Tuesday, June 12, 2012

The Business of Writing: the FOURTH Swing of the Pendulum!

Barnes & Noble has finally weighed in on the Department of Justice lawsuit against Apple on the issue of whether or not it colluded with publishers on price fixing ebooks. Laura Hazard Owen has an excellent summary on B&N’s filing over on PaidContent.org. I strongly recommend Owen’s excellent coverage to get a clear summary of B&N’s legal submission.
It’s pretty clear that B&N is in opposition to the DoJ’s position. They offer an opinion that both echoes Apple’s response to the DoJ’s filing and gives it from another point of view. An eyebrow-raising point is that Barnes & Noble is a direct competitor with Apple. Both publish ebooks in the ePub format. Therefore, ebooks purchased from one can be read on the ebook reader of the other. Once you remove any DRM, that is.
In my opinion, this further weakens the case that the DoJ is bringing against Apple and the publishers. At least until this lawsuit comes to court, where the DoJ will present their collected evidence.
What I find most interesting about B&N’s filing is the data they present to the court. For one thing, they place Amazon.com’s position in the  ebook market at 60%. I have seen reports from various time periods guessing anything from 45% to 80%; the 60% strikes me as a more plausible number. It is very difficult to find accurate numbers reflecting market share, because the companies guard these numbers very jealously. Amazon.com wants everyone to think they have 85% of the market on ebooks. Their competitors prefer to say Amazon only holds 45% of the market.
Why is this number so important? Bargaining power!
For example: if Amazon.com truly holds 85% of the ebook market, they could go to independent authors and say, “We’re only going to pay 40% royalties on every ebook sold.” While their competitors offer 70%. Very simply, what it boils down to is that 40% of 85% of the market still yields more in sales than 70% of 15% of the market. Out of $100, that means $34 in your pocket vs. $10.50. If 85% of your books are going to be sold through Amazon.com, in order to maximize your return, it behooves you sell through Amazon.com. (For the record, Amazon.com offers 70% royalties, Apple offers 70% royalties and B&N offers 65% royalties.)
What if the companies each offer you an exclusive deal, where you sell exclusively through one company for a period of three months? Again, market share comes into play here. What if Amazon.com only held 45% of the market? If you signed an exclusive with them for three months, then you would be cutting out 55% of the market. Amazon.com would have to sweeten the deal to guarantee you a good return in exchange for the exclusive. In this situation, you would have the bargaining power.
It could be worth it to you to sign an exclusive with a smaller competitor in the market. It is a marketing campaign to increase their market share by getting an exclusive with an author. If fans can only buy the book through that company’s channel for a period of time, then it guarantees sales during the promotional period. The smaller competitor would have to pay you extra in compensation for cutting out a larger part of the market. It’s a way to increase sales traffic and market share for the company, so it would be worth to pay you, the author, extra in compensation for the exclusive. If the period is not too long, it could also serve as hype for when the exclusivity period is over and jog sales on other sites higher.
This is why market share is so important. You need to take this into consideration before locking yourself into any restrictive deals.
While writers describe themselves as artists, one cannot forget that writing for a living means writing is a business. When you go out to sell your book, you must pay attention to the markets. Who buys your book? Where they are buying it from? These are vital things you should pay close attention. Each book you sell is the source of your income so you should do everything you can to maximize those sales. Bills don’t pay themselves and food doesn’t magically appear on the table; one can only freeload for so long.
To the artist’s heart in a writer, it comes across as rude and impersonal to view things as a business, to reduce the purchases by your readers to cold numbers on a spreadsheet. Hate targeted advertising when you log into a particular website? This is exactly what you must do! If you wrote your book with the mind that it would be popular among college-aged men, but it turns out pre-teen girls are accounting for 90% of your sales,  then maybe it would be financially prudent to spend money advertising your book in Seventeen instead of Playboy. (You may also want to reconsider that sex scene you were writing for the next book…)

If you don’t want to sell your book through a certain channel due to personal reasons, but that channel yields a lion’s share of your sales, then you had better be prepared for the reality that you won’t be a writer for very long. You won’t be able to afford to continue writing if sales don't generate enough income to make a living. The time to take personal moral stands is when you have enough of a following that they will buy your book no matter where they have to get it. Until then, suck it up, park your ideals and work to maximize the sales of your book.
The foundation for all this is which distributor sells the most books. Knowing the hottest places to sell your book is important. Keep in mind, that just because one site may sell more books in general than the others, perhaps one of the smaller sites is the biggest seller in the genre your story is categorized. You may want to maximize your attention there.
Next, who is buying your books? Where do they prefer to buy their books? This will play into your marketing, too. If a large number of sales of your book are in the Boston area, then it would probably be wise to schedule a booksigning in Boston. Soon!
By paying attention to where your book will best sell and thereby maximize your financial returns, you can better guarantee for yourself an actual career as a writer, as opposed to making a little extra on the side as a hobby.