2017 began with a blow to indie writers and continued to prove what those of us who have freelanced forever learned the hard way: Never have your eggs in one basket, even if that basket is making you huge profits.
The year started with the collapse of All Romance Ebooks and OmniLit. ARe and OmniLit were big players in the early part of the ebook boom. They sold books on their site and they distributed to hard-to-get-to places, like iBooks (back when it was almost impossible to get into). A lot of writers, particularly romance writers, were making a fortune on ARe.
Then, on December 28, 2016, ARe, sent out an announcement that it was closing its doors. I wrote a quick blog about this, advising writers to pull their properties down—and, if they could, to eat the loss rather than go through a big lawsuit against ARe.
The reason? Life is too short. I, unfortunately, learned that the hard way years before.
Now, more than a year after ARe’s closure, I decided to see how the writers who were owed a lot of money from ARe faired. I could find dozens of blog posts about the crisis with ARe, but very little after March.
There was an active Facebook group (which I did not join, since I had no books at ARe by the time it closed), and I have no idea what’s on that group. I do know that a number of authors sued to get their money out of Lori James, who mismanaged the company into oblivion.
(A note: usually when someone mismanages something into oblivion, they spent all of the money too. That’s what it looked like with ARe, although I don’t know if that’s true. So, suing their asses might feel good, but it probably will cost more money than it nets. Just a rule of thumb.)
I finally found a late September blog and a post on the Kindle boards by romance writer Marilyn Vix. She too was wondering what was happening with the ARe writers, and did a lot of research (which I piggybacked on).
Here’s her summary of what she found in September:
According to a Facebook group that I joined for authors burned by the owner, Lori James, of ARe, some people have been paid the small amounts they were owed. Some people didn’t get their settlement. It seems to be pretty staggered on who got paid. Some got 1044s that were from earning in different years when they should have been for 2016. There also seems to be supposed burned readers asking authors to give them free copies of the books lost. Many authors and publishers were trying to make good for where Lori James failed….
Vix also had a link to the Florida lawsuit, which went nowhere, but gave me enough information to let me find it. There was a ton of activity from January to August. (Note: Sometimes you have to search “status” and “Lori James” to see the case.) And then…nothing. Not a thing. Not a peep. Until a notice filed on December 22, 2017. The notice is a Notice of Voluntary Partial Dismissal Without Prejudice.
In other words, the case was settled, and if the parties don’t meet the terms of the agreement whatever they are, the case can be revived. So, a bunch of writers spent the better part of a year chasing this case in court.
I do hope the writers managed to get some writing done as well. Cases like these are time-consuming and nightmarish and never end up the way you want them to.
I don’t blame the writers for going after Lori James and ARe. Some writers were out tens of thousands of dollars, and a few even more than that. James wanted to settle last year at 10 cents on the dollar and from Vix’s note above, James didn’t even seem to manage that. We might never know how it all shakes out. Often, settlements like this contain a nondisclosure agreement as part of the terms.
So, essentially, we started 2017 with hundreds of thousands of dollars (collectively) vanishing from the pockets of writers, and ended 2017 the same way.
At the beginning of December, Patreon announced a new fee structure. For years, Patreon’s creators received 90% of the money pledged, with remaining 10% split evenly between fees and Patreon itself.
The change that Patreon announced would have charged each patron 2.9% plus .35 cents for each transaction. The creators would take home 95%, but the patrons would be charged a weird and sometimes incalculable amount every month. It hit the patrons who pledged tiny amounts the hardest. If a patron supported 100 different artists at $1 per month, that patron would have spent $138 in fees, rather than the $100. (If that same patron had supported only one artist at $100, they would have spent $103.25.)
Patrons who specialized in small support of a lot of people canceled pledges the moment the change was announced. Within a day, creators’ Patreon accounts lost tons of money. Patrons were upset too, unable to access content. Conspiracy theories abounded. No one knew what was going on—and the policy hadn’t even been implemented yet.
One week of social media shouting, phone calls to Patreon, letters, and media attention later, Patreon announced that it had made a mistake and would not implement the fees. But by then, the damage was done. The pledges were cancelled, writers and magazines and vbloggers and many others had lost a lot of income.
I lost a few supporters, but had many others up their pledges (for which I’m grateful), so my net sum went up a few dollars. But I was never on Patreon to make a living. My readers had asked me to go on Patreon, so that they had a second way to support the blog. Some objected to working with PayPal for political reasons after the U.S. election; others never wanted to deal with PayPal in the first place. Still others wanted a place to go for an annual payment.
But a lot of writers, particularly traditionally published writers, used Patreon to even out their monthly income. (Many traditionally published writers only got paid once or twice a year in huge lump sums.) These writers did a lot for their patrons, doing things like writing a story a month or more only for Patreon. Readers came on with small amounts mostly, just to be part of the community and to support their favorite writer.
The instant loss of income hurt. A lot. Patrons left immediately, canceling everything to do with Patreon.
And this wasn’t the first major change that drove people off Patreon in 2017. In October, Patreon expelled anyone they believed to be involved in porn or to have adult content, by changing its terms of service. In fact, erotica writers, in particular, have had the somewhat unique experience of being kicked of various platforms, sometimes overnight, going from making thousands to making nothing at all, with no recourse.
Of course, every site has the right to manage its own content its own way. Some of the adult content crackdowns came as businesses grew and ran into problems with investors or libraries or (in one case) governments.
But the way that sites change and manage content has had a huge impact on individual creators in 2017.
YouTube changed its partner program in 2017, and a lot of people who made a living on YouTube didn’t know about the change until they stopped receiving payments. Now, you can say that these folks should have stayed on top of the changes, but sometimes the impact of a single decision made on a corporate level isn’t easy to spot. This article on Mobile Marketer sums up a lot of the YouTube changes pretty well, I think (at least, I hope, since I’m not deeply involved in the YouTube side of things).
Other changes brushed by me, and I know they had a huge impact on writers. Goodreads starting to charge for giveaways changed the way a lot of writers promote their books. The same with changes (or proposed changes?) to Facebook ads.
Amazon always toys with its algorithms. It seems that the minute Amazon-only indies know what Amazon’s doing, Amazon changes things again. The big fight that I’ve seen is over spikes in sales—even if those spikes are easily explained by some kind of major promotion. Amazon will (at times) remove a book’s sales rank, even if that rank is the direct result of a Book Bub or something else.
Some of these changes that major sites do are to get rid of pirates and scammers, and in the big sweep of the change, regular honest folks get swept in. Other changes came about because of investment, change of ownership, or new managers—things that happen in every business.
For eight years, I have told indie writers to go wide and to make sure they’re protected, legally and otherwise. Be cautious and conservative when you join new sites or new ventures. Make sure you understand the terms of service, and realize that with many companies, the terms of service are take it or leave it. When you have terms of service like that, your decision to take it had better be informed, and when you get bit on the ass, you should have known that the bite was coming.
I am not victim-blaming here. I’m trying to protect you folks going forward. My ass is full of bites, because I learned this the hard way decades ago. When you’re in business, someone will screw with you. If you want to stay in business, you make the choice that will allow you to keep working with a minimum of fuss.
If you have lawyers on retainer (and can afford them), then you might consider lawsuits. If not, you might consider writing off any losses on your taxes.
Yes, that means that you will incur huge losses sometimes. It also means that you might have to rebuild from scratch.
Please know that I am not saying that lightly. I have rebuilt, several times. It’s hard, and painful, and awful. I’ve had hundreds of thousands owed me, and not paid ever, and I know how infuriating it is to lose that kind of money—particularly when the people in question continued with their lives and businesses as if nothing went wrong.
Yes, I know. You believe you can’t change your behavior. Even wide, 90% of your income comes from one source.
You need to ask yourself what will happen if that single source suddenly closes shop, like ARe did a year ago. You need to plan for that. It might never come true, but it might.
You also need to expand your reach. Don’t decrease what you’re doing on your 90% platform. Expand your reach on other platforms. Grow them so that they become more of your income.
What I’m telling you to do is increase your income by expanding your cash streams. Then, a year from now, you might be earning as much or more from the current 90% platform, but instead of that platform making 90% of your income, it only accounts for 60%. Then in 2019, you might be able to make it 40% of your income—not by reducing what you do on that platform, but by adding in other platforms.
I hope that’s clear.
Because the biggest lesson for indies in 2017 is that it’s extremely dangerous to get all of your income from just one source. That source can go bankrupt, change its fee structure, ban your kind of content, or just ban you because…well…because.
And then what?
So plan for the worst by expanding your business in 2018. Investigate new cash streams. Figure out how to get your work into other channels.
Save your money. Don’t spend it all on ads. Don’t increase your expenses significantly.
If you do anything in 2018, expand your reach.
And, of course, write more.
***
What a dark and gloomy indie post. The only reason it is dark and gloomy is because I decided to divide up the indie posts. The next post will be on all of the great innovations in 2017. I expect more in 2018.
As Marie Force said in the comments last month, this is still the very best time ever to be a writer.
One of the most amazing parts about writing for me is this blog. You folks have consistently visited this website every Thursday since 2009 (with a small hiatus). Thank you! Your comments, interactions, questions, and inspiration keep this blog alive, as do your donations.
Thanks ever so much.
Click paypal.me/kristinekathrynrusch to go to PayPal.
“Business Musings: The Indie Publishing Lesson,” copyright © 2018 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / fizkes.
Another lesser known site people were using for selling books, which recently sent emails out letting authors know it was closing was Pronoun. They were slowly growing when I found them. I didn’t use them for selling, but giving me helpful analytics. So I’m curious how many have used them too.
This is all good common sense, about not relying on a single or a small number of outlets. When we set up Shoreline of Infinity we assumed our main digital sales would come via Amazon, so we dutifully set that up. But because I happen to also do webdesign and can handle WordPress it seemed logical for us to do that, and so I set up an ecommerce shop on our site to sell our magazines and books, both print and digital.
It turns out that now most of our sales are via our own site. This is excellent for us, as the only transaction fees are for Paypal (and we’re working on alternatives for that). So rather than handing Amazon 35% or 70%, we keep around 96% of our sale.
Digital sales are handled automatically, Print sales, with the software linking straigt to the Royal Mail online posting service, are quick to manage.
The costs are all in the set-up, but once it is running, it’s just a matter of maintaining it.
Another benefit is that as we spread the word, we only have to point people back to our site.
Sure, we do have our books on Amazon et al, but as we do all our own marketing and PR, using Twiter Facebook and anything else, why should we give Amazon such a big cut? They do nothing to promote our publications.
Hi Noel,
We also sell digital books from our own wordpress website (www.biblepathwayadventures.com/store). We started with Paypal and now use SendOwl so we can offer credit card payments (and Bitcoin if we chose). This system works very well and is much more reliable than solely using Paypal. It also gives us the ability to offer a Cart facility, affiliate links, and discount codes.
Pip
I completely agree with all of your points.
Oddly enough, when I tell groups of indie writers that depending so heavily on Amazon (the exclusive outlet I see most often) is dangerous, I generally get told off as failing to understand the bold new world we’re in.
SIGH. I do understand it. That’s WHY I’m saying that we need to look for other outlets and retailers.
Personally, I also keep a weather eye on what large publishers are doing. Sometimes they’ll spot things before the rest of us do.
An interesting comment I heard on an author podcast. ‘People say they only sell on one platform. But if you look at their ads or their website, they only link to one platform. They haven’t filled out their author info at any of the other sites, or bothered to proofread their book descriptions at any other sites to make sure their aren’t any odd characters showing up. They haven’t checked the other site’s sampling features to make sure their book file is working. They haven’t bothered to set up pricing or keywords properly anywhere else.’
Well, yes, that does make it very hard to build a customer base on other platforms.
Now, I’m an enormous, know-nothing newbie, but it seems to me that the big thing with many of the other platforms is that there’s no big thing. They’re just slow-and-steady, basic outlets. I know people who do pretty well for secondary income on Kobo, but they ramped up over time, evenly. There’s no trick, really. You just keep showing up. It’s not very exciting, but it could be a steady stream of income. A lot of businesses are like that though – you do steady, basic stuff, and it gives you steady, basic income.
Yes, going wide does take a certain effort. Yes, the more books you are putting out, the more effort that would theoretically be. But, like anything else, once you’ve figured out the basics and made yourself a checklist, it shouldn’t be the end of the world. (It seems to me the biggest issue is accounting. Possibly because that’s my least favourite part, but mostly because it’s ongoing.)
I am also advocating going wide, and I’m glad I did so with my books. It’s a shame that Amazon requires exclusivity for being on Kindle Unlimited, because that service is a great way to save money for huge readers. For me, it’s the private equivalent of the libraries, with much more transparency of payment for the authors. And monthly payments, too!
One of the best parts of the indie revolution, though, is the direct contact with readers, especially with mailing lists, that enable us authors to keep our independence, and, as a group, to be a force to reckon on.
I’ve been debating and debating with myself over whether to go exclusive with KU for the first 90 days of my ebook’s release, or to go wide from the start. The matter still isn’t settled, but this blog post will definitely shift some weight towards the “wide” position. And it confirms that I’m not wasting my time learning how to get my ebook into html so it’ll work across platforms, instead of letting Amazon convert my word processing file for me.
Always wise words, Kris. I’ve been wide from the beginning of my indie journey in 2011. My choice was based on memories of huge stock market failings like Enron and WorldComm where my parents had a large amount of their retirement income invested and ended up with settlements of a couple hundred dollars instead of the thousands they were owed. I also remember lots of early e-only publishers going under within a couple of years. In addition to ARe, the other big player to go bust was Samhain, an early ebook first publishing company that had been around for 15+ years. They first sent out notice of closing in 2016, but then a few months later said they managed to save the company–only to close down in early 2017. I didn’t have books with them, but many fellow romance writers did. The really sad part, to me, was that when several of my friends got the notice and recant in 2016 they still stayed AND gave more books to them.
I think a lot of this has to do with two things: 1) Fear of changing when you have a place making you money; and 2) A desire to make more money quickly. Whenever I ask people why they are Amazon exclusive the three common responses are: 1) “Why should I change when I’m making good money? It’s easier to track one place.” 2) “I tried it once and within three months I had almost nothing from those other retailers, so I went back to exclusive.” 3) “I need to make lots of money now and I know the most about how Amazon algorithms work. No one understands the other retailer algorithms.”
Like everything in this business, there is no EASY button–no quick way to make big money. Yet, every writer keeps searching for it and that, IMO, is what drives bad decision-making.
RE: Writing off the losses
Back when I was a young lawyer in a firm, the firm shut down — pretty much — between Christmas and New Year’s and went through the client list. There were always some clients whose cases were dead and who were delinquent on their accounts. They got letters asking them to pay by 15 January. A few paid up, but most did not. Those that did not got a 1099 for the amount they owed mailed out 31 January, CMRRR. Then they got to wrestle with the IRS, and the firm got to write off the losses.
Meaning that what they failed to pay your firm counted as income to them? Hmm, savvy. As you say, let them deal with the government.
I never got the ‘all your egg in one basket’ thinking for any sort of long term strategy, and as you say the last little while has brought that home to many.
Major agreement about protecting yourself from a big company going out of business or otherwise changing.
People scoff when you point out that Amazon could shut down at some point. “They’re Amazon! They’re not going to close!”
Sure. Just like Sears was the number one retailer in the US for, what, a century? Century and a quarter? More? They’re barely holding their heads above water now. Borland was one of the major software houses back in the 80s. I loved them; their copyright policy was awesome. They’re gone now. Broderbund was one of THE biggest computer game companies during that same period. They were huge before EA was anything. They’re gone now. IBM dominated the business machine market, and was the number one producer of computers of all sizes — for decades with the mainframes and minis and such, and then for almost 20 years at the start of the PC revolution, which is literally forever when you’re sitting there at the time, aware that IBM PCs outsold every other kind for as long as anyone but hobbyists who owned soldering irons to do their own board assembly could own a personal computer. IBM equalled Home Computers back then. Now, it’s “IBM? Are they still around?”
No manufacturer or retailer is too big to fail, but too many writers seem to believe that Amazon’s going to be around and overwhelmingly dominant forever. Bad assumption. :/
Angie
I’ve learned so much from your business musing posts and really appreciate your sharing your wisdom! I’ve been wide since 2014, a year after I published. I never had many sales outside of Amazon until I ran an International Bookbub in 2017, and since then my Kobo and iTunes sales, in particular, have been picking up. Does the bulk of my book income still come from Amazon? Yes–but I feel more secure knowing I have other options. 🙂
This is hardly the first time you’ve advocated being wide with your ebooks, and I’ve paid attention each time. Up until last year, my reaction has always been “Yes, but…” However, as more games were played with KU (Each time Amazon has recounted ebooks, mine lost pages. And the downward trend of per-page payouts until some magic number of authors must have left the program, so they goosed it up again.), I made the commitment to take my books wide.
My previous experience with attempting to sell on other vendors gave poor (pretty much no) results. But this time, combined sales at B&N and Apple are outpacing my sales at Amazon after only one month. Now, I’m not selling a lot of books (yet), but this is incredibly encouraging to me. And exciting to know that it is possible to sell books on other platforms.