Is Amazon The Big Bad Wolf?

So you’re an indie author and you’ve published your novel on all the online retailers, but now you’re wondering whether you should have gone exclusive with Amazon. Is Amazon the Big Bad Wolf? Is it wrong to leave all the other retailers out in the cold?

Mark posted this question on my “Ask A Question For My Blog” page:

Howdy!

First off, I just want to let you know that I LOVE your blog, and read each post as soon as it comes out. You have a lot of great knowledge and information, and I’m really thankful that you’re willing to share that with the world.

So, my question is about KDP Select. (Being an indie author, I’m sure you’ve heard of it before.)

What are your thoughts on it? There’s a lot of conflicting opinions out there, and I’m wondering what yours is. I know that you currently publish with smashwords, so that means you’re not presently enrolled in KDP Select, but would you consider jumping aboard in the future? Why, or why not?

I currently have several non-fiction books out (and am planning on self-publishing some fiction pretty soon) and all of them are enrolled in KDP Select, but I’m considering withdrawing some of them.

What are your thoughts?

Thanks!

Randy sez: That’s an excellent question, Mark.

First, let’s talk about what “KDP” and “KDP Select” are, to make sure everybody’s on the same page with us.

“KDP” is “Kindle Direct Publishing.” It’s a web site at kdp.amazon.com, run by Amazon which allows anybody to publish their book online as an e-book at no charge.

KDP is a great program for authors. You can upload your e-book, set the price you want, and Amazon will create a sales page for you, collect the money, and pay you a percentage every month (either 35% or 70%, depending on the price and certain other factors).

KDP has several competitors. Here are the most prominent:

NookPress.com, run by Barnes & Noble.
The Apple iTunes Store, run by Apple using their free iTunes software.
KoboBooks.com, run by Kobo.
Smashwords.com, run by Smashwords.

The great thing for authors is that you can work with ALL of these at the same time. This gives you more places to sell your book, and that’s good for you. It’s also good for readers, because different readers like to shop in different online stores.

“KDP Select” is a special option within KDP. If you choose the KDP Select option, you agree to work exclusively with Amazon. This means that if you choose the KDP Select option, you CAN’T also publish your e-book with B&N, Apple, Smashwords, Kobo, or anyone else. You work only with Amazon.

Why on earth would any author agree to do that?

Because Amazon offers you several perks if you choose the KDP Select option. Here are some of them:

You get paid when people borrow your book from the Kindle Owner’s Lending Library.
You earn higher royalties for books sold in certain countries (currently, Japan, India, Brazil, and Mexico, but this list is constantly changing).
You can list your book for free for 5 days during each 90 day period.
You can run a Kindle Countdown Deal, where your price is temporarily lowered and a countdown timer shows when the deal will expire.

These have value to you as an author, and Amazon gives you these perks in exchange for giving up the right to sell your e-books on other online retailers.

A lot of people believe that Amazon is evil, that they’re the Big Bad Wolf and they intend to eat up their competition and then jack up prices when they have a monopoly.

My own opinion is that Amazon would definitely like to eat their competition. But I can see no evidence that they intend to raise prices, should they ever get a monopoly. So I don’t consider Amazon evil. They’re just a very strong competitor.

Competition is not bad. Competition is good for readers and for authors. Competition keeps prices low for readers. Competition keeps options attractive for authors.

I won’t tell you what to do, Mark. I think that the markets work best when readers and authors do what’s in their best self-interest. This keeps competition working correctly. It’s a free market and you can do what you want.

My own choice, so far, has been to refuse the KDP Select option. I’d rather work with multiple retailers, because I want my readers to have as many options as possible. Not all my readers want to buy from Amazon. I’ve posted my e-books directly on Amazon, B&N, Apple, and Smashwords.

Smashwords is not just a retailer–they’re also an aggregator, which means that they can get you distribution into other online retailers. So you can use Smashwords to put you onto Amazon, B&N, Apple, Kobo, Sony, Diesel, Oyster, Scribd, Library Direct, and more. So I use Smashwords to put my books into all the places that I don’t deal with directly.

For the last couple of years, some authors have done very well using KDP Select to promote their books for free for 5 days each quarter. This gets them lots of downloads (sometimes tens of thousands of downloads in a single day), which makes their books visible. And some authors have then gotten sales traction because of that visibility. However, the word on the street is that this isn’t working as well as it used to.

In fact, the biggest lure of KDP Select that I can see is this ability to make the price free for 5 days each quarter. Because this is no longer as effective as it used to be, there is less and less appeal to choosing the KDP Select option.

I’m looking at my sales spreadsheet right now for my novel Oxygen, which was the first e-book I released, so I have the most data for it. Here are the percentages of units sold for the various retailers that I can track:

Amazon: 84%
B&N: 13%
Smashwords: 3%
Apple: I don’t track sales on Apple because their accounting is such a pain in the ***. Note to Apple: Please clean up your act. Your accounting tools suck.

Why work with Smashwords, if sales are so low there? Several reasons.

Smashwords lets you price your e-book free anytime, all the time, with no restrictions. (Amazon and B&N don’t let you do this.)
Smashwords is international, and the price they charge is the SAME anywhere in the world. (Amazon sometimes adds a surcharge to certain countries, and you have no control over that. This can be horribly embarrassing when you run a promotion at a special price, and then learn that people in some countries are having to pay a higher price.)
Smashwords will sell your book in ANY format, including Kindle, ePub, PDF, RTF, Sony, text, and a web-readable format. (Amazon sells only the Kindle format, and most other retailers sell only the ePub format.)
Smashwords lets you create coupons so you can easily give away copies to friends and family by giving them a coupon code.

Why work with Apple, if their accounting tools are so bad?

You still get paid, even if it’s a pain to learn which books earned you the money.
You can set the price to free on Apple, and Amazon will usually match that price. This is called the “permafree” strategy, because it lets you make your book free ALL the time. I’m told it’s much harder to get Amazon to match a free price on Smashwords. Permafree is a nice marketing tool for the first book in a series, because it gives readers an easy way to try before they buy.
Apple sells in most countries and you have complete control over the pricing in each country.

I will note that all of the online retailers do a poor job at making accounting information available. Sure, you can easily find out how much they’re paying you total. But the real numbers you care about are these two:

How many copies did each individual book sell?
How much did I earn in US dollars for each individual book?

The number of copies sold is important for marketing purposes. If your book has sold 100,000 copies, you’d like to be able to brag about that in your ads. But you can’t do that if you don’t know the number. And none of the retailers lets you easily find this out. They do make the information available, but it’s fragmented.

The number of dollars earned is important if you have a co-author. You need to know how to split the money.

It is bizarre that NONE of the online retailers lets you easily get these two crucial numbers, and two of them make it impossible. Smashwords does the best job, but you still have to manipulate a large spreadsheet to get what you want. Amazon gives you all the data, but not all in US dollars. If the book was sold in Europe, you’ll see a line-item for sales in Euros, and they don’t tell you the exchange rate. And ditto for books sold in the UK, Japan, Mexico, Brazil, etc. This makes it impossible to do an accurate split if you co-author some of your books and write others on your own. B&N provides the data you need, but you have to manipulate a spreadsheet. And Apple is simply crazy to work with, so I’ve given up trying to get data out of them.

Well, Mark, I hope that helps. I’ll repeat my advice–do what makes the most economic sense to you. If you believe that KDP Select will earn you more money, then go with it. If you believe you’ll do better with multiple online retailers, then work with them all. The choice is yours.

Mark, you asked if I’d consider going with KDP Select in the future. Yes, possibly. For me, a major concern has been what’s best for my readers. More options for them is better for them, and this outweighs in my mind the advantages of KDP Select. But I might consider a test of one book on KDP Select to see how it works out. Every author would like to get the word out on their books, and one way to do that is to use the 5 days of free pricing on KDP Select.

If you’ve got a question you’d like me to answer in public on this blog, hop on over to my “Ask A Question For My Blog” page and submit your question. I’ll answer them in the order they come in.

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