2020 Publishing Predictions: House of Indie on Fire

From The Smashwords Blog:

Welcome to my annual publishing predictions, and hello 2020!

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Each year at this time I polish off my imaginary crystal ball, read the proverbial tea leaves, and generally attempt to divine a future that is anything but divinable.

The value in speculating about the future is that it gives us all an opportunity to imagine our place in that future.  We can identify opportunities and threats, and a take steps now to alter the course of future history.

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My predictions are based on what I’m seeing.  I’m the first to admit I’m not without my blind spots.  Your vantage point might be different.  I welcome your perspective in the comments.  Working together, we can paint a truer picture.

I try to spot emerging and entrenched trends, analyze the economic and psychological drivers of those trends, and speculate how those trends will play out over time.

I’ll start by sharing my thoughts on the state of the indie nation and then I’ll jump into the predictions.

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If you’ve followed my publishing predictions over the last decade, you may have observed that in the early years my predictions were rife with gushy optimism about the increasingly important role that indie authors and indie ebooks would play in the future of publishing.  Those posts proved prescient, because indies did indeed become a force of nature in this industry.

Indies pioneered the best practices of ebook publishing and ebook marketing; proved that self-published authors can achieve awe-inspiring commercial success; and captured significant ebook market share from traditional publishers.  Indies introduced readers to an amazing diversity of new voices that would have been lost to humanity were it not for the amazing opportunities presented by ebook self-publishing and democratized retail distribution.

In recent years my publishing predictions have taken on an increasingly ominous tone.  Although I’m a naturally optimistic person and more inclined to see cups as half full than half empty, I’m a realist as well.

I care about truth.  Truth is my anchor, and I’m always searching for it to keep me moored in the choppy seas of an ever-changing reality.  In business as in life, I try to keep my opinions flexible and open to modification when facts change.

It’s time to recognize that if the indie publishing movement were a house, the house is on fire and not enough people have noticed yet.

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I celebrated the virtues of the indie author movement back in 2014 when I published the Indie Author Manifesto.  I celebrate the movement and its world-changing potential to this day.

Yet it’s becoming increasingly clear to me that the indie author movement and everything it represents is in jeopardy.  Authors liberated themselves from one gatekeeper only to find themselves in the clutches of another.

Can authors honestly call themselves indie authors when they’re getting 80-100% of their sales from a single retailer?

What is independence anyway?  If I wrap myself in chains and submit myself to the mercy of a single sales outlet, am I still an indie author if such bondage is by choice?

If each of Amazon’s ebook retailing competitors left the ebook market tomorrow, would it make a difference to your future?

Indies appear to have made their choice.  Get a group of indies together for any period of time, whether it’s in an online forum or in person at a writers conference, and the conversation invariably devolves into questions of how to please Amazon and its algorithms.  Shouldn’t the conversation be about how to please readers?

The indie community is beginning to grapple with these difficult but important questions of what it means to be indie.  Although I remain optimistic about the potential of the indie author movement, I’m losing confidence that the community at large has the necessary situational awareness to dig itself out of the hole it now finds itself in.

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Many bestselling authors from four or five years ago have seen their sales plummet. Some have cut back production or quit writing altogether to take on a “real” job that pays. Jobs that don’t involve writing. This saddens me, because when you strip a person of their ability to pursue their creative passion, a part of them dies, and humanity as a whole suffers.

None of these talented writers suddenly became crappy writers. These writers have readers who want them to write more books but the authors are refusing to write them. When you depend on your author income to pay the bills and feed your family, you can’t write for charity.

The same factors hurting bestsellers are hurting every other author who’s trying to reach readers with their books.

When I meet an author who’s suffering, they’re often quick to blame themselves for any misfortune. This year I heard each of the following repeatedly:

  • I need to learn how to do better on Amazon ads.
  • I need to learn how to do better on Facebook ads.
  • I need to find more paid marketing opportunities.

The above answers are like a moth saying, “I need to fly faster toward the flame.”

You can’t fix a problem if you’re unable to identify the cause. In my 2019 publishing predictions post last year, I identified the primary cause, and expressed my bewilderment that so many authors and even large traditional publishers were continuing to make decisions that ran against their best long term interest. As I wrote in that post, when I posed this conundrum to literary agent Michael Larson, co-founder of the San Francisco Writers Conference, he responded, “Pain seeks simple solutions.”

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Some industry watchers have attempted to divide the indie universe into two camps: The serious professionals and the amateur hobbyists.  As this thinking goes, the professionals are serious and implement best practices, and the amateurs are amateurs and therefore flail and fail.  I find this view unsatisfying and even dangerous.

Yes, there are lazy amateurs out there who still think their illegible homemade ebook cover is wonderful because if you click to expand the cover image and squint, you can read all the important words in the image (!!!!).  Darwin will sort out the delusional, pig-headed and willfully ignorant.

Yet there are talented professional authors who implement best practices, write super-awesome reader-pleasing books, invest in expensive professional editors and cover designers and marketing teams, and they too flail and fail.  Something else is going on here.

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Publishing is not an easy business to learn.  It takes time, an inquisitive mind, and a lot of hard work.  A newbie author might have a master’s degree in biochemistry, neuroscience, or sociology, but that doesn’t mean they’re equipped to make intelligent publishing decisions.

Thousands of new indie authors enter the market each year.  The path forward for them is more confusing than it was a mere 10 years ago.  New authors are confronted by a cacophony of advice and unlimited options from so-called experts.

Often the advice from experts is conflicting or just plain wrong which causes further confusion.  Confusion leads authors to make poor choices.  Often the simplest solution to the pain is the wrong solution.  Confusion makes aspiring authors more likely to fall prey to predators, and more likely to make decisions that undermine the long term opportunities for all writers.

It’s not just the newbie authors who are making poor choices.

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I had a revelatory epiphany earlier this year that helped me view the challenges faced by indie authors in a new light.  The epiphany was triggered after stumbling across a brilliant essay from the 1980s titled, The Basic Laws of Human Stupidity by Italian economist, Carlo M. Cipolla.

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His essay attempts to explain how the behavior of each individual affects a society at large.  He posits that people occupy one of four quadrants, defined as follows:

Intelligent – Cipolla argues that Intelligent people make decisions that reap mutual benefit for both the individual and society.  These people naturally gravitate toward win-win decisions and relationships.  Their actions elevate a society for everyone’s benefit.

Bandits – Bandits act selfishly with callous disregard for society.  Think of thieves, cheaters, scammers, and others who are only out for themselves.  Although no one likes thieves, Cipolla posits they’re a net neutral to society because they’re just transfering value from one pocket to another.

Stupid – Cipolla definines stupid people as those who make self-destructive decisions that also harm society.  Stupid people are a net negative to society.  Their actions sap society of its wealth and potential.

Helpless – Helpless people are adept at making decisions that never benefit themselves, but always benefit someone else. Similar to bandits, helpless people are a net neutral to society because their loss is someone else’s gain.  Although bandits and the helpless don’t drag a society down per se, they also don’t contribute to the society’s prosperity.

The essay makes clear that intelligence, banditry, stupidity and helplessness have nothing to do with education level, race, religion, political orientation or socioeconomic class.  Instead, these labels are more a reflection of one’s personal priorities, world view, curiosity or willful ignorance, and the desire and capability – or lack thereof – to not act stupid.

Every society, country or large family will have a mix of each of the four types of people, as well as those who straddle the gray areas of each quadrant’s border.  The same holds true for any business entity, retailers included.  The really interesting stuff happens in the gray areas, because that’s where an otherwise stable or vibrant society can slip into stagnation or decline when things tilt out of balance.

The lessons in Cipolla’s essay are rich in their applicability to any situation, especially if rather than viewing it as an explanation for why a society might rise or fall, you view it through the lens of how a movement might rise or fall.  The outcome for any movement – whether it’s the indie author movement or a political movement – is determined by the interplay between the four groups.

Put another way, a society or movement performs best when the majority of participants are making decisions that produce enough positive benefits to society to counter the decisions by those that sap a society of its strength.  The more participants who occupy the Intelligent group, the more prosperous the society.  While it would be wonderful if all members of society landed in the Intelligent group, such a utopian dream is unattainable.

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Back in 2011, Amazon introduced a predatory scheme with KDP Select which later spawned Kindle Unlimited (2014).  These interconnected publishing options devalued indie ebooks, stripped indies of their independence, and starved Amazon’s ebook retailing competitors of books and customers.  Traditional publishers acted like KDPS/KU was only a problem for self-published authors who were already selling their cheap books too cheaply anyway.  But when indie ebooks are artificially devalued to the point that readers are reluctant to purchase single-copy ebooks, all books are devalued.

In other words, the entire industry had a hand to play in the banditry, stupidity and helplessness that authors observe today.

If you question why an individual author, publisher or retailer should care about the success or failure of the indie author movement, the answer is that we’re all in this together.

If we allow a single retailer to grind all the profit out of publishing, we can look forward to a dim future Amazon’s competitors exit the market, royalty rates drop further, and where the only books that get published are from deep-pocketed hobbyists who are willing to pay more to be read than they earn in income.

It’s not too late for indie authors to chart a more prosperous course for their careers.  It starts with fiercely defending the independence upon which the indie author movement was born.  Your independence is your power.  Don’t let others take it away.

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Sanctions coming against Amazon and Facebook – In my predictions for the last two years, I predicted that the pressure would grow for the political establishment to bring some of these too-powerful platforms to heel.  When a company tangles its tentacles too far, too wide and too deep, it suffocates innovation.  Here’s a cooking metaphor for those of us who’ve mastered the art of boiling water.  If 2018 was pre-boil, then 2019 became a full-on simmer, with politicians on both sides of the aisle agreeing that something needs to be done.  In 2020, the calls to break up these companies will reach a full boil.

Backlash coming against Amazon Ads for stealing author platform – Last year I predicted that Amazon would become recognized as pay-to-play in 2019, and certainly that view became more accepted in 2019.  Amazon’s transition into pay-to-play marks a sad realization of the satirical April Fools post I wrote in back in 2017 titled, Kindle Power Bucks, which solved the age-old book marketing problem by allowing authors to pay to be read.  In 2020, we’ll see the author backlash.  It’s not that the idea of advertising is a bad one.  What’s bad is how Amazon implements advertising.  Amazon replaced their also bought shelves with sponsored ad shelves. This means they removed the organic book recommendation wisdom of fellow readers and replaced it with paid advertisements.  It’s a disservice to readers because now a book’s visibility is measured by the author’s ability to pay for that visibility.  As I wrote in Publishers Weekly last month in my column titled, Platform Theft, Amazon Ads enable Amazon to sell your author platform to the highest bidder.  Try this exercise learn how this affects you:  Click to the Amazon home page, select Books, and enter your pen name.  It’s not uncommon for the first three search rows to be occupied by sponsored ads for four books by other authors.  It’s also common to find that up to one third of all your results on that search results page are promoting other authors that Amazon knows are not you.  Each is a detour designed to take your reader away from your books.  It also means that Amazon is forcing indies to trample upon the platforms of fellow authors simply to remain visible in the store, in the same way that KDP-Select causes authors to trample upon the visibility of their fellow authors who refuse to go exclusive.  You work hard to build your readership and your author brand.  Now Amazon’s working hard to take it away, cloaked in the vapid veneer of a paid marketing opportunity.

Audiobooks disappoint – For indie authors, peak audio may already have come and gone.  The audiobook market will grow in 2020, but the average participating author will see slower growth or even declines.  The first indie authors to do audiobooks reaped the most benefits.  Now the market’s getting crowded.  Amazon’s Audible division continues to maintain a stranglehold on audio, and similar to Amazon’s strategy to commoditize and devalue everything they sell, they’re successfully devaluing audiobooks (by restricting the author’s ability to set their own prices, and demanding long term exclusivity for the best visibility) which means your profit opportunity will continue to decline in audiobooks for the same reasons it has declined in ebooks.

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Single-copy ebook sales face continued pressure from Kindle Unlimited – I’ve made similar predictions in prior years, and we’ll see this trend continue into 2020.  When readers have unlimited access to over one million ebooks with their Kindle Unlimited subscription they can read for free, and when the subscription service decouples author compensation from the author-set single-copy price of the book, it’s a recipe for significant devaluation, and it gives readers over a million reasons to never purchase another single copy ebook again.  Even 99-cent ebooks start to look too expensive to readers when they read other books for what feels like free.

Platform ownership to become a top indie imperative – Most authors already know the importance of building their marketing platform.  Your platform is your ability to reach your prior and prospective readers.  To date, most authors have focused the majority of their platform-building on growing their social media following, and building readership at the various retailers.  But when your relationship with your readers is mediated by a third party, it means that third party is the gatekeeper to your readers.  That third party can erect tolls or implement other policy changes that make it difficult, expensive or impossible to reach the readers who want to purchase your book.  In the examples of Facebook and Amazon we see blatant toll-taking.  In 2020, more authors will wake up to the danger and realize the imperative of building an author-controlled marketing platform.  This doesn’t mean authors will need to open their own ebook stores (most who try gain a new appreciation for the valuable services offered by a retailer).  Not all retailers are the problem.  I can’t think of a single instance in the 10-year indie ebook retailing history of Apple Books or Barnes & Noble, for example, where either implemented a single policy change designed to tax authors, reduce royalty rates, or strip them of their publishing freedom.  Despite Apple and Barnes & Noble being the second and third largest sellers of English language ebooks, both are small potatoes compared to the worst offender Amazon that has implemented new policies each year for the last 10 years that strip authors and publishers of their profit margin and independence.

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Romance Writers of America faces make or break year in 2020  – I’ve long been a fan of Romance Writers of America, one of the largest and best organized professional writing organizations here in the US.  The organization has been operating continuously since 1980 when editor Vivian Stephens joined with other romance writers to form a national organization to advocate for the interests of romance writers.  In the years since, RWA has helped tens of thousands of romance writers.  This past July, it was my great honor when the RWA board of directors awarded me their 2019 Vivian Stephens Industry Award for my contribution to the genre.  Following the acceptance of my award in New York, I enjoyed meeting several RWA board members during the conference’s after-party.  Therefore, as you might imagine, I was shocked and saddened to learn that most of the RWA board abrupty resigned over the Christmas holiday in protest to what they viewed as secret backroom dealings related to how they handled allegations of racial insensitivity.  The story even caught the attention of the New York Times who covered it yesterday.  Many members now feel angry, hurt and disappointed. This turmoil is a critical test for RWA’s leadership.  How they deal with it will have lasting implications for RWA’s future and possibly even its survival.  I hope they rise to meet the challenge and emerge from this crisis stronger, better, and more inclusive than ever.  Diversity is strength!

Link to the rest at The Smashwords Blog

PG hadn’t visited Smashwords for a long time.

Mark Coker deserves credit for being an early facilitator of self-publishing and ebooks. More than one successful indie author gained his/her start and began to build a loyal readership on Smashwords.

However, it’s really, really, really tough to compete with Amazon and has been for a long time. Smashwords, iBooks and Nook were early victims (they are each still alive, but much smaller than they would have been absent Amazon), but Amazon claimed many other victims as well.

Here’s a link to a list of 81 major retail bankruptcies that have occurred in the last five years with Amazon as a major contributor for most.

Even the biggest retailer of all, Walmart’s pretax income in 2019 was less than half of its income in 2015 as was its net income.

In terms of revenues, Walmart is basically the same size as it was ten years ago. Amazon’s revenue is over twelve times larger than it was ten years ago.

Perhaps PG didn’t read Mark’s blog post well enough, but PG didn’t see a lot of reasons for an author to do business with Smashwords. It was more Sturm und Drang than advantages Smashwords could provide to an indie author absent evil Amazon Mandalorian stormtroopers doom and gloom.

PG took a quick look at two of Smashwords’ major competitors – Draft2Digital and Kobo – and the difference in websites and the attitude that each communicated was, for him, striking. D2D and Kobo each had clean, fresh-looking site designs and communicated an upbeat professional attitude toward their business and, by extension, their respective futures.

D2D, in particular, had lots of information and resources for indie authors – sales and marketing tools, D2D Author Pages with features found on quality author websites, book tabs, a universal book link builder, “a single link that can take readers to everywhere your book is sold online,” and differentiating service positioning – “Self-Publishing with Support.”

As to Laws of Stupidity, is that really a persuasive reason to choose Smashwords over Amazon?

 

 

Publishing Your Ebook Is Changing on Smashwords

From The Book Designer:

This is a third and final perspective in my publishing strategy trilogy, a drama festival with three events, Amazon and Ingram being the earlier performances. There have been five-week breaks between these theatrics as I proceed in the Joel Friedlander modern publishing ecosystem.

If you want to distribute your ebook through Amazon directly and then also to “every ebook vendor beyond Amazon,” how should you do it? Smashwords is my recommended choice.

Non-exclusive is my chosen publishing survival mantra in book/ebook publishing. I work with Amazon directly, but am non-exclusive. I also think this is the healthiest approach for all citizens who control “knowledge products” in our society, meaning books/ebooks. We need as much diversity in the marketplace of ideas as we can arrange. Diversity in the marketplace is a socially desirable goal.

I have always wondered what percentage of ebooks sold in America are sold on Amazon. I have heard a lot of folks say 60% for several years. But recently a couple of knowledgeable people said the figure is higher. If you have credible info on this, please share it with us.

I wanted a way to distribute my ebook with Amazon and beyond Amazon. My targets would be Apple Books (formerly called iBooks), B&N ebooks, Kobo, and all the other vendors. How would I do this?

. . . .

I decided years ago, in my first ebooks, to proceed with BookBaby for two ebooks. They did and still do a good job. But revisions of my ebooks with BookBaby will require a substantial new cost, as I understand it. In Amazon Kindle and in Smashwords, I can simply write over the file at no cost. So I switched to Amazon direct and to Smashwords for “everyone else,” which is what I recommend now for ebook distribution.

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Details of Financial Return to the Author in Kindle, Ingram, and Smashwords

Authors need to keep track of exactly the cash returned to them in sales from their participation in each of these publishing ecosystems.

With my $4.99 ebook, how much do I earn today in the various structures?

Amazon Kindle

In Amazon Kindle, the formula appears to be 70% of retail, but after a delivery fee, which depends on ebook size.

Your ebook on Amazon must be in the recommended $2.99-$9.99 range to get the 70%. The return appears to drop to 35% when you are out of compliance regarding the recommended ebook prices.

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IngramSpark

In IngramSpark the formula for ebooks appears to be 40% or 45% return of retail price and there is no restriction on price parameters.

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Smashwords

In Smashwords, the situation is both simple and more complicated.

When Smashwords sells one of my ebooks in Apple Books, as an example, it appears that I earn 60% of list. For Libraries, the return is 45% of list.

However, Smashwords also has its own internal selling ecosystem, so my book in that structure appears to net for me 56% to 85% of list. The details are granular. Mark Coker recently wrote me about this as follows:

“For sales through the Smashwords Store, the percentage is based on the total amount of the shopping cart. The author earns 85% net where net = the purchase price minus the PayPal fee. So, for some common price points it would be 56% for a 99 cent ebook, 74% for a $2.99 book, 76% for $3.99 and 80% for books or shopping cart totals over $7.99. The easiest way for you to get the exact percentage at different price points is to log into your account, click publish, then enter sample prices into the pricing calculator. It’ll display a dynamic pie chart that shows how much is earned at each price for each channel.”

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Smashwords, as well as IngramSpark, does not appear to penalize authors who want to price their ebooks above $9.99. Two of my travel journalism colleagues, experts in their niches, like this set-your-own-price approach. They have their niche markets and are able to command higher than $9.99 for their ebook products. On Amazon their return would drop to 35%.

Link to the rest at The Book Designer

Perhaps it’s time for another exploration of Smashwords and IngramSpark, but PG’s long-ago experiment with non-Amazon platforms resulted in very few sales for Mrs. PG’s books.

While PG was on The Book Designer site, he discovered that Joel Friedlander, book designer extraordinaire, had vastly expanded his collection of templates for the interior design for various types of books. You find all the design templates here.

For the last two of Mrs. PG’s books, PG has used KindleCreate (if the link doesn’t work for you, just Google KindleCreate), a free downloadable book formatting mini-program.

KC has worked pretty well and none of Mrs. PG’s readers have complained, but Joel’s templates address some of KindleCreate’s shortcomings (in PG’s eyes):

  1. KC only has four different formatting templates (and to PG’s untutored eye, only one looks good enough for Mrs. PG’s books.)
  2. KC is tightly-integrated with KDP (good), but the file it produces doesn’t seem to be useful for anything but publishing with Amazon. No Epub sites need apply.
  3. Additionally, PG couldn’t find any way to adjust anything in the file produced by KindleCreate in MSWord. Any problems with the final ebook file could only be addressed with the very limited KC program.

PG would be interested in hearing other comments about KindleCreate vs. MSWord-based templates from visitors to TPV who are familiar with both.

2017 Book Industry Predictions: Intrigue and Angst amid Boundless Opportunity

From Mark Coker via Smashwords Blog:

If you could see into the future, what would you do to change it?

Each year I polish off my imaginary crystal ball and attempt to divine how the boiling crosscurrents of technology, competitive intrigue, author aspirations, and reader tastes will shape the opportunities facing authors, publishers and retailers for the year ahead.

. . . .

2017 will mark a special milestone for the ebook industry.  It marks the ten year anniversary of the Kindle.  It’s also the ten year anniversary of Smashwords’ incorporation.  In early 2007, after three years of crafting our business plan, I hired our first programmer and began active development on the Smashwords platform which we launched in early 2008.

Although my prediction track record has been pretty good over the years (see the end of this post for a complete list of my past predictions), my overarching objective is not to be correct.  Instead, these predictions are meant to spark conversation and contemplation.

. . . .

Before we get into my ten predictions for 2017, let’s take a moment to review the amazing transformational change over the last decade, and celebrate how far the indie author movement has come in such a short period of time.

Ten years ago traditional publishers controlled the means of book production, distribution and sales.  It was a print-centric world where print books accounted for 99.8% of book sales, and where publishers were the bouncers at the pearly gates of authordom.

Publishers controlled which writers graduated to become published authors, which books readers could read, which authors remained in print, and which authors would be allowed to publish another book.

. . . .

In the last ten years ebooks took off.  Ebooks today account for maybe 25% of book sales, up from essentially nothing a decade ago.  In genres like romance, the percentage is much higher.

When I look back at the rise of the indie author movement the last ten years, romance authors and their readers have always led at the tip of the spear.  They were first to embrace the indie ebook publishing, the first to achieve significant commercial success as indies, and the first to pioneer many of today’s best practices for ebook publishing and promotion.

Romance authors – predominantly women – are the some of the smartest players in this business, and their readers are the most coveted and voracious.  These are the readers who often read a book a day.

Romance authors are the canaries in the coal mine.  Romance authors were first to benefit from the rise of ebooks and the first to experience the deleterious effects when the market became saturated.  They’ve also been the first to fall prey to some of the more troubling developments in the industry now affecting writers and publishers in every category.

In the last decade, hundreds of thousands of writers have joined the indie author movement, drawn by the advantages of self-publishing ebooks.  What are these advantages?  In a nutshell, indie authors enjoy faster time to market, greater global distribution, complete creative control, greater pricing and promotion flexibility, greater opportunity to serve their readers with high-quality low-cost ebooks, and the opportunity to earn royalty rates up to five times higher than what the traditional publishers pay.

. . . .

1.  Indie authors will continue to capture greater ebook market share in 2017 

Indies will capture a greater share of digital reading in 2017.  Factors driving this include:

  • Each year the indie author community raises its game to become more sophisticated and more professional.  Indies are learning to implement – and in many cases pioneering – the best practices that motivate readers to choose one ebook over another.
  • Indie ebook authors combine quality with lower prices, providing readers tremendous reading value.
  • Even though indie ebooks are already low-priced, indie authors have greater flexibility to lower prices further than do the large publishers.  This is a mixed blessing.  This also means indies are vulnerable to some of the greatest devaluation pressures because indies don’t wield the collective bargaining power of large publishers.

2.  The glut will grow more pronounced

Over the last few years here at the Smashwords blog I’ve talked a lot about how there’s a glut of high-quality low-cost ebooks.  These ebooks are immortal and will never go out of print.  Thanks to low-cost virtual shelf space, retailers can stock these ebooks forever – even if the books don’t sell.  Although it’s great that your book will forever occupy the shelf, and forever be discoverable and purchasable by new readers, it also means that the virtual shelves are becoming more overcrowded every day.   The major ebook retailers each stock millions of ebook titles in their online stores, with Amazon fast approaching five million titles.  Every day from yesterday forward it will become more challenging to stand out, which leads me to my third prediction.

. . . .

10.   Amazon to face anti-trust scrutiny for unfair business practices

This is a long shot, but in the spirit of prediction folly I’m going to go out on a limb here.  In anti-trust law, there’s nothing illegal about operating a monopoly (where you have exclusive control over a commodity and can manipulate prices) or a monopsony (when there’s only one major buyer).  What’s illegal however, is when a company exploits their monopoly or monopsony for unfair business advantage that makes it impossible for other competitors to compete on a level playing field.

Amazon defenders will argue that Amazon is a brilliant competitor and innovator, and that those who think Amazon plays unfair should stop whining and start innovating.  But this argument rings hollow.  The other retailers have innovated, and continue to innovate.  I work with them.  I see it.  This specious argument by Amazon defenders confuses market share for commitment.  If Kobo earns authors 1/10th of what they earn at Amazon, it’s not necessarily a failing of Kobo, it’s a function of market share.  If you decide to open an indie ebook store specializing in personalized recommendations for cookbooks, the fact that you can’t grow sales to billions of dollars overnight is not a failure to innovate.

One industry watcher explained Amazon’s anti-competitive business practices to me with an analogy about trains, which I’ll paraphrase and expand upon:

Let’s say you own the railroad network that connects farms to the largest marketplace (which your railroad also owns) 1,000 miles away where 70% of corn is bought and sold; and your railroad also owns some corn fields along the rail lines.  If the railroad operator decides to give its own corn first priority on shipments, then their corn will reach the market first while the corn of other producers spoils or is late to market.  If the railroad also gives its own corn preferential display in the marketplace, or if it denies other producers the option to sell under favorable terms in their marketplace, or gives them poor placement within the marketplace, then what are the other farmers to do?  Shame on the other farmers for not buying their own railroad or operating their own marketplace!

Bringing this back to Amazon, Amazon operates the world’s largest ebook retailer providing access to 70% of the world’s ebook readers.  They operate their own publishing imprints.  This means Amazon has the ability to give its exclusive titles first class priority on the train and in the marketplace, and they do.  They operate the Kindle store where all books are allowed but exclusive KDP Select books and Amazon-imprint books are given preferential store placement.  They operate marketplaces such as Kindle Unlimited where only exclusive books are available and non-exclusive books are shut out.  Shame on you Mr. Retailer or Ms. Author for failing to innovate.

This is anti-competitive and unfair, and these facts have led some anti-trust experts to conclude that the only way to solve this problem is for Amazon to be broken up into smaller, independent companies that operate at arms length.

Amazon has so far been able to skirt anti-trust scrutiny by arguing that the network they operate benefits consumers because of Amazon’s track record of lowering consumer prices for ebooks, and this is very true.

But what about the producers?  Do they have any rights?  You’re a producer, you tell me.

Link to the rest at Smashwords