ebook pricing

Amazon-Hachette: The Sounds of Silence

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This post by William Ockham originally appeared on A Newbie’s Guide to Publishing on 7/13/14.

Everybody’s talking about Amazon’s latest move in the Amazon-Hachette kerfuffle and the reactions have been pretty predictable. Lots of confirmation bias going around. While the public broadsides, grand offers, and nasty anonymous leaks are full of sound and fury, I’m fond of looking for the truth in the silence. What the companies aren’t saying is as important to understanding the situation as what they are saying. I’m not sure if anyone has noticed, but neither side has denied any of the specific factual claims the other has made. In fact, if we read between the lines, we can cut through the noise and see what’s really happening. I have learned* the best way to do that is to make a timeline. Our brains have a tendency to remember the order in which we learned a set of facts and it has a hard to reassembling the chronological order of how things actually happened. We should be continually re-evaluating our understanding of this situation based on new information.

Recent statements from both sides have provided a lot more information about how this dispute got to this point. To avoid turning Joe’s blog into an academic article, I’m not going to footnote all of these events. If you want the source for a particular claim, just ask in the comments. My primary sources are the most recent Amazon-Hachette exchange and Michael J. Sullivan’s account of his interactions with Amazon and Hachette this year. If I have left off any significant events and gotten any of this wrong, please let me know in the comments [section on the original post]. I’m far more interest[ed] in getting this right than being right.

 

Early Jan 2014

Amazon makes the first move, sending an offer to Hachette. Based on Hachette leaks, we know that Amazon is offering a return to wholesale pricing.

7 Feb 2014

Amazon stops discounting Hachette titles.

 

Click here to read the full post on A Newbie’s Guide to Publishing.

 

Breaking Free – What Happened When I Left KDP Select

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This post by Nick Stephenson originally appeared on his site on 6/6/14.

“KDP Select is evil”. “Free promotions are pointless”. “Nick, you’re an idiot”. These are things I hear on a daily basis, the latter usually being something I say to myself when I’m looking in the mirror. As for the first two, I talk to a lot of authors who have a strong opinion on the relative merits of signing up for 90 days of exclusivity with Amazon, and the words “shackled” and “dungeon” come up a lot. It’s the same for free days – half of authors think they’re a God-send, the other half would rather cut off their own limbs with a rusty spatula than offer their work gratis. And that’s cool, I don’t have anything against people having wildly different opinions – and there are plenty of authors making a decent income without touching free promotions, and there are plenty who swear by them. But I like to look at the cold, hard numbers before coming to a conclusion, as everybody’s mileage seems to vary.

The two main strategies for free books I see most often are:

1. A variety of titles signed up to KDP Select, with rotating free promotions on each book. This is pretty easy to do with the 5 free days you get to play with under the KDP Select contract.

2.Titles NOT in KDP select, and up on other vendors, with the first book in the series permanently free. This is also pretty easy to do.

There are pros and cons for both approaches, but last month was the first time I’d tried option number (2). I’ve had a bunch of emails and comments asking for me to report back on the results, so here’s the skinny:

Income Report: All Books in KDP Select

 

Click here to read the full post, which includes sales graphs and detailed analysis, on Nick Stephenson’s site.

 

Amazon Speaks!

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This post by Alex Shephard originally appeared on the Melville House blog on 7/3/14.

Amazon does not like to talk. And Amazon especially does not like to talk to the press—when the company felt it had to address its dispute with Hachette in late-May it avoided the media completely, and instead released an odd, condescending statement on its Kindle forum. In every report about its ongoing negotiations with Hachette you could expect to find one, beautiful sentence: “An Amazon spokesman declined to comment.”

That changed late Tuesday, when an Amazon representative—Russ Grandinetti, Amazon’s senior vice president of Kindle content—did comment, to the Wall Street Journal’s Jeffrey Trachtenberg. The timing was, perhaps, deliberate—Trachtenberg’s piece went up shortly before “Amazon: Business as Usual?” a panel discussion hosted by The New York Public Library began. That panel discussion featured a number of outspoken Amazon critics, including James Patterson, Bob Kohn, and Tim Wu. Amazon was clearly paying attention: it paid to fly self-publishing blogger and pro-Amazon zealot David Vandagriff to New York City to participate. (That Amazon finds Vandagriff, who does little to hide his disgust with “traditional publishing” on his blog, to be an appropriate spokesperson for the company’s aims is interesting, though it’s possible that they merely wanted to counter-balance the other panelists’ anti-Amazon views. Fight fire with fire: the Amazon way.) Once again, Amazon found the media narrative slipping away, and it decided to fight back.

 

Click here to read the full post on the Melville House blog.

 

2014 Smashwords Survey Reveals New Opportunities for Indie Authors

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This post by Mark Coker originally appeared on the Smashwords blog on 7/6/14.

Welcome to the 2014 Smashwords Survey, our third annual survey that reveals new opportunities for indie ebook authors to sell more books.

As in prior surveys (view the 2013 Smashwords Survey here and 2012 Smashwords Survey here), we examined aggregated retail and library sales data of Smashwords books and then crunched the numbers based on various quantifiable characteristics of the book.

For this year’s survey, we examined over $25 million in customer purchases  aggregated across Smashwords retailers including Apple iBooks, Barnes & Noble, the Smashwords.com store, Sony (now closed), Diesel (closed), Oyster, Scribd, Kobo, public libraries and others.

This year, we break new ground with more data, including survey questions that explore preorders and series, two categories of inquiry that weren’t possible in prior years.  These latter two categories were enabled by Smashwords’ introduction of ebook preorder distribution in July, 2013 and our new Smashwords Series Manager feature which allows us to capture, analyze and share the performance of series books.

The goal of the survey is to identify Viral Catalysts.  I first introduced the concept of Viral Catalyst in 2012 with the publication of my free ebook best practices book, The Secrets to Ebook Publishing Success.  A Viral Catalyst is anything that makes a book more discoverable and more enjoyable to readers.

 

Click here to read the full post on the Smashwords blog.

 

Authors Behaving Badly and Authors Who Aren't

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This post by J.A. Konrath originally appeared on his A Newbie’s Guide To Publishing blog on 7/3/14.

So a bunch of legacy authors–many of them smart and who should know better–just signed a letter accusing Amazon of things that simply make no sense.

Some of the usual suspects are at the forefront. James Patterson, who continues to show he has no clue about how his own industry works. Scott Turow, whose tenure as president of the Authors Guild amounted to being a shill for Big Publishing. Douglas Preston, who once supported windowing ebook titles and keeping prices high.

Preston recently said:

“If I were Jeff Bezos, the one thing I would fear most is if authors organized themselves and took broad, concerted, sustained, and dignified public action.”

Konrath replies:

“If I were Jeff Bezos, I would know that legacy authors have no power, because they signed away their rights to their publishers. Patterson, Turow, and Preston couldn’t remove their books from Amazon even if they wanted to. But, strangely, I don’t hear any of them demanding it, or even mentioning it.”

Naturally, I’m going to fisk this letter. Then I’m going to link to a different sort of letter for authors to sign. Hugh Howey and I, along with Barry Eisler and others, have been fiddling with this letter for the last 24 hours, and it explains to readers what’s really happening with the Amazon/Hachette dispute.

 

Click here to read the full post on A Newbie’s Guide to Publishing.

 

Big Publishing is the Problem

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This post by Hugh Howey originally appeared on his site on 6/14/14.

A few weeks ago, I speculated that Hachette might be fighting Amazon for the power to price e-books where they saw fit, or what is known as Agency pricing. That speculation was confirmed this week in a slide from Hachette’s presentation to investors [Publetariat Editor’s note: click on image to view an enlarged version in a new tab or window]:

So, no more need to speculate over what this kerfuffle is about. Hachette is strong-arming Amazon and harming its authors because they want to dictate price to a retailer, something not done practically anywhere else in the goods market. It’s something US publishers don’t even do to brick and mortar booksellers. It’s just something they want to be able to do to Amazon.

The biggest problem with Hachette’s strategy is that Hachette knows absolutely nothing about retail pricing. That’s not their job. It’s not their area of expertise. They don’t sell enough product direct to consumers to understand what price will maximize their earnings. Amazon, B&N, Kobo, and Apple have that data, not Hachette.

 

Click here to read the full post on Hugh Howey’s site.

 

Is Amazon Good For Books? and other dumb questions

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This post by Robert Kroese originally appeared on his site on 6/10/14.

I finally got around to reading George Packer’s article in the New Yorker entitled “Cheap Words: Amazon is good for customers. But is it good for books?” yesterday. Spoiler alert, in case you haven’t read the article: Packer doesn’t answer the question. In fact, he doesn’t even really address the question. Most of the article is taken up with head-shaking reminiscences of Amazon’s ruthless business practices, its treatment of books as “widgets” rather than the lovingly birthed children of the tortured souls of artists, and a few anecdotes about poor working conditions in warehouses (another spoiler: warehouses, by and large, are not fun places to work). Finally, in the concluding paragraphs, Packer gets around to the question at hand:

Several editors, agents, and authors told me that the money for serious fiction and nonfiction has eroded dramatically in recent years…. These are the kinds of book that particularly benefit from the attention of editors and marketers, and that attract gifted people to publishing, despite the pitiful salaries. Without sufficient advances, many writers will not be able to undertake long, difficult, risky projects.When consumers are overwhelmed with choices, some experts argue, they all tend to buy the same well-known thing….

These trends point toward what the literary agent called “the rich getting richer, the poor getting poorer.” A few brand names at the top, a mass of unwashed titles down below, the middle hollowed out: the book business in the age of Amazon mirrors the widening inequality of the broader economy….

 

Click here to read the full post on Robert Kroese’s site.

 

Announcement Hachette/Amazon Business Interruption

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This post from the Amazon Books Team was posted on the Amazon site on 5/27/14.

We are currently buying less (print) inventory and “safety stock” on titles from the publisher, Hachette, than we ordinarily do, and are no longer taking pre-orders on titles whose publication dates are in the future. Instead, customers can order new titles when their publication date arrives. For titles with no stock on hand, customers can still place an order at which time we order the inventory from Hachette — availability on those titles is dependent on how long it takes Hachette to fill the orders we place. Once the inventory arrives, we ship it to the customer promptly. These changes are related to the contract and terms between Hachette and Amazon.

At Amazon, we do business with more than 70,000 suppliers, including thousands of publishers. One of our important suppliers is Hachette, which is part of a $10 billion media conglomerate. Unfortunately, despite much work from both sides, we have been unable to reach mutually-acceptable agreement on terms. Hachette has operated in good faith and we admire the company and its executives. Nevertheless, the two companies have so far failed to find a solution. Even more unfortunate, though we remain hopeful and are working hard to come to a resolution as soon as possible, we are not optimistic that this will be resolved soon.

Negotiating with suppliers for equitable terms and making stocking and assortment decisions based on those terms is one of a bookseller’s, or any retailer’s, most important jobs. Suppliers get to decide the terms under which they are willing to sell to a retailer. It’s reciprocally the right of a retailer to determine whether the terms on offer are acceptable and to stock items accordingly. A retailer can feature a supplier’s items in its advertising and promotional circulars, “stack it high” in the front of the store, keep small quantities on hand in the back aisle, or not carry the item at all, and bookstores and other retailers do these every day. When we negotiate with suppliers, we are doing so on behalf of customers. Negotiating for acceptable terms is an essential business practice that is critical to keeping service and value high for customers in the medium and long term.

A word about proportion: this business interruption affects a small percentage of Amazon’s demand-weighted units. If you order 1,000 items from Amazon, 989 will be unaffected by this interruption. If you do need one of the affected titles quickly, we regret the inconvenience and encourage you to purchase a new or used version from one of our third-party sellers or from one of our competitors.

We also take seriously the impact it has when, however infrequently, such a business interruption affects authors. We’ve offered to Hachette to fund 50% of an author pool – to be allocated by Hachette – to mitigate the impact of this dispute on author royalties, if Hachette funds the other 50%. We did this with the publisher Macmillan some years ago. We hope Hachette takes us up on it.

This topic has generated a variety of coverage, presumably in part because the negotiation is with a book publisher instead of a supplier of a different type of product. Some of the coverage has expressed a relatively narrow point of view. Here is one post that offers a wider perspective.

http://www.thecockeyedpessimist.blogspot.com/2014/05/whos-afraid-of-amazoncom.html

Thank you.
 

May 2014 Author Earnings Report

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This post originally appeared on Author Earnings on 5/19/14.

Three months ago, we released our first full report on Amazon e-book sales and author earnings. Our goal was to look at unit sales and earnings by various publishing paths in order to help authors make informed decisions in this rapidly changing publishing environment. The results were eye-opening, but it was merely our first data point. Our long term goal has been to pull data every quarter to see if we can spot developing trends.

A quick recap on our methodology: Using a custom software spider, we can crawl every Amazon bestseller list and pull info from each book’s product page html. This data goes into a spreadsheet, which gives us the price, ranking, average review, and much more for every ranked e-book on Amazon. Using established ranking-to-sales data from numerous bestselling authors (including our own works), we are able to present author earnings by title and publishing type. As with our past reports, all the data has been anonymized and is available for download at the end of this report. And just like with past reports, any reasonable numbers entered for the power curve of the product rank-to-sales ratio reveals the same overall picture. That is, our conclusions are not dependent on our estimates but are borne out of the freely available data.

The exciting thing about pulling this data is that we have no idea what we’re going to find. Our conclusions since the last report might need rethinking. Our advice on what an author might want to do with a manuscript today could very well change as the publishing industry takes another swerve. My partner and I debated what we expected to see from this second round of data. We both predicted no more than a 2%-3% swing from any one publishing path to the other over such a short period of time. I wagered we’d see a 2% drop in self-publishing titles, offset by an increase in Amazon imprints, as the latter continues to snatch up high performing e-books and put more marketing muscle behind their own authors. My partner thought we’d see a 2% hike in self-publishing at the expense of traditional publishing. We bet a dollar on the outcome.

 

Click here to read the full post on Author Earnings.

 

The Great E-book Pricing Question

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This post by David Gaughran originally appeared on his Let’s Get Visible site on 4/17/14.

There’s more guff written about pricing than almost anything else, resulting in an extremely confusing situation for new self-publishers. I often see them pricing too low or too high, and the decision is rarely made the right way, i.e. ascertaining their goals and pricing accordingly.

 

Price/value confusion

Before we get to the nuts-and-bolts, it’s time to slay a zombie meme. Much of the noise on this issue springs from conflating two concepts, namely price and value.

Authors often say something like, “My book is worth more than a coffee.” Or publishers might say, “A movie costs $10 and provides two hours of entertainment. Novels provide several times that and should cost more than $9.99.”

Price and value are two different things. From Wikipedia:

Economic value is not the same as market price. If a consumer is willing to buy a good, it implies that the customer places a higher value on the good than the market price.

The price is something we, as self-publishers, attach to the product. The value is the worth the consumer places on it (not the author or publisher). In simple terms, unless your price is lower than the value a reader places on your book, they won’t purchase.

Marketing isn’t simply about reaching consumers but also about convincing them to place a value on the product higher than the price-tag. The higher the price, the harder that job will be.

In other words, it’s a lot easier to sell a book at $2.99 than $9.99.

 

Doesn’t price influence value?

 

Click here to read the full post on Let’s Get Digital.

 

Is Kindle Countdown the new Free? Keeping Books Visible in 2014

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This post by M. Louisa Locke originally appeared on her blog on 2/25/14.

For the past year there has been a good deal of hand-wringing over the question of KDP Select free promotions. Have they de-valued fiction, do they attract negative reviews, do they even work anymore? As anyone who regularly reads my blog posts knows, I have been a strong proponent of offering ebooks free for promotional purposes, and free promotions have been very good to me in terms of increasing my reviews and keeping my books visible and selling.

However, I also believe one of the distinct advantages we have as indie authors is our ability to use our own sales data to respond innovatively to changes in the marketing environment. As a result, in the past year I followed a number of different strategies to keep the books in my Victorian San Francisco Mystery series visible, including beginning to experiment with the new promotional tool, the Kindle Countdown, that has been introduced as part of KDP Select.

In this post I am going to:

A. Review how successful the strategies I pursued last year were for selling books in 2013.

B. Address whether or not Free is failing as a strategy.

C. Compare the Kindle Countdown promotions to Free promotions.

D. Assess whether or not Kindle Countdown promotions can replace free-book promotions as my primary promotional strategy for 2014.

 

Click here to read the full post on M. Louisa Locke’s blog.

 

Does What You Paid For A Book Affect How You’d Rate It?

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This post by Jane Litte originally appeared on Dear Author on 2/23/14.

When I first started buying my own books some twenty plus years ago, I had very little money. My favorite authors were starting to come out in hardcover (Julie Garwood, for example) and unless I wanted to wait to be the 80th person at the library to read the book, I had to fork over $22.00 or more which, at the time, was a lot of money for me. It basically meant I wasn’t going to be able to buy another book or maybe even eat anything but ramen and macaroni for the month.

Most of the time, however, I bought my books used at the Half Price Bookstore or some other used bookstore that sold romances for $0.10 or $0.25. And when I bought the hardcover, I knew that I was sacrificing at least four other reads for that one book.

As I got older, I was able to buy more books but my reading habit got to be really pricey so I instituted a book budget of no more than X amount of dollars to be spent a month. Because I read three to five books a week, I was only able to purchase about eight titles a month new and the rest would have to be library lends or used book store purchases. During the heydey of chick lit, I was really struggling!

Price has always been a big thing for me when it comes to books and from what I’ve heard from industry professionals, mass market purchasers are very price sensitive. Most romance readers are mass market purchasers although the new readers coming in to the market after Fifty Shades are probably not.

There’s an interesting concept called anchoring. Anchoring is the tendency of humans to rely on the first piece of information offered. In economic terms, anchoring means that the first price a consumer encounters for widget A is likely the price that the consumer believes she should always pay for widget A. (Widget is an official economic term. No lie.)

 

Click here to read the rest of the post on Dear Author.

 

Cheap Words: Amazon Is Good For Customers, But Is It Good For Books?

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This article by George Packer originally appeared on The New Yorker site for its 2/17/14 print issue.

Amazon is a global superstore, like Walmart. It’s also a hardware manufacturer, like Apple, and a utility, like Con Edison, and a video distributor, like Netflix, and a book publisher, like Random House, and a production studio, like Paramount, and a literary magazine, like The Paris Review, and a grocery deliverer, like FreshDirect, and someday it might be a package service, like U.P.S. Its founder and chief executive, Jeff Bezos, also owns a major newspaper, the Washington Post. All these streams and tributaries make Amazon something radically new in the history of American business. Sam Walton wanted merely to be the world’s biggest retailer. After Apple launched the iPod, Steve Jobs didn’t sign up pop stars for recording contracts. A.T. & T. doesn’t build transmission towers and rent them to smaller phone companies, the way Amazon Web Services provides server infrastructure for startups (not to mention the C.I.A.). Amazon’s identity and goals are never clear and always fluid, which makes the company destabilizing and intimidating.

Bezos originally thought of calling his company Relentless.com—that U.R.L. still takes you to Amazon’s site—before adopting the name of the world’s largest river by volume. (If Bezos were a reader of classic American fiction, he might have hit upon Octopus.com.) Amazon’s shape-shifting, engulfing quality, its tentacles extending in all directions, makes it unusual even in the tech industry, where rapid growth, not profitability, is the measure of success. Amazon is not just the “Everything Store,” to quote the title of Brad Stone’s rich chronicle of Bezos and his company; it’s more like the Everything. What remains constant is ambition, and the search for new things to be ambitious about.

It seems preposterous now, but Amazon began as a bookstore. In 1994, at the age of thirty, Bezos, a Princeton graduate, quit his job at a Manhattan hedge fund and moved to Seattle to found a company that could ride the exponential growth of the early commercial Internet. (Bezos calculated that, in 1993, usage climbed by two hundred and thirty thousand per cent.) His wife, MacKenzie, is a novelist who studied under Toni Morrison at Princeton; according to Stone, Bezos’s favorite novel is Kazuo Ishiguro’s “The Remains of the Day,” which is on the suggested reading list for Amazon executives. All the other titles, including “Sam Walton, Made in America: My Story,” are business books, and even Ishiguro’s novel—about a self-erasing English butler who realizes that he has missed his chance at happiness in love—offers what Bezos calls a “regret-minimization framework”: how not to end up like the butler. Bezos is, above all things, pragmatic. (He declined to be interviewed for this article.)

 

Click here to read the full article on The New Yorker site.

When Famous Author Promos Backfire

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This post by L.J. Sellers and Peg Brantley originally appeared on The Crime Fiction Collective blog on 2/7/14.

L.J.: You mentioned in our last conversation how much you liked Michael Connelly’s Mickey Haller series, and it reminded me that I’d recently encountered something surprising with that series. A promotional website posted a link on my Facebook page to the author’s short story, The Switchblade. (Which was odd and made me wonder if his publisher had hired them.)

More important, I went to Amazon to check out the short story and discovered that it has almost all one-star reviews. I was stunned! I read several, and they all have the same complaints: The story doesn’t have a real conclusion, and the ebook serves mostly as a promotion for Connelly’s next book, The Gods of Guilt. Both the short story and the novel are selling well, so was it effective? And even so, was it worth alienating some readers?

 

Peg: My guess would be no, soooo not worth it. I have become a huge fan of Michael Connelly and have to wonder what his publisher was thinking. By the way, while I’ve read a lot of mixed reviews on sites like DorothyL and For Mystery Addicts about The Gods of Guilt, but I enjoyed it.

But Connelly isn’t the only author who might be suffering repercussions from this new marketing tactic. I recently downloaded what I thought was a short story by Dean Koontz, another of my favorites. I was completely turned off when at some point (it was moving rather slowly for a short story) I figured out it was simply a marketing promotion for his next book. I never finished it. And it still leaves a bitter taste in my mouth.

 

L.J.: Readers hate that! Which makes me wonder whether the author knew what his publisher planned and if he had any say in the matter. I like to think that he didn’t and that he’s not happy about the situation. I know that publishers sometimes encourage (pressure?) authors to write short stories as between-book promos. And sometimes they want their authors to participate in new programs and formats.

 

Click here to read the full post on The Crime Fiction Collective blog.

 

Playing with Permafree Books – The Results

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This post by Nick Stephenson originally appeared on his site on 1/9/14.

I’ve been experimenting with a permafree book over the last few weeks – admittedly, I’m a little late to the game, but with so many indie authors using this approach, I figured it was time to dip my toes in the water. I chose my shorter title, “Paydown” (a 95 page novella) as the guinea pig for this little experiment. The book has been well received, with a 4.2* rating on Amazon over 15 reviews at the time the title first went free. A few weeks later, reviews are still good, averaging 4.1* over 28 reviews. But I’m far more interested in measuring the ROI, so here’s the breakdown for y’all:

Price of Paydown prior to permafree = $0.99c
Average daily revenue for Paydown prior to permafree = $2.20
Average daily unit sales for Paydown prior to permafree = 6

Granted, I only had the book up for sale for 2 weeks before going free, but that gives you a rough idea. Essentially, for every day the book is free, I’m losing $2.20 off the bat (I figured I could live with that). So how did jumping on the permafreebie bandwagon help sales across my other titles? Here’s a lovely graph:

 

Click here to read the full post, which includes a breakdown of the sales figures, detailed analysis, and conclusions, on Nick Stephenson’s site.