From Kristine Kathryn Rusch:
[Note on 5/5/23: As most of my regular readers know, I’m dyslexic. I have a first reader to catch errors, but this post–which was late–went live without the assistance of that first reader. As a result, I made two typical errors for me, which have been discussed in the comments. Normally, I leave my mistakes and let the comments speak for themselves, but because the KU people are here, these two small errors have grown all out of proportion. At the request of a few folks, I’ve removed the mistaken passage and corrected a math error, but I’m leaving all the comments, which I think are valuable. If you want to read the actual removed section, download the audio version. The errors remain there.]
I’m writing this on the last day of April. I’ve been planning this post for months now, as the drumbeat of bad news out of Amazon escalated from rumors to asset sales to major layoffs. The reason I’m posting the date in this blog is because by the time you read this, there might be even more news that has somehow affected writers.
I’ve been worrying about this year since at least 2011. Maybe longer. I knew at some point, the world’s largest retailer would mess with their ebook program(s). Amazon is not a book retailer. They’re no longer a bookstore, and haven’t been one since the last century.
They’re an online retailer, currently the largest in the world by most measures, but they might not be number one by the end of 2023. Others are rapidly climbing the list, and aren’t suffering from the same kind of missteps that Amazon made during the past few years.
When big companies have bad earnings reports, the people running the big company must make changes—even if changes aren’t warranted. The CEO answers to the stockholders, not to the customers, and stockholders generally demand some kind of change…or the CEO gets fired.
In the past two years, Amazon has had bad earnings reports. 2022 was terrible.
. . . .
Keeping an eye on earnings reports, both expected and actual, are important for writers to do with any business they’re tied up in, because then the writer isn’t blindsided by changes that come from above.
The losses started in mid-2021, but they were small. Year over year, though, which is how most publicly traded companies now look at earnings, were devastating in 2021. After all, 2020 was filled with phenomenal growth. A year later, the growth was slowing, and by 2022, reversing.
Amazon made a lot of money during the pandemic and, like many tech companies, seemed to think that the gravy train would continue. Apparently no one in the company thought it through: what we were going through was a true Black Swan event. It happened worldwide at the same time, and no one alive had gone through anything remotely similar.
Rather than seeing the event as something unique, with its own set of rules, the people in charge of the tech companies decided the future had arrived. We would all be shopping online forever now, talking to friends and family on Zoom, and never leaving our homes. Apparently, these starry-eyed CEOs and prognosticators weren’t listening to their own friends and family, who were probably chomping at the bit as much as everyone else, waiting for the day when they could burst out of their little bubble and return to “living” again.
When living returned, the tech companies saw quarter to quarter losses, and many of those losses were major. Some companies are doing just fine because they didn’t expand during the pandemic. But others are doing poorly.
Amazon spent the newfound wealth like it was a growing start-up again. They bought or rented warehouse space all over the country, and added a huge number of employees.
And now, with the financial losses, Amazon is reversing a lot of those decisions.
Most writers wonder why that’s important. After all, big companies are just big companies, right? They have money. They’ll continue.
But they don’t always continue. Take a look at Bed, Bath, And Beyond. In fact, take a look at this article in Business Insider, which is illustrated with large bold subheads. It gives a quick overview of how a company can go from a juggernaut 20 years ago to bankruptcy and possible closure today.
For more than a decade now, I have fought with writers old and new about relying solely upon Amazon. I’ve written blog after blog recommending that writers go wide, and yet many writers never listen.
. . . .
I kept saying that someday Amazon will change, and that change will hurt writers, particularly those who tie their entire writing career to Amazon. The writers who have gone exclusive through Amazon via Select are really going to be in trouble.
And the trouble has already started.
Some of that trouble was built in from the start. What actually got me taking notes for this blog post was a Facebook post from one of the best-known Kindle Unlimited writers who claimed that writers never have a passive income off their work. Writers must constantly write and release to be successful.
Um…what? Really? News to me and most writers who have gone wide. One of the best things about writing is the passive income. If Dean and I quit tomorrow, we will continue earning for years to come. Sure, some of the revenue will go down a bit if we don’t put out new product, but mostly, the income will plateau.
Apparently, goosing payment through new releases is one of the few ways that K.U. writers survive. And if they don’t do it, they don’t get paid as much or as well. Or maybe not at all, given what he (and all of the people in the comments) said.
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.
PG acknowledges that Amazon is far from perfect. However, at the present time, it’s still the best friend indie authors have.
A handful of stats from a TPV post a few days ago:
- Amazon sells over 487 million ebooks through Kindle every year.
- The company’s market share in ebook sales stands at least 67%, climbing to 83% when Kindle Unlimited is included.
- Amazon is estimated to control over 87.9% of yearly ebook sales in the UK.
PG prognosticates that ebooks are the future of publishing, indie or otherwise. Compared with the dead-tree side of publishing, ebooks have a much higher margin. All you need is a website, the ability to process credit card purchases and enough cheap online disk space to hold a bunch of electrons in one or more ebook formats.
Amazon’s management decisions have definitely gone downhill since the Bezos era, but even less-talented management has definitely established the best way to sell ebooks at a profit. It’s a reliable cash generator. However, the book business as a whole, traditional or indie, is not a huge money-maker on either the gross or net column in a giant company’s annual report.
Amazon’s huge overhead numbers and sunk costs are in the bricks and mortar side of things. Lots of physical warehouses being stocked with lots of physical products which are then sold and shipped all over the place, mostly on trucks, but also on planes. Amazon has certainly modernized the way physical warehouses are operated, but physical warehouses and physical shipping is a very expensive way to distribute goods compared to a bunch of spinning disks hooked up to the internet. Bits are always more efficient than atoms.
PG would like to see more than a few upstart competitors to Amazon’s book business pop up. It’s not difficult for PG to envision a much better internet bookselling platform than Amazon’s.
However, while he doesn’t have definitive inside information, PG suspects that trying to fund a company to compete with Amazon in ebook sales is a very, very hard sale to any venture capitalist.
With respect to ebooks, The Zon has fallen into the same pit that has claimed or almost claimed a whole bunch of tech companies – keep the servers running, collect the easy profits, but send a lot of money and a great many smart people in the organization off pursuing this or that flavor-of-the-month in the start-up world.