Monday, January 26, 2015

No, There Aren't Too Many Writers - Part Two

In my last post I took apart the meme that "too many writers" means that all writers are forced to sell themselves cheaply, because of the "economic laws" of supply and demand in the labor pool. This idea is not only fundamentally incorrect, but it is being promoted by people in the old publishing industry who know it's not true. Their goal is to diminish the importance of the self-publishing revolution and to convince writers that they have little value. Unfortunately, many writers, uncertain about their own prospects in a highly competitive market, believe it.

Obviously, not all writers will succeed, if their goal is to support themselves solely by writing. There is no guarantee that anyone who enters any business will succeed. And the more profitable a business is the more competition there will be. The entertainment industry, of which publishing and fiction writing is a part of, can be highly profitable. But it is also extremely risky, complex and doesn't fit into simple business cliches about supply and demand. Self-publishing also operates by a completely different set of economic rules than work-for-hire writing. When you self-publish, you are the boss of your own small business, and that also brings unique pitfalls and great opportunities. I'll talk more about that in my next post.

In this post I want to focus on how writing, and all creative work, is different from other types of labor. Specifically why: MORE WRITERS MEANS WRITERS GET PAID MORE. (Not less.)

To quickly review: it is not true that if too many people want a type of job, the job will eventually pay little because of "supply and demand." In fact, it's usually the opposite, the reason people are lining up for a job is that it's a great job. That makes sense, right? But it is true, in most cases, if more people want a job, the harder it is to get it. If three hundred people want an entry level job at Zappos, your basic odds of getting it are 300-1. Having an inside track, a winning personality, or great skills might improve your odds. But if there are less people applying for the same position, your chances certainly improve. If you have a good chance of getting the job at 300-1, you have an even better chance of getting it if less people apply and the odds are 20-1. If only five people apply you've got a much better chance.

This kind simplistic job odds math might make the "two many writers" meme sound plausible. If there are only ten writing jobs available, and a thousand people want them, then logically your chances are 100-1. If less people wanted those jobs, your chances would improve. Right? Well, not really.

Competition is not only a good thing for writers, but it's critical if writers hope for fame and fortune, or even just a nice living. Yes, some writers will fail, but the more writers there are, the more likely it is that many will be able to achieve their dreams, and that a lot more will get pretty darned close.

Because the business of entertainment, and self-publishing specifically, doesn't work like other industries. In most industries, demand for entry level jobs is mostly an indication that the jobs pay well and the company has a good reputation. If a high tech company, like Zappos, that has a policy of paying employees well, opens up in your small town and you can get in line first, you have a better chance. If you can do it before word gets out that there are great jobs to be had, all the better. If you wait too long, or word gets out too quick, you might find yourself with too much competition and your odds go down.

In some other professions, like law, medicine, science and high tech, job opportunities are created and restricted by the amount of education, certification and training required. Generally, a lawyer fresh out of law school will benefit if there is a shortage of lawyers and his job prospects will be hurt if there are too many unemployed lawyers. People in those professions have to make a decision about their job prospects years in advance. If the choose well, they could be in the cat bird seat upon getting their law degree. If they choose badly, they could be scrambling to compete for lesser jobs.

Entertainment, however, works completely differently. In entertainment, supply often creates demand. In fact, that is the hallmark of successful entertainment. Supply creates demand. Let's repeat that: SUPPLY CREATES DEMAND. There are little old ladies (and a lot of other people) that had no idea they wanted to read about naughty S&M games until they heard about 50 Shades of Grey. Then they rushed out to buy up millions of copies of the book. The author of that book, E. L. James, didn't take any jobs or money away from anyone. She created money and jobs. A great job for herself (famous writer/cultural icon/soon to be film producer) and made millions. But she also created tons of jobs and money for other writers that quickly cranked out rip off versions of the story, satires of the story, non-fiction about S&M and other material related to it. She also created money for writers who had already written their own similar stories, and writers that wanted to write similar stories, and were finally able to market them thanks to the growing popularity of the genre. She even contributed to the growing popularity of ebooks and ebook readers in general.

I could pick a thousand similar examples, many in fiction writing, going back hundreds of years through the history of literature, but this is common sense, right? When Edgar Allan Poe created the modern mystery story with the invention of a detective character who smoked pipes in Murder of the Rue Morgue he didn't take any money or jobs away from other writers. When Sir Arthur Conan Doyle followed that model with Sherlock Holmes, he didn't take jobs or money away from other writers. When Raymond Chandler build upon that foundation to create hard boiled detectives, he didn't take any jobs or money away from other writers. Instead, they all created wealth for themselves and created jobs and money for the writers that followed in the detective genre. Conventions were established, story techniques were refined and audiences were built. Supply created demand.

Those trying to twist economic "laws" to say that too many writers will destroy the self-publishing market either don't know anything about entertainment economics or are simply lying for their own ends (probably the later). The meme is transparently false, but unfortunately it distracts from the true story about opportunities in self-publishing. That is likely it's true purpose, to shift the debate from the good things about self-publishing (self-expression, entertainment, independence, financial rewards) to discussing the negatives (not everyone gets rich). The biggest issues facing self-publishers are nuts and bolts stuff like which genres are currently popular, which cover designs attract customers, how to handle pricing and advertising, etc. But since a debate on global economic theory has been thrust upon us, let's take advantage of it to really understand the big picture. Because if you understand real economics and the global economy, particularly with regard to entertainment, the fact that more and more writers are joining the self-publishing industry is unquestionably a great thing.

Here are some real principles of economics:

  1. Standard of living depends on a country's production.
  2. Differences in living standards lies in differences in productivity.
  3. High productivity leads to high standard of living.
  4. To boost living standards productivity must be raised.

Note that there's nothing in any of that about supply and demand. The key is productivity. Standard of living basically means money. You want to make money, increase productivity. More people writing ebooks means more productivity (more breakthrough books that attract readers) and that will lead to larger audiences and more sales.

How does this work? Imagine a valley that is divided by two tribes, one group of farmers and one group of hunters. By tradition the leaders, let's call them Pubs, refuse to allow trade between the two groups because they want to keep all the food to themselves. When the farmers try to hunt, the hunters scare off the prey, when the hunters try to farm, the farmers destroy their fields. This has been going on for some time, but the problem is that during the winter the hunters don't have enough food, because it is hard to hunt in the snow. The farmers don't have enough food in the summer, when the crop is starting to grow. So both tribes get fed up and overthrow their leaders. The new leaders, lets call them Indies, start trading. During the summer the hunters share excess meat and during the winters the farmers share excess corn. Currencies are developed to help the trade.

Then what happens? The hunters have motivation to work harder and produce more than they need. Not just hunting, but tanning leather, learning to dry meat, and reason to cut back waste. The farmers have the same motivations, learning to make baskets with corn stalks; they start creating jewelry for trade, clothing, etc. This creates abundance, the population can grow, they can begin trading with other valleys and eventually create the internet and sell ebooks. This is the way the world works.

Now, can things go wrong along the way? Sure, the Traditional Pubs can return to power and screw it up again by trying to control trade for their private benefit. Some individuals can try to manipulate the market by eliminating competition. And yes, there will be good harvests and bad harvests and ups and downs along the way. (Original efforts to develop the internet with corn husks failed.) But productivity is ALWAYS the key to long term growth.

The "two many writers meme" wants to ignore thousands of years of economic evidence that increased productivity builds economies to focus on what might go wrong. They are found of citing the "Tragedy of the Commons," an economic theory published in 1968 by Garrett Hardin, who was not formally trained in economics. The gist of that is that whenever a lot of people are involved in anything it must be doomed to failure. It is a widely disputed theory with a really lurid history and connections to a lot of nasty things like scientific racism and genocide. Hardin used it to predict the world would end due to overpopulation and advocated famine, war and forced sterilization as a solution. I’ll save all that for another post some day, but it’s safe to say it is an unsound economic theory that bad people grab onto when they want to do bad things or kill good things. More importantly, it is always, always wrong in predicting real life outcomes. If it was true there would be no businesses, churches, non-profits, armies, movies, cities or civilization. That critics are citing it is virtually proof that self-publishing will grow and thrive.

The real economic theory that applies to all markets, including ebooks, is Adam Smith’s “invisible hand,” which basically says that in free markets people will eventually figure out solutions to problems of supply, demand and production. There is dispute about how quickly it works, how well it works in some situations, what its effects are on wealth distribution, but no serious economist disputes that the basic theory is correct. If it wasn’t, and the world worked the way the Tragedy of Commons proposes, all free markets would have collapsed centuries ago.

So when our hypothetical farmers start producing too much corn they will logically shift to growing other crops or finding different jobs like basket weaving. If there are too many hunters, some will start fishing or panning for gold. Logically, this had to happen for society to have progressed to it’s current state. The invisible hand worked.

The creative arts also are subject to the same forces that guide the invisible hand, but they are quite special compared to other forms of labor. Artists are creators, with all the godlike implications of that. They can create value simply from ideas. They can take corn husks and turn them into baskets. They can make baskets into games and into works of art. The different between the value of one basket and another can be simple details, or even just the fact that it was created by an admired person.

Some of this can even be done with basic commodities. Special varieties of corn can be developed; it can be packaged attractively and branded successfully. But the creative artist simply has a great deal more tools at their disposal for creating value. (Yes: creative, creating.) There will still be ups and downs in markets for creative work, but the talented artist has greater ability to adapt to them.

Because creative arts are not essential, like food and shelter, an artist's ability to sell their work depends enormously on people having disposable income. However, modern society, at least in developed countries, has solved that issue for most people. But if one were looking for reasons to be worried about larger economic issues in regard to self-publishing, the ups and downs in the overall economy in the United States and the world are a much greater concern than the growing number of ebooks or competition among writers.

In fact, as I explained before, competition is a good thing because it leads to creative innovations that can build audiences. Some artists might not want completion (I love completion), but even if you don't like it, it is simply the logical outcome of the success in any market. If you want a large sailing boat, it is going to be heavier than a smaller boat made of the same materials. Do you want a large boat or a small boat? If you want a large one, it will be heavy. If you want a large market for a product, there will be competition. Even in markets that are successfully monopolized, competition bites around the edges and eventually breaks through. (For example: major film studios controlled visual entertainment, broadcast networks rose to challenge film, cable rose to challenge broadcast, then online video rose to challenge cable. Postal services dominated mail delivery, telegraphs competed with mail, the telephone competed with the telegraph, texting competes with the telephone, etc.)

Let's suppose that in our farming and hunting village, thanks to the takeover by the Indy leaders, there is an abundance of food and disposable income. A market for handmade baskets develops and more and more creative artists enter the market. Surely at some point everyone will have a beautiful basket and the market will collapse, right? No, if there is enough disposable income, some people will collect baskets. As they collect them, they acquire a taste for better, rarer, and more expensive baskets. Baskets will be made to store other baskets. Artists will put more and more time into even more unique baskets. The best known artists will be able to charge more simply by virtue of their name value. But won't that mean more artists enter the market? Of course, and that's a great thing. Because those artists will have to study baskets to learn how to make them, often buying them. They will take classes from other artists, providing additional income. They will create fresh excitement in the market and innovation.

But surely, at some point it all has to collapse if too many artists try to enter the market? No. It doesn't. The market might fall if there is a food shortage and disposable income drops. If that doesn't happen there is a danger that people lose interest in baskets and start collecting pottery, jewelry or other crafts. (Just as the real threat to ebooks is competition from other entertainment like video and games.) But it is far more likely people will lose interest if the market is dominated by a few older artists, who keep creating the same things, than if new artists steadily enter the market and generate new ideas and enthusiasm. If the population grows the market can grow with it. If the village can expand trade to other villages, then the market can grow even faster.

Let's take the idea to the extreme. Every single child in the community is taught how to make baskets and encouraged to make baskets for fun in their spare time. Instead of ruining the market, this would create generation after generation of people interested in the craft. The most talented would be revered because everyone would have a sophisticated idea of the work involved. In a free market, only the best would be able to charge for their work, and others would simply move on or create for fun. This isn't just random speculation, it is the nature of human culture. Certain art forms have extra value in different cultures, the skills for them are taught in schools, broad audiences are built and famous artists are rewarded. The Japanese have a culture appreciates fine handmade pottery, and many people create it for fun, but does not stop the best artists from making money creating it. On the contrary, in Japan it is far more likely an artist who makes pottery will be able to sell their work for a high price than in America where handmade pottery is less common and less appreciated.

In the 17th Century, a love of opera music swept over Italy and eventually took the world by storm. It became one of the most popular forms of entertainment. At the height of it's popularity in Venice, when a new opera would open, by the end of the night every gondolier cruising every canal would be singing new songs from it. (It was the 17th Century version of copyright piracy.) There were singers in every cafe, beggars singing on street corners and for small amounts the rich could hire excellent singers for private concerts. With music everywhere, with singers singing the exact same songs you could hear in a professional opera theater, did that mean that ticket sales collapsed and professionals could not be paid? No, the opposite took place. The huge popularity of opera made the best artists rich.

A "too many artists" person might argue that at some point opera fell out of fashion. Yes, after several hundred years it stopped being seen as popular entertainment. But even today there is more opera being performed on Earth than ever before, and more opera singers, professional and amateur. As a percentage of the population, it is much, much smaller than in the 17th and 18th century. It's declining popularity came after it stopped appealing to the masses and became a "refined" art form for the elite and upper classes. (Particularly by focusing on past opera compositions, instead of new originals.)  That lead to it's slow decline as more popular forms of musical theater took over. There is a scary parallel with opera and big publishing. The push away from popular genre writing by large publishing houses in the 1960's, in favor of promoting unpopular but "important" literary fiction, slowly drove casual readers away.  Published fiction was increasingly viewed as an elitist art form. Thankfully, the rise of ebooks and self-publishing is bringing back genre writing and readership is rising again.

The critical issue for writers hoping to make a living writing fiction is how popular ebooks are with the public. There is no fixed "demand" for ebooks, the number sold will rise and fall with based on the popularity of specific writers and genres. (There is also a connection to the popularity of types of ereaders like Kindles and iPads.) Popularity is a two edged sword, it will make more money available, but will also lead to more competition. There is no real life situation where an art form becomes wildly popular but only a limited number of artists become interested in pursuing it. The fact that many, many writers are rushing into self-publishing is a healthy indication of the rising popularity of ebook fiction. It increases the likelihood that more of those writers will earn a good living.

Performing arts (and I would include sports in that) are a little different than creative arts, but jobs and wages in those industries also rise and fall based on popularity.

Let's suppose a young kid, Buckaroo, dreams of being a rodeo clown… and wants to make a decent living… and hopes to get rich some day. Rodeo events in the United States have about $80,000,000 in ticket sales each year. To keep it simple, let's say that represents 10 million rodeo fans. And lets say about $1 million in ticket sales is directly related to rodeo clown popularity and gets passed along to rodeo clowns. Despite the danger, the skills and art required, rodeo clowns get as little as $100-$200 for freelance day work (and, like writers, they sometimes have to work for free to break in). A successful professional might make as much as $50,000 a year, a living wage, and a few popular clowns break into six figures. If the money were evenly distributed there would be room for about 20 rodeo clowns to make $50,000 a year. But, short of a union, it's more likely only a few make a living wage, some make more than that, and others much less. Let's say there are 100 rodeo clowns in the market, some making very little or working part time, and maybe a dozen that make a real living.

So if Buckaroo wants to be a rodeo clown, odds are he has to give up on any realistic hope of making a living, unless he has an inside track, works harder than anyone else, or is one hell of a great rodeo clown. What could change that situation?

Let's say there is a terrible rodeo accident and ten of the top best rodeo clowns are injured and have to retire. Does that improve the kid's chances, since there are less rodeo clowns in the job market? Not really, there are still 90 other clowns scrambling for jobs. While theoretically the odds have improved, it will still come down to whether Buckaroo has an inside track, works harder than anyone else, or is a hell of a rodeo clown.  In fact, there is a danger ticket sales might go down, even for good, if some of the most popular clowns retire and the new clowns don't measure up.

Same thing applies if the rodeo industry institutes a gatekeeper system. Perhaps requiring recommendations and limiting applicants. Let's say they try to limit the number of rodeo clowns to 50 so they can each make more money. Well, that still means at least 50 clowns won't get jobs. And if Buckaroo doesn't have an inside connection to get past that gate, or doesn't work hard to get past it, or isn't such a great clown they let him through, a gatekeeper system won't help his chances. It will almost surely hurt them.  Moreover, with less clowns actively competing, there is a danger there will be less innovation in the industry.

Now, let's imagine a really amazing rodeo clown, Cowpoke, hits the circuit. Cowpoke is funny, he's charismatic, great in the ring and great with fans. On top of that, he's super savvy about social media.  Next thing you know, everyone is talking about him and he gets on the talk show circuit. He does sketches on Jimmy Kimmel that go viral on You Tube. He writes a book about his adventures as a rodeo clown. People who had no previous interest in rodeo start talking about him.  Next thing you know, ticket sales are up not only for the shows were he performs but for rodeo in general. Suddenly, instead of their being $1 million dollars in rodeo clown related revenue, there is $5 million and then $20 million. The number of clowns who could potentially make a $50,000 a year living goes from 20 to 200.

Of course, with the extra fans will come increased competition, because some of those new fans will dream about becoming rodeo clowns themselves. If the Buckaroo is going to succeed, he will still need connections, hard work and talent.  However, he is now entering a profession with a lot more money available.  In success, his chances of making a living greatly improve and his chances of getting rich greatly improve. Also, Cowpoke has shown the way.  Buckaroo can follow his example in using social media and possibly even topple his popularity.  If Cowpoke is smart, he will welcome the competition to help build the industry even larger.

Note than nothing in this very plausible scenario requires Cowpoke to charge a lot for his services.  Let's suppose Cowpoke is the son of a rich rancher and works for free.  Let's go one step further and say he actually pays to promote himself, that was what got him all the attention in the first place.  None of that hurts Buckaroo.  In fact, Cowpoke working for free, spending money to promote the industry, is absolutely in Buckaroos interest.

This is why it is so crazy when writers complain that other writers are giving their works away for free.  They are devoting their time and energy to help build the business and create fan bases.  Yes, it means your writing is going to have to be really good to compete, but it had to be good anyway to compete with all the older books, and all the new television, movies and other forms of entertainment. Any writer wishing to sell books is already competing with the Avengers films, with Wicked on Broadway, with the Lord of the Rings books and downloads.  Competition is already there.  The most important thing for the self-publishing industry right now is to get people into the habit of downloading and reading ebooks.  One way to do that is to get people excited about writing books themselves (or telling their families about it).

There's an old Russian joke that goes like this: Ivan is very jealous of Yuri because Yuri has a goat and Ivan doesn't. Yuri gets milk from the goat, he grooms the goat to get hair to make blankets, he takes the goat on walks and he keeps talking about how great the goat is. An angel comes down to Ivan one day and offers to make Ivan's dream come true. Ivan smiles and says, "You're going to kill Yuri's goat?"

Those who are upset about there being too many writers want to kill other people's goats, rather than focus on how to get their own goat.

While the rodeo clown business is relativity small, Basketball is a huge industry. The NBA generates about 5 billion in revenue a year. Only a small portion of that actually goes to the players, never-the-less, top players can make millions. But in order for those players to make millions, they have to face amazing competition from hundreds of thousands of kids who dream of playing professional basketball. But that is a good thing for the industry, because all those kids practicing basketball in schools and back lots and watching games are a huge part of the popularity of the sport. They bring in revenue, both by buying tickets themselves, but also promoting the game with others. Wishing for riches, or even a decent living, in entertainment, but not wanting competition, is like wanting a fruit tree without leaves.

This is also true of writing, perhaps more so than any other form of entertainment. Because, to a large extent, writing in modern civilization is the equivalent of our farming village's basket weaving. In developed countries, almost every kid is taught how to write. It is the foundation of eduction. Obviously, teaching writing is important to teach kids how to read. But it is not difficult to imagine a totalitarian society that emphasized reading and discouraged writing and self-expression. On the other hand, in modern life kids are encouraged at a young age to read stories, to write stories, and to study literature. This is a huge built in fan base. This is the potential market for buying ebooks: virtually everyone in America and a growing number learning English around the world. We have barely touched the surface of how big the ebook industry can grow.  But it is the height of foolishness to hope that as the industry grows, none of these potential customers and fans will consider writing their own books. Moreover, anyone who wants a healthy industry would want as many writers as possible.

Promoters of the "too many writers meme" do not want a healthy industry. Many want a closed system that caters to the elite and are willing to sacrifice fans, popularity and revenue in order to get it. That was the direction the big publishing industry was going, and it was bad business motivated by snobbery and cronyism. They were willing to accept a shrinking industry so that a smaller number of selected writers could feel special about themselves, even as fiction lost it's larger cultural relevance. They wanted to take literature down the same path opera took, away from being popular entertainment toward something only the elite could appreciate and participate in. With self-publishing, we have a chance to reclaim this wonderful art form for the masses.

There are also some who have already benefited from the success of self-publishing who wish they could pull up the ladder now that they have gotten to the top.  And others who are just starting out who  think they would do better without competition.  But competition is the price of popularity.  If new artists stop flocking to the industry, the industry will decline and there will be less for everyone to fight for.  Recent history has proven that those who enter a rising market will do better.  Those who got into self-publishing early reaped rewards as first movers.  They should continue to have an advantage.  Those coming in now should wish for more to follow.  That's their best hope of doing well.  There is less net competition in a rising market because it takes a while for the word to get out that there is money to be made.  But as the market declines, while less new blood comes in, there is still a large number of players who got in during the growth.  The market will almost always decline faster than the number of people exiting it.  I bring this all up because promoting self-publishing among new writers is critical for it to keep growing.  And if it keeps growing, everyone will do better on average.

I mentioned in the previous post that this was personal for me, and it is. I grew up with dyslexia and always found reading difficult. I had given up on the idea of reading for pleasure as a kid until I stumbled upon the works of Edgar Rice Burroughs in used books shops and then pulp novels from the 30's and 40's and sci-fi. Short, fun, entertaining (cheap) books that make it worth the extra concentration. In junior high and high school I poured through books like that. When I got to college I tried to take writing classes and dreamed of being a novelist. But the literary fiction being pushed by my professors turned me off. I then abandoned the idea of pursuing a career after I heard countless stories of writers submitting manuscript after manuscript to slush piles only to get rejection after rejection.

To the elitists who controlled the industry, that was a positive outcome. I gave up my dream of being a novelist, leaving more room for those who did have the inside connections to go around the slush piles. But to the health of the industry, it was not good. Not that it mattered that they had lost me as a writer, but they had lost me as a customer, almost for good.

Because I basically stopped reading fiction. I didn't have time to comb through used book shops searching for pulp novels I hadn't read. Every time I walked into a bookstore all I saw was pretentious literary fiction prominently displayed, along with a few generic thrillers, detective stories and romances. I thought, if this is what is really popular among regular readers, then I guess I don't want to be a regular reader.

That slowly changed with the ebook revolution. At first I had no interest in ebooks, because I just assumed it was more of the same but in a digital format. I only downloaded some free books to play with the technology. But then I found that some of my beloved pulp classics were available and started to read them. Amazon started recommending new writers in similar genres. Then I learned about the self-publishing revolution and also learned about the dysfunctional side of the traditional publishing world. They weren't serving readers, they were serving the establishment.They had stopped focusing on the business of selling great stories and saw themselves as arbiters of literary taste. Self-publishing was way around them. I suddenly released I could chase my dream again. I could write a novel, the kind I would enjoy, and publish it myself.

So far, I haven't done that. I've spend three years working on it. But during those three years I've bought dozens of books I simply wouldn't have bough otherwise. I've bought books on writing, on self-publishing. I've bought genre fiction to study the form and I've bought books from writers who are self-publishing to check out what they are doing. I have also started reading again for pleasure. I have yet to sell a single book myself, but I'm helping support a lot of other writers.

And I'm not the only one. People worried about competition need to realize there is no clear line between their customers, their fans and their competitors. It's all mixed together. But more competitors always means more potential fans. Out of a million fans, tens of thousands will dream of being a writer. Only a few thousand will actively pursue it. Only a few dozen will succeed. To wish away those few dozen competitors is to wish away the million fans.

Entertainment is different than other industries because for it to generate money there has to be a fan base to support it. The bigger the fan base, the more money. Much of what entertainment is selling is a dream. Star Trek fans dream of being Captain Kirk or Spock and go to conventions dressed as the characters. But that is not enough for all of them. Some shoot videos of their own Star Trek episodes, some write fan fiction. That many fans are inspired to create is a natural and healthy part of pop culture. Of course self-publishing is encouraging people to become writers. It's popularity is growing. The only time to worry is when people stop being interested.

It is my belief that we are just at the beginning of a much, much larger market. Any real investigation into the contributing economics would indicate that. The number of people in the world is still growing. The number of people who read English is growing even more rapidly. The number of people who have internet access is growing even more rapidly. The number of devices that can read ebooks is growing. The amount of money Amazon makes from ebooks is growing. The number of competitors to Amazon in the ebook market is still growing.

Most of the wannabe writers will tinker around the edges and give up. Let us all hope that they remain fans, which means, let us hope they continue to dream that maybe some day they'll get back to it. Let us hope that in addition to teaching literature, that every high school teaches kids how to self-publish their own books. It would be great for the industry. Those kids would sell books, buy books, and create innovation and enthusiasm. Likewise, let's hope that when every teacher, lawyer, soldier and other professional retire they write books and self-publish. Along with every struggling waitress and janitor. It can only grow the industry for the benefit of all (even the selfish elites who are currently complaining). Let's have people singing about self-publishing on every street corner.

Mackay Bell

More to come soon in Part Three about the advantages of working freelance, the benefits of writing, and why it's okay to want to get rich.

Saturday, January 10, 2015

Self-Publishing Controversy: No, There Aren't Too Many Writers

AUTHORS NOTE: I'm relatively new to blogging and have been doing it mostly for fun.  So I haven't done much research into how to build audiences and such.  But the one piece of advice I did read was to keep posts short and frequent, which seemed to make a lot of sense.  As I was busy with other things, mostly finishing my novel, I didn't post frequently but I did work hard to try to keep it short.  However, my last post was very long and has gotten by far the most traffic.  So maybe short posts aren't always better.  I share this for two reasons.  One, it's always good to question conventional wisdom when you see evidence to the contrary.  And two, this is another long one:

There is a popular meme, which comes up often in discussions about self-publishing books, to the effect that there are too many writers. It is rarely questioned, though there is some argument as to how big of a problem it is. Some consider it a disaster, while others effectively shrug and accept that it is annoying problem that has to be lived with. There is also a great deal of handwringing that growing popularity of self-publishing is making it all worse because it’s too easy to publish a book. There are arguments that maybe things were better when wannabe writers were discouraged from pursuing careers by gatekeepers like traditional publishers and literary agents. Even some of those who have found success through self-publishing, evading the old gatekeepers, worry too many people are trying to follow them. There are suggestions that special measures must be taken to make it harder to publish along with predictions that unchecked the problem will have disastrous consequences for all. For writers, for literature, for the world.

I disagree. I don’t think there are too many writers, and I believe the world will be better off with even more writers. The best possible outcome of this self-publishing revolution will be if everyone on the planet writes a book. Writers specifically benefit from the all the other writers, and wannabe writers, who actively pursue their craft. The self-publishing revolution is one of the greatest gifts technology has brought to the world. While it undoubtedly discomforts those who benefited from scarcity, elitism and dysfunction in the old publishing world, it’s unquestionably better for society as a whole.

Now, let me be clear, this is personal. I am exactly the kind of wannabe novelist that complainers are worried about. I’m a guy who dabbled in all sorts of writing for decades, but never finished a full novel. Let alone had it published. I’m about to self-publish my first book, completely inspired by the success of others. I’m exactly the kind of person who was put off by the notion of gatekeepers, and slush piles and would have probably stayed out of the book business for the rest of my life. So I’m one of the “too many.” By stepping into the game, it’s assumed I’m going to take money and opportunity away from those who have already been playing.

The idea that more writers is a bad thing for literature, self-publishing, or even traditional publishing is not only wrong, but diverts writers from discussing the more important issues related to fair compensation, career management and growing the industry for all. So I’m going to pick the concept apart piece by piece in the unlikely hope of burying it once and for all.

The arguments against too many writers has several components. Some of it is pure snobbery, that people like me can easily join the “published author” club diminishes the respectability of “serious” authors. How dare I call myself an author, and demand attention to my work, when there are real authors who deserve more attention to their works? Others obviously just hate the idea of competition and want less of it. That is sometimes hidden by a concern that “bad writing” and “unprofessional” writers are “ruining” it for the rest. This lament was recently expressed in an article by Stephen Akey in New Republic, “There are far too many writers out there, and if the good ones are not to be buried by the bad ones, agents have an obligation to recognize and nurture talent that might otherwise go undetected.”  Rather than shoot at fish in a barrel, I’ll pass on mocking the logic behind appealing to literary agents for salvation. Stranger to me is the assumption that we will all nod our heads in sad agreement when he says “there are far too many writers out there” as if writers were an infestation of rats or a bevy of pickpockets moving through innocent crowds.

A more persuasive argument is that too many writers means that writers don’t get paid enough. If there were less writers in general, individual writers would get more money (and maybe their own literary agents to nurture them). This argument has the advantage of not appearing to be selfish. It’s presented a concern for the overall health of the business, an expression of market reality: supply and demand. If there are too many people who want to be writers, then there are too many books, too much downward pressure on book prices, and everyone gets less money. Writers can’t make a living wage, and because publishers can always find writers desperate to work, they can pay them terribly. Frequently, this argument is pursued to a reductio ad absurdum where all writers are soon forced to work for free.

There are a lot of problems with this argument, even if one were to accept that it is a correct assessment of basic market forces. Presumably as writers stopped making money, less writers would try to get into the business and the pendulum would swing the other way. That logical outcome is dismissed with the thought that there are too many writers who aren’t concerned about money and would still work, but that contradicts the idea that this is a new problem caused by the success of self-publishing and it’s promise of riches.

Which highlights another problem with the “too many writers” argument. History and reality. There have always been more people who would like to make a good living writing than there are good paying jobs for writers. Pick an era, twenty years ago, a hundred years ago, a thousand years ago. There have always been more writers than paid writing opportunities. In ancient Sumeria, there were plenty of farmers who would have happily given up the plow to pick up a stick and write poetry on clay tablets if they could make a decent buck. When books were copied by hand, I’m sure scribes thought, I could write better than this, if only I was given a chance. In the nineteen twenties and thirties, there were tons of books written about the desperate efforts of starving writers living in big city slums (some of which made the authors a lot of money). Despite all the unfulfilled dreams by the majority, in past history, many many writers have gotten very, very rich, despite the fact that there are a lot more writers who didn’t get rich. And plenty of writers were paid nice working wages, even as many, many more begged for jobs. If all writers weren’t forced to work for free back then, why do we presume they will now? Because the ratio of writers to jobs has shrunk? Instead of a hundred people that want to be writers for every one available writing job, are there now a thousand that want to be writers per writer job? Or ten thousand to one?

Unquestionably, there are more people who want to be writers than ever before, because there are more people on the planet. But aren’t there also a lot more writing jobs and money making opportunities for writers? Aren’t there more interesting non-writing jobs in other fields too? Has the ratio of desire to opportunity really changed? A larger percentage of people dream to be writers, rather than teachers, doctors, lawyers, firemen, computer programmers or whatever? I’m not so sure. And why would market forces that didn’t kick in when the ratio was a hundred to one, suddenly kick in when it becomes a thousand to one?

Then there is the problem of current reality. Several years into the self-publishing revolution, there are a lot more books being published. Some writers are getting rich, some are not. Some give their books away for free, some sell books and make a bundle. Just as one self-published writer complains that sales are down, another reports sales rising. Yet supposedly just around the corner, everything will fall apart and every writer will work for free because there are too many writers. Recently it was reported that million dollar advances to first time authors are becoming more common in the traditional publishing world. They are the "new normal." That’s right, despite there being too many writers in the world, and the fact that all these “bad” books are ruining the self-publishing market, a bunch of unknown novelists are getting a million dollars upfront from old school publishers. I guess they didn’t get the memo that soon all writers will work for free. Of course, some will say this is bad news because it will encourage more writers to jump into the business hoping to get million dollar advances, and THEN everyone will have to work for free.

The truth is that market forces don’t work the way the “too many writers” crowd proposes. The meme imagines a kind of “How Green is My Valley” world where unemployed writers are lined up outside a coal mine begging for jobs. The longer the line, the less the mine owner has to pay the workers. If the line is long enough, the workers will be forced to work for very little or even nothing. Then, with coal smudged faces, they have no choice but to shuffle back home to their starving families.

This assumes that the mine owner is an evil bastard that enjoys making workers suffer. But even if that is the case, if he pays below a certain wage the workers won’t have enough to eat or pay their rent and won’t be able to work for him. Below a certain rate, some workers may prefer to starve. This also assumes the workers have absolutely no alternatives, they can’t leave the valley searching for other work, they can’t start up their own businesses in the valley, there are no other jobs available.

In reality, even evil mine owners have to deal with the fact that they can only squeeze workers so far before they refuse to work, unionize or even riot. They have to deal with the fact that the mine owner over the hill might offer slightly better wages and lure off the best workers, or all the workers. The vast labor pool they take advantage of could move out and they are subject to community pressure. Whether it’s the local priest that decides to make an issue out of worker welfare, or state regulators that the mine owner needs to appease to keep operating. Whether there are twice as many workers wanting jobs, or hundred times as many workers, there are limits to how low he can drive down salaries before it hurts his own long term interests.

Moreover, not every boss is evil. There are plenty of bosses that pay fair or even good wages just because they feel that’s the right thing to do. There are also very good business reasons to do so. Not all workers are equal. The better ones are worth more money. Worker turnover is expensive. The cost of training an employee can be high. In fact, many smart businesses adopt a principle of paying top wages for the best employees. This, of course, puts pressure on other companies that want to pay less. Back to our mythical evil mine owner, if workers are lined up to dig coal, rather than pay less, wouldn’t it be smarter to pick the strongest, hardest working and most experienced workers? Even if that means you have to pay them a little more? Aren’t the benefits of a good worker worth the extra money? Even if you’re evil and want workers to suffer?

In situations were the boss isn’t evil, or has a philosophy of hiring the best workers, what matters most is how much money the business is making, and what can it afford to spend on labor costs. The more money the company brings in (per worker), the more generous the company can be in salaries and perks.

Who makes the most money in America? People who take jobs no one wants? No, not by a long shot. Sure, occasionally you’ll hear about good paying jobs drilling for oil in Alaska or something (which is great if you know how to drill for oil and like the cold), but the jobs that pay the least, are the jobs, NO ONE WANTS. Fast food employees are not paid very little because there are so many people that dream of working near a fry cooker. They are paid very little because people want cheap hamburgers and the economics of the industry can’t support high paying jobs for entry level employees. Janitors and hotel maids are paid lousy, not because people are lining up for the jobs, but because the labor costs of running a hotel make it hard to pay much more. Sure, in a tight labor market they might have to pay a little more per hour, or if there is a lot of nearby unemployment they might get away with a little less. But the basic pay scale will not fluctuate much for that kind of job in that kind of industry. Nor is it an issue of low skills and or little eduction. Teachers and nurses are historically and widely paid very little, in contrast to the large amount of education and trainning needed, despite frequent shortages in both professions.

On the other hand, stock brokers and investment advisers can make millions. And there are plenty of people lined up to try to get those jobs. Including many people who will intern for free. Not only do bankers and executives who work in financial markets make a lot of money, but the office workers who support them are paid well too. Many lawyers get rich, even as others worry too many people are getting law degrees. Real estate agents in good markets can also get rich, despite the fact that it takes little training or formal education. A private tennis instructor in Beverly Hills will make a lot more money than a physical education teacher in Iowa. And it’s not because no one wants to be a tennis instructor. CEO’s of big corporations have huge salaries even though there are hundreds of qualified executives who would happily take their place for a smaller salary.

The reasons some people make more money than others are complex. Much of it has to do with the value society puts on a profession. Sometimes it has to do with training and education, but not always. Sometimes people are paid more for more dangerous jobs (but not always, just ask a soldier). And yes, sometimes it does have to do with how many applicants might be interested, but only in a limited range. The main reason some people are paid more than others is they are: closer to the money.

The closer you are to money, the more likely it is you will be paid well. The bigger the money you are close to, the more you get paid. That’s why bankers and stock brokers get paid well. And the CEO’s of big companies. Is there a lot of money? How many people between you and the money? Not many, guess what, you’ll be paid more. Are you further down the food chain? Well, how much money is there at the top? If there’s enough, you’ll do okay.

This is why a real estate agent makes a lot of money. They are very close to a big financial deal. Even if they only take a couple percent off a house sale, it’s a small fortune. The house inspector that they hire is going to make less, despite having more specific expertise. This is why you can make money as the boss of a small business, but probably not as much as an executive five layers below at a big business. How much money a business makes, how many employees it requires, and how far down the food chain you are, has much more to do with how much money you will make than how many people want the job.

If you own your own hot dog stand, you’ll make more than someone who works for a guy who owns the stand. If that guy works for some other guy, you’ll make even less. If the hot dog stand makes a ton of money, you’ll still be okay. If it doesn’t, you’re in trouble.

There are lots of great jobs in the tech world, where lots of money is being made in businesses that don’t require a lot of human labor. Tales of employees being lavishly paid and showered with perks are common. Zappos, an online shoe retailer, famously treats even it’s lowest paid employees extremely well. In addition to above average compensation, the company provides no deductible medical coverage, free food, a 24 hour fitness facility and more. Does it offer all this because no one wants to work at Zappos? No, Zappos, not surprisingly for a company which treats employees so well, had over a hundred to one application to job ratio. (They recently stopped putting out job placement notices to cut back the number of applicants.) Not only do they not have trouble finding people to hire, but they famously offer to pay employees $2,000… to quit. That’s right, they only want happy employees and will pay you to move on if you don’t like it there. They raised it from $1,000 to $2,000 because they felt not enough employees were taking them up on the offer. Google, a much larger company, but one that also makes tons of money, also competes on the good pay, free food and perks front. It, famously, has a rigorous application process, searching for the best people despite a thousand to one applicant ratio. In other words, because so many people want to work at Google, rather than pay people less, they go to great lengths to figure out who is best and pay them more. Google can afford to.

It’s not just in the tech world that many, many high profit businesses pride themselves on hiring the best workers, and paying them well. They see it as a good business strategy. So question: is this philosophy less likely to be valid with writers than online shoe salesmen at Zappos, computer programers at Google, real estate agents, tennis instructors, lawyers and stock brokers?

Well, how much money does the publishing industry make? Billions. In the United States there were some ten billion in print sales last year and five billion in ebook sales alone. The world market is estimated to be over 100 Billion.  Ebook sales are expected to grow past print sales in the next five years. And that’s where self-publishing gets the biggest slice. How close is the writer of a novel to the money that novel brings in? Pretty damn close. If they self-publish, they are the boss. But even if they work as a hired gun, there should be no reason for them to be so far down. Those billions in sales come from hundreds of thousands of books, but some books sell millions and others barely register. So why should the writer of a book that sells millions get very little? Even if the work is for a big company, even if there are layers between the writer and the money. If other highly profitable businesses pay their employees well, why wouldn’t publishers? If other businesses search for the best and pay extra for the best, why wouldn’t that happen in publishing? (Like, perhaps, paying first time writers million dollar advances for hot new novels.)

Some people, strangely some writers, think these common good business practices don’t apply to writers. For example, novelist and journalist Cory Doctorow recently said:

“Artists have traditionally gotten a rotten deal from the entertainment industry, but I think that the rottenness of that deal rises and falls based on the amount of competition there is for our services. If you are in the catbird seat, if you are lucky enough to be one of those superstar artists who has negotiated a really good share of that money, then your fortunes rise and fall with the fortunes of the investor class.”

“But I don’t think that’s true of the majority of artists. I think the majority of artists get the least that the investor class can get away with. They are, from the perspective of the investor class, largely interchangeable. That is to say, if you plan to publish 15 fantasy novels this month that are going to be primarily aimed at people who are buying them in airports to read on an airplane, then really what matters is that you just have 15 novels that are of readable quality. And there’s far more than 15 people willing to write you a novel this month for it.”

Artists have traditionally gotten a rotten deal from the entertainment industry? But for the lucky ones? Those who happen to work when the business climate for deals just happened to be favorable due to competition? I presume those lucky exceptions include Steven King, J. K. Rowling, Edgar Rice Burroughs, J. R. R. Tolkien, Danielle Steel, James Patterson, Tom Clancy, John Grisham, R. L. Stine, Jackie Collins, Michael Crichton and say hundreds of other novelists. In the music world there are exceptions like Frank Sinatra, The Beatles, The Rolling Stones, Bruce Springsteen, Madonna, Elvis, etc. In comics there are exceptions like Stan Lee, Charles Schulz, Bill Watterson and Alan Moore. In film there are exceptions like Steven Spielberg, George Lucas, Walt Disney and James Cameron. So what were the competitive market conditions around Edgar Rice Burroughs and Walt Disney’s time that allowed them to succeed when other artists would soon be exploited? Were those same market forces in play when Steven King and J. K. Rowling got so lucky? Was it the same for Charles Schulz and Bill Watterson? Or did it dip in and out between? The lucky exceptions that Doctorow refers to would presumably include most popular artists.

Yes, there are plenty of true life horror stories about artists who are ripped off. There are artists who die penniless, or fail to profit from their creative efforts as others get rich. But there are many, many other artists who make millions of dollars (or simply nice living) from their creative works. There are artists, like Walt Disney and George Lucas, who invest their millions in profits into hiring and paying other artists and in creating innovations in the entertainment industry. The difference between those artists who profit from their work, and those who don’t, I believe has a lot more to do with hard work, talent and business savvy than luck. Yes, many artists do get ripped off, some even die penniless, but poor market conditions are not the main reason why.

Doctorow’s comments are part of his larger concerns about the negative effects of internet consolidation but they fit in nicely with the “too many writers” meme. If success in writing is mostly due to luck, then your odds unquestionably improve when there are less people in the lottery. And if exploiting artists makes for good business, then Doctorow is right that keeping businesses small is probably the only chance for artists to have more leverage. The problem is, not only is he wrong, but the concept, unchallenged, is dangerous for both businesses and artists.

Woe upon the publishing startup company that takes seriously Doctorow’s suggestion that “readable” will work if you’re trying to sell 15 new fantasy novels a year in airports. How does that sales pitch go with the buyer for Hudson Booksellers? Hey, we have these readable fantasy books. Who wrote them? Oh, it doesn’t matter, just some dime a dozen writers. How are those books expected to compete with established names for the few places available? A new company wouldn’t even get those books on the shelves, and passengers looking for something to read would likely skip them in favor of more famous authors. Even if the company has some inside track on book placement, even if the company uses famous brand names (first created by good writers?) and hires cheap ghost writers, it is not going to survive for long if the people on airplanes simply find the books readable. Unless by readable, Doctorow really means “pretty good,” in which case you’re going to need good writers that are able to deliver. If the books aren’t good, eventually even airplane passengers will avoid them and the brand names associated will be tarnished and the airport bookstore will look elsewhere for product. Which is to say you just threw away all your startup investments.

Not that there aren’t “readable” or even flat out “bad” books being sold in airports. But “readable” and “bad” are subjective based on the reader’s opinions. One readers “bad” is another reader’s “good.” Prominent placement and good marketing, including beautiful cover art (from a poorly paid artist?) and well written book descriptions (from a poorly paid copy writer?) can make a huge difference in impulse sales. But why, if a new or old business is going to go to all this trouble to get books onto valuable shelf spade, would they prefer to hire bad writers rather than good? To save a few extra bucks? To avoid paying royalties? Obviously, they have to make some decisions about cost vs. value, but saving money by hiring the cheapest writers possible because the quality of the writing doesn’t matter is the worse way to save money. It would be incredibly short sighted. If that is your new business, why not hope that eventually the books sell in places other than airports? Like online? Why not hope they become intellectual property worthy of movies or television shows, given all those people casually reading them on airplanes? Why give up hope for a best seller or even a classic? Would that help your start up pitch? Would that lure more investers to your company?

Obviously, not all businesses are run well. Some bosses are assholes. Some do take pleasure in exploiting people. Some do dismiss the value of talent. And, unfortunately, some businesses can make a lot of money even if they are run badly or for short term gain. But those businesses are always surpassed in the long run by businesses that are managed well. That means smart decisions are made about how to compensate employees and how to retain top talent. Zappos was sold to Amazon for $1.2 billion dollars. Google mints money. In the publishing world, giant corporations are buying up small publishers and paying first time writers million dollar advances. They aren’t doing that because its easy to hire cheap writers and anyone can write a “readable” novel.

I’ve done a variety of work in the entertainment industry, in film, television and internet startups, for decades. I started as a guy that was paid $10 an hour to teach people how to use Microsoft Word on their Macintosh. My very first freelance client said, "I'm recommending you to a friend, raise your rates."  Very quickly, my rates jumped past $100 an hour because people liked me and I did a good job.  More than one boss advised me to charge more to the next guy.  Before long, I was branching into more creative work including consulting for major entertainment companies. Working freelance is always hard, there are ups and downs.  I ran into some evil bosses along the way that took advantage of me (or tried to).  But good companies would also seek me out, not because I was cheap, but because I did a good job and worked hard. Cutting my rates to get more jobs was never a good idea. Raising my rates almost always resulted in more recommendations because I was perceived as being more valuable. And the higher my rates rose, the higher I moved up the food chain in terms of both getting closer to, or working directly for the boss. It was also more likely I would be working for a company that knew how to make a lot of money, or at least had a lot of money.

The other thing I've learned over the years, seeing some creative people fail and others rise to incredible fame and fortune is: it's not luck.  Blaming success, or failure, on luck feeds the meme that all writers are the same, and thus the only power is with the boss.  Yes, there is a lot of luck if you are born in a favorable environment.  If your parents are well connected, if you don't have to worry about money, then you have a leg up.  Equally important, if your parents encouraged your creativity, educated you well, supported you emotionally, that also helps.  Just being born near an important media center like Los Angeles or New York also helps, even if you don't have any other advantages.  But being rich, well connected or in a favorable location isn't enough.  The people who really succeed do so because they work really, insanely hard, and they bring something unique to the table creatively.  It might not be "better" than what someone else brings to the table, it might just be more popular or more timely or more easy to appreciate, but it's that unique quality what makes them successful. Those people, that combine something unique with hard work, are rare and really valuable.  Finding those people and, yes, "nurturing" them can make other people rich.  Finding those people and exploiting the hell out of them can also make you rich, if they will put up with it.  The best won't, at least not for long.  (And if you don't have something unique, hard work and craftsmanship will get you pretty damn far.)

There’s an old joke, that applies to many industries, and goes something like this:

Q: How do you make a small fortune in the entertainment business?

A: Start with a large one.

That is, a lot of wealthy people, or people with good investment connections, jump into the entertainment industry with a big pile of money to burn, and it burns up until they walk away in failure with a small pile. I’ve seen dozens of these companies come and go, I’ve worked for some of these companies, and I will tell you the problem almost always is they don’t understand how to manage creative talent. They underestimate how hard it is to get good talent, how expensive good talent is, and how hard it is to keep the best talent. The companies that succeed are always the ones that either learn how to manage creative talent (usually by paying well), or already have great creative talent. In fact, one piece of advice I frequently give to startups is that in entertainment, it’s critical they have a creative person in charge, and that almost always means a writer, former writer or someone with a keen story sense who loves writers.

The publishing business also knows this. That’s why they pay million dollar advances. That’s why they pay their best selling writers a ton of money. And that is exactly why they are helping promote the “too many writers” meme in regards to self-publishing. They hope that good writers will be fooled into questioning their own value and can be bought more cheaply. They don’t want to be forced to pay million dollar advances. They want to try to lock up the best writers to work in their coal mines, and that means convincing all writers, good and bad, that they are worthless.

Sadly, many struggling writers are quick to repeat and promote the “two many writers” meme because they are afraid of competition, they refuse to be honest about the quality or marketablity of their work, and plain old insecurity. Some of this has to with the self-questioning nature of writers in general, and some of it is just a normal part of the difficulty of working freelance, which most writers have to do. I have sympathy for writers struggling make a living, but competition will never go away in a profitable industry. And entertainment is a highly profitable business that lures the best and brightest as well as the most powerful and well connected.

Books, novels, entertainment and art, of any sort, all compete in a vast global capitalistic market whether they like it or not. While there are some tiny enclaves, non-profits, wealthily patrons and government grants, creative works are expected to compete for attention. Even an artist who works privately in secret, with no ambitions for fame or fortune, runs the risk of becoming a Henry Darger, who’s landlord made a fortune selling his work to Madonna and the Museum of Modern Art after his death. He didn’t understand it was worth millions and he died penniless. Others quickly realized it’s unique value and profited.

Those who dream of fame and fortune from their creative work, or even a decent living, have to compete in the world. That means understanding the value of what you do and fighting to get paid fairly.

If you live in a valley where the only boss in town is an asshole mine owner, get the hell out of the valley. Yes, that means you might have to move away from your beloved home town, your close-knit family and the girl/boy next door. Yes, there’s no guarantee you’ll find a better job. But if you settle to work for lousy wages in the coal mine, you have no one to blame but yourself. It sucks that you happen to have been born into a poor mining town, but a lot of things suck in the world. Don’t blame the poor suckers that live next to you.

That’s why it’s dangerous to keep repeating this mantra that too many writers means writers will work for nothing. Some idiot bosses will take it to heart and think they can get away with paying little. And some good writers will believe it and think they don’t deserve to be paid. The best way to increase the value of all writers get is for good writers to demand more money. And for the employers of writers to learn that you get what you pay for, like in any other profession. Companies that don’t want to pay good hard working writers, and end up hiring bad or lazy ones, will go bankrupt quicker, which makes more room for the good companies to prosper and hire more good writers. What happens to all the bad writers? Well, in the long run they never would have been happy (or well paid) until they upped their game. So maybe this will be motivation for them to work on their craft and job seeking skills. Or move on to something else.

The only writers who don’t have to worry about how to make a living are the ones that were born rich, or became rich through other means. And guess what, you have to compete against them too. And you have to compete against those writers who happen to have been born with better connections that you to influential people in the publishing world. There are far more poor people than rich people, powerless people than powerful. It is very hard to move up from one social economic status to another. That fact of life plays a much bigger role in holding struggling writers back that the dreams of other struggling writers. The truth is that those desperate writers trying to climb up next to you are the best allies you have to get to the top.

Which is the other dangerous thing about the “two many writers” meme. In addition to trying to convince writers that they should devalue themselves, it works to convince writers to fight with each other rather than stand together to improve their lives.

Finally, at least for now, while it is obvious that smart businesses hire good people and pay well, it is often argued that creative workers are different from other workers because they will, at least sometimes, work for free. Some view writing as a hobby, and some will work free in hopes of a big payoff later. Both things are absolutely true. But neither of those are bad things, they are actually very good things, at least in self-publishing. Because not only is it not true that more writers means writers get paid less, but actually more writers means writers get paid more.

I’ll cover this in my next post.

Saturday, January 3, 2015

Kindle Unlimited: Which Conspiracy Theories Should You Believe?

Kindle Unlimited, Amazon’s ebook subscription service, was launched back in July of this year and while all the data isn’t in, a lot of self-publishers are complaining it has hurt their sales and/or revenue. As a result, some famous Amazon supporters have been pulling out of the program, at least temporarily. It’s not clear that KU is hurting the revenue of all self-published writers. Some authors even say they see improved revenue and better numbers in both in borrows and sales. For example, Robert Gregory Browne commented on the Passive Voice: “Kindle Unlimited makes me money… my sales haven’t suffered and I’ve at least doubled borrows.” Moreover, if you charge less than $1.99 for your books, you make more for a borrow than a sale through Kindle Unlimited. This is a big advantage for short fiction and writers who price first in a series at $.99.

While it is not a good thing if any writers incomes are hurt, this is a great opportunity for the self-publishing community to unite by sharing information and strategy to the benefit of all. Many writers are doing exactly that, generously revealing their own personal sales information, explaining what is and isn't working, and discussing future plans.

Personally, I think Kindle Unlimited is a very interesting new tool for writers. I can see how it might help some and hurt others, but overall, I believe that businesses grow and improve by embracing change so it seems like an exciting development. I am about to self-publish my first book, Eve's Hungry, and I intend to put it into KU. In fact, KU has solved a lot of issues for me in terms of pricing strategy. Since this is my first book, discovery, gaining new readers, will be my primary focus. Much of the conventional advice is that if I want new readers I should make the book available for as little as possible: $2.99, $.99 or even perma-free. Others say that free and $.99 don't work on Amazon anymore. Others, notably Kristine Kathryn Rusch say that underpricing a full length novel devalues it in the long term and suggests a minimum of $6. Since my book is a real novel, over 70,000 words, I'm tempted to take her advice. So Kindle Unlimited solves both problems. I can put my book up for $5.99, so I don't seem to be devaluating it, but it will also be free to KU subscribers to add to discovery. That KU requires exclusivity is actually a bonus to me. Putting out my first book is complicated enough. I'm happy to go all in with Amazon for this first one. As I get results I'll share them on this site.

It would be nice if most discussions about Kindle Unlimited focused on real data, on individual choices, and what is best for self-publishers in the immediate future. Unfortunately, the anti-Amazon crowd, particularly those who don't like self-publishing and view it as a threat to the established publishing community, see this an an opportunity. They are quickly co-opting the debate for their own purposes by throwing out misinformation, conspiracy theories, and wild predictions of the future.

Those of us who don't see Amazon as evil are compelled to make some effort to defend it. So we are thrust into a debate about Amazon's good or bad intent with Kindle Unlimited, and where it might really be headed in the distant future. Sadly, once again the issue becomes framed through the lens of how it helps or hurts traditional publishing vs. self-publishing. Someday, over the rainbow, self-publishers might be allowed to conduct their business without it being perceived as a fight between them and traditional publishing. But, for today, Amazon critics are determined to use the KU debate to refight old battles they lost.

This is going to be a long post, so feel free to jump off now and go to the links above of real writers talking about real facts, rather than general speculation and conspiracy theories. I don't mind, really.

While some of the people complaining about Kindle Unlimited are writers who are directly affected by it, many are what I will call PPP, or Pundits Protecting (traditional) Publishing. These are the same group of people who originally slammed self-publishing for creating a "volcano of shit," and who openly pinned for it to be shoved into ghettos where no one would see it. These are the same ones who, during the Amazon/Hachette dispute, spun around and demanded self-publishers join Hachette's side to save literature and stop Amazon. When self-publishers didn't join Hachette's side, or offered sensible compromises, they were attacked and belittled with absurd arguments like "thinking Amazon was their friend." The PPP made sure that reasonable discussions about ebook pricing dissolved into attacks on self-publishing for undercutting prices. They frequently suggested that self-publishers had nothing to offer readers but free and cheap books. When the Amazon/Hachette dispute was settled with a whimper, despite their efforts to paint it as a life or death struggle for the future of literature, the PPP tried to claim it was a victory for agency and price fixing and another nail in the coffin of self-publishing.

So it shouldn't be a huge surprise that the same group that has always been antagonistic to Amazon, and self-publishing, are smacking their lips with savory schadenfreude as they hope self-publishers are suffering. They are smugly recycling their old failed arguments into a “I told you so” lesson. Presumably, self-publishers should have collectively turned on Amazon and supported giant print publishers prior to their ebook income streams being hurt by KU. How that would have helped them, or fixed any issues with KU, is anyone’s guess.

With KU in the news, the PPP hope to convince self-publishers to act against their own interests and for the benefit of the traditional publishing world they support. Their goal is to protect the status quo: rich successful writers who don't like competition, literary agents who don't like the independence self-publishing gives writers, publishing executives who don't want their choices questioned, and giant publishing corporations that want to maintain their dominance over the industry. There is no consideration that some self-publishers might foolishly take their advice and get seriously hurt, like the student in The Prime of Miss Jean Brodie who runs off to join the wrong side of the Spanish Civil War. Self-publishers who pull out of Kindle Unlimited, or pull some books, or don't join it in the first place, should do so because it is good for their business, not because the mouthpieces of larger business interests convince them that Amazon is an evil that must be stopped.

Since the actual problem isn’t sufficient to terrify self-publishers into hating Amazon, it’s necessary to forecast future doom by predicting that KU payouts will inevitably shrink to nothing and the service will destroy all ebook sales. While they're at it, why not recycle old arguments like that too many writers are flooding the market and creating a "glut." And that cheap ebooks devalue writing and will soon force everyone to work for free. Those predictions didn’t come true when they were made years before, but with KU maybe they will. And why not suggest that evil Amazon knew KU would hurt self-publishers and introduced it because they view books as a "loss leader" so they can sell other stuff like diapers.

Let’s return to reality for a moment. We don’t know for sure yet whether KU is a net positive or negative for self-publishers. Obviously, new writers entering the market can’t know whether it helps or hurts, since they don’t have any data to make a comparison. We also can’t know for sure if any individual drop off in sales is completely related to KU, or if there might be other factors related to the author's work or the market in general. We can’t know if any drop in revenue is a temporary effect of KU as it starts up and readers test it out, or part of a troubling long term trend. We also don’t know if most writers can solve their issues by modifying which books they put into the program and which they keep out. Finally, we don’t know if Amazon itself may make changes in the program to solve most of the complaints.

What we do know, is that the anti-Amazon army isn’t going to wait for data, and is going to do everything they can to try to terrify self-publishers into panicking. They’re going to try to convince writers that pulling out of KU is the “right” thing to do for literature and humanity. They want to frighten off writers who are considering self-publishing by saying, falsely, that the entire market is collapsing. And they want everyone to pressure Amazon into making changes that might not be good for Amazon, and might be worse for self-published writers, but good for the big publishing interests.

I have faith that the larger self-publishing community won’t fall for this propaganda any more than they did during the Hachette dispute. I’m also sure Amazon isn’t going to panic and make any hasty moves. However, I think it’s important to try to counter these arguments before they can gain ground and possibly hurt some innocents along the way who believe them.

Let’s start with a quick review of the whole Amazon vs. traditional publishing argument. What’s wrong with traditional publishing? Nothing. But, historically, there’s a lot of things wrong with the way the very biggest traditional publishing companies (now merged into the big five) have been behaving. Starting with the fact that they have colluded for years to treat many, many writers terribly with unfair "standard" contracts, fuzzy accounting, and poor handling of their books. Not all writers, just the most vulnerable ones, and that makes it worse. Toss in that they have historically treated women writers miserably and primarily favor white males from certain socioeconomic classes that mirror the executives making publishing decisions. Add that they have been horrible to genre writers, who bring in the bulk of their profits, and try to prop up pretentious literary darlings no one wants to read and in the processes have driven down the market for all books. Let’s not forget they did everything they could to sabotage independent book stores in favor of giant book chains. They also treat readers badly by gouging them with high prices, which also hurts the overall market. But the most important thing is this:

They won’t publish your book.

Okay, now Amazon. There’s stuff about them not treating warehouses workers as good as they should, okay, bad there. They were really mean to those rich writers who took out the $100,000 ad in the New York Times. And I’m sure there’s some other stuff. But the most important thing is this:

They will publish your book.

And they allow you to make money from it. That's a pretty nice thing. And no one really did it before Amazon. At least, not in a way that gave you a good chance of making money. Right now, it's easy to take that for granted, but it could have gone another way. Amazon could have made deals with the big publishers that would have completely shut self-publishers out of the ebook market. And, in retrospect, I'm sure the big five wish they had. Sure, thanks to the internet, there would be other companies that would sell self-published books, but they would not be attached to the largest online market in the world. And that would have dramatically lowered the chances of any self-publisher making a living.

Now you might think you deserve more money, or you just might want more money, but at least Amazon gives you the opportunity to make money. The big publishers won't. That is, they won't publish the vast majority of writers. (And they can't under their current business model.) Amazon will publish anyone and that is one of the main reasons the big publishers hate them. They don't want the competition that self-publishing brings. And if they could force Amazon to stop selling self-published books, or shove them into a ghetto that one could find, they would do it in a heartbeat. (That might have been part of what the Hachette dispute was really about.)

Now, for the sake of argument, let’s just assume that overall KU is currently hurting more self-publishers (at least in terms of revenue) than it is helping. Let’s go a step further and assume that those writers, who have lost revenue, would have done better if KU hadn’t been created, and would do better, at least in the short term, if KU never existed. And, just for giggles, let’s assume Amazon is not a super villain that randomly kills their loyal sidekicks to prove how evil they are. I’m not saying Amazon is anyone’s friend, but let’s work on the assumption that they are a business, and are more concerned with overall profits and growth than simply destroying writers lives because they don’t care about literature. And let's assume that they didn't facilitate the entire rise of self-publishing, just to suddenly try to kill it off to sell more diapers.

So why did Amazon create Kindle Unlimited? Why didn't it just leave everything the way it was? Shouldn’t they have known that it would hurt a lot self-publishers income?

The notion of subscription services has always been popular with big corporations. Amazon already has one with Amazon Prime. It's a great way to mint money, if they work. But most of them don't work. The giant record labels have tried for many years to get people to subscribe to music services, but for the most part they have failed except for the free ones. Yet the huge success of Netflix in movies and television has inspired a lot of talk about whether that model would work with books. The technology for doing it with ebooks is even more simple. There are a lot of investment bankers and startup executives (who really don't care about writers) who are willing to throw a lot of money out to test the concept.

Amazon wisely tries to stay ahead of the competition. They had already been experimenting with ebook subscriptions by allowing Prime members to borrow a very limited number of books. If Amazon had wanted to jump into subscription services in a big way, they could have easily done it long before anyone else. And frankly, if Amazon wanted to hurt self-publishers and make all books free, they could have just turned Prime into a full ebook subscription service. But Amazon didn't. They set up a separate service with Kindle Unlimited that costs an additional monthly payment and is certain to have less subscribers than Prime. Why? Probably because they are making a ton of money through ebook sales and they didn't want to rock the book. This PPP invention that Amazon views ebooks sales as a lot leader is absurd. Apple, yes. Amazon, no. Apple charges a big premium for their hardware, so they don't care as much about making money on content. They do make a lot of money on it, but their main goal is to sell hardware. Amazon is the opposite. Kindles are very low priced, often sold at or below cost. Amazon wants to make money on content. (There is no profitable business model where getting free books makes people buy other stuff like lawn mower blades.) Hugh Howey is correct when he says that Amazon is primarily concerned with helping their customers. But they do want their customers to give them as much money as possible. As a result, I think they hesitated to launch a subscription service, which might hurt their overall ebook sales, and angered self-publishers, until they were forced to.

What forced them too? The launch of ebook subscription services Scribd and Oyster. This was bad news for Amazon for a bunch of reasons. Scribd and Oyster are typical investment startups and are in a position to lose money for quite a long time, as long as they can gain market share and prove they have some potential. Amazon is also famously willing to lose money to gain market share, but since these companies are just starting, their share is small and they can afford to lose more per customer. They also don't have to worry about cannibalizing their own ebook sales, they don't sell ebooks. Amazon does. I'll repeat: Amazon does not want ebook sales to tank. There is no logical reason to believe they do. But Amazon had to respond. For two reasons: one, if Scribd and Oyster took off in a big way, Amazon might lose BOTH markets anyway, second, if they took off, they could start offering ebook sales and who knows, maybe even sell diapers.

Okay, so Amazon was in a fix. But what about self-publishers, what do they care if Amazon is hurt by Scribd and Oyster? Isn't competition good? Isn't it better if there are more services wanting our ebooks? Yes, in some cases it is good. iBooks, despite Apple's eagerness to cozy up with big publishing, is generally a good thing, it provides some alternatives to Amazon. Nook is okay too. But Scribd and Oyster, in my opinion, are poisonous. Self-publishers should not be rushing to support them, particularly at the expense of Amazon. Why?

They won't publish your book.

But wait, aren’t a lot of self-publishers putting they’re books on those services to “diversify?” No. They are putting their books on Smashwords. And Smashwords is putting them on Scribd and Oyster. Because both of those services require an aggregator in order to accept self-published work. That, to me, is bad. Oh, Scribd, at least, will allow you put up stuff for free, but if you want to make money, you have to give a cut of it to an aggregator like Smashwords. (Now explain to me again how Amazon is secretly planning to make writers work for free when they don’t allow free books and writers have to jump through hoops to get perma-free? Meanwhile, Scribd will take free books, but makes writers jump through hoops (signing with Smashwords) if they want to make money? Scribd is the good guy?) I assume there are some writers who are happy with Smashwords, but I’ve read a lot of bad stuff. I was particularly concerned with the issue of them forcing self-publishers into a hidden ghetto for libraries that used Overdrive’s service. Smashwords CEO Mark Coker’s explanation of how that happened, and their slow efforts to correct it, always sounded flimsy to me. Was Smashwords testing out the self-publishing ghetto big publishers dream of creating?

But the biggest thing is I fundamentally disagree with the idea that self-publishers should be forced to use an aggregator (a middleman) in order to get on these services, or any book service. Apple used to require an aggregator, and as much of an Apple fanboy as I am, I was very annoyed with it. Thankfully they’ve switched and now allow you to directly set up accounts. (Hmm… did Apple switch only because the DOJ forced them to keep arms length from big publishing?) Amazon has already proved self-publishing can be done without an aggregator, so in my opinion that should be the model self-publishers support. Let's not go backwards. The entire purpose of self-publishing is to get rid of middlemen, and aggregators are nothing but middlemen. Aggregators should offer something extra (marketing?) to self-publishers to earn their cut, not simple access.

So I would be against Smashwords even if I hadn’t heard bad things about them. (If you need an aggregator, check out some of the other options like Bookbaby and draft2Digital.) But Mark Coker makes me even more nervous every time he opens his mouth. Coker has plenty of reasons to hate Amazon, they won’t play ball the way he wants, but much of his commentary during the Hachette debate was pretty transparently false. And naturally he’s all over Kindle Unlimited as being the first step in dooming writers to working for free. Despite supposedly being out there fighting for self-publishers, most of his commentary is very traditional publisher friendly. He stays on point with a lot of their false arguments about not only Amazon, but about a glut in content (which is particularly odd for someone who supposedly makes his living helping create that content).

So, everyone thinks Amazon has a secret plan to turn on self-publishers? I don’t think so. But I have my own conspiracy theories. One is that Mark Coker's end game is the hope of selling his company to one of the big five. His writings sure don't seem to come from someone invested in the long term health of the self-publishing movement. Another theory is that the investors of Scribd and Oyster see the big five as playing a huge part in their end games, either out and out sales, mergers or investment. And the big five? I think they are frantically searching for a secret plan to screw self-publishers. Because it’s not enough that they don’t want to publish your book. They don’t want you to publish your own book. That's what is behind all this PPP talk about there being a glut that needs to be stopped. The glut, of course, is all those writers who are self-publishing.

But how can they stop you? Amazon has made it too easy. Well, first, they have to knock Amazon down. So that’s part of all the efforts to use big media to create hysteria against Amazon. Second, they know now that they can’t stop you, so the only hope is to force your books into a ghetto where no one sees them. (Kind of like what Smashwords and Overdrive did with self-published books that wanted library access. Hmm… connection?) To build those ghettos, they will need a lot of leverage with the biggest players in the ebook markets. They tried to get leverage over Apple, but the DOJ stopped them there. They tried to get leverage in the Amazon/Hachette dispute, but that failed too. So, guess what, next they might try to get leverage in subscription services which might be the new frontier for ebooks.

None of the big five publishers have made their ebooks available on Kindle Unlimited. That’s why Amazon has to pay full sale price for the few traditionally published books KU does offer. Two of the big five have made deals with Scribd: HarperCollins and Simon and Schuster. And it looks like Macmillian may soon follow. It would not surprise me if all five did. Undoubtedly one of the reasons the big publishers are willing to work with Scribd is simply to undercut Amazon. (Macmillian CEO John Sargent opening admits that lowering Amazon’s market share is a key priority.) I think it’s also possible that the big publishers insisted Scribd only allow self-published books from an aggregator, or that was something Scribd offered out as an incentive on its own to placate them.

So, what might be the fantasy that big publishers have for how subscription services change the business of ebooks?

1. Services like Scribd and Oyster (anyone but Amazon) dominate.

2. Big publishers make lots of money on those services from their backlists, but protect most of their new releases with tiered pricing. (Keeping them off the services until they have earned as much as possible.)

3. The success of these favored services hurt Amazon’s ebook market share. It’s okay if it kills a lot of (Amazon) ebook sales as long as the big five make the money back elsewhere.

4. Amazon, struggling to compete against the new services, is forced to make deals with the big five the way the big five want them or lose the ebook market all together.

5. Self-publishers must use aggregators to access the services. Bonus if big publishers can force Amazon to use an aggregator too. Self-published material is less prominent on subscription services by design.

6. Big publishers BUY AGGREGATORS. Self-publishers can’t access any major services without an aggregator. Aggregators make big publishers lots of money from self-publishers, which can be used to think up other ways to screw self-publishers. (Raising fees, charging for discovery, charging to put your book up, forcing you to sign over rights, etc.)

Beyond Smashwords, you need no other reason to believe that big publishers are evil, or at least one is evil, than the fact that Penguin Random House bought and operates Authors Solutions. Authors Solutions really is the super-villain of evil publishing organizations. It is so slimy and toxic, it is difficult for me to comprehend why even an evil publishing company would want to own it if they had any other options, which Penguin Random House clearly does. So why did they buy it? Is the amount of money they steal from little old ladies who want to be writers really worth it? Is it worth all the lawsuits and bad press? Really?

It’s the kind of thing that could eventually end up with a Congressional investigation like when Famous Writer’s School was finally exposed back in the 1970’s. Moreover, in an internet age, it’s very hard to maintain that kind of scam, which is why they are now focusing on writers in third world countries. It makes no sense to me. The only way it would make sense for me is:

They see it as the future of self-publishing.

How do the big publishers stop self-publishing? They don’t, they just control it. They make sure that anyone who wants to self-publish has to work through aggregators like Smashwords or services like Authors Solutions. But those companies have to have something to offer self-publishers, other than the long con. That would be access. If you want your book in a major market, either you pay a bundle to Authors Solutions, or you pay a percentage to Smashwords. If not, you don’t get on Scribd or Oyster and whatever other services dominate in the future.

But Kindle Unlimited screws all that up. If it becomes the biggest subscription service, or at least a good competitor, that worse case scenario plan isn’t going to work. So if we want to talk conspiracy theories rather than real data, top of my list would be to worry about the relationship Scribd has with big publishers. Even if I’m wrong about all those concerns, or if they don’t happen because big publishers can’t get enough leverage, there are very good reasons to prefer the Kindle Unlimited model over Scribd and Oyster.

Amazon is still very much in the business of getting people to buy books, in addition to borrowing them. A reader who borrows a book by Writer Smith, and likes it, can click a button and see a bunch of other books by Writer Smith for sale on Amazon (I know, I've done it and bought books that way). Scribe and Oyster are focused on subscription only. This is a huge advantage to working with Amazon. Unless writers expect to earn all their income from subscription services (dominated by traditional publishing interests) it’s a lot to expect readers to leave Oyster to see what you have available on Amazon. I even think some readers might enjoy a book so much they borrow it and then buy it. I’m already struggling with the 10 book limit on Kindle Unlimited, and I can certainly see buying some books to keep that I borrowed. (I'm on the edge of buying You Only Live Twice, even though it's in my borrow list, because I want to free up the space and I don't have time to read it right now. It's something I'd like to own in ebook form anyway.)

Here’s another important thing to consider in regard to the traditional vs. self-published war. One of the big criticisms of Kindle Unlimited is that it pays from a pool instead of a fixed amount per book. I’ll admit I’m suspicious of that business model, nor am I placated by the idea that Amazon offers special bonuses to “star” authors who sell in the top brackets. (And I’m not a fan of Amazon Studios, which encourages writers to work in a kind of American Idol style contest.)

But I do understand why it makes sense for Amazon to have a fixed pool, and why it was the best approach for them as they test out the new market. I also appreciated that they have added to the pool a couple times to raise the payouts. As others have pointed out, the higher Oyster and Scribd payouts are probably not sustainable if readers actually use their services. Scribd CEO Trip Adler has publicly said that his subscribers on average only read one or two books a month. It appears they are shooting for the “gym membership” model, where most people sign up thinking they will read books, but end up not using it and then forget to cancel. In other words, just short of a scam. (Try asking about a gym membership without feeling dirty afterwards.) Pursuing a kind of sleazy business model isn’t particularly surprising coming from Scribd, which originally planned to make money by violating copyright and encouraging ebook piracy before they switched to subscription and struck deals with some big publishers.

So the question for self-publishers is: do you want to support (over Amazon) a kind of scammy service that pays more for books, but hopes that people won’t read them? How are you going to make money off people who don’t read your books? Scribd will. You won’t. The less people read, the more money Scribd and Oyster make. Amazon, however, has committed to paying out a pool regardless. So the less books people borrow, the more money that will be sent to the authors of the books that are read. Is that so bad? Maybe that is a fairer way after all. So both Amazon, and writers, are invested in making Kindle Unlimited work. Making it a service people want to use. You can make money off of the borrows and also possibly sell your books that aren’t in the service. If Scribd emerges as a service that people pay into but don’t use, not only will you not make any money, but it won’t help you sell books and won’t help promote you as a writer.

If books aren’t being borrowed, doesn’t that hurt the big publishers too? Not necessarily. Because we don’t really know what kind of deals they struck with Scribd and Oyster. It’s quite possible, maybe even likely, that they made deals like the record labels did with music subscription services. The reason musicians are making so little from music subscriptions is because the record labels get paid first, and a lot more. It’s quite possible that the big publishers are getting paid a fee just for allowing access to their libraries. Or they get a share of overall subscription sales, or minimum guarantees. In other words, they might be in on the scam. They might be fine if no one borrows or reads books and authors don’t get paid. (Which might account for Scridb requiring a higher percentage than Amazon to qualify a “read.” 30% over 10%. Yes, that’s right, Amazon pays at 10%, you get nothing at Scribd for that.)

Traditional publishers already have deals to take the bulk of ebook revenue from their writers, so maybe, in addition to getting a piece off the top, they want borrows. But there they have an advantage over self-publishers too. Traditional publishers price their books higher on average. So since Scribd pays 60% of the sale price, on average traditional publishers will get more money. If, say, there are 50,000 borrows of big publisher books that average $8.99 per book, and 50,000 borrows of self-published books that average $3.99 per book, the big publishers get almost twice as much money for the same number of borrows. (Not to mention Smashwords, or another aggregator, takes 15% of the self-pubished share.) If that becomes the model for the future, big publishers win. Self-publishers make the service look appealing because there are lots of books to choose from, but they end up getting a lot less money.

But don’t the big publishers get more per book from Kindle Unlimited too? Yes, but they have a lot less books in the system. Most of Kindle Unlimited is self-published, with a few big titles, like Harry Potter thrown in to make it appealing. So, if 100,000 books get borrowed on Kindle Unlimited, its quite likely most of them will be self-published. In fact, its almost a reverse situation with big publishing helping self-publishing. The big name borrows, like Harry Potter, lure people into subscribing. But once they have a subscription, they mostly have to choose self-published. That may be what the big publishers really fear, and that’s why the PPP is trying to talk self-publishers into abandoning Kindle Unlimited. If Kindle Unlimited is a huge success, and mostly features self-published material, that could be really dangerous to big publishing's long term plans.

There are a lot of other factors to consider. We can’t really know how these different services are treating discovery. Because Scribd is more invested in keeping the big guys happy, will their search favor their books? Or particular books? Will that one or two book borrows a month only be best sellers from the big five? It all gets down to issues of trust, and so far, I see no reason for Scribd or Oyster to be invested in helping self-publishers. And I see a lot of logical reasons for Amazon to be. Not to mention, historically they’ve been pretty good to self-publishers.

Where is this all going? There are two very different possibilities, and some room in the middle. Regardless, long term I hope Amazon remains the major player.

Subscription services could be a bust. They could just turn out not to work on a big enough level to pay off in a serious way. It could be that Scribd and Oyster have to pay too much for their big publishing deals and can’t afford to survive. In that case, Amazon might fold Kindle Unlimited into Prime and it will just be a little perk for their best customers. If so, self-publishers can return their focus to sales and use what is left of Kindle Unlimited for short material and as a kind of perma-free for sample books and first in series. Thus, a lot of this drama about KU will have been for nothing.

The other possibility is that subscription services really work. In that case, they might seriously gut sales and not being in a subscription will mean self-publishers won’t see any revenue. If that is the case, then those who complained that Kindle Unlimited hurt their sales, would eventually have gotten hurt by Scribd and Oyster even if Amazon hadn’t created KU. If sales really drop across the board, it doesn’t matter which subscription service caused it, writers will have to adapt. If that is the case, I would prefer to have Amazon remain one of the big players in subscription, rather than have big publisher friendly (and dependent) Oyster and Scribd completely in charge.

Don't forget, the "loss leader" argument against Amazon might actually work the other way around. Cheap diapers are what drive people to splurge on ebooks. More likely, because of Amazon's size, because they are so diverse and have so many sources of income, they can stand up to the big publishers and are willing to fight for self-publishers, who are also good customers for all their other products. And keeping self-publishers happy might bring Amazon a lot of good will. That glut of writers who are publishing books no one buys? Maybe when they check their sales they wander off to buy lawn mower blades… and other writer's ebooks.

Ultimately, writers should make decisions based on real facts, not conspiracy theories, even my own. If being in Kindle Unlimited doesn't make you money, or hurts your other sales, get out. If being in Oyster or Scribd, or Smashwords, brings in income, go with them. If you're not sure, try to find some actual data. But if we’re going to look into the dark hearts of big corporations, or into the future through a crystal ball, Amazon still seems like the closest thing to long term ally self-publishers have.