Business Musings: Direct: The Year in Review Part 8

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From Kristine Kathryn Rusch:

On January 6, 2023, Michael W. Lucas made a rather important announcement on his blog. He wrote, in all caps:

AMAZON IS NO LONGER MY BIGGEST INCOME SOURCE.

It’s not that he added a consulting business to his writing income, or started doing in-person speaking gigs. He didn’t get a day job. Instead, he’s been, in his words, disintermediating.

He’s been consciously moving his readers away from Amazon (and other sources of revenue) and moved those readers to his website. He posted his 2022 sales, in percentages, and noted that, for the first time, revenue that came through his website outpaced revenue that came through Amazon.

Full disclosure: He also announced that his income was down, but that he had expected that, after the online pandemic buying frenzies of 2020 and 2021.

What, exactly, did he filter through his website?

Here’s his breakdown (along with percentages).

Direct sales, 18.57%. Direct Patronizers, 6.34%. Sponsorships, 5.33%, and direct preorders, 2.38%. Taken all together, 32.62% of my income coming from sales through my web site.

Amazon provides 31.35%.

Yes, that is, as he says, a slim percentage difference. (The remaining 36% comes from places like IngramSpark, Kobo, and his old books still mired in traditional publishing.) It’s worth noting that over 10% of his income came from Kickstarter, which he does not count as website sales (appropriately because it takes a percentage and the people you bring to that site grows that site.). However, Kickstarter is a one-time fundraising platform, which provides another way to sell direct to the consumer, without a percentage taken from each book. As such, that means that more than 42% of Michael’s income has come from direct reader engagement.

He’s not the only writer who has made note of this. I’ve talked with several who are taking more and more control of their own product and sales. Dean and I had a dinner with two other couples at 20Books in which we discussed a Shopify store. We’d been doing WooCommerce and weren’t that happy with it. Because we’re early adapters, we’d had our initial WooCommerce store in (jeez, I think) 2013 or 2014. Long ago, when everything was clunky and hard.

Now it’s not.

A few weeks ago, I wrote a post on this site that scared the crap out of most of you. It was about Amazon’s year, and the fact that Amazon is rethinking much of the way that its website and sales platform works.  Amazon’s innovation enabled writers to self-publish and make a solid living (if not more), but that was more than a decade ago. Since then, Amazon has been changing the algorithms. It has new management, and it’s just not that interested in books. It will, at some point, maybe in the near future, cease being the biggest beast in the American bookselling sphere. (If you want to argue with me, do me a favor and read the other post first, then argue there.)

A number of writers responded in the comments and also to me personally, some denying that anything was happening (and of course, they thought I was making this all up).  Other writers responded with some great and useful comments.

After a decade of dealing with delusional self-published writers (after two decades of dealing with delusional traditionally published writers), I’ve learned to shut those poor deniers out. You can’t convince people who stick their fingers in their ears, close their eyes, and sing every time you show them evidence.

But others? People who want to continue as writers and get the largest audience they can? Those folks are well worth my time. Many of them were panicked and wondering what was next.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

18 thoughts on “Business Musings: Direct: The Year in Review Part 8”

  1. I’m going to assume that these figures are Mr. Lucas’ net income (before taxes, but after all operating and administrative expenses). But they are rather disingenuous – the actual percentage of his from book sales (which is what the various publishers/distributors are passing on to him) is only 20.95% from his website.

    “Direct patronage” and “direct sponsorship” are not book sales. Completely different source of income – which you can receive even in an exclusive Select relationship with Amazon, or any other book distribution channel.

    “Going wide, going direct” as KKR consistently encourages, is (potentially) an income enhancer. For an author with an established market base. If you are still building that base, keep her advice in the back of your mind – but don’t expect it to work right now.

    • With respect, Writing Observer, KKR has written and had published/published dozens of books. She’s also a much-lauded editor and business person. The woman knows what she’s talking about and it is NOT only for an author with an extablished market base. Please, if you’re going to pass along advice to others, back up that advice with your own experience at writing, publishing and licensing books. According to your own website, which apparently was last updated in July 2020, you are a “newbie (wannabe) writer.”

      I started writing novels and short stories only 6 years ago. Typically spending no longer than 4 hours per day writing, in that time I’ve written over 70 novels, 8 novellas, and around 250 short stories. Once I learned to design attractive, genre-tuned covers and write good sales copy, my own sales took off. And yes, I publish wide. Much of my success is due to listening to Dean Wesley Smith and Kristine Kathryn Rusch, especially on matters of business.

      Blogging on IT issues—your apparent area of actual expertise—that would be like KKR blogging on the writing business. Just sayin’.

      • What percentage of your sales are through Amazon? How much through direct sales?

        I’m pretty sure neither you nor KKR gained success through a disintermediated-first approach, because the problem with that approach (as WO rightly points out) is discoverability.

        Whether diversifying away from Amazon/Kobo/TradPub/etc makes sense, once you’ve gained an audience, is a different matter.

        • KKR literally addresses discoverability (however briefly) in the article and yes, it is GO WIDE. List your book at all the retailers and ALSO list it on your site. Her comment about things like Select is that it can work for carefully targeted, selected projects, but she never ever went exclusive for anything that wasn’t carefully targeted and selected and timeboxed and gained her success through going wide.

          Direct is, as she covers here, a relatively new development for being such a big chunk of anybody’s sales and even when she says you should start off with a direct offering, she 100% does not say to stop listing with retailers or doing any marketing.

          Going wide is vital for everybody. Going direct is an additional stream that’s gaining importance and for stability of your own business reasons, becoming vital.

          • Note that KKR started her career at a time when “going wide” wasn’t even a thing – except in the narrow sense of “don’t submit to only one traditional publisher.”

            There is a point, though, in that even if you go exclusively through one distribution channel – marketing must be multi-channel.

            I do recommend that everyone – starting or established or in-between – read this post (and others by KKR). One quote, especially relevant to direct sales (emphasis added):

            The first is this: Going direct to the consumer is not about discoverability. A new reader is probably not going to discover you on your website. That reader will need to pick up your book in a major retailer like Kobo or Barnes & Noble or Amazon. In the back of that book, you promote your own store. So the reader needs to find out about the writer somewhere else, and then come to the writer’s ecosystem.

      • If I were to meet a writer in your position, and they told me that they were still Amazon exclusive – I would be among to first to tell them to remove their cranium from their posterior, read everything that KKR has to say (on modern publishing), and think very long and hard on it.

        For any writer, I absolutely refer them to KKR’s thoughts on agents and trad-pub, and also on being very, very careful about just what IP rights they sell.

        However, this still does not change the fact that Mr. Lucas’ income from direct book sales is less than his income from Amazon book sales, not more. Not to mention that, speaking from what you call my area of actual expertise, running your own e-tailing site is far more work and direct expense than dumping the entire thing onto a distributor. (I’m assuming that his gross sales margin is higher for direct sales than those through any of his distribution partners – although that is not always the case. It is something that a properly run business must keep a constant eye on.)

        • I really don’t care how you run your business, WO. Doesn’t affect my bottom line either way. I was just saying, you have close to zero actual experience with these matters, yet you feel free to offer up opinions on them.

          I know many writers who started self-publishing as unknowns and today are making a good living with their work, and almost all of them “go wide” and have done since the beginning.

          As for writing advice and writing business advice, I don’t listen to those who haven’t been there, done that, and had success with it. No disrespect intended. It’s just that in any other field of endeavor, untested theory simply doesn’t stack up to real world experience. Why do people tend to think writing/publishing/licensing fiction is any different?

          If I have a legal issue, I get advice from an actual attorney, not someone, no matter how well-meaning, who’s written one legal brief (he thinks, maybe), talks about being an attorney, s kind’a sort’a thinking about becoming an attorney, and in the meantime hands out legal advice.

          • Sigh… I know (of) several people who are wildly successful with other business strategies. KKR’s strategy works fantastically for her. Your strategy works fantastically for you. Michael Anderle’s strategy (Amazon exclusive and everything in KU) works fantastically for him. J. K. Rowling’s strategy (traditional publishing) works fantastically for her.

            All that I am saying, Harvey, is plain old business advice. Every would-be writing business person needs to look at their own situation. Their own goals. Their own resources (investment money and time). And they must constantly reevaluate all of those things as the business goes on, looking both at their own situation and at how other people are coping with current realities.

            One way is not the best way for everyone. If that cannot get through to you, well, it doesn’t. This is my last word on the subject here.

      • Harvey: I’m in awe of your prodigious output. Congrats! I’ve considered Going Wide several times, but the readership and royalties (Page Reads = ~50% of total) from staying in KDP Select (and thereby KU) are hard to give up. I mean, I only have five novels to my name, but they generate millions of pages read in KU. If “readership” is one of my goals (and it is), I don’t see how going wide would make up that difference. At least, at this moment in time. But I keep thinking about it. Additional thoughts appreciated.

        • Hi Harald,

          I really don’t have much else to say. To each his or her own, as WO pointed out.

          As for my own personal strategy, I don’t go wide out of fear that Amazon might crumble (as some advocate). I seriously doubt it will during my lifetime or probably during the life of my copyright. I go wide only because I see no reason to discriminate against those who prefer to buy from Kobo or Apple or any of the dozens of other venues.

          When I even think of selling (licensing) through only one venue, it makes my toenails curl. And anyone, even Amazon, telling me exclusivity means I can’t even sell from my own site makes me wanna chew wheels and spit nails. So there’s that. (grin)

          As for my “prodigious output,” writers only have to trust themselves and their own creative voice more than they trust the concsious, critical minds of others. That really is all it takes. (And that’s valid from the first word of the first story or novel the writer writes.) Odd that it’s such a massive leap of faith for most fiction writers to simply believe in themselves.

          See my free archives at my website.

  2. There’s always the middle ground even if you DON’T have an established huge base. Go fully wide, including staying on Amazon, doing other outlets AND selling on your own site. Now that I’m out of my KDP Select obligations, I need to add things to my own site for sale. You never know where your sales will occur and it’s never too late to start your own personal funnel on an outlet you control.

    • Certainly. So long as you keep a very good eye on your P&L – and be prepared to change course yet again.

      Definitely the one thing that would raise my ire against Amazon would be their increasing the period that you are stuck in Select once you have entered it. Ninety days is not ever too long to change your sales strategy for the better. (Many people have a mixed strategy, after doing a deep analysis on their cash flows for each offering – some books they keep in Select, others they sell through other channels.)

  3. Some more random thoughts:
    1) If KKR thinks Amazon is going to lose its #1 position in e-Books in the US (Kindle + KU) within 3-5 years, she’s smoking some pretty good weed. Amazon’s market share is very high, and there’s quite a bit of “stickness”, especially if you have a Kindle reader.

    2) I suspect her advice really depends on the genre. To put it another way, some readers care about the author (I do), but from what I’ve heard, some readers just want a decent book in their favorite genre — and those readers aren’t likely to bother to go the author’s web site, when Kindle/KU/Kobo/etc is so much more convenient (and I suspect a lot of them use KU).

    3) I do think KU (or equivalent) is important for discoverability. Given the backlog of books to read from authors I trust, I’m not likely to take a flier on an unknown author’s $5+ e-book unless their book is free (e.g. KU) or very low cost (e.g. the price the first book of a series is low). Maybe free samples chapters can help for non-KU books.

    • Indeed…

      Amazon’s innovation enabled writers to self-publish and make a solid living (if not more), but that was more than a decade ago. Since then, Amazon has been changing the algorithms. It has new management, and it’s just not that interested in books.

      That bit with emphasis – where have we heard that before, and how many times? How many times has it been rebutted? Sure the people at Amazon don’t particularly care about books any more than they care about computer games or dishes or anything else. So what? Since when did being “interested in books” matter to the service they provide?

      There’s a little shopping cart icon on the menu of every Kindle, and it’s damn handy. There is a limit to how much side-loaded sales from a stand-alone website can grow.

      • Amazon is interested in widgets. Hammers, socks, and books all fall under the category of widgets. Nothing is special.

    • Which is why I dropped my subscription and stopped visiting her site. A brilliant business mind wildly and deeply tainted with political mudslides. Believing her a sensible acquaintance, I did email her directly to complain, once. She apologized, promised to keep her politics out of her posts on the writing business, and did for maybe one post. Sigh.

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