Are indie authors truly independent?

In his annual post, Smashwords founder Mark Coker asks ‘Can authors honestly call themselves indie authors when they’re getting 80-100% of their sales from a single retailer?’

His question inspired me to investigate my own sales. And it turns out, the sales of Number Eight Crispy Chicken fall right in this range.

Although it is also available on Apple, Barnes & Noble, Kobo, and Smashwords, over the first month, 91% of the sales of Number Eight Crispy Chicken were via a single platform. You guessed it: Amazon.

Drilling down, however, 44% of those sales on Amazon were for paperback books. Only 72% of ebook sales were on Amazon.

But that’s still a lot of eggs in one basket.

Diversification

In investing, diversification is an important, if little understood, topic. Essentially, it’s the principle of spreading risk around. Not putting all of your eggs in one basket. That way, if one egg (or investment, or, in this case, book retailer) goes bad, you still have the others.

If I were managing a stock portfolio, I don’t think I’d feel comfortable investing 72% of my money in a single company.

And in fact, it’s worse – all of the sales that weren’t from Amazon came from another single seller: Apple.

Again, if I were managing a stock portfolio, I don’t think I’d feel comfortable investing all of my assets in just two stocks.

As the old saying goes, ‘Don’t put all your eggs in one basket‘.

Indies aren’t alone

“Indie” authors may be independent, but we’re far from alone in not having adequate diversification. Fewer than half of investors surveyed by the ASX claim their portfolios are diversified. And even that group holds just 2.7 financial products on average.

A further 40%, who held just 1.6 products on average, said they knew their investments weren’t diversified enough. But most worrying of all, 15% of investors admitted they didn’t know if their investments were diversified or not.

If you’re an author, is your work diversified? Or have you invested everything in Amazon?

“Investing” in Amazon

The reality is, I haven’t “invested” in Amazon.

I haven’t ‘gone exclusive’ with KDP Select, Kindle Unlimited or similar. I made the decision to publish Number Eight Crispy Chicken “wide” across as many platforms as possible, because I believe in making information and entertainment accessible to all – not just those in certain geographic regions, or those who have certain (expensive) devices.

Funny thing is, even though 100% of my sales come from Amazon and Apple, I own neither a Kindle or an i-device. In fact, due to my traveling lifestyle, I often have great difficulty even purchasing ebooks on the Kindle app, and I don’t have Amazon Prime.

I haven’t purchased any Amazon ads. All of my advertising has been free, and, wherever possible, has included links to all of the other platforms through which Number Eight Crispy Chicken is available.

I haven’t prioritised Amazon on my website. The images on my site display a mix of paperback and electronic books, and the ebooks are displayed on Kindle and generic devices. Where I’ve placed purchase links, they are in alphabetic order, which does put Amazon first, but the other options are equally visible. Similarly, on social media, I’ve posted photos of the ebook on generic devices, and mentioned multiple sales outlets.

Overexposure

As the current covid-19 crisis has brought to light, it’s not just individual investors who suffer from a lack of diversification. Many major companies are overly reliant upon on a single customer or group of customers.

Take mining, as an example. Mining companies – like many companies – have suffered losses in recent weeks following the widespread disruption in China. Rio Tinto, Vale, BHP and Fortescue all rely on China for half or more of their revenue. In fact, in Foretscue’s case, 95% of their revenue is from China.

In boom times – when China is well, and its economy is steaming ahead, when Amazon is our friend and making our books accessible to an audience so huge, few of us could have anticipated it decades ago – everything is well.

But it’s a different story when tens of millions of people are in quarantine, or when Amazon decides, for whatever reason, to drastically change how its algorithms or ranking work, how its review terms and conditions work, how crucial paid advertising is, how it will prioritise KDP Select books, or how it will compensate authors.

Even though I haven’t (intentionally) invested all of my eggs in one basket, sales of Number Eight Crispy Chicken still suffer from a lack of diversification. To be specific, there is an overexposure to risk. Should Amazon fold (ha ha!) or, (more likely) decide for some reason to change how it works and hide my books, then I might lose up to 91% of my sales.

If you’re an author, how many sales would you lose?

It’s about readers

Although I’ve been referring to “sales”, I’m not really talking about, or interested in, money here. It’s all about the readers.

Each sale is (hopefully) someone who will read your book. Sure, you can give your book away for free. But often times, free books aren’t read at all.

In 2015, it was reported that 60% of books downloaded to Kobos were never opened even once. Interestingly, it appears that the more expensive a book is, the more likely it is that a reader will open it.

This makes sense. Price is one important part of the story we tell about our books. By charging $5.99 for a book, we’re telling potential readers that it’s worth $5.99.

By charging 99c, or nothing, we’re telling potential readers the book is worth little – or nothing. And we can expect their expectations and behaviour to follow suit.

Readers who download a book that costs $5.99 are likely to open it up because they believe it’s a more valuable book, and because of “sunk costs” – they’ve already invested in the book. Fewer readers will invest this much, but those who do are more likely to open the book, and perhaps more likely to finish it. But they may also be more likely to judge it harshly if it doesn’t meet their expectations.

Readers who download a book that costs little or nothing are less likely to open it up, because they believe it has less value. More people may download a book that is offered for free, but many of them may simply be book “collectors”, who have no real interest in reading the book once their desire to acquire it is satisfied. Their lowered expectations may lead to them being pleasantly surprised if they do pick it up.

So when we’re talking about sales, what we’re really talking about is readers. Sales simply appears to be a better way of counting readers than downloads.

And when we’re talking about platforms, what we’re really talking about is not just where the writers are. That’s just one piece of the puzzle. As I’ve demonstrated above, authors aren’t necessarily intentionally “overinvesting” in Amazon. It’s also about where the readers are.

Exclusivity is censorship

Make no mistake – as Coker argued in his annual post last year, exclusivity is censorship:

“It says you can express yourself here, but not there.
Algorithms that give preference to exclusive books are a form of censorship too.”

I first became passionate about censorship when I was working as an academic, and became involved in the open education movement.

In recent weeks, academics around the world created an archive of research articles studying Covid-19, in order to facilitate international cooperation in the containment, treatment, and hopefully, the development of a cure for this novel coronavirus.

The archive was, technically, a form of piracy.

While undeniably the right thing to do, these archivists were, technically, breaking the law by sharing articles that were locked down by giant publishing companies, even though it was in the public interest.

Research on this terrible virus, which has already left thousands dead and affected the lives of tens millions of people, resulting not only in physical illness and economic impacts but psychological stress and appalling racism, is fast-paced. The executive editor of the New England Journal of Medicine states that up to 20 new submissions relating to the virus are received by that journal alone every day.

A petition on Change.org has urged those publishers which have coronavirus-related papers behind a paywall to unlock them. As the petition points out, during the Ebola outbreak, the Liberian Minister of Health warned that subscription fees were standing between Liberian doctors and life-saving information.

When I was a PhD student, I found the cost of single article downloads prohibitively expensive. A single article represented nearly a whole months’ worth of ramen noodles (not that I ate ramen every day, but you get the idea).

Consider the situation of a physician in Liberia. $45 for a single article represents half a week’s salary.

And in case you’re wondering, once I became an academic, I did not start reaping enormous profits by publishing articles of my own. In fact, I never earned a penny from any of the articles I published in academic journals – and neither do most scholars. Many, in fact, must pay for the privilige of having their work published. Meanwhile, the companies that publish these journals reap massive profits of around 40%, often in the billions.

The scholarly big five

Just as there is a ‘big five’ publishers in mass market books, there is a ‘big five’ in academic publishing.

Between 2006 and 2013, more than half of all peer-reviewed academic papers were published in journals owned by the following five companies:

  • Reed-Elsevier (a publicly listed company with 7.8 billion pounds in revenue annually, subject to massive boycotts and controversy over its paywalls, review processes, and data handling),
  • Springer (the result of a merger with Macmillan and other publishers, with 1.64 billion euro in annual revenue),
  • Wiley-Blackwell (a subsidiary of the multinational $1.7 billion a year publisher Wiley),
  • Taylor & Francis (a subsidiary, along with Routledge, of the 3 billion pound media group Informa), and
  • Sage (the only independent publisher on this list, with over 1,000 journals under its belt).

In some fields, the figures were even more skewed. In 2014, these companies accounted for more than 70% of the papers published in Chemistry and Psychology, two-thirds of those published in the Social Sciences, and, relevant to the current viral outbreak, more than 60% of those papers published in Clinical Medicine.

It wasn’t always like this. Back in 1996, those five companies controlled “just” 30% of the academic market. In 1973, it was 20%.

So why do academics increasingly publish in journals owned by such a tiny handful of publishers? Especially when many may be concerned about bias and accessibility?

While some academics, institutions, and indeed, entire countries have boycotted profiteering, exclusive publishers, opting for or even enforcing Open Access, other academics are subject to institutional or funding rules that require them to publish in “well-ranked” journals – which are often published by – or eventually purchased by – these mega corporations. In short, their hands are tied.

A dream of independence

My experiences with the scholarly big five informed a lot of my attitudes towards the publishing industry in general, and shaped my desire to become an indie author.

Which has left me asking myself, how successful have I been in that aim, if, as Mark Coker suggests, 80-100% of my book sales are coming from Amazon?

Is it all about Amazon?

Although I’ve focused on Amazon here, as Coker points out, this struggle far predates Amazon. Amazon simply happens to be the most powerful ebook retailer at present, with around 60% of the market in Australia and Canada. In the USA, its reach is even more monopolistic, with close to 90% of ebook purchases reportedly taking place on the platform.

In short, the issue is not with Amazon per se, but with monopolies in general.

“Monopoly” is simply Greek for “single seller”. As Bloomberg reports, Amazon is fast approaching that. In addition to selling almost 90% of ebooks in the US, Amazon also sells more than 80% of all ereaders. Close to half of all physical books sold in the US are bought from Amazon. And more than a third of streaming services and devices are likewise purchased from Amazon.

But of course, Amazon is not simply a bookstore. Far from it. As The Everything Store outlines, Bezos chose books to begin with, not due to an undying passion for the written word, but simply because he thought they would be easiest. Unlike clothes, you don’t need to try them on. Unlike many other products, they’re essentially identical no matter where you buy them. And they’re flat and rectangular: perfect for shipping.

Amazon truly has become the store for everything. In 2018, almost half of everything bought online in the US was bought from Amazon. Two-thirds of all toys and hobby equipment bought online come from Amazon. As does more than half of consumer electronics, office equipment and supplies. In 2018, Amazon Prime was second only to Netflix in paid membership services, and Amazon Web’s cloud computing was by far the largest in the industry. Since acquiring Zappos and Wholefoods, Amazon became the second largest retailer of clothing and shoes, and the fifth-largest supplier of groceries. Not just online. Full stop. (Or, as our American friends would say, ‘Period’).

Is Amazon a monopoly?

Perform a search for ‘Amazon’ and ‘monopoly’ on my favourite search engine, Duck Duck Go, scroll past all of the listings of the game Monopoly for sale on Amazon, and you’ll find a number of articles discussing whether or not Amazon is a monopoly.

In 2017, How Stuff Works published an article entitled “Why is Amazon not considered a monopoly?” As the article explains, simply being successful does not mean that a company is doing anything illegal.

The following year, Forbes published an in-depth article titled “Killing Amazon” which speculated that Amazon could become the largest company in the world. In 2020, the article predicted, Amazon may grow to account for 10% of all retail sales in the US.

However, it argues that even this will not be enough to set off the monopoly alarm bells: “as a practical matter, a market share of greater than 50% has been necessary for courts to find the existence of monopoly power” says the United States Department of Justice.

Furthermore, to qualify as a monopoly, a company must engage in monopolistic behaviour: “when one provider is the dominant provider in the market and that provider is able to prevent others from offering competing products and services.”

Amazon, considered as a “retailer” does not appear to be a monopoly. Yet. But that doesn’t mean it doesn’t have a monopoly on ebooks – at least in terms of numbers. More than 60% of the ebook market in most English-speaking countries, and close to 90% in the USA is well above the threshold of 50%.

As for monopolistic behaviour, way back in 2012, Huffington Post warned that some of the terms and conditions for enrollment in KDP Select “carry potential anti-competitive and restraint-of-trade implications.” (If you’re an author enrolled in or considering KDP Select, this article is well worth a read)

Monopoly or Monopsony?

The word “monopoly” actually has a lesser known counterpart: Monopsony, meaning single purchaser. In a monopsony, a single buyer controls the market by being essentially the only buyer for goods and services from many sellers.

Amazon is an online retailer. It is, of course, also a buyer – at least of some goods. Those physical ones it keeps in its warehouses, anyway. And in some areas, it may be the case that Amazon represents something more akin to a monopsony – that if you can’t sell to Amazon, you can’t sell at all.

When it comes to books – especially indie-published books – things are a little different. When you or I publish a book on Amazon, we don’t receive payment from the platform. We only make money when the book is sold – whether it’s an electronic or a print-on-demand book.

So what is Amazon?

In an environment of healthy competition, we’d see a structure that looks like this. Lots of readers with unrestricted access to lots of writers, and lots of writers with unrestricted access to readers:

But, based on the above data, I don’t think anyone would argue that this diagram accurately represents the ebook market at present.

A monopoly, as we’ve discussed, would look like this:

Few producers or sellers of something – in this case, writers – and many readers. These readers would all be forced to buy from the single author who controlled the market. But, even though a handful of very popular authors do dominate the book market, this diagram isn’t exactly representative of the current market, either. For one thing, there are many authors out there – even if many of them are completely undiscovered. And for another, even the most popular authors don’t have unfettered access to readers.

A monopsony would look exactly like the above, but inverted.

Many writers would all be vying for a single buyer. And while this is sort of what we see, with authors concentrating almost entirely on gaming Amazon’s algorithms, sometimes to the extreme detriment of the books they produce, in reality, there are many readers who want to buy ebooks and books in general. So what’s going on?

Monomesazon

In the case of indie authors, Amazon represents something of a ‘middleman’. Which in Greek, I believe, is (rather appropriately) mesazon – a kind of intermediary.

Amazon doesn’t clearly fit the definition of either a monopoly or a monopsony, as far as the law seems to be concerned at present. But, at least where ebooks are concerned, I wonder if it might qualify as a kind of ‘monomesazon’ to coin a new term – a single middleman, which creates a bottleneck of sorts between authors and readers.

There are many readers. Multiple sources claim that around 1 in 5 American adults read ebooks. That’s a huge market. And in other countries, there exists even more potential. While Americans are reading less and less, people in countries like India and Thailand spend almost double the amount of time the average US citizen does reading each week.

And there are many writers. Thanks to indie publishing, there are far more published authors now than at any other point in history. Millions of books are published every year.

But, there is effectively only one middleman. Only one platform which matches readers and writers. And that is Amazon.

When readers talk about ebooks, Kindle is almost a generic term for ereaders, just like ‘Kleenex’ or ‘Rollerblades’. And as Coker points out, when writers talk about ebooks,

“the conversation invariably devolves into questions of how to please Amazon and its algorithms.  Shouldn’t the conversation be about how to please readers?”

In my next post, I’ll explore how we can do that – how we as writers can please readers, and how we as readers can support a healthy book ecosystem. But in the meantime, have a read of Coker’s 2020 predictions, and click over to his Indie Author Manifesto as well.

Tell me what you think! Is it possible to be an “indie” if you’re dependent on one platform for sales/downloads? I’d love to hear your views.

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