Help: my eBook business model is broken

A few weeks ago, I was watching a topical panel show. When the question of plastic pollution came up, one of the panelists replied, ‘No, you’re not laying the blame at my door. I bought plastic on the understanding that it would be recycled. It’s not my fault if someone went and dumped it in the ocean’ (or words to this effect). Like all of the best jokes, this one had a firm foundation in truth.

‘As far as we were concerned, we were buying responsibly. Nobody told us.’

I know what you’re thinking. What does this have to do with eBooks?

Bear with me.

I last blogged about eBook pricing in 2016. This post was my response to complaints that the price of eBooks appeared to have increased. Readers had noted correctly. The price hike was due to the recent addition of VAT. (Previously, eBooks had been exempt.) Unfortunately, few authors and publishers were able to absorb the cost. I wanted to come clean about:

• The real cost of publishing an eBook (which has since increased) 
• How many copies I need to sell before I break even/the slim chance of actually breaking into profit
• Options for readers who are looking for value for money.

Two years down the line and the goalposts have moved.

In this article, I won’t be able to avoid mentioning the A-word. I don’t want what follows to come across as a rant against the biggest retailer on the planet, because there’s a reason that Amazon enjoys this accolade. Its chief consideration behind any new innovation is, ‘How can we go the extra mile to delight our customers?’ The problem (as I see it) is that the innovators don’t always think through the consequences.

But let’s begin by talking about what Amazon do brilliantly.

First, there was the eBook. And the eBook was a magical marvellous thing for authors, because you could sell it on-line with little or no overheads. Amazon was the undisputed forerunner in the eBook publishing revolution. At a time when traditional publishing was becoming increasingly risk-averse, it gave authors tools to bypass the middle man and get their work into the hands of readers. For many like me, this was a gift. Where publishers couldn’t see the potential market for a book, authors found their own niches, creating new sub-genres of fiction along the way.

The terms seemed pretty generous too. If your book was priced at less than $2.99 you received a 35% royalty and if your book was priced at more than £2.99 you received a 70% royalty. Some authors did incredibly well, selling 100,000 priced at $0.99 in a year. As I write stand-alone books in one of the less popular genres, my expectations were relatively modest. Based on the 70% model, provided that I could sell 1000 copies (a tough call, admittedly), I would be able to recoup the cost of the professional services I’d used within a year. I had already established that I wouldn’t be able to break even with the sale of physical books alone. Paperbacks have always been a loss leader for me. Thankfully, 95% of my revenue came from eBooks and of that, about 95% of my eBook revenue came from Amazon. 

Like many authors, I clung to what I thought was a reasonable assumption: the more titles I published, the more eBooks I would sell. Then cross-selling would kick in and sales would mushroom. Not so.

My sales started off pretty well, but have taken several nosedives, on each occasion plateauing at a substantially lower level than before. I agonised over what I was doing wrong. My reviews were good, I took pride in my professional standards – I even won an award for them. I changed one book cover, I had my book blurbs re-written, I experimented with pricing…  

In 2011, Amazon introduced Kindle Owners’ Lending Library. Readers paid a monthly fee and the author received a royalty payment when a title was downloaded.

• Amazon Prime Members could download one eBook a month.
• No restriction was placed on the number of eBooks Kindle Unlimited subscribers could download per month, but they could only keep 10 KU titles on their device at any one time.

In 2017, Written Word Media estimated that there were 2.5m active KU subscribers reading an average of five books a month.

But authors could only get a bite at this apple if they signed an exclusivity agreement called KDP Select. Some authors wished to remain independent on principle. Others tried to estimate which path would be more lucrative, or else experimented until they found the best combination. It must be said that some authors have done extremely well from KDP Select, authors of romance, erotica, sci-fi and fantasy especially so.  

Then the terms of KDP Select changed. Instead of being paid per download, authors were only paid per page read. While some benefited and others found ways to exploit the new system, there were authors who’d signed up who saw their incomes fall.

Amazon also decided to allow readers who had bought an eBook to loan that eBook to another reader for up to 14 days. And they automatically opted all self-published authors on the higher royalty rate in to the lending ‘option’. There was no ‘opt-out’. If authors didn’t want their eBooks to be lent, they had to choose the 35% royalty rate. In other words, in order to maintain a constant income, they would have to sell double the number of eBooks. I’d love to say that I was aware of this when publishing each consecutive title, but that would be a lie. Certainly, I was never tempted to select the 35% royalty. It simply didn’t fit my business model. The impact of eBook lending was more subtle than other developments, but I now believe it to be part of the bigger picture. 

Then Amazon began to expand advertising on product pages. As far as I was concerned, I would spent a great deal of time, money and energy getting people onto my book pages, and they seemed to be doing everything in their power to lure them away. After a couple of paid adverts in premium listings failed (listings that had always produced excellent results in the past), I wrote to Amazon. I pointed out that an advert now appeared at the top of my book page (“60 eBooks at £1 each”), in the prime eye-catching spot to the right of the page (a feature ad), just underneath my condensed blurb (“-70% – a new selection of Kindle Books each month”),  then underneath the selection of books that other customers bought after viewing mine appeared Sponsored Ads Relating to This Item.    

The answer was that Amazon were opening advertising up to self-published authors, first in the US and later in the UK. At last, perhaps something to level the playing field. And it did – all the while that only a few took the option of paid ads, my sales increased. But within a year, it became apparent that if you weren’t advertising, your titles weren’t going to sell.

Amazon advertising works on the basis of payment per ‘click’ not payment per sale. A ‘click’ it when someone using the site clicks on a book cover in the Sponsored Ads Relating to This Item. Advertisers select the product pages that they would like to advertise on and bid for opportunity. The Naturally, the more authors who jump on the bandwagon, the higher bids are pushed. Whereas it was initially possible to win a bidding ‘war’ at 2p a click, 50p is the new norm. In other words, advertising is now a necessity, but is becoming far more expensive and is far less effective. Whereas the US used to be my main market for eBooks sales, I find that I can no longer afford to compete there. In the UK, I pay more than 50% of my eBook revenue back to Amazon Marketing Services, just to stand still. In other words, my 70% royalty rate has become 35%. 

Why should I care?

If you’re an author and you’re reading this, you will be all too aware of the issues I have outlined, even if there’s no evidence that they have affected your sales. If you’re reader, you may ask, ‘Why should I care?’ So many new titles are published each year that if there isn’t another Jane Davis release, there’s always her back-catalogue and, let’s face it, there will never be a shortage of other books to choose from. 

“Experimental work will suffer. Most of us write something with a different edge or a new interpretation from the mainstream. These new pathways ensure writing is dynamic. This is a great gift that indies bring to the world of writing. Without that dynamism the whole thing is sunk.” ~ Alison Morton.

But this issue doesn’t only affect self-published authors, it affects the publishing industry as a whole. The legitimate lending of eBooks – something that was considered to be theft only a few years ago – has been normalised. People will call themselves fans of certain authors and yet never buy or borrow their books in a way that ensures they contribute to that author’s livelihood.

Of course, what isn’t helpful is the lack of transparency. It isn’t made clear to consumers who ‘buy’ an eBook that they are only buying a licence to read it. Unless the terms of sale state otherwise, that licence is non-transferable. As this article explains, eBooks aren’t ‘owned’ and cannot be copied, gifted after use or left to someone in a will.

It isn’t clear what the Powers That Be envisaged when they permitted eBook lending, but the reality is that books aren’t just being loaned to family, friends and book club members. Message boards abound asking if anyone has an eBook available to lend.

Only last week, author Lisa Jewell, posted on Facebook that she was ‘sickened’ to find an on-line request for her latest release, a book  she’d worked so hard on for a year. The request was posted on a Russian website.  Lisa outed the culprits by posting a screenshot of the exchange. That exchange showed that a mere forty minutes after her request, person A was rewarded with an epub file. You might say that’s only one lost sale, but the epub file posted by person B could be opened and downloaded by anyone looking at the thread. On a website that boasts it has 9 million active members worldwide. Lisa’s fans sent a wave of support. ‘Cheap’ was one of the milder labels applied to those concerned. But eBook lending is a widespread practice and very few people are saying ‘this is wrong’. (Indeed, not even the author community can agree.) 

“Lending is so widely misunderstood that it is contributing to increased piracy. By way of an experiment, ask someone to explain the difference between the two. Go on, I dare you.”

Reader website Goodreads have a facility where users can create virtual bookshelves of books that they have available to loan (and why go to all the trouble of creating a bookshelf if members only intend to loan the eBook once?) Yes, there is a clear anti-Piracy statement, but there is no guidance about the very restricted circumstances under which eBook lending is permitted.  

What’s more, Calibre, a fantastic downloadable piece of free software used by authors and readers alike, now comes with a feature to ‘safely share all (or just some) of your e-books with anyone you choose.’ This facility is presented as a force for good – to stop any retailer for gaining a monopoly on the eBook market. What it does not come with is guidance as to the circumstances under which the sharing of files would be legal, or about the consequences of illegal sharing. Mediafire, Rapidshare and Megaupload are other examples of software than enables file sharing.  

Now that the waters have been muddied, I believe that the issue of lending is so widely misunderstood that it is contributing to increased piracy. By way of an experiment,  ask someone to explain the difference between the two. Go on, I dare you. 

“Pirating book one means that publishing cancels book two.” ~ Maggie Stiefvater

Whilst the practice of eBook lending isn’t yet recognised as a threat to publishing, piracy is. It is estimated that 17% of all books read on-line are pirated. Bestselling American author Maggie Stiefvater is one of a growing number of writers who has issued a warning to fans that if they want to read the next book in her fantasy series, they must stop downloading pirated eBooks. It is that simple and that serious.  

Another difficulty is that eBook piracy is fast gaining a mask of respectability. Many sites that offer illegal downloads purport to support the publishing industry and struggling authors. They suggest that, if you can’t afford to pay for a book, it’s OK to grab a free download now on the understanding that you will leave a review, or pay for the book at a time when you can afford it. Unsuspecting readers might stumble across a site and assume it has the blessing of the publishers/authors whose books are featured.

The same, it must be said, applies to the film and music industries. I have heard from so-called fans of film and music who would rather pay £15 a month for a nifty piece of software that helps them avoid detection when they access illegal downloads rather than pay for the content they use. In fact, here’s a website that offers advice on how to download  music, movies, TV shows and books without getting caught.  Interestingly they think that while the piracy is illegal, there may be moral arguments in favour. My take is the other way around. Lending files may not be illegal, but is it moral?   

“This guide isn’t here to debate morals. That’s on you. This is just a toolbox for how to pirate stuff without getting caught.”  

While we’re on the tricky subject of morals, if you want a label that makes you feel comfortable about not paying for stuff, this site provides you with one. You’re a ‘non-paying user.’    

I know that eBook piracy affects my sales because I subscribe to a service that alerts me every time one of my titles appears on a pirate website. But how do I know that eBook lending is affecting my sales?

I’ll admit that it’s been a slow realisation. A suggestion that produced a hesitant, ‘Oh, I don’t know if I should…’ only a couple of years ago, now produces an, ‘Oh, well, if everybody’s doing it.’

I market my titles to book clubs, as a result of which I receive frequent requests for discussion points or to attend meetings in person. My sales are such that the purchase of ten books would cause a spike in my sales figures. That spike used to be readily apparent. No more. So I started asking questions. Can I offer you a bulk discount? Oh, you’ve already bought your copies. You prefer eBooks. No, I don’t blame you. Who has room for a home library? Can I ask where you buy your eBooks from? And book club members have no qualms about telling me. The club bought one copy and shared it.         

How is lending an eBook any different to lending (or selling) a paperback?

Another very good question. 

1. Once you own something, the law allows you to gift, lend, sell or otherwise dispose of it as you see fit. Lending a paperback is legal. Lending an eBook is only permitted under very restricted circumstances, and the evidence suggests that readers have failed to grasp what those circumstances are.   
2. The impact of the trade in second-hand paperbacks is limited by the nature of the physical book. Quite simply, paperbacks deteriorate whilst eBooks don’t. The last time my mother borrowed a paperback, she read it in the bath and it fell apart.     
3. The market for eBooks is global. Take the post that Lisa Jewell referred to. The website in question was Russian. The person who responded was on the other side of the world. Second-hand books can obviously be shipped abroad, but the cost of doing so is usually prohibitive.  
4. Readers who manage eBook libraries on their laptops can share a single file any number of times. Once a new reader has it in their library, there is nothing to prevent them sharing it. And so on. And so on.      

I wish I were clever enough to create an infographic, but here are just a couple of possible sharing routes. Imagine, if you will, a flowchart.

Paid for eBook with no licence to lend > uploaded onto eBook library on Calibre > Goodreads Virtual Bookshelf created based on eBook Library > eBook shared on request with member of Goodreads Community because user doesn’t remember that there was no licence to share.  

Paid-for book with a licence to lend > lent legitimately to one family member > uploaded by family member onto Calibre > shared on request from message board – after all, one year on, who can remember if the eBook was paid for or not and doesn’t it feel great to be part of a global community? > ends up on pirate website > downloaded by multiples of ‘non-paying users’. 

At what point does a legitimate loan became piracy? Can you see the joins?

Now image how a flowchart might look if the chain started with a Free eBook downloaded following receipt of an email from BookBub. 

Does anyone remember the millions of single-use plastic bottles that end up in the ocean?