1.67. That gives us 5000. If we rashly assume that non-American English markets follow Amazon’s trends, and we add 20%, that bumps it up to 6000. Across the English-language indie ebook spectrum, then, we might have something like this:

6000 indie books might make $1000+/month

Of those, 3000 might make $2000+/month

And about 1200 indie titles might make $5000+/month

Now, this is really, really casual math. It requires a lot of assumptions and a lot of multiplying, which means that any mistakes are compounded. So don’t treat it as gospel. It’s just a rough stab.

And it’s possible these numbers are a fraction of the indie authors making a decent to significant income off their writing. Not only do most indies have multiple books–I didn’t account for any books making less than $1000/month, but ten books at $100/month will earn you the exact same money–but all these figures have been drawn from the lowest ends of the scale. If a #2000 rank is good for $5000/month, that means about 500 indie books are doing that well on Amazon–but the ones on the upper end are doing much, much better. An indie with a $2.99 book ranked #100 is making something along the lines of $1000-1500 a day.

Much of that top money will wind up repeatedly skewed to the top indies, of course. But for illustrative purposes, if you can launch a new $2.99 book to #100 and stick it there for 30 days, you’ve just made something like $30,000, minimum. On one book for one month. It doesn’t have to sell a single extra copy for you to get by for the next year in most parts of the US.

This process and more modest versions of it happen on Amazon every day. You put out a new release, and (if it sells fairly well) Amazon promotes it for thirty days; a few weeks or months later, it (generally) slides down the charts, maybe until it’s down there where no one can see it. It would be largely unaccounted-for in the methodology I put together here.

I don’t know how to account for that (or for the “most authors have multiple books” problem, which cuts both ways). But I think that, at a conservative estimate, it’s likely that at least 10,000 indie authors are making at least a part-time wage from their writing. And it could be a whole lot more.

I don’t know how that compares to the population of traditional authors, either. But if nothing else, there’s evidence that the indie revolution has provided a career for thousands and thousands of writers who didn’t have one before.

And that’s pretty cool.

ETA: An earlier version of this post put the $5000+ club at 1500, not 1200. But let’s not allow my failure at basic multiplication to detract from the credibility of this post!

As long as I’m adding this postscript, I should note that one of the reasons I show my work is so other people can identify any errors (and so people can tweak the sliders, should they disagree with my assumptions). If you think I’ve made an error, or you’ve got an idea for how to attack more complex problems like the “multiple books” issue, please speak up!

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Amazon’s Vested Interest in Indie Authors

This morning, a post on Kboards mentioned that Amazon has a new “Indie” section of their storefront. Within a handful of posts–and ignoring the fact this list is actually two years old and has been browsable for months, if not that entire two-year period–the thread was awash in posts proclaiming that this was the first step in Amazon’s master plan to shutter indies away in some self-publishing ghetto, where normal shoppers would never see our tainted wares.

Amazon won’t do that. It’s in their vested interest to keep indies in the same population as trad-published books. Segregating us to an indie dungeon would only hurt them.

Why?

Well, for one thing, Amazon thinks the ebook market does best when most titles are $2.99 – 9.99. Major publishers prefer to charge as much as they can. Indie authors price almost exclusively at $0.99 – 5.99 and are probably the single biggest pressure for downward prices in the ebook market.

But yes, Amazon has no use for us and it’s just a matter of time until we’re stuffed into the closet.

In the meantime, rather than fostering the race to the bottom (another major indie boogeyman), comparing Smashwords’ yearly surveys from 2012 and 2013 indicates indie prices have gone up in the last year, with more and more indies pricing and selling well at $3.99 – 5.99. Meanwhile, the average price of ebooks on Kindle bestseller lists has recently fallen to the $7-7.50 range. Right in the middle of Amazon’s $2.99 – 9.99 sweet spot. There now exists a band of prices covering every point between free and $14.99 (and up), allowing Amazon to target every conceivable type of reader, from extreme bargain-hunters to those who equate low prices with low quality.

But I’m sure now is the time when the ebook market will stabilize forever, allowing Amazon to toss us out like last week’s leftovers.

Even if prices were to magically stabilize here, a thriving indie market gives Amazon access to tens of thousands of titles no one else has. They have more books and more data than anyone else in publishing. By not setting arbitrary prices or restricting what gets published, they don’t have to make guesses about what might sell or how to sell it. They have hundreds of thousands of books creating a living ecosystem they can analyze to make their storefront even better–and they’re the only ones with access to that data. The more authors they allow in, and the more those authors are allowed to innovate, the more Amazon learns, and the bigger the advantage they have over every other publishing company on Earth.

But obviously, sooner or later Amazon is going to decide the jig is up and they’ve learned everything there is to know about ebooks and publishing.

We cost Amazon nothing. We’re free money. The only possible threat indies pose to their business is if we somehow poison the pool with bad books, but they’ve built their system so no one sees those books. And sometimes books that everyone would agree are “bad”–terrible editing, ugly covers, derivative plots–sell like gangbusters anyway. Why? I don’t know. But I bet Amazon has a few theories.

Because they were happy to let everyone publish, let consumers decide what they wanted to buy, and take advantage of that emergent behavior to get even better.

It’s tougher than ever to get started as an indie, but I think that has much less to do with Amazon squeezing us and more to do with how hypercompetitive indie authors have become at every aspect of the business. As we continue to innovate, not only does Amazon get 30-65% of everything we sell, they learn everything about how we sell it and what their customers want. The moment Amazon starts segregating us from the market is the moment they forfeit their knowledge-advantage to Kobo, Apple, Barnes & Noble, and anyone else looking to grab a corner of the ebook world.

If Amazon’s business model is a) be stupid and b) hand over the keys to the castle to their competitors, then yes, they might want to quash or segregate indie books.

But if they want to maintain dominance, they’ll let us continue to mix it up with the big boys just like we’ve been doing since the launch of KDP (or DTP, if you’re old school). Because collectively, indie authors continue to be one of their sharpest tools they have to remain the biggest, the smartest, and the most powerful player in the bookselling industry.

And that’s not going to change any time soon.

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