Monday, August 07, 2006

Amazon E-Books: Good for Writers?

When I first heard that Amazon was getting behind e-books, I thought, “Great! If anyone can move e-books into the mainstream, it’s Amazon!” This could be a very good thing for writers—a potential market numbering in the millions, as opposed to an exposure of a few hundred thousand for a paper (hardcopy) book.

It sounded good. And Amazon was offering its very own e-book creation software to help with the publishing process, though one could choose other programs to create e-books in other formats--or so I thought.

When I started checking into the setup, my enthusiasm waned. What I learned convinces me that Amazon will be about as helpful to e-book writer/publishers as the 19th century coal companies were to West Virginia and Kentucky landowners, company stores and all.

Why the dreary prediction? Because writers have to pay to be published. And because Amazon would make money whether or not a given author’s titles sell well, giving the company little incentive to help build sales.

If Amazon builds it, they will come
First, understand that Amazon will legitimize e-books. Not that e-books are illegitimate--but consumers have to learn to trust some products. (It’s like the early days of radio, when most people avoided buying radio receivers because they didn’t understand radio and thought it was some sort of trick.)

Readers will flock to Amazon because it’s a trusted brand name, has a terrific selection, and has earned a reputation for value. Independent and e-book-only writers will go along with the plan in order to get the world’s largest bookseller behind their product. Trust me; there are few writers who will pass up the opportunity to put their work in front of tens of millions of readers, no matter what they say about not being in it for the money. Whether their motivation is money, a cause, or just getting “in print,” writers want their work to have as much exposure as possible.

How will writers make money?
If Amazon adheres to the Mobipocket business model, it will make a fair profit on each e-book it sells--50 percent of the cover price. That’s not out of line, as most brick-and-mortar bookstores make 40 to 50 percent of a book’s cover price. For authors who are also publishers, it’s a bigger piece of the pie than they get from conventional publishers.

But the author/publisher would not receive 50 percent. Under the current Mobipocket/eBookBase contract, author/publishers are charged a 10 percent “affiliate fee.” Which leaves them with 40 percent of the cover price of each book sold.

That’s still a greater percentage than a typical author gets for a paper book. But sales aren’t going to be on the same level as paper books. (More on that in a few paragraphs.)

“You have to spend money to make money ...”
Here’s an element that really bothers me: Writers have to pay to be published. No, it’s not a per-book or stocking charge or anything like that. It’s more like an admission fee: Anyone who wants to see their work in Mobipocket form (thus backed by Amazon) has to buy Mobipocket Creator Publisher Edition, currently priced at $149. There’s a cheaper personal version, but it doesn’t offer security or Digital Rights Management (DRM) features--which turn out to be very important because you can’t sell books without DRM.

For $149 you get a license to use the creator on one computer. I assume commercial publishers will get some sort of site-license deal. Now, the $149 isn’t a big chunk of money, but my motto has always been “Writers don’t pay—writers are paid.”

The hard part
Once you put your book into Mobipocket format, there will be a submission process to go through with Amazon. It will probably involve providing some promotional material about you and the book, and maybe breaking out a sample. Hopefully it won’t involve a fee. Then you’ll sit back and wait for the royalties to roll in.

But those royalties may not roll in for quite a while. Mobipocket pays quarterly, but retains royalties until they reach $150. Mobipocket also holds all proceeds from retailer sales until the amount reaches $150. This means that Amazon could hold 100 percent of the proceeds from every book for months or years.

Combine this model with Amazon’s scale and the company is guaranteed to make money whether or not books sell well. If an e-book sells a lot of copies, Amazon makes out with its 60 percent share. Plus, it gets to hold the money a few weeks before releasing it to you (this is called “float”). If a book sells only one or two or five copies every month or quarter or year, the gross proceeds go into the float, money the company can invest or use for operations.

With the number of books Amazon is likely to have in stock, the float will add up to serious money. And Amazon will attract a lot of writers. People who never even thought about writing a book will be inspired to put together e-books to offer on Amazon.

What are you worth?
Right now you can buy The Da Vinci Code in e-book format for $6.99. The book has probably sold a goodly number of copies. Whether they’ve read it or not, most people will feel it’s worth the price. But what about The Odysseus Solution, by midlist writer Michael A. Banks, or Ghosts of Futures Past, Anton Katzenskeller’s first novel? Are you, the average reader, willing to take a gamble on one of these for seven bucks? Not likely. But you might go for one at $3. If you buy Anton’s book, he will net $1.20—actually more than he’d get as a royalty on a paperback novel.

This means Anton has to sell 125 copies of his novel before he gets paid--assuming Amazon retains the Mobipocket/eBookBase setup.

Now, how likely is unknown writer Anton Katzenskeller to sell 125 copies in a quarter, with tens of thousands of competing titles fighting for readers’ attention? Not very. And as long as Anton sells fewer than 125 copies, Amazon is using his money for nothing.

Hm ... this sounds almost as bleak as conventional publishing. At least the publishers don’t make us pay to get into print. Not real publishers, anyway.

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