Business Musings: Putting All Your Eggs in One Basket: Amazon Edition

Business Musings: Putting All Your Eggs in One Basket: Amazon Edition

I’m putting up this post in the middle of the fear sequence as it appears on my website, not because the post fits in the fear cycle, but because I don’t want to monitor the news for weeks to see what, if anything, has changed.

On June 9, here in the States, Democrats in the House of Representatives introduced a package of five bills which theoretically have bipartisan support. In a nutshell, the bills are aimed at stopping anti-competitive practices among the tech giants. Some of the provisions could even force companies like Amazon to break apart into smaller units.

Now, realize, that here in the U.S., just because a bill gets introduced doesn’t mean it will pass. It needs to pass both houses of Congress, and then the President must sign the bill into law. If the President refuses, Congress can override his veto…with enough votes.

In other words, there’s many a slip twixt cup and lip. The bills as proposed will not see the light of day. They are a draft of what’s to come, if, indeed, enough Congress critters can agree—and if enough Senators vote to pass the revised bill with at least 60 votes—and if President Biden signs whatever we end up with.

So why am I writing about this now?

Well, because we are going to conduct a thought experiment. For a decade now, I’ve been railing against writers who go exclusively to Amazon. I’ve been say, as clearly as I can, that as a business person, you should never, ever, ever put all your eggs in one basket.

Back in the early days of the new world of publishing, indies from the Kindle Boards would screech over to my website (usually on a Saturday) to call me stupid and ignorant, especially when I “attacked” Amazon.

Amazon is too big to fail, they said. Amazon will be around forever, they said.

And it didn’t matter how many examples I gave them of too-big-to-fail companies that did, indeed, disappear, they didn’t listen.

Those indies are mostly gone now, not because Amazon failed, but because they burned out or didn’t understand what kind of success they actually had and therefore gave up.

But for every screamer who left, another took their place. Usually quieter, and often just as dismissive. They’ve now moved to other places to share information because they know I’m inhospitable to exclusivity and Kindle-only. They’re stuck in Amazon’s algorithms, believing their writing careers are safe.

When these writers “go wide” as they call it, selling their books on sites other than Amazon, and lose Amazon’s exclusivity and “page reads” and deals, their income goes way down. Because these writers don’t understand that they need to build a new audience on each platform.

Building audiences takes time, but it protects against the eggs-in-one-basket problem.

But Amazon is too big to fail, right?

It might not “fail.” But regulators have already dinged Amazon overseas where the antitrust laws are much more stringent than they are here in the U.S. Those laws, many of them in the E.U., were, in my opinion, the handwriting on the wall. But I didn’t blog about it, because most writers don’t understand their own business, let alone the practices that lead to anti-trust violations.

When a company gets hit with antitrust violations, there are a lot of remedies. Breaking up the company is one. Forcing the company to divest itself of parts of its business that help it create a monopoly is another. And there are so many more.

On June 11, Michael Cader, of Publishers Marketplace, explained what these bills as written might mean for book publishing. One bill, the Ending Platform Monopolies Act, applies only to companies worth at least $600 billion dollars…like Amazon. The Act “eliminates the ability of dominant platforms to leverage their control over across multiple business lines to self-preference and disadvantage competitors in ways that undermine free and fair competition…” making it illegal for the “platform operator[s] to own, control, or have a beneficial interest in a line of business other than the covered platform that utilizes the covered platform for the sale or provision of products or services.”

“For Amazon,” Cader writes, “that would likely mean divesting most arms of their publishing octopus, including much if not all of Audible, plus Brilliance, Amazon Publishing, Kindle Direct Publishing, and probably CreateSpace. It might apply to divesting AbeBooks as well.”

Sit with that for a moment. Amazon might have to get rid of everything that makes their indie publishing arm possible. Amazon could do a few things with it. They might sell the pieces. If those arms aren’t making a lot of money (in corporate terms), they might simply shut them down.

That’s not a big deal for people who are wide. They’ll still be able to publish.

But indies whose entire career is based on Amazon’s ecosystem? Those indies will go through a year or more of turmoil—if Amazon sells those pieces. If Amazon shuts those pieces down, the indies will lose their careers overnight.

This is why writers should never ever ever put their eggs in one basket.

You exclusive folks have no control over the company that provides all of your income. You have a freelance career, sure, but it’s based on the status quo, and if that particular bill passes, the status quo is gone.

The other bill, the American Innovation and Choice Online Act, would also have an impact on indies, particularly those that are Amazon only.

I’m just going to use Cader’s pull quotes here, since he really does very little editorializing, except at the end. (Although the choice of quotes is instructive.)

Here’s how he describes that Act:

The Act “prohibits discriminatory conduct by dominant platforms, including a ban on self-preferencing and picking winners and losers online.” In particular, it prohibits conduct that “advantages the covered platform operator’s own products, services, or lines of business over those of another business user.”

Significantly, covered companies may not “interfere or restrict a business user’s pricing of its goods or services.”

It blocks the use of “non-public data obtained from or generated on the platform by the activities of a business user or its customers that is generated through an interaction with the business user’s products or services to offer or support the offering of the covered platform operator’s own products or services.”

And it would keep Amazon from putting its thumb on the scale of their various promotional levers, blocking, “in connection with any user interfaces, including search or ranking functionality offered by the covered platform, treat the covered platform operator’s own products, services, or lines of business more favorably than another business user.”

There’s so much to unpack here. Note that this act covers pricing and promotion and, once again, competition. Instead of the Amazon ecosystem favoring Amazon, it would have to level the playing field in all areas.

That would mean, indies, there’s no competitive advantage to being Amazon-only.

Amazon itself would survive. If the American Innovation and Choice Online Act is the only one that passes, then all those publishing services would remain intact, but the promotional deals that favor only Amazon products—and yes, your exclusive book is an Amazon product—would disappear.

All the advantages you have at Amazon would disappear if either of these two Acts pass in the current form.

They won’t. They’ll be different, if they ever make it out of committee. They’ll be significantly different after random House members get to put their imprint on the bills. They’ll be even more different after the Senate messes with it.

This is why I didn’t want to publish this post weeks from now. The tampering will begin.

I only wanted this as a thought experiment for those of you who are stuck in Amazon exclusivity.

Eventually, the U.S. government will take apart Amazon and the other tech giants. In the 1920s, the U.S. government took apart the tech giants of the late 19th century. When the tech giants’ power rivals the U.S. government and/or trumps the government (pun intended), the U.S. government—in a bipartisan way—will defang a tech giant. It sometimes takes years. But it will happen.

What do I recommend for those of you who are Amazon exclusive? I recommend that you watch this legislation for one thing. For another, I would start—slowly—divesting yourself of the exclusivity at Amazon.

I’d take my lowest performing works and pull them out of the exclusive ecosystem, going wide with them. I’d focus on promotions outside of Amazon for those particular products. I’d learn how to be a business person without Amazon, so when the Amazon ecosystem changes—and it will—you will be prepared.

I know, I know. Many of you think that’s too much work, just after reading this piece. More of you think that I don’t understand how tied up your finances are with Amazon.

I do understand.

I have watched countless writers go under when the book publisher goes bankrupt. I  have watched non-publishing businesses go down because they have, essentially, one client and either that client stops paying or that client goes out of business.

See this as the shot across the bow that it is. The changes might not happen in 2021 (most certainly they won’t). They might not happen in 2022. But by mid-decade? Maybe.

Or maybe the appetite for bringing down these tech giants might be greater than I think. There’s already bipartisan support on this. The tech giants got a bit too big for their breeches, according to the political class. That’s a bad, bad, bad thing. It means that throwing money at the U.S. Congress might not help at all.

(The tech giants have been throwing money at Congress to prevent just this thing for years. It seems to be less effective now, and not just because the Democrats are in power. I think we hit a tipping point in 2020 with tech influence, and the political class got scared.)

The system Amazon built that has—as a sideline—benefitted some exclusive indie writers will change in the next five years. I can guarantee that.

It might change sooner.

The indies who act now to slowly go wide will survive.

Those who cling to the old ways of doing things—exclusive, through Amazon—will lose their entire business, maybe sooner rather than later.

*****

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“Business Musings: Putting All Your Eggs In One Basket: Amazon Edition,” copyright © 2021 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / bruhum

19 responses to “Business Musings: Putting All Your Eggs in One Basket: Amazon Edition”

  1. Chris says:

    I went all in with KU when I had just a handful of books. Then I pulled everything out when I had an armful, and it was like having the rug swept out from under me. I had underestimated how much money I got from page reads. Basically, at my level it was enough to make me wonder about going wide. Of course, I hadn’t considered the need to build a readership on all channels, as I was primarily focused on Amazon.

    During 2020 I kept my main series and associated novellas wide, then created a new series just for KU. About 20% of my royalties currently come from page reads. Those books – novellas, actually – sell well, but obviously only to readers happy to buy on Amazon.

    Going wide is tough as coming out of an exclusive agreement, in my experience, is like quitting a job and having the income plummet. I make this doubly difficult by not advertising, as in no paid adverts and no social media. Crazy, perhaps, but I don’t yet have the budget for it and SoMe falls squarely into the “better off writing” category. My next book is my advertising. I write, release, and move on to the next book, taking a few pages out of DWS’s playbook. It works for me.

    So I’m kind of doing what Kris says, and moving the lesser read books to wide. It helped a lot to keep my main series wide after pulling them from KU the first time, but traction = time and I’m not there yet. But I love the library aspect of being wide, and look forward to all my books being available in libraries, which means all my books must be wide.

    My “problem” is kind of ironic, in that the series I wrote to get back into KU is currently my best selling (as in units sold) to date. Perhaps it would sell just as well wide, but I’m not ready to pull it yet. I need a better exit strategy than last time which was “all or nothing” with the “nothing” being hard to swallow.

    Now, with a rather large armful of books, I am close to 50:50 exclusive and wide. But I need to establish a presence wide before going 100% wide.

    I’ll keep learning, making mistakes and bad judgement calls, and learning heaps more. Learning is about the only way I imagine I’ll be able to stay in this game.

    Thanks again, Kris, for an equally inspirational, terrifying, and motivational series of business posts.

  2. Philip says:

    You KNOW something is serious when the stars align that both Republicans and Democrats agree on something. Everyone sees the threat to free markets that Amazon presents, not just in crushing other retailers but in essentially controlling the internet through its insidious AWS branch. Sadly, I’ve been following this and learned that many Democrats and Republicans are in Mr. Bezos’s pocket.

    Imagine what would happen if if the Bill never passes but, on whim, Amazon got rid of its Select program. All these ad-gaming, algo chasing authors would lose their captive audience of cheapskates and have to find real, dedicated readers who are willing to spend actual money for their reading pleasure.

    Great post!

  3. Preaching to the choir, here. I’ve never been Amazon-exclusive, and now I feel righteous and justified. 😀

  4. Kevin says:

    I’m mostly in KU. FWIW, Publisher’s Weekly’s assessment is incorrect, insofar as the bill wouldn’t impact KDP at all, and Createspace doesn’t exist anymore. 😉

    The Amazon imprints, for sure. Those would need to be divested. However, KDP is a publishing channel; legally speaking, it’s literally no different from the tools the major publishers use to upload books to Amazon.

    Basically, this legislation won’t impact indie authors at all, as it is currently written. Trad authors writing for Amazon imprints, however…yeah.

    But the bigger KU/Wide discussion deserves a little extra attention.

    There’s a reason why folks use KU. It’s simple, actually.

    The global English language ebook market share looks like this (all numbers approximate and the info is a little dated):

    Kindle: 70%
    KU: 16%
    Apple: 9%
    Kobo: 2%
    B&N: 1%
    Google Play: 1%
    Everyone else combined: 1%

    What this means is that wide…isn’t. “Wide” represents about 14% of all English ebook sales globally, and KU represents 16%. These numbers are rough, but as of the last reliable data set (about two years ago) KU was rising and all other channels were slipping (except Kobo, which has held steady for years). So if anything, it’s likely KU is larger than this and wide is smaller.

    We’ve got two mutually exclusive audiences, one slightly larger than the other. It’s not shocking that people lean into the larger audience. Unfortunately, it’s about equally easy (difficult) to get a KU reader to buy a non-KU book from an author they’re not already a fan of as it is to get an Apple or Kobo reader to buy a KU book. 😉 In both cases it only really happens after a strong recommendation from a close friend.

    Being Amazon exclusive has always represented at least a mild risk for all authors. If Amazon ever decided to end KU, it would be a major adjustment period getting traction wide. In my experience it takes like 6-12 months to really get that going.

    But that doesn’t mean folks who are doing this aren’t paying attention and being careful. Right now, KU remains the smart call for most authors. Will it always? Probably not. 😉

    • I will never agree that KU is the smart choice, since it cuts out readers who want your work. It also prevents writers from doing the hard work of building a global audience that is theirs not Amazon’s.

      • Kevin says:

        Kris, that’s sort of my point… The “wide” author and the KU author have almost identical markets. The wide author gives up on KU. The KU author gives up on Apple, Kobo, and a few smaller venues. But the market share each gives up is very nearly equal.

        In an ideal world, we could reach EVERY reader. But that’s not where we’re at. Instead we’re forced to choice between two almost identically sized audiences.

        • Wow. You’ve really swallowed the Kool-Aid. If I went to KU, I’d cut out 2/3 of my readers that I know of. I get it, Kevin. You want to stay with KU. Then do so. It’s your career.

          • Cora Buhlert says:

            The overall market share of the various platforms is not as important as the market share the various platforms have for an individual author.

            Many people like Kevin who are Amazon exclusive report that the majority of their income comes from KU page reads. Meanwhile, people who have been wide for a long time like Kris and me report that the majority of their income comes from platforms other than Amazon. For example, last month I sold twice as many books on the small DriveThruFiction platform than at all Amazon stores together, because a lot of my readers are also gamers and they buy at DriveThru.

            Every indie needs to do what’s best for their business.

    • C.E. Petit says:

      I can’t agree with this comment, in part because some of the Amazon system (and, I should add, virtually all of the Apple system and the Kobo system) is unlawful under current antitrust law. In an objective sense… not “this is what happens after the scorched-earth-tactics litigators who make IBM’s defenders in the 1960s and 1970s look accommodating have their say” sense. And that part becomes apparent every time you go to the store to pick up replacement parts for your car, or see photocopy paper that’s not the same brand as your photocopier/printer: It’s called “unlawful tying,” and the key word there is the first one. (Naturally, Apple is far more guilty of this than is Amazon at present, but it’s sort of the difference between a true serial killer and the guy who gets caught after one murder.) The problem is not with lawfulness, but with enforcement. (And the less said about other aspects of e-book ecologies, like cross-border DRM and its seldom-acknowledged interface with arms control, the better.)

      Leaving that incorrect framework aside, those statistics betray the real problem — unsatisfactory warrant and data. “The global English language ebook market share” — really?
      * Unit sales, gross revenue, profit?
      * Including types of books not ordinarily available through consumer platforms, like, say, articles in law journals (offsite PDF, another thing both Amazon and Apple try to avoid) or laboratory manuals or even big-glossy-paper titles like Science and Nature? (Those last two, all by themselves, have profits larger than entire mid-sized publishers.)
      * Presuming much about how that will look after any significant change in context at all; just hypothetically (yeah, right), that more and more elementary schools start stationing both hardware and content at desks, given that Apple has such huge market penetration in schools?
      * Multimedia integration, for which Kindle requires substantial transcoding and backward-compatibility gyrations (due to both hardware and software issues) and, to name one competitor, epub does not?
      * Potential distribution systems like streaming?
      * Please define “book” for me while you’re at it.

      I could go on for a while. I won’t. Although the end of the comment at least acknowledges “probably not,” that’s based on a false assumption in the first place — that Kindle, in fact, is uniformly dominant at present across all of electronic publishing. That’s leaving aside “English-language dominance” problems; it’s leaving aside “most authors,” because most authors do not limit themselves to narrative fiction in English; and so on.

    • Kevin, where did you magic up these nonsensical numbers?

      The global English-language ebook market is not just the handful of Kindle countries. The Kindle store isn’t even an option in many English-language markets (Nigeria, for example, with 154 million people online). KU is available in even fewer places than the Kindle store. Many Amazon markets (English-speaking Singapore, for example) do not have Kindle stores.

      For those countries

      No question Kindle is the primary player in US, but the US has just 6% of the world’s internet users. For ebook-focussed indies this matters.

      Being exclusive with Amazon locks you out of the lucrative digital library market. OverDrive alone, in 2020. clocked 289 MILLION ebook downloads.

      For indies who are Amazon focussed the US/UK is their effective market, but for globally-minded indies there are myriad other options and those that take wide seriously are likely seeing less than 50% of their income from Amazon.

      You say,

      ““Wide” represents about 14% of all English ebook sales globally, and KU represents 16%.”

      There are simply no global statistics available to make this argument. Where did you magic this 16% from? Subscription (ebook and audiobook) options like Storytel and Nextory are not available in the US, yet dominate the markets they are in, and English-language titles make up the bulk of their catalogue.

      You say,

      “it’s about equally easy (difficult) to get a KU reader to buy a non-KU book from an author they’re not already a fan of as it is to get an Apple or Kobo reader to buy a KU book. ? In both cases it only really happens after a strong recommendation from a close friend.”

      No, an Apple or Kobo user is not going to “buy a KU book” for the simple reason that KU is a subscription service. You can’t “buy a KU book”. They would have to pay the full month’s subscription to get that book. They could buy the book as a unit from Amazon, but that’s not KU. And that would mean using the Amazon app and the Amazon company that they have already made a conscious decision not to use, just to get that one book.

      • Kevin says:

        Bookstat. It’s literally the sole source of reliable sales data on the major ebook retail outlets, right now, filling the space in the industry that Bookscan used to.

        You’re making a variety of incorrect assumptions.

        First, that Kindle isn’t available globally. This isn’t true. Amazon doesn’t have as many localizations as Apple, but Apple Books and Kindle Books are available in precisely the same number of countries. About 180 of them, in both cases.

        Amazon is the largest consumer ebook retailer globally, with over 75% of the market share in the US, Canada, Australia, UK, New Zealand, and India.

        As for buying KU books… It’s pretty easy, really. Apple users can and DO come over and buy KU books, because KU books are also for sale on Amazon. So I can say “hey, I read this good KU book the other day, really enjoyed it”, and you can wander over, even as a non-KU reader, and buy it from Amazon.

        It doesn’t happen often. It pretty much only happens via a strong recommendation from a trusted friend, near as I can tell.

        But it happens about as often as KU subscribers buy non-KU books from authors they’ve never heard of, which IS the point.

        A KU book loses access to virtually all non-Amazon readers. The only non-Amazon readers who will pick up a KU book are old fans of the author and people who got a strong recommendation from a trusted source.

        A non-KU book loses access to virtually all KU readers. The only KU readers who will read a non-KU book are old fans of the author and people who got a strong recommendation from a trusted source.

        It’s a trade-off, and the pools of readers are near identical in size.

        • Kevin, the person you’re mansplaining the industry to runs The New Publishing Standard, which is the industry bible on the global publishing industry. He has forgotten more about the current industry than I’ve ever learned. In other words, he’s one of the experts on publishing worldwide. You might want to read his publication for the summer and then see how you feel about your numbers after that. I’ll let others teach you about Bookstat, if they’re so inclined. You’re so deeply entrenched in the myths that talking with you isn’t really going to help you, me, or anyone else who reads this.

        • Cora Buhlert says:

          You’re also assuming that every author is aiming primarily at the US market. But even if the US e-book market, which is very dominated by Amazon, is one of the biggest, that doesn’t mean that it’s not possible to make a good living catering to the tastes of other anglophone, let alone non-anglophone countries. It’s a very big world out there.

          If you write books that are squarely aimed at the US market and in a genre/subgenre popular with KU readers, going exclusive may really be the best choice for you. However, for many others of us it’s not.

    • Exactly. And KU page reads income which for most it two to one (as compared to copies sold) will expand to ten to one in the next few years. plus there is no basis for comparing what Standard Oil did with Amazon/Kindle. Not unlike comparing apples with oranges, or in this case, perhaps lemons.

  5. Mel Todd says:

    I don’t disagree with the notion of going wide. But for right now I make a lot of money off of being exclusive. But I’m also expecting Amazon to fold, kick me out, or do something else and I’m setting money a side for when that happens. I’ve been working on strategies to then advertise wide, I’ll ramp up people buying direct from my website, and I have add and funnel ideas that I will implement at that point. But for now it isn’t worth it to walk away. I don’t think being exclusive is a bad thing, but I firmly believe it is something you should expect to only work for a limited time.

    As for the lowest performing books I have – you’re probably right, but my issue is that is also a pen name I have quit writing under and there won’t be anymore. When it was wide I was getting zero on it, at least in KDP I’m making a few dollars a month without doing anything on them. That is something I’m struggling with when they are pen names (genres) you aren’t going to write any more in. Is it worth the advertising money to take them wide, or just let the money trickle in via KDP.

    Eh – I’d love to be wide, as I’m a huge library and accessibility fan, but when I’m making five figures monthly via KDP with minimal advertising it isn’t worth it to pull out until AFTER my income tanks. But remember I expect it to at some point and then I’ll kick off everything I’m thinking about. But that is my plan and it may not work for others1.

  6. M T McGuire says:

    This … all of this. I cannot begin to comprehend why people go exclusive to Amazon or Audible but they do. That said. I write humorous sci-fi. 80% of the independently published books on Amazon are on KU. What this means for me is zero traction on the other sites. I have 30% wide sales in a good month and I target these folks so I am scratching my head a bit, and also very nervous! My marketing efforts seem to have very little effect and I literally do not market to amazon users. Even to the point where I target Kobo, Apple and Google Play readers, and buy space on promotional newsletters where I leave the Amazon entry blank. Sometimes I think I am mad trying to go wide, but then I read a post like this and know I am doing the right thing, even if, right now, it isn’t really working.

    • Widdershins says:

      Maybe not now, but you’ll have all your ducks in a row when this current landscape goes tits up, again … and you’ll be streets ahead when the sheeple are running around like chooks with their heads cut off … there’s an interesting number of animal references in what I just wrote! 😀

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