Business Musings: Your Basket is Leaking
In October 2018, Sears filed for bankruptcy. The form of bankruptcy the corporate heads chose was something called Chapter 11 here in the U.S. It means that the company—once the largest retailer in the entire world—will be able to reorganize and, if they’re lucky and the folks running the company are smart, they might be able to emerge from bankruptcy with some of the business still intact.
The key here isn’t the details of Sears’ bankruptcy. It really isn’t even Sears itself which, when I was a child, fifty years ago, was a fixture in America. It’s the trajectory of the company.
In the late 19th century, Sears started as a mail order company that sold watches. Over the next three decades, the founder acquired partners and reorganized his business more than once. The company made an initial public offering after the turn of the century, getting more and more cash into the business.
And Sears grew from a mail order company that sent out catalogues featuring watches to one that featured bicycles, stoves, washing machines, dolls, clothing, and groceries, among many, many other things.
By early 1940s, Sears’ catalogue became known as the Consumer’s Bible. In the 1950s or so, Sears started opening brick-and-mortar stores, and by the mid-1970s, the brick-and-mortar business overshadowed the mail order catalogue.
Mismanagement, a failure to keep up with the times, and a large corporate structure led to a decline starting in the 1980s, exacerbated by the rise of Wal-Mart in the 1990s. Sears still had a lot of value after the turn of the 21st century, but not in retail. The value was in its properties and its stock, and eventually that declined as well.
And now, Sears—mismanaged to pieces, its mail-order business (and famous catalogue) a distant memory—has almost thrown in the towel. They’re fighting for their existence. Very few adults alive remember the store in its heyday.
But look at that trajectory. Mail order on one item only. Then more items. Then unrelated items. Then becoming one of the biggest companies in the world. Then adding brick-and-mortar.
Does that sound familiar? Think of it this way: instead of mail order, think online. Instead of watches, think books. And then realize that Amazon shares much of Sears trajectory, only on a slightly accelerated pace—and without the name changes and the obvious added partners.
Sears to Wal-Mart to Amazon. There is a direct line. Wal-Mart is still fighting for dominance, but they’re no longer fighting Sears. They’re fighting Amazon. And Amazon is probably fighting some other company with a good idea, some company that I’m not entirely aware of.
Why is that important?
Because currently, Amazon is the biggest online retail company in the world. (Wal-Mart is still the largest retailer, but Amazon has moved up to second there as well.) Amazon is exceedingly important to the indie writer movement. In fact, indie publishing would not be where it’s at without Amazon’s innovation with the Kindle ereader ten years ago.
In that time period, a lot of self-published authors have used Amazon’s ecosystem to make themselves, if not wealthy, then at least comfortably well off. Many of those writers don’t even market their work outside of Amazon at all, preferring to use the tools provided by Kindle Select to promote their series and their work.
Early on, writing advice for indies (as I’m going to call writers who work outside of traditional publishing) centered on an Amazon-only strategy. If you look at my earliest blogs on the publishing industry, back in 2009/2010, you’ll see me constantly defending myself against that very argument. I learned as a young freelancer to go wide—and that was back in the early 1980s. Relying on only one source for income—no matter how large that source is—is never a good idea.
Eight years ago, my argument looked weak. Back then, Amazon had few competitors in the ebook space. But now, there are more than I can count. Barnes & Noble tried to go head to head with Amazon here in the States and largely failed. Kobo has managed a large international presence, and is continually growing their business. iBooks has played off Apple’s established network worldwide to remain a player, and even GooglePlay has made inroads in Amazon’s dominance.
But none of those markets or any of the others indie writers can access when they go to D2D or other aggregators come close to Amazon in sheer reach.
I know that. It’s hard to avoid that. That’s why my books are on Amazon. But, as I told folks at the 20Booksto50K conference earlier this month, I never had the option of joining Kindle Select. Kindle Select demands exclusivity from its authors, and I couldn’t do that, under any of my then-existing pen names. Through traditional publishing, my names had gone worldwide. Going exclusive to Amazon meant that many of my regular readers wouldn’t be able to get my books.
Having been in traditional publishing, with its weird rules and limitations, meant I had learned early on how angry readers get when they can’t get a book that they want. I didn’t want to replicate that experience for them, particularly as I took back control of my publishing, so I never even considered Select.
Although, I had to admit, I was envious at times of writers who could manipulate that system to raise their profiles—at least on Amazon. It would have been nice to have access to the same tools. Eventually, I developed a few new pen names (for a variety of reasons, and no, I’m not telling you who they are), and they experimented in Select.
The Select promotion tools are good until they’re not, as everyone who plays in that ecosystem knows. Amazon changes the system, and then the indies figure out how to best use that system, and then Amazon changes it again.
There have been complaints about Amazon and its practices from the start. But savvy writers have known that Amazon started this revolution, and no matter what they’ve done, we all owe them big for that.
But…then there’s the argument I’ve been making on this blog since at least 2010. Do not put all your eggs in one basket. Even if that basket is the biggest online retailer in the world.
I still get pushback on that advice. But not as much as I used to. Because some of the big pro-Amazon indies are beginning to see cracks around the edges of Amazon. There’ve been too many changes to Select, too many broken promises, too many costly mistakes.
Some of the formerly pro Select-only gurus are now quietly going wide. A few others, trapped in the ecosystem, are using other tools to make their novels available before they put the books into Select. They’re still gaming Amazon’s system, but they’re gaming it to keep the income coming—until they can move out of the exclusivity trap that they had allowed Amazon to build around them.
For the writers, though, who continued to argue that Select was the only viable place to play, October and early November were a difficult time. Writer after writer here in the U.S. noted that their international sales had declined dramatically.
I felt for a number of them, many of whom self-reported on David Gaughran’s blog that sales figures from the countries that had provided most of their income had dropped precipitously in recent months.
Amazon had made some kind of internal change designed to funnel readers into the country-appropriate stores. A lot of international readers who had been buying from Amazon.com (the original site, based in the U.S.) could no longer do so this fall. However, in theory, if those same readers went to the Amazon store in their country (Amazon.it in Italy, for example) they would find the books readily available.
In practice, it was haphazard, and no one—not the readers, not the writers—had been informed of the change.
It caused a huge mess. And finally David Gaughran, who lives in Ireland, researched what was going on. He did fantastic work to discover what the problem was, and how it affected customers worldwide. I highly suggest you read this blog post of his, as well as the comments.
At the time of this writing (in mid-November), there’s uncertainty as to whether or not the problems stemmed from a bug in the system or a deliberate change that backfired on the P.R. level. After a lot of pressure, which ramped up after David’s piece, Amazon finally released a statement about the situation.
We’re experiencing an issue that has made some eBooks unavailable in the Kindle store in different marketplaces. Our engineers are working to solve this issue as quickly as possible. We’ll update this post to keep the Community informed once this issue has been resolved.
That’s as clear as mud, since the “issue” might well have been intentional. Or it might have been, as some readers suggested, a side effect of a change in the way that Australia collected the GST (Goods and Services Tax) on overseas businesses. (Essentially, if Amazon’s Australian customers bought from Amazon Australia, then Amazon wouldn’t have to pay the GST. If those customers bought from Amazon.com (A U.S. store), Amazon would have to pay the tax.) Amazon had started geo-blocking Australian customers from using the U.S. store. and there is speculation in the indie community that this geo-blocking marked the beginning of the problem across Amazon.
Whatever the reason, the changes in Amazon resulted in a drastic loss of income for some writers. That loss was even more severe for writers who were not wide. Because that meant that a lot of those writers lost impulse sales. They also lost revenue from promotions that went nowhere (to Amazon pages without buy buttons).
If that reader then decided to download the book from another retailer, like Kobo or iBooks, the reader wouldn’t be able to find the book at all—because the indie author chose to be exclusive to Amazon.
The sale was, for all intents and purposes, gone.
Now, before you write me, I know that a lot of readers want their .mobi files and nothing else. They don’t want to move to Kobo’s readers or to read on their iPhones. They want to use their Kindles or their Kindle apps. And if the book isn’t available on Kindle for those readers, it doesn’t matter if the book exists on another platform. Those readers won’t go to that platform at all.
That’s a side point. But let me continue the digression for a moment. Because if a writer’s work is wide, then the reader gets to choose how she buys her books. The writer doesn’t dictate what platform the reader has to use to get the book. There are a lot of benefits in being wide. That’s just one of them.
This last month, though, it reminded me of the dangers of putting your eggs in one basket. Select writers saw their sales damaged due to a change in Amazon policy, a change Amazon had not been transparent about (to readers or writers). Since the change happened behind the scenes, it took more than a month for writers to learn what was happening.
By then, the sales were lost, and there was nothing the writers could do to recoup that lost revenue.
These problems had happened in Select before, and will probably happen again in the future…as long as Amazon maintains Select. But I’m hearing concerns from the hardcore Amazon defenders that Select might be shut down. I don’t have any data that suggests such a maneuver, but Amazon has been known to shut down its programs without much warning at all. Earlier this year, it shut down Kindle Scout and Kindle Worlds. It’s not a big stretch to think it might shut down Select, especially given some of the complaints it’s getting from readers about the program.
Amazon’s deliberate lack of transparency makes it hard to know what’s in the works at corporate headquarters. Even if Select is highly successful from the outside, it might be requiring too much time on the part of its staff to justify its existence. Or it might have outlived its usefulness.
Or all of this speculation might be wrong.
But what happens to the writers who are making a fantastic living inside the Select ecosystem? If Select goes away, so does their income. They’d have to rebuild wide, and they might not ever achieve the same level of success.
These writers had a taste of what can go wrong this fall. That precipitous drop in income due to Amazon’s “issue” should be seen as a warning shot across the bow. One “issue,” one technical glitch, one corporate decision, and all of the indies who are exclusive to Select might go from making five to six figures per month to making nothing at all.
If you’re one of those writers, think about what that would mean for you and your career. Have you banked enough money to handle that sudden loss of income? Do you know how you will react if Select vanishes?
If you don’t know the answers to those questions now, it’s time to figure out what you’ll do. Because you’ve had fair warning.
No retailer is forever. And no retailer is on top forever. Retailers are like any other business. They grow, they change, they mature, they cut back. Look at the history of Sears. It went from being the biggest company in the world to filing bankruptcy. If you don’t believe me, believe Jeff Bezos. On November 8, he told his employees:
Amazon is not too big to fail. In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.
He’s right about the 30-plus years. That’s where Barnes & Noble is at right now. And B&N was the big scary store-eating bookseller two decades ago.
If you don’t think that the loss of a retailer can have an impact on a writer’s career, let me remind you of how many indie writers had their careers destroyed by the loss of All Romance Ebooks just two years ago. Writers lost hundreds of thousands of dollars, money they were never able to recover.
If Amazon shuts down Select, it will pay its outstanding debt (unlike All Romance Ebooks). But that doesn’t help writers on the loss of future earnings. You can go from earning thousands in December to earning nothing in January. It will be scary. Or it might not happen at all.
But the wise indie is the one that sees the warnings that Amazon is sending. Protect yourself now. Figure out, over the next few months, how to take your writing wide.
It’s the best protection you have. It might not replace the vast income you could lose if (when) Select disappears, but it will enable you to easily rebuild.
Amazon is just one retailer, like Sears was one retailer. Sears was the giant of its generation, just like Amazon is now. But giants shrink with age, just like the rest of us.
Remember that, and you’ll still be here years from now.
Even if Select is not.
The more things change…
It amazes me how similar the Sears growth trajectory is to Amazon’s. Amazon hasn’t been around as long as Sears, so we’ll see if the similarities continue across generations. But right now, Sears does provide a great object lesson—and one that comes at the same time as Amazon’s Select “issue.” The timing couldn’t be more auspicious—for the blog writers of the world.
I have a few ideas on how to make the transition from Select to wide, but I haven’t finished researching them in depth. I learned about a few at the Business Master Class, and a few others at 20BooksTo50K. I’ll be writing about them in the months to come.
In the meantime, thanks to everyone I met at both conferences. It was nice to put faces to names, nice to meet supporters in person.
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“Business Musings: Your Basket is Leaking,” copyright © 2018 by Kristine Kathryn Rusch.