Thoughts on Mark Coker’s 2018 Publishing Industry Predictions

January is a time for making forecasts and predictions, and Mark Coker of Smashwords certainly did not disappoint. I have a lot of respect for Mark Coker, not only for being one of the pioneers of indie publishing, but for continuing to share his data and insights with us over the years.

That said, I have many much opinions.

Mark gets a lot of flak from authors for his anti-Amazon stance, which is nowhere crystalized quite so perfectly as his 2018 publishing industry predictions. Seriously, half the post is a massive litany against Amazon’s publishing practices that systematically recounts just about everything he sees wrong. It’s quite impressive.

Perhaps the most inflammatory thing he says is this:

Authors who now derive 100% of their sales from Amazon are no longer indie authors.  They’re dependent authors.   I suppose we have indie authors and de-authors now.

Here’s the thing, though: he isn’t wrong.

Back in 2010, when self-publishing was still considered by many to be the “kiss of death,” I read a post on a writing blog (I think it was Writer Beware) that said, basically: “if you’re taking the indie publishing route instead of traditional publishing, that makes you self-published. So call yourself a self-published author, because you are one.”

At first, I was really pissed off at that blogger. Couldn’t she see that there was a huge gulf between indie publishing and self-publishing? A year or two later, though, I had to concede that she had a point. I was bringing my own baggage to the table by insisting that indie publishing was separate and distinct from the dreaded “self-published” label. Today, I don’t give a damn whether or not a book is self-published, and I don’t think most readers do either.

It’s the same thing with Mark Coker’s “indie authors” and “de-authors.”

The truth is, if you depend on only one publisher or publishing platform for all of your writing income, then by definition you are dependent. It doesn’t make a difference whether that’s a traditional publisher or Amazon. If you want to be independent, then you have to cultivate multiple income streams from multiple sources. It’s that simple.

You’re still a self-published author, whether you do savvy ebooks and print-on-demand editions. or whether you did a 5,000 book print run with a vanity press that sits in your basement from now to eternity. You’re still a dependent author, whether you’re making a killing on Kindle Unlimited or whether you sold your copyright to a Big 5 publisher for a mess of pottage.

However, while I agree with Mark on that much, I disagree quite strongly on his conclusion that the government needs to break Amazon up. Oh, no. Hell no. It’s not different this time, Mark. The Luddites are still wrong.

The biggest publishing story of 2017 was that Amazon’s biggest enemy is… Amazon. Because it turns out that when you stop paying authors for single-book sales and instead pay them shares out of a massive fixed pot, it incentivizes scammers to find all sorts of interesting ways to game your system. And if your business model depends on automating as much of your website backend and customer service as possible, you can’t fix the scamming problem without pissing off indie (and not-so-indie) writers everywhere.

It’s going to take a while for all this to shake out, but I do believe that indie writers will come out on top—so long as Amazon’s competitors in the publishing world step up and actually compete.

Stop whining about Amazon, Mark, and bring your damn website out of the late 90s.

With that out of the way, here are Mark’s predictions, with my thoughts.

1.  2018 will be another challenging year for the book industry

Has there ever been a year in which this hasn’t been the case? Long before KDP, Smashwords, or any other epublishing platform was invented, all of the best books have been up on the internet for free. Movies, TV, video games—we’ve always competed with these things for reader attention, and always will. I don’t see anything that makes 2018 different in that regard.

In fact, I’m going to go out on a limb and predict that the book industry will stabilize and grow—not as measured by traditional metrics like Nielsen Bookscan, but in non-traditional metrics like the Author Earnings Report. Why? Because books are counter-cyclical, and we’re already overdue for the next recession. The stock market is melting up, the yield curve is flattening, inflation is already hitting real estate, healthcare, and education, and the geopolitical situation is a nest of potential black swans.

I don’t think 2018 will be the year when shit hits the fan—I expect that will happen in Trump’s second term, sometime around 2021 or 2022. If nothing else, the tax cuts have applied palliative care to our economy. But the debt will continue to grow, the deficits will get worse, and inflation is going to hit the average consumer in a massive way this year.

All of this bodes well for books.

2.  The glut of high-quality low-cost ebooks will get worse

Please, Mark. The Tsunami of crap was never a problem to begin with. Like I said above, long before epublishing was a thing, the best books ever written in the history of the world were already available, for free, through sites like Project Gutenberg.

There’s still plenty of opportunity for new authors. The Childlike Empress still needs a new name. The Nothing is not going to swallow Fantastica. If you know how to swim, you can still swim just as well, whether the water’s ten or ten thousand feet deep.

3.  Barnes & Noble is sick and will get sicker

I can see this happening. I haven’t been following Barnes & Noble too closely, but they failed pretty hard with the Nook and their corporate troubles haven’t been good for the bottom line. At this point, though, Barnes & Noble is dead wood that needs to burn in order for something else to come up in its place.

4.  Kobo’s sales will falter

I don’t think they will. Kobo is much bigger in the international markets than Amazon, and the economic problems are worse overseas than they are here in the States (which means that conditions are better for books). I think Kobo will do just fine, though I’m not sure that Smashwords books on Kobo will do as well.

Kobo is still innovating, with things like Kobo Plus and the promotions tab on KWL. Mark Lefebvre had a good run, but I think it’s a good thing that they’ve got some new blood coming in. I predict that Kobo will do just fine.

5.  Devaluation pressures will persist

Again, I completely disagree with Mark Coker on this one. Ebook prices for indie books have actually stabilized over the past few years, and with increasing inflation, I predict they will tend to rise in 2018, though not in a dramatic way.

Once you get below a certain price point, competing on price really doesn’t make much of a difference, and I think a lot of successful indies understand this. Also, books are not fungible. When I make time to read, I don’t want just any book—I want that book. So long as it costs me less than a good meal, price be damned.

There is, of course, an argument to be made that all else being equal, power readers are drawn to lower-priced books. It’s probably an exaggeration to say that these power readers are king makers, but it’s not too far from the truth. That said, the way to get around this is to run periodic sales and promotions, just like any other industry.

Come on, Mark. Just because your book is $5.99 doesn’t mean you can’t mark it down to free or 99¢ every once and a while.

6.  Single-copy ebook sales will decline

On Smashwords, perhaps. I’m not convinced that they will generally.

For the entertainment value, it’s a hell of a lot cheaper to buy a book (especially an indie book) than it is to buy a video game or a movie. Because of that, books tend to be counter-cyclical. The real economy is not doing as well as the official numbers say: households are still under massive pressure, with debt at unprecedented levels and wages shrinking as adjusted for price inflation. I predict that this trend will continue in 2018.

I haven’t seen the data on this, but if I had to speculate, I would say that power readers tend toward subscription models for books, whereas casual readers tend toward single-copy book sales. I would also speculate that power readers are less responsive to economic shocks than casual readers—they’re going to read whether or not their pocketbook is getting squeezed. Again, I haven’t seen the data for this, but if I had to plant a flag, that is where I’d plant it.

Are single-copy sales cannibalized by book subscriptions? To an extent, yes, but I think we’ve already hit something of a floor. If the economic pressures on the middle class worsen and we see an influx of casual readers into the market, I think single-copy sales will start to bounce back. As I see it, there’s a lot more room on the upside than the downside.

7.  Romance authors will feel the most pain from KU

Can’t speak to that, as I’m not a romance author. But based on Amazon’s missteps in 2017, I think KU will actually see a decline as authors continue to flee and scammers continue to dominate. Again, I don’t see much more room on the downside for things to fall.

8.  Large traditional publishers will reduce commitment to romance

And large traditional publishers will continue to shove their heads up their backsides, so no one in the indie publishing world will care. Kris Rusch wrote a much more lengthy analysis where she says as much.

9.  Email list fatigue

Totally disagree. The guys over at the Science Fiction and Fantasy Marketing Podcast discussed this recently, and the conclusion they came to is that authors who claim that email lists don’t work as well as they used to are doing it wrong.

That said, I could see a bit of a shakeout as readers who have signed up for every author’s list go through and cull their inboxes. And I could also see a stabilization and/or decline in sites like InstaFreebie that offer free books in exchange for signing up for an author’s list. But I don’t think this will translate into declining effectiveness of email lists generally.

In contrast, I predict that email lists will continue to be the most effective marketing tool for the vast majority of authors, myself included. My list has never been larger, and never been more effective at selling books.

10.  Pressure will build to drop author royalties

I could see this happening. That said, the pessimists in the industry have been predicting this for years, and I don’t see why it would happen now. In fact, if it did happen now, it would create a great opportunity for competing publishing platforms.

Amazon may be the big dog in the publishing industry, but they don’t have their house in order. The KU scamming scandals of 2017 demonstrated this quite clearly. If Amazon were to cut author royalties, it would hurt KU authors the most, and really bite Amazon in the ass long-term.

It’s not a bad idea to have contingency plans in place, in case something like this happens. That said, I don’t think Amazon’s position is strong enough to pull it off.

11.  Audiobooks will be a big story in 2018

This, I can see happening. From what I can tell, audiobooks are experiencing explosive growth, which will continue as more competitors like Findaway Voices find a place in the market, and more indie books come out of their exclusivity agreements with Audible. I really need to figure out how to put out audiobook versions of all my books.

12.  Audible will face increased competition

This is already happening, and I believe it will continue. Perhaps we will see more pressure to raise author royalties for audiobooks than we will see pressure to lower author royalties for ebooks.

13.  Readers will still pay for books worth reading

Yes, indeed. In other news, the sun will continue to rise in the east, people will continue to grow old, and teenagers will continue to believe that they are the very first ones to discover human sexuality.

14.  New subscription services will be introduced

I’m very interested in this one. Mark is in a much better position to see these things coming than I am, and if he’s right, that would be very big news indeed.

Will it be a game changer? I don’t think so, but I half expect to be wrong. Right now, my books are on Scribd and Kobo Plus, and I haven’t seen much of an effect, but subscription services tend to shake up every industry where they take root, and ebooks aren’t an exception.

That said, I don’t think that any new book subscription services will dramatically change my own indie publishing business in 2018. I hope to be proven wrong.

15.  Calls will grow in the US for antitrust action against Amazon

Fat chance, Mark. If anything, Walmart and Home Depot are going to eat Amazon’s lunch. The “Amazon effect” has been greatly exaggerated: truth is, the retail sector is just full of dead wood after a decade of easy credit, stock buybacks, and government bailouts.

Trump is going to defy expectations and win a second term. The Republicans may lose the House in 2018, but I don’t think they will. As for the Senate, almost all of the seats up for election are currently held by Democrats. The Russiagate narrative is coming apart, the Clinton Foundation is once again under investigation, tax cuts are coming, and #MeToo is causing the Left to eat their own. I think the Republicans are going to have a good year.

If calls for anti-trust action against Amazon grow, they will fall on increasingly deaf ears. Thank goodness.

16.  Indies will reassert control over platform

More to the point, Twitter and Facebook will generally decline, while sites like Steemit and Weme will pick up the slack.

If indies do take control of their own platforms, it will be through things like blogs and email lists, which runs contrary to Mark’s prediction in #9. However, I half expect a shakeup in social media to lead to a mass migration of authors to some new site, once the first movers experience huge success.

I’m not sure of this one. It could go either way. Barring the rise of the next Facebook, I think Mark may be right. But I consider it just as likely that we see Facebook go the way of MySpace as something else takes over.

17.  Indie authors will take a closer look at podcasting to reach new readers

Not a bad idea. I doubt it will take off generally, but a few authors will certainly find new opportunities here—especially authors who are also invested in producing their own audiobooks. Could shake things up a bit.

Overall, while I tend to disagree with Mark’s 2018 predictions, he raises some interesting points to consider. Here are some predictions of my own:

  1. I will continue to write new books.
  2. I will continue to publish new books.
  3. A lot of new readers will discover my books.
  4. My email list will more than double.
  5. I will fall behind on this blog more than I should.
  6. I will continue to listen to Sabaton.

Rethinking free

I recently read an interesting blog post on Dean Wesley Smith’s blog, about how, how not, and whether to make your books free. The conclusion he comes to is this:

Free is short time, limited supply, and never on the major bookstore shelves.

In other words, no permafree, no free pulsing, and no publishing free online content on sites like InstaFreebie unless it’s for a limited time.

Three or four years ago, I probably would have pushed back pretty hard against this advice. There are still points of it that I disagree with, such as the idea that giving anything away for free devalues all your other work. Perhaps that’s true for physical product, but for digital content I think there’s a solid argument to be made that the rules have changed.

That said, a lot has happened in the last three or four years. Permafree worked really great until about the middle of 2014, at which point I noticed that it was a lot harder to generate any kind of interest in my free books. I switched to a free pulsing strategy in 2015, which was a lot more effective at giving away free books, but that didn’t always translate into more sales.

In fact, there’s a passage from Dean’s blog that sums it up real well:

A customer walks through your door and you have a wall of twenty pies in glass cases, all the smaller short story pies in a case in the center, and some specials near the cash register.

And there on your wall are three pies that say, “Free.”

And a bunch of short stories that are “Free.”

The customer can take an entire pie for free or buy one. As a customer, what would you do? Duh. You take the free pie and leave.

And pretty soon your customers start to change. The only people who come through the door are people who only want the free stuff. They would never buy something under any circumstances, but you are giving your pies away for free, so they take one.

Pretty soon there would be lines out the door to get your free pies and you would make nothing. The free takers would crowd out and devalue the pies you are trying to sell.

Now, I don’t entirely agree with Dean here. My 90-day sales chart on Amazon shows a predictable uptick in sales every time I set a book free and send out an email to my list. Most of my subscribers signed up through InstaFreebie, which means they’re probably not quite fans yet (and probably signed up for a bunch of authors’ lists).

But my long-term data tends to agree with Dean. Back in 2012 and 2013, there was a very clear correlation between free downloads and royalties / paid sales. Then, in 2014, that correlation started to become fuzzy. Over the next several months, it got progressively fuzzier (even though I was giving away more books), until today there’s really no correlation at all.

Obviously, YMMV and I can only speak for my own books. But there have been a lot of major shifts in the ebook market over the last five years. Kindle Unlimited has had a huge impact on the effectiveness of permafree, or any kind of free book strategy for that matter.

Point is, it may be personally useful to rethink my free strategy. I’m not going to stop doing the free book thing altogether, since I do think there’s still value to it (if for no other reason than that little sales bump, plus the handful of “thank you!” responses I get from my email subscribers each month). But instead of free pulsing two books each month, usually including a first-in-series novel, it may be better to do a 99¢ novel and a free short story.

The two biggest mistakes I’ve made so far in my writing career have been 1. underpricing my books, and 2. unpublishing books that were still selling. (I still can’t believe how stupid I was) Holding onto a free books strategy that isn’t working could easily become a close third. I’m not going to throw the bus into reverse while it’s barrelling down the highway at 70 mph, but some experimentation and a course correction may be in order.

Why Kindle Unlimited is a broken system

kuI recently became embroiled in an unexpectedly hostile discussion on Mad Genius Club over the brokenness of Kindle Unlimited. In retrospect, though, there was nothing surprising about it.

The OP had asserted that Amazon is “still the only real game in town,” which I attempted to refute. It ended with the fine folks at Mad Genius Club putting words in my mouth, threatening to ban me for my “tone,” and calling me a “pompous blowhard” and a “prancing, self-aggrandizing, self-congratulating spunkmuffin.” Which would have been amusing except that… okay, it was pretty amusing. But it was also a bit infuriating to watch so many people deliberately take offense simply because I disagreed with them.

(The irony was especially thick as they viciously attacked me, then turned around and emphatically denied that KU pits authors against authors, all while demanding me to prove to them that it does—often in the same breath.

And for the record, I do not think that there’s anything “dickish” about asking the other side to back up their argument with sources. This is especially true for things that “everybody just knows,” and doubly so when forming a negative argument, such as “no one bothers with outside Amazon.”)

In all fairness, however, there were a few arguments I made that I could have done a better job supporting. And since this is my blog, where no one holds the ban-hammer but me, it seems appropriate to make them here.

First, though, I want to make it clear to any KU readers that I’m not trying make you feel guilty for subscribing to KU. If you are a KU subscriber and you enjoy the program, great! I have nothing at all against that. Whether or not the system is broken, we’ll still find ways to get paid. Have fun, and as always, thanks for reading.

Also, I want to point out that even though I believe KU is broken, I would still love to enroll my books. The problem, as I’ve pointed out before, is that Amazon demands exclusivity for the privilege. Not only am I wary of putting all of my eggs in a basket (especially a broken one), I also think that that’s a bad deal for my readers on iBooks, Kobo, Nook, etc, or who live outside of the territories where Amazon operates. Their numbers are not insignificant.

So why is Kindle Unlimited a broken system? In a word, incentives.

In a healthy system, writers write the books that readers want to read, readers support the writers by voting with their dollar, and the middlemen (publishers, distributors, booksellers, etc) provide value to both readers and writers commensurate with the cut that they take.

A healthy system is not closed. If readers collectively decide to read twice as many books, writers collectively earn twice as much. If another writer’s books do twice as well, it does not take away from the money I earn from my books.

Contrast that with the closed system that is KDP Select. We have only a ballpark estimate for the size of the KU subscriber base. Amazon keeps that (and most other KU-related data) close to the chest. We have no idea if the pay is commensurate with the subscriber base.

Instead, writers are paid out of a fixed pot, the KDP Select Global Fund. If readers collectively read twice as many KU books, it doesn’t increase the size of the pot. The pot only increases if Amazon decides to increase it, which again may or may not be commensurate with the increase in books read, or subscribers enrolled. We have no way of knowing.

Worse, because pay is based on a share of the pot, if someone else’s books receive twice as many borrows, everyone else’s earnings go down—even if their readership remains unchanged.

This is why so many writers are up in arms about the latest KU scandal, covered in depth by Phoenix Sullivan and Ann Christy. To summarize, the current iteration of Kindle Unlimited (KU 2.0) pays authors based on number of pages read, and scammers are gaming the system with text synthesizers and click farms. It’s not impossible to make $500,000 a month with this scam, all of which is taken out of the share of legitimate writers.

Is Amazon working to fix the problem? Until last week, it wasn’t clear that they were—and it’s still an open question if they can. It’s a perpetual game of whack-a-mole where the moles keep getting smarter, increasing the odds that legitimate writers will get whacked.

When you look at the way the incentives are structured, however, there’s nothing surprising about this unmitigated mess. Amazon has divorced the readers from the writers in such a way that pricing signals no longer work. Worse, the fixed pot pits authors against authors in a zero-sum race to the bottom. You do not earn more by simply getting more readers—you earn it by getting more reads than other authors. In the meantime, Amazon keeps lowering the KENPC payment rate, and authors keep bending over.

Is there still value in an ebook subscription service? Readers certainly seem to think so. If there’s value for readers, it shouldn’t be too difficult to also find value for writers.

But when you look back on the history of KU, you realize that it’s not really about providing value for readers or writers, but undercutting Amazon’s competition. KU launched right around the same time as two other subscription ebook services: Oyster and Scribd. These subscription services did provide value to writers, as they paid full price for every completed read.

Amazon responded by launching KU 1.0, which paid writers significantly less. However, since Amazon had most of the ebook market share (at least in the US), and since non-KU books receive much less visibility on the Kindle Store than KU-enrolled books, authors were aggressively pressured to sign up. Amazon’s exclusivity requirements kept its competitors from receiving content, and as a result, they have since either folded (Oyster) or failed to gain much traction (Scribd).

It ultimately comes down to the contrast between makers and takers. KDP Select is a closed system, where the size of the pie is fixed and the best you can expect is to get a larger slice than the person next to you. This turns everyone into a taker: someone who feels threatened by other people’s success and jealously guards their own.

Is it any wonder then that KU authors, when presented with someone critical of the KDP Select program, resort to rhetorical tactics like gaslighting, lampost-moving, name-calling, and conflating disagreement for personal attacks? Sadly, no. These are all classic hallmarks of a taker, which the system has forced them to become. In this way, Kinde Unlimited pits authors against authors.

It’s a broken system, but of course, different people experience the brokenness in different ways. When I was living in Georgia, I met several older people who believed that things were better under Communism. Without a doubt, the Soviet system was broken, but these people did better under it than they did after it fell. In the same way, there are a lot of authors doing very well under KU 2.0 who would love to keep things exactly the way it is.

Several of them employ text synthesizers and click-farms.

And when KU 3.0 comes out, as it inevitably will, it will sort out a new batch of winners and losers just like KU 2.0 did before. Because of Amazon’s exclusivity requirements, many writers will lose just about everything, having developed no other income streams.

But not the scammers. They’ll just find a new way to game the system, based on the way KU 3.0 misplaces the incentives. Amazon will continue to aggressively insert itself between readers and writers, breaking the incentives structure in new and interesting ways.

And the cycle will begin again.

Why my books are not in Kindle Unlimited

Last year, Amazon came out with a book subscription service called Kindle Unlimited. As a reader and an Amazon customer, I’ve noticed that they’ve been pushing this service quite aggressively. As a writer, I’ve been following it quite closely, especially with some recent changes with how they compensate their authors.

However, if you check my Amazon catalog, you will find that none of my books are available on Kindle Unlimited. And if I had to tell you why, I could sum it up in just one word:

Exclusivity.

In order to enroll your books in Kindle Unlimited, Amazon demands that the content of your book cannot be available anywhere else. Not on competing retailers. Not on your website. Not on a site like Wattpad or posted on social media. It’s KU and KU only, take it or leave it. And you can’t get around that by doing separate editions, since it’s the content that must be exlusive, not the book.

Recently, Hugh Howey argued that KU’s exclusivity doesn’t really hurt writers or readers, because all of Amazon’s competitors in the ebook market suck so hard that it’s no big loss to lose them anyways. I disagree, though. Different readers have different needs, and as great as Amazon is, it isn’t the best choice for everyone.

I believe that readers should be empowered to make their own choices, not only in what they read, but in how they read it. Some readers would rather sideload their ebooks, and don’t want to deal with Amazon’s proprietary .mobi format. Others would rather keep their books native to their device and not deal with Amazon’s apps. Others live in parts of the world where Amazon tacks on an arbitrary $2 USD surcharge to every kindle store purchase, and that obviously doesn’t work for them.

Put simply, I believe that exclusivity is a bad deal for readers—and that because of that, it’s also a bad deal for writers. The less control that readers have over what they read, the less they are going to read. The more control that middlemen have over the market (and for all the wonderful things that it does, Amazon is still a middleman between readers and writers), the less pressure there is for them to innovate and improve.

On many of the indie writers forums and communities that I frequent, it appears that other writers are more interested in short-term monetary gains than in doing what best serves their readers. And that’s unfortunate, because Kindle Unlimited is structured in such a way that it pits writers against each other in a zero-sub game. Instead of paying a fixed rate for each page (or KENPC) read, Amazon sets a “pot” and pays each author a share of it, in proportion to how many borrows/pages they got. Thus, if one author gets more reads than another (or games the system to make Amazon’s algorithms think that he had more reads), that means less money for the other author.

A lot of writers argue that it’s not really a zero-sub game because Amazon usually adds to the pot after the month is over, thus manipulating the borrow rate to hit some undisclosed target. Even if that’s true, though, it makes things even worse. If Amazon has a target borrow rate in mind, why not tell authors up front? It basically amounts to not telling authors how much they’re going to be paid until after their books have been sold. In any other supplier relationship, this blatant lack of transparency would be insane.

From what I can see, it’s all about control. Exclusivity gives them a great deal of control, not only over the marketplace but over authors as well. The lack of transparency and ever-changing borrow rates make it difficult for authors to gather the data they need to decide whether to stay in KU or to publish their books widely. And authors who decide not to opt into KU are punished by having their books rank lower, thus achieving less visibility in the Amazon ecosystem. In the year since KU came out, my Amazon income has fallen by at least 60%.

Even with all of that, though, I would be happy to enroll all of my books in Kindle Unlimited if Amazon dropped the exclusivity requirement. There are a lot of readers who prefer Amazon’s KU subscription service, and I would love to make my books available for them.

But exclusivity is a bad deal.