David vs. Goliath: From Where The Author Sits

This is the type of post I don’t like writing. Mainly because I hate to be the bearer of bad news. I am writing it now because this issue is something everyone should be paying attention to, readers, publishers, and authors alike. This morning I did my usual rounds of news-checking, which includes reading the Smashwords blog. If you get a chance, give this article on Amazon vs. Hachette a read. It’ll be an eye-opening experience.

A quick recap: Amazon is trying to lower the royalty rates it pays to Hachette publishing house. Hachette does not want to agree. The negotiations have led to some pretty nasty practices by Amazon to list Hachette titles as out of stock, advertising “similar books at lower prices”, etc. Basically, here’s what you need to know:

Amazon now controls the largest share of book and e-book sales worldwide among retailers. It’s not a monopoly yet, but let’s just say they’re not exactly quaking in their boots about competition. It knows how to treat business like business. KDP Select is the milder example; it’s the honey to lure the unsuspecting flies. The vinegar is Amazon ruthlessly cutting Audible royalties to less than half of what they used to be. As convenient as it is to shop on Amazon (Hey, I do it too!), their main focus is, was, and always will be profit, and that profit comes not from customers, but from merchants, including authors and publishers.

You might say, “But Amazon always has the lowest prices, and all those fantastic deals! And that’s gotta be good for authors, right? The more readers you get the better! What are they griping about??”

And I would answer with some math. Say you’re with a publishing house that pays you 25% net royalties. That means you get 25% of whatever the publisher gets from Amazon. And because your publisher needs to make a profit too, they will set the price at at least $2.99 to get into the 70% royalty bracket. So, on a book listed at $2.99, the publisher gets $2.01. Of that, the author’s take is $0.52. Now, if Amazon does what it did with Audible, and tried to do with Hachette, let’s say they drop the 70% royalty bracket all together, and leave only the 35% option. That means, for your $2.99 book, the publisher will get $1.05, and you, as the author, will get a whopping $0.26 of that pie. A little over a quarter per book sold at Amazon. That means, you’d have to sell 10,000 copies every two weeks (without any returns) to make a decent living off your book sales. As you can see, being a novelist is not what one might call a Get-rich-quick scheme.

Now you try another tack: “Why don’t authors just self-publish and take the 70% directly?” Good question! And there are many possible answers. For one thing, not everyone can, or wants to, go into business like that for themselves–and believe me, self-publishing is a 24-7, no holidays or vacations kind of business. You need to be on top of everything from concept, to delivery, to promotions and marketing, it’s not for everyone. Another answer is that publishers still have some perks and benefits that serve authors well. For one thing, they have the power to set sales and promotions (unless I am mistaken) without enrolling books into KDP Select.  Indie authors can’t do that. They also can’t publish free books on Amazon. They can only set the price free for a limited time, and only in their KDP Select program, which means limiting their reach to Amazon customers only. Still another answer is that to be Indie is to be on your own. You have no individual bargaining power. You can’t go up to a bookstore and ask them to stock your books. Well, you could, but your chances to get it done are very slim. You can’t negotiate your royalty rates. Basically, you’re a very tiny fish in a very, very big ocean. There are a lot of you, but think of what it would take to band them all together, when each and every one of them has a livelihood at stake.

This is a major issue for everyone. All those awesome discounts Amazon gives? They come out of Author pockets, not theirs. If it keeps going as it has, not only will you see a rise in prices as publishers desperately try to keep their revenues up, authors will see their royalty rates decline for the same reason. You might wake up one day and see a lot of authors posting something along the lines of:

“Dear readers,

It’s been a wonderful ride, and I love you all for allowing me to live my dream of being a published author for a little while. Unfortunately, it’s become too painful to continue this struggle physically, emotionally, and financially. I must think of my family first, and writing books simply does not put food on our table. I am forced to take a second job to make ends meet, and will no longer be able to keep writing. It is my greatest joy to have shared my stories with you, and my fondest wish that you will remember me by them. Good-bye, and fare well, my friends.

Love,

Starving Author.

That’s not me, at least not yet (because I still rely on my day job to pay the bills). But who knows, really? Authors write for the love and joy of it, true, but it is a tremendous undertaking that takes time away from our families, countless sleepless nights, lost friendships, lost opportunities, and a whole lot of heartache. At some point, a lot of us ask ourselves, “Is it worth it?”

So here is where I ask something from you and hope that, from what you’ve read already, you will understand why I ask:

Authors with publishing houses: BE AWARE!

Talk to your publishers and educate yourself on the situation, and how you can do something about it. Don’t turn a blind eye; you will ultimately end up being the one who pays the price.

Indie Authors: DIVERSIFY!

Don’t count on Amazon to carry you financially–that’s not and never has been their goal. You are on your own, so spread your books as far as you can reach, and keep looking for more avenues to reach new readers. Even if you only sell one book a month at another store, it’s still one book more than you’d have had without it. Pinch your pennies and be grateful for each sale.

Readers: SUPPORT YOUR FAVORITE AUTHORS!

  • Read books.
  • If you feel so inclined, review them.
  • I know it’s so convenient to buy from Amazon on your Kindle, but consider that you’d do your author a huge favor if you purchased their book directly from their publisher’s storefront (or Smashwords, if they’re Indie). In most cases, they earn higher royalties there, and those stores will have several formats available. Also, unlike with Amazon, who only license the content and can literally snatch it right from your account if they feel so inclined, your purchase from the publisher is yours. You download the file, and it’s stored on your computer or device, and no one can touch it but you.
  • PLEASE do not return books you have read for a refund. It hurts us as much as downloading pirated copies–maybe more, because it adds insult to injury. We authors pour our hearts and souls into our books, and we offer them to you for a pittance, if not free. To read a book and then return it is quite cruel, and a crushing blow to our confidence as writers.
  • Share the word about your favorite books with your friends and loved ones. Word of mouth is still, and always will be, the best way for readers to find great new books, and for authors to get their name out there and keep doing what they do best.

Okay, I’ve ranted enough. If you’ve read this far, you might be thinking this doesn’t affect you, or that you don’t care. You’re Indie, you have your 70%, you’re Amazon’s bread and butter–they won’t touch you.

Well, think again. It’s already started on the Indie front as well. Did you know Amazon now tacks on an author-paid “delivery fee” to all e-books in the 70% royalty bracket? Go ahead. Check it out if you don’t believe me.

**And if anyone’s interested, my books are available at most (if not all) online retailers, including Amazon. You can find the purchase links by clicking on the covers in the sidebar here. The link at the top of each book’s page will lead you to the publisher’s storefront direct. Thank you for supporting authors!**

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11 thoughts on “David vs. Goliath: From Where The Author Sits

    • Alianne

      Yep! And the scariest part of all is how insidious they’re being about it. I haven’t had any notification of them adding on the delivery fee. If I hadn’t logged in to update pricing, I never would have known.

    • Alianne

      Hmm, I must have missed it, then, because I didn’t notice it with the first indie book I put into that category a year ago. Thanks for letting me know =)

  1. Lisa M. Green

    Yeah, I know they had it as of last year when I first started researching the publishing avenues, and it may not be a huge chunk of change yet, but as you say the inch slowly turns into a yard. I still offer all my formats on my website, but very few sales come from there. Same with Smashwords. BUT at least I know I’ve given the option to people. It does give one pause. I try not to think about it too much or my brain starts to melt. Or maybe that’s just my eyes leaking.

    • Alianne

      That’s exactly what I was thinking. They always start small, test the waters, see if anyone complains, and then WHAM! In terms of sales, Amazon is still strongest for me. I haven’t figured out how to do the storefront thing yet, not sure if I want to go that route anyway, but I do have a few sales trickling in from B&N and Apple. Smashwords not at all unless I give a coupon to make it free. =\ This whole one-stop-shop thing kind of makes me think of the Buy ‘n’ Large from WALL-E. You remember that? LOL Not a comforting visual…

  2. Lisa M. Green

    I saw the article you mentioned a few days ago and had a discussion with someone about it. When I get back to blogging, I’ll try to remember to reblog this. It’s too important not to.

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