Business Musings: Exclusivity in 2022 Part Two

Business Musings: Exclusivity in 2022 Part Two

The previous post discussed some of the ways to use exclusivity to benefit an indie publishing business. I especially focused on how to think about a short-term exclusive project.

The problem comes with long-term or even permanent exclusivity.

Normally this business blog is from the writer’s point of view. But it’s always important to understand the overall picture before we take the writer’s eye view of this issue.

I’ve owned a lot of businesses. I have some ethical issues that do not benefit me as a business owner. There are business practices that I do not like that, if I did them, would make me a lot more money than I am making right now.

Those practices are stupidly easy to do. They rely on the gullible side of human nature. People want to believe that the other people they’re doing business with are good-hearted and have their best interests in mind. Many business people do not have other people’s interest in mind. They only consider their interest.

So let’s look at exclusivity through that prism.

As a business model for a publishing or related industry, exclusivity makes complete sense. The more a business can bind an author to that business, the better off that business will be, particularly if the author is famous.

The problem with publishing businesses is that they don’t create anything. They buy other people’s creations and then put those creations in a form that can be distributed. Generally speaking, a writer or an artist who licenses their work to a publishing company is relying on that publishing company’s expertise in design, marketing, and distribution to get that book/project/writer out to as many readers as possible.

This is the deal writers make with traditional publishers. With the Big Five, and others that operate just like them, the writers have been brainwashed into believing those companies are the only route to distribution. And they were once, but ironically, they licensed fewer parts of the copyright in those days…when a writer, by necessity, had to be exclusive.

Now, though, there’s indie publishing and a million other ways for a writer to maintain their rights and distribute their work, if the writer is willing to run their own business. Which means that distribution companies, publishing companies, streaming companies, and others must up their game if they want bestselling writers in their fold.

That’s why there are the tiered systems in these newer companies, which I mentioned last time. A writer has the option to do some limited non-exclusive work with Company A, or a short-term exclusive, or many short-term exclusives, all of which have tiered benefits for the writer. (I keep typing “tired” instead of tiered. Wonder what that means. LOL)

If the writer ends up becoming popular on Company A’s platform—however Company A defines popular—then Company A is going to want the writer to do more and more work for them. If Company A can control the amount of work, the timing of the work, the payment for the work, and—most importantly—make Company A the only place readers can get the work, then Company A wants to do that.

That’s why the superstar tiers exist, with all kinds of benefits. Company A wants the popular writer fully and completely in their stable and will do all kinds of things to keep the writer there.

Which, in the short term, sounds really good. Imagine being a superstar author on the platform that made your name.

In the short term, these superstar deals greatly benefit the writer and Company A. It’s the long term that’s the problem.

As long-time readers of this blog know, the writing business is not linear. Fortunes rise and fall. They never really go down to their lowest level. The rise always results in a much higher floor than the writer had before, but the rise itself is never permanent.

So, at some point the most popular writer in Company A will be superseded by some other writer who will sell more or whose product is fresher or more attuned to the moment. The original popular writer will still be popular, just not the Flavor of the Month. And slowly, ever so slowly, the original popular writer will be neglected.

Company A will still benefit from original popular writer’s latest releases, but original popular writer will run into new problems.

And that’s charitable. Sometimes original popular writer will fall off a cliff.

First, let me give you an example from my own business. And then, I’m going to show you some other ways that permanent or superstar or long-term exclusive can go horribly wrong.

My example has to do with Audible. Fifteen years ago, Audible was not just new(ish), but it was the only real digital audio player in the game. Unless a writer had access to a recording studio—and had the chops to read a book—the writer couldn’t even record their own work, let alone distribute it.

I’d had some audio books—on tape—from some of the best companies in the business…whose business soon got subsumed or at least offered through Audible.

Audible came to me with a great deal. I got up-front money on all of my books including backlist (under Rusch only at first, and then Nelscott, but never Grayson). In addition, I got paid a hefty bounty for each book sold, a bounty that did not get counted against that advance money. I got royalties and a bounty, and all of that translated into tens of thousands, and in one case hundreds of thousands of dollars.

I had my eye on it, though, and I had voice training. I knew that Audible would eventually get real competitors. One of my main priorities in setting up WMG was setting up our own recording studio, and we did it just as ACX got started. I was going to run the recording studio, but I got sick. We hired an audio director who turned out to be horribly unsuited for the work. (My fault: I thought she could grow into it. I was wrong.)

Had we followed my lead at that time, we would have had a lot of WMG-produced high quality audio that we could still market now.

But I was sick, the audio program fell apart, and so I relied on the money that Audible provided through the equivalent of its superstar program.

Which no longer exists. They use other incentives now.

My editor at Audible moved, a new editor got hired and then fired. He was replaced by one of those corporate employees who comes in as some kind of hatchet man—someone who wipes out all trace of the previous employees. I can’t even get my new editor on the phone or contact him by email.

Needless to say, Audible and I have parted company on new work. The old work has pretty good contracts—I can get out of them at any time—but that would make my backlist unavailable in audio, something I’m not currently willing to do.

It’s a mess, and it’s one I need to clean up.

Audible asked for exclusive, I granted it, and now, fifteen years later, I have a major mess to clean up. Part of that mess are my audio fans. There are a lot of listeners who don’t have time to actually read a book, so they listen on their commutes or whatever. And all that reaching, growing, and developing will fall by the wayside if I don’t do something in the next few years.

Yes, it’s on my ever-growing to-do list.

Here’s the thing: I benefited from Audible’s superstar program back in the day, but I’m paying the price now.

This happens to writers in traditional publishing all the time. I recently came across this very sad post from Therese Walsh on Writer Unboxed. About fifteen years ago (gee, funny how that works), she was lucky enough to get one of those super huge book deals for her very first book. She had a large two-book contract.

Then the Great Recession hit and her bright sparkling book didn’t get any of the promised benefits from the company. The company went through editors like toilet paper, so that she ended up with at least four of them. By the end of 2014 and the publication of her second book (to glowing reviews), she was considered toxic within the publishing company. Through no fault of her own, her books did not sell to expectations.

Her problem was the same problem most writers have in traditional publishing. She was exclusive to that publishing company.

In the 1990s, I made sure I had as many different publishers as possible. When that became harder and harder due to consolidation, I started up a variety of pen names, so that I was never at the mercy of one company. Every single time I was in the situation that poor Therese Walsh was in, I had another company as an out.

Contracts changed, and required non-competes from their authors (without making a similar promise on their own). Most writers signed the dumb things, making it impossible under their contract to go to another publisher even when there were problems. Contracts continued to change and buy more rights, because traditional publishing is in trouble, and writers are more likely to be exclusive with them than not. So more traditionally published writers are going through what Therese Walsh is going through, rather than fewer.

However—and this is important—this is not just a traditional publishing problem.

In fact, it’s a major indie problem.

Here’s why:

Indie writers still strive for validation. They worry that they’re not as good as they should be. They don’t have the stamp of approval from traditional publishing or from awards or from something else that will validate their work.

That’s because writers are trained not to value readers. Traditional publishing is not about the number of readers; it’s about the number of books sold in a short period of time (not read, sold). So building a reader base means nothing to them. Building a bookstore base is more important, so that orders go up.

That attitude has permeated indie publishing. Indies, who know that a new book in their series will sell 1,000 copies in its first week, discount readers as unimportant.

That’s 1,000 readers who are waiting for a new book. When it only takes 5,000 books sold for a traditional book to hit the New York Times list in the off months, that’s huge.

But indies don’t understand that. All writers are insecure, and we all manifest those insecurities in a variety of ways. One of them is to discount our successes in non-traditional manners.

The superstar programs of platforms and companies reach into that need for validation, and yank hard on it, getting a writer to participate in that program and stroking that writer’s ego.

Especially now, as there are fewer situations where there’s only one major player in the game, like Audible was fifteen years ago. Yes, that streaming service might be great, but there are other streaming services. That company might be the first into that market, but other similar companies are being developed.

The superstar programs are designed for the platforms and companies—according to what I wrote above. They want to trap and hold the bestselling writers on their platforms, and they do so with major perks.

If the superstar programs are term-limited, meaning the superstar writer can get out of the program in a year or two or even five, then that’s marginally okay. The writer will end up like I am with Audible—with lots of IP and not time to move it or develop it.

But most of these superstar programs are open-ended with automatic renewals. The writer/superstar is trapped in them, exclusive to one platform.

If the platform is doing well, then that exclusivity won’t seem like a problem to the superstar author. But platforms are like the rest of publishing—on top for a while, then down. People go off to the newest platform, the latest thing. Not everyone. The faithful or those who like the way the platform works will stay with that platform. Some people will subscribe or use many platforms. Some will move with the crowd.

We’re seeing that with Amazon right now. Two or three years ago, the K.U. people who made a lot of money with every one of their books in K.U. only suddenly started talking about going wide because their income on K.U. was going down. Those poor folks were delusional enough to believe that they’d sell well in the wider marketplace, not understanding that each distribution platform, each streaming service, each new piece of technology requires the same kind of build that they put into their accounts on Kindle Unlimited.

Essentially, their exclusive gig stopped working well, and they had to become brand new writers on the newer platforms.

That’s what happens to all of us. Yes, I have name recognition, but not with all readers. If I decide to use one of the newer streaming platforms, I’ll attract the readers who know who I am who also happen to be on that platform, but I’ll have to educate the other readers about who I am.

Being a long-term writer is a constant re-education of the reader. One of my favorite Gwen Stefani songs came out in 2020, “Let Me Reintroduce Myself,” which expertly shows how a decades-long career works.

A long-time writer is constantly introducing new readers to their work. It’s not reinvention so much as figuring out how to hook them into your oeuvre. It might change with tastes (which is why you should write in a lot of genres) or it might change with platforms.

But if you take the superstar package on any platform or with a publishing company or in any kind of medium, you run a huge risk. When I was coming into the business, a lot of traditional publishers were going bankrupt and disappearing, taking entire writers’ careers with them. The assets (writers’ licensed IP) were being auctioned off, and no bankruptcy clause in a publishing contract could stop it.

So I was always cautious about making sure my books and stories and articles were in more than one publishing house. That habit has served me well, and the one time I didn’t do it—Audible—it truly bit me in the ass.

In the past years of this blog, I’d use the bankruptcy example about why you shouldn’t go exclusive, and it meant little to the writers reading the blog, especially those in K.U. who smugly told me that Amazon would never go bankrupt because it was too big. (Tell that to the investors at Enron.)

But there’s a whole other problem with Amazon—or any other platform. They can cancel your account for seemingly no reason at all. There’s a reason, of course, but figuring out what it is can often be a nightmare.

Read this series of posts from USA Today bestselling author Lexi Ostrow. Start here, and be sure to read the comments. There are three posts, but read the what comes next post in January as well. Her first tip in that post? Go wide.

What happened to her? She launched a book, the first one in a year due to life issues, and within 24 hours, everything she had up on Amazon was taken down—by Amazon—because, Amazon claimed, her new release violated someone’s copyright, but wouldn’t say what or who or how.

Here’s what she wrote:

Per the email, my books were gone. My reviews were gone. My royalties would not be paid – yes, you read that correctly, Amazon was going to keep money I made on all my BACKLIST titles because the preorder raised a flag. I also cannot create another KDP account to begin again (which is fair if I’d done what I was accused of doing or anything else).

She went through weeks’ long nightmare, and managed to get information from Amazon through the help of friends. Her work has been reinstated, but she’s understandably skittish and she’s lost money.

Other writers, in the comments, haven’t been as lucky. Some are still blocked from Amazon for something that happened in October…or even farther back.

Here’s the thing, folks. You upload your books and you’ve agreed to the current Terms of Service. In that Terms of Service are the very terms that Lexi Ostrow ran into—they can take a book down for a violation and refuse to pay royalties, particularly if an author (or a scam artist) did violate someone else’s copyright.

Ostrow didn’t and she was reinstated, but she learned that hard lesson—going exclusive has a severe downside.

She’s one author. There are a handful of others in her comments that went through the same thing.

However, Kindle Unlimited is an advertising program, not a book-sales program. The Kindle Unlimited program is designed to get readers into Amazon’s ecosystem, not to help writers get new readers. The payout, which comes from something called the Kindle Select Global Author Fund pays writers based on “page reads,” not on book downloads.

And it’s even more complicated than that. From what I understand after too much time wasted digging, the payouts are based on the writer’s home country. Here’s the explanation, thanks to an editor/writing coach. (Note that I am not recommending his services. His explanation is just the clearest.)

the share of fund allocated to each country varies based on a number of factors, such as exchange rates, customer reading behavior, and local subscription pricing. Author earnings are then determined by their share of total pages read, up to a total of 3,000 pages per customer per title.

This is a program in Amazon. It’s not as straightforward as putting your books up (or your coffee mugs or your jewelry). It’s a program they’ve designed to bring in a certain amount of money into their corporation.

When the Kindle Select/Kindle Unlimited program ceases to earn at the accepted level and/or if it becomes to cumbersome to continue and/or it doesn’t bring in the right number of subscribers anymore, Amazon will cancel it.

If writers are lucky, they’ll have weeks, maybe months, to deal with the cancelation. If they’re unlucky, they will find themselves in the same position as Lexi Ostrow—everything they’ve worked and built for now gone. Only unlike Ostrow, these writers in this imagined future will have no recourse at all. It’ll be a company-wide decision that won’t care how many individuals get trampled.

A lot of writers will get hurt if Amazon shuts down Kindle Unlimited. Even more will be hurt if Amazon decides (for some weird reason) not to sell books anymore. Writers in other countries, especially the European Union, might see their income decrease significantly, because the E.U. is trying to regulate Amazon. Big companies don’t take kindly to regulation. Many of them will do a cost-benefit analysis and decide that it’s better for the company to become unavailable in the country that tries to regulate them than it is to follow the regulations.

In other words, if you’re exclusive for any reason to a major corporation, your entire career can vanish if the corporation decides that the program you’re part of is no longer viable or if the company itself is no longer viable.

That stuff happens all the time.

So take this as your warning, indies. Make 2022 the year you decide not to go 100% exclusive with any company. Sure, experiment with exclusivity in new platforms, but not at the expense of all of your work.

Grow your business across as many platforms as you can handle.

When you make a mistake—and we all do—figure out the best way to extricate yourself from that mistake.

The best way to make sure you have a lifelong career, though, is to go wide.

Good luck.

*****

 

A quick reminder for all of you: we are having a half-off sale that lasts until the 24th. Lots of new workshops to choose from, including a Study-Along for my in-person(!) mystery-caper workshop in May. Yes, in-person. And we still have one slot or so for that. This workshop will be a lot of fun. The reading list is out now, so you’ll need to get on it as soon as you can if you’re interested.

If you’d like to order workshops in the half-off sale, go to Teachable.com, look through the workshops, and put in the code MidWinter at checkout. That’ll take half off the price.

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“Business Musings: Exclusivity in 2022 Part 2,” copyright © 2022 by Kristine Kathryn Rusch. Image at the top of the blog copyright © Can Stock Photo / Alexmit.

4 responses to “Business Musings: Exclusivity in 2022 Part Two”

  1. I read Lexi Ostrow’s blog after reading this post. What a nightmare. I’ve never been exclusive anywhere. It’s stories like this that consistently remind me why being wide is so important, not just for an author’s career but for an author’s sanity.

  2. Jason M says:

    That comment under “what comes next” on Lexi’s blog is a nightmare.
    Hachette publishes author’s book with perfectly legal public domain image on cover. Then Amazon blocks it and shuts down author’s account and won’t respond to anybody about why, not the author, not the CEO of Hachette, not the AIA.
    All Amazon said was for the author to log on (which he’s blocked from doing) to change the image. Catch 22.
    That person isn’t exclusive, either.
    I’m starting to think that maybe Amazon doesn’t really want to be in the publishing business in a real, responsible way, and that its best role was as a great white shark devouring other distributors.
    Thanks for the post.

  3. Just a minor correction—Kindle Unlimited pays a specific rate per virtual “page” (which usually works out to a bit smaller than a physical mass market paperpack page, so a 100-page book might have 120 “pages”). This rate varies subtly every month. However, the payout has nothing to do with the writer’s location. It has to do with the subscription reader’s location.

    I don’t keep track of the payout, and I think they’re kept fairly close, but Kindle Unlimited pays one rate for US subscribers, one rate for UK subscribers, and another for EU subscribers. And I suppose this is fair enough, since there are different numbers of subscribers paying different prices for their subscriptions in each territory.

  4. I’m experimenting this year. I have a lot of short projects that I want to get done and off of my to-do list, so…I’m running them through Kindle Vella, at least until the bonus payouts stop. Then through KU, then wide. We’ll see how that does, but…to date, I have one book that’s earned a nice little chunk of change just through Vella bonuses, even before I put it up. Once the bonuses stop, I’ll probably shift to serializing on Substack, and experiment with different ways to do that.

    Serial fiction is a potential sleeper, and I’m using Vella as a means to learn a little bit about the process, both the pacing and the promotion. At the moment it appears that smut is highly popular, but we shall see–and some of the authors I’m hanging with have done more extensive analysis about the Vella vs KU vs wide audiences.

    That said, paid ads for Vella appear to have stalled out. Folks were making good money on it before, not so much now. Since Vella isn’t my endgame, and I do have these little projects I want to work on, welp…now’s a darn good time to play with it. Years ago, I was advised to jump onto new stuff quickly, get whatever I could out of it, then leave. This is the first time I’ve been able to do that, and even so, I kinda missed the boat on the first two months of bonuses. My bad.

    But we shall see–also playing with Substack as well.

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