A Bucket of Pennies
A lot of people worry about going all-in with Amazon. What if he starts charging self-publishers to publish? What if he stops letting us publish there? What if it all goes away tomorrow? What do we do?
They're valid concerns. The world seems to have more than its share of billionaires gone wild. Diversification into the wider network of tiny outlets, taking the smaller levels of sales across a wide collection of storefronts makes a certain sense.
Using a distributor like Draft2Digital can take the tedium out of managing all those stores for a small piece of the action. For a lot of reasons, going wide makes sense for some authors.
Financially, the question comes down to whether you think you can do better with the wider collection than you could within Amazon's ecosystem of sales and Kindle Unlimited subscriptions.
I started wide, but over the years, my non-Amazon revenue fell from 10% to 5% while my Amazon revenue doubled. I was never able to get any traction on all those smaller markets. I chose to go all-in late in 2015 and haven't looked back.
Would it be the same today? I don't know, but I know I'm too risk averse to cut out 60% of my income on the chance that those other, smaller, markets in aggregate would cover the loss. They're called “golden handcuffs” for a reason.
But the risk of Amazon changing the terms? Of cutting me out? Other than some fluke of digital mayhem, I've never worried about Amazon's terms changing to disadvantage me too much.
First, the commitment for my text editions is only ninety days. If things go really west, I can pull out. Yes, I'd have to rebuild but that's why I keep a website and maintain a mailing list. I can't keep all my current readers, but I can keep enough of them to reboot the business. I always have a backup plan for when it all goes wrong.
Second, I'm making hay while the sun shines. The money coming to me stays with me. It's a lot of money but I'm aware that the stream may dry up one day. I'm salting it away like Ebenezer Scrooge was running my budget. Someday I might want to retire and I'll need it then.
Third, I understand that Amazon is not just the name of the company. It's the business model for the enterprise.
Imagine you have a big bucket of pennies. You stood on the street corner with a sign that said “Buy a Penny – $1” and every day people line up around the block to buy your pennies.
How soon would you stop selling pennies?
Now imagine that about once a day, somebody gives you $10 for a penny. You never know who, or if, but over time you figure out that about once a day some shmuck will pay you $10 for one of your pennies.
How soon would you stop selling pennies?
Imagine that once a month somebody pays you $100. Once a quarter somebody gives you $1000. Once a year somebody buys a penny and gives you $100,000 for it.
You don't know who. You just know that one of the people lined up to pay $1 for a penny is going to be your jackpot.
How soon would you stop selling pennies? What incentive would you have to make it more difficult to buy the penny?
The value isn't in the individual sale. It's in the random payoffs that come out of the blue from a flood of people who just pay the dollar.
That's what self-publishers are to Amazon. They spend a penny. They earn at least a buck. Sometimes they earn a million bucks, but they never know which penny will pay out big.
Just like the river system in South America, Amazon collects a massive stream of small payouts into a torrent of revenue. Some of it comes from the people who just manage to cover the dollar. Some more of it comes from the people who make a few more sales. Most of it comes from the self-publishers and small presses who manage to earn six- and even seven-figures a year. They sometimes publish how many people earn certain thresholds each year. The last numbers I saw showed that over 1000 authors earned six figures and nine or ten earned over a million. Those earning at least $50,000 numbered in the multiple thousands.
That was then. I suspect it's a little different now, but a lot of self-publishers are still in the game.
As for Amazon, they're still selling pennies. They're still not sure which of those pennies are going to pay off. They'd be stupid to make it harder or do anything to throttle that cash cow.
I can believe Amazon might be a lot of things. Venal. Greedy. Demanding. Possibly, evil.
But I can't believe Amazon is stupid.