Friday, April 8, 2011

Who Wants To Be A Kindle Millionaire?

Self-publishing for e-readers has been very lucrative for a small a small group of authors in the last few months. However, for the vast majority of authors trying to sell books, self-publishing won't bring much exposure and it won't earn them much money.

The case-studies for self-publishing success are  J.A. Konrath and Amanda Hocking.  These two authors have been very good at self-promotion and their books are better than virtually all their self-published competition.  These authors distinguish themselves from commercially-published authors on the basis of price; their books cost $3 or less.

Amazon pays a 70% royalty to authors who self-publish on Kindle and sell their books for between $2.99 and $9.99.  By contrast, a hardcover royalty is usually 10-15% of the cover price and a mass-market royalty is usually 6-8% of the cover price.  That means a royalty on a $3 e-book is close to the same as an author earns selling a $15 hardcover (which has a $25 cover price).

$2.99 was a great opportunity when very few people were selling books in that price range.  This high royalty made it very easy for self-published authors to undercut the price of commercially-published books, because these authors were able to keep a much larger percentage of their readers' money.  This arrangement was also very beneficial for Amazon and BN because it attracted a huge cadre of value-conscious consumers to e-reader platforms.  However, Amanda Hocking's success story is now common knowledge, and everyone with an unpublished novel believes they can replicate that success.

These authors don't have the imprimatur of New York publishers.  They don't have authoritative praise from critics or famous authors.  They don't even have professionally-designed book covers.  So they use price to compete.

That means it's very hard for an unknown self-published author to price a book at $2.99 right now; most other self-published books that are ranked high in Kindle sales are priced at $0.99.  But if you sell a book at $0.99, you get only a 30% royalty, or 33 cents per copy.  It's very difficult to earn a substantial amount of money at that price, with that royalty, and the 70% royalty is no longer the game changer it seemed to be six months ago because most authors can't earn it.

E-book growth has been huge in the past few years, but we shouldn't overstate its market-share.  For a published author, bookstores are still roughly 70% of the market, and e-books are only about half of online sales.

That means that, while a $.99 cent self-published John Locke title may be selling as many e-books as the new Michael Connelly, the Connelly book is selling the same number in hardcover as it is in e-books on Amazon.  And brick and mortar bookstores represent nearly triple the total online sales.

Meanwhile, the attractive 70% royalty rate doesn't benefit Locke, because that rate only applies to books priced between $2.99 and $9.99.  An author of a bestselling hardcover like Connelly makes ten times Locke's per-copy royalty, and sells five times as many copies.

Locke claims he sells an e-book every ten seconds.  If that's true, he'll sell about three million copies in a year and he'll earn a million dollars.  That's ten times as many copies as a commercially published author has to sell to make the same money.

Self-publishing on Kindle, for most authors of fiction, is likely to become a stepping-stone to real publication rather than a viable business in its own right. The model going forward will most likely force authors to price at $0.99, in hopes of garnering significant sales that will attract an agent and publishers, and then a real book deal.
Nearly everyone who can publish with a commercial publisher goes that route, especially in fiction.  And there are good reasons why this is the case.

9 comments:

  1. "Self-publishing on Kindle, for most authors of fiction, is likely to become a stepping-stone to real publication rather than a viable business in its own right."

    Agreed. That's what happened with Hocking, after all.

    Although I think $3.99 is fair for my book, I was recently advised to lower it to $2.99. Since this has been more about telling my story and making extra income than is has "getting rich," I think I may take the advice.

    I realize that not everyone Kindle shops the way I do - I think anything below $9.99 is fair. But it seems the suggested/expected price for self-published Kindle books is between .99 cent and $2.99.

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  2. Just to ball-park, if your book has a cover-price of $6.99 and sells for $5, you get a $0.40 royalty at 6%.

    Self-pubbing that same novel for $2.99 at a 70% royalty gets you two bucks per copy. That means that if more than 20% of your readers will follow you when you ditch your publisher, you can make more money self-publishing. I think Eisler tends to move most of his volume in mass-market format, so this is probably what his math looks like.

    Maybe Eisler is just the first one to figure this out, but the fact that he's out there alone means that many other mass-market authors are probably looking at the same math and concluding that they could not sustain that fraction of their audience share if they left their publishers to put their books out on Kindle.

    That really shows the degree to which people are overestimating the popularity of self-published bestsellers.

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  3. Dan,

    I'm jumping in your Twitter conversation cause I spy it here, but not in my Twitter stream...

    You don't think people will pay full price for Hocking? I read a lot of her Amazon reviews - and heard firsthand reviews from my own friends/readers - and the majority said the same thing: the writing wasn't that strong, horrible or no editing, but they wanted to find out what happened next so they kept reading (and buying).

    I have to wonder if people won't be willing to plunk down more if they thought the work would be properly edited.

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  4. There are a number of readers who bought Kindles because they wanted to read books that were free or very cheap. They're not interested in frontlist titles. Before Kindle, they were probably buying used paperbacks at garage sales or something. I don't think most of these people will pay $15 for Hocking or anyone else. She's going to have to use her name-recognition and her publisher's resources to build a new audience.

    Amazon has been marketing to these readers more than e-book vendors, and you see the results in the sales rankings; the top self-published authors are ranked much higher on Amazon than on Nook or iBooks.

    These people were good to $2.99 authors for a while. But now they're gravitating to $0.99 books, because a lot of these people seem to be undiscriminating about what they read as long as they pay as little as possible for it.

    Here is popular self-published author Zoe Winters talking about how she thinks it's not worth it to chase $0.99 readers.

    http://allindiepublishing.com/author-interviews/zoe-winters-on-ebook-pricing/

    They've been really angry at her about it.

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  5. I think I read this before, but it was good to read it again.

    I agree with a lot of what she said. When I got close to releasing my book, I mentioned to a friend that had been a big help in feedback in its early stages that I was going to price it at $4.99. She said that was too high.

    Now, my thinking was that it was ONLY five bucks and I said before, I think anything below $10 (for traditional or e-books) is a bargain. Then I started doing research and saw that she was right: it seemed people expected to pay between 99 cent and $2.99. Two friends collaborated on a Kindle book of four short stories (2 a piece) and priced it at .99 cents. I think that's fair.

    But $1 for a full-blown novel seems wrong. Even the people that gave Hocking four and five stars complained about little or no editing, misspelled words, poor formating and awkward sentences. My thought process was that editing and providing a full length novel should count for something and we shouldn't be expected to price our work so low simply because think that's what it should be.

    Then again, I've been known to drop a grip on a pair of shoes or a nice bag so, what do I know?

    I need to find the link to an experiment a friend of mine did recently. She teaches English comp and creative writing at a college in NYC. She gave her students a few pages of a Hocking's novel and the same of another (traditional) author in the same genre to compare. The reactions were very interesting when they found out how much Hocking's books were.

    It's a shame that solid e-books might be passed over because people think $3.99 is too high.

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  6. OK. Here's a link to my friend Will's blog in which he lays out Tracey's (other friend/teacher) that did the experiment.

    As I skimmed through it a few minutes ago, I was reminded of something else, a point I happened to make on a radio show the other day: some people look at it as, "I can buy x number of e-books for the same price of one of his."

    And if you're looking to be entertained and don't really care about the editing or stumbling over phrasing, then I can see people snatching up anything as long as it's not higher than $1-$3. Not saying I like it, but I kinda understand the thinking.

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  7. Would have been nice to include the link. Sorry, been a long day and two Tylenol PMs are juuuust kicking in:

    http://willentrekin.com/2011/03/30/the-hocking-keene-zombie-pocalypse-death-match-stravaganza/

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  8. Given that a coffee often costs more than $3 these days, I would hope that people would not choose a $0.99 novel over a $2.99 novel based on price alone! Many of the ebook sellers offer a free 10% sample (or more) so you can see what you are getting before you pay for it.

    I think anything below $10 for a good book is a bargain! I believe (perhaps naively) most people would be happy to pay more for a better book. Hopefully anyway...

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