Self-published ebooks: the surprising data from Amazon

Hugh Howey, author of the bestselling, indie-original science fiction series Wool, has published an eye-popping, and important data-rich report on independent author earnings from ebooks sold on Amazon. Howey makes a good case that the "average" author earns more from a self published book than she would through one of the Big Five publishers, and, what's more, that this holds true for all sorts of outliers (the richest indie authors outperform the richest Big Five authors; less-prolific indies do better than less-prolific traditionals, etc).

Howey's report includes a lot of raw data and makes a lot of very important points. It certainly is an aid to authors wondering whether to do business with major publishers or go it alone. I read it with great interest.

I think that there are a couple of important points that Howey skirts, if not eliding them altogether. The most important of these is that all the authors Howey studies live and die by the largesse of one company: Amazon. This is the same company whose audiobook division, Audible, requires authors to lock their products to its store with non-optional DRM, and which has no real competitors in its space. So it is neither an angel by nature, nor is it subject to strong competitive pressures that would cause it to treat authors well when its own self-interest would cause it to treat them badly. As bad as it is to have a publishing world with only five major publishers in it -- a monoposony in which a tiny handful of companies converge on terms and practices that are ultimately more to their benefit than those of authors, it's even worse to have a world in which a single company controls the entire market. That's not just bad, it's catastrophic.

The second point is the opportunity cost of being your own publisher: almost all successful authors have to do things that aren't writing in order to sell their books (all the hustling, touring, etc that comprises the writerly life in the early 21st century), but if you're your own publisher, there is an order of magnitude more non-writing stuff that becomes your job. Going the traditional route makes sense for writers who can earn more by writing another book than they can by spending that writing time being a publisher; it also makes sense for writers who just aren't any good at that stuff.

Now, this second point does not militate against self-publishing per se -- rather, it suggests a new kind of service-bureau/publisher that provides services to authors that sit somewhere between self-publishing and traditional publishing. Companies like Lulu, Bookbaby and Smashwords already do this, and many of the big literary agents are starting to do this for their authors, especially with their backlists.

But the first point is a significant concern. In the 1980s, when the midlist collapsed and the number of mass-market distributors in America fell from 400+ to three, and the trade retail channels for mass-market books were dominated by Barnes and Noble and Borders, authors discovered that their careers could be suddenly and totally ended, merely because the mass-market distributor stopped carrying them, or one of the retailers stopped selling them. Writers who'd published a new novel every year for decades suddenly found themselves with no one willing to publish, distribute or sell their next book, or carry their backlists.

That's what concentration begets. It's a major problem, and an existential risk to the market that Howey has identified. There are ways to improve the odds for indie authors -- a plurality of payment systems, lots of different search- and recommendation services, more companies providing services to authors. These, of course, are exactly the sort of thing that extremist copyright proposals like SOPA and the TPP work against: by making the companies that serve authors and their audiences bear the liability for infringement, we shrink the number of companies that supply authors and ensure that only big players like Amazon, Paypal, Apple and Google can occupy those niches.

Pro-competitive ground-rules won't solve the competition problem on their own, but without them, no solution is possible. As creators -- and as audiences -- we are all best served by a churning and chaotic retail and publishing channel, in which many companies compete to offer us all the best possible deal.

You may have heard from other reports that e-books account for roughly 25% of overall book sales. But this figure is based only on sales reported by major publishers. E-book distributors like Amazon, Barnes & Noble, Kobo, the iBookstore, and Google Play don’t reveal their sales data. That means that self-published e-books are not counted in that 25%.

Neither are small presses, e-only presses, or Amazon’s publishing imprints. This would be like the Cookie Council seeking a report on global cookie sales and polling a handful of Girl Scout troops for the answer—then announcing that 25% of worldwide cookie sales are Thin Mints. But this is wrong. They’re just looking at Girl Scout cookies, and even then only a handful of troops. Every pronouncement about e-book adoption is flawed for the same reason. It’s looking at only a small corner of a much bigger picture. (It’s worth noting that our own report is also limited in that it’s looking only at Amazon—chosen for being the largest book retailer in the world—but we acknowledge and state this limitation, and we plan on releasing broader reports in the future.)

There’s a second and equally important reason to doubt a 25% e-book penetration number: The other 75% of those titles includes textbooks, academic books, cookbooks, children’s books, and all the many categories that are relatively safe from digitization (for now). Print remains healthy in these categories, but these aren’t the books most people think of when they hear that percentage quoted. E-book market share is generally spoken of in the context of the New York Times bestsellers, the novels and non-fiction works that are referred to as “trade” publications. If we look specifically at this trade market, it’s quite likely that e-books already account for more than 50% of current sales (some publishers have intimated as much [link]). Factoring in self-publishing and further limiting the scope to fiction, I’ve seen guesses as high as 70%. But that can’t be possible, right?

The Report [Hugh Howey/Author Earnings]