Indie Authors can react MUCH faster to a Hot New Market

One of the things that has struck me in the last few months has been the number of ‘Billionaire’ type titles that enter the Top 100 Lists in the Kindle Store and the Nook Store. It shouldn’t really be a surprise – 50 Shades of Gray created a hot new market. Now everyone wants to read about billionaires who can tie more types of knots than a drunken sailor.

The thing that is really intriguing is that a lot of them have been indie authors. Riding a Hot New Market to hit the Top 100.

It’s a replay of what happened when YA and Twilight and Sparkling Vampires suddenly became big. A lot of indie authors were able to take advantage of the trend before Publishers could.

At first, this seems strange.

  1. We have the Big 5 Publishers with thousands of people, hundreds of millions of dollars, specialists in every area. They have all the expertise, all the tastemaker skills, all the polish and refinement tools.
  2. We have indie authors who are mostly one-person crews. Most of them have never had a hit before. Some of them have never even written a book before.

How are Indie Authors able to outpace Big 5 Publishers to the opportunity?

Well, it’s quite simple.

Publishers move like Giant Dinosaurs, Indie Authors move like Cheetahs

Here’s what happens with a Publisher –

  1. A book like Twilight or 50 Shades of Gray shows there’s demand for a particular type of book. Basically, it validates the existence of a lucrative market. Let’s call it the ‘Hot New Market’.
  2. Publishers start trickling this information down to Agents and Authors. Perhaps it takes 3-4 months until Publishers decide which authors should try and tap into this Hot New Market and get a few of them to agree.
  3. The Author takes 3-9 months to finish the book. Perhaps longer.
  4. Then, and this is the surprisingly slow part, it takes ONE ENTIRE YEAR for the finished book to be polished and readied and published to the stores.
  5. The End Result: Approximately 1.5 to 2 years after the Hot New Market was found, Publishers have books catering to that market. Sometimes, Publishers move faster and get the books out in 1 to 1.5 years. However, it’s usually 1.5 years or longer.

So, and you can see this if you check some of the new Young Adult novels coming out from authors who haven’t written YA novels before, a Hot New Market gets catered to after 1 to 2 entire years have passed.

Readers just have to twiddle their thumbs while their need for new books in the Hot New Market goes unfulfilled.

This was quite alright when Publishers controlled the distribution channels and were the gatekeepers. During those dark and dreary 1 to 2 years of waiting, no one else could cater to the Hot New Market and the demand went unfulfilled – sometimes it increased, sometimes it died away. However, no one except Publishers could cater to it.

Indie Authors, who can now reach readers quickly and easily, without needing the blessings of a Publisher or a Bookstore Chain, can react much quicker than Publisher Dinosaurs.

  1. A book, let’s call it Book X, proves there’s a Hot New Market with HUGE demand.
  2. Indie Authors who are quick can make a call within a few months. Perhaps even a few weeks. Let’s be conservative and say 2 months.
  3. Indie Authors, if they manage things well, can finish the book in 3-6 months.
  4. Optionally, Indie Authors can take a few months to polish the book.
  5. That’s it. They are ready to release. They can send out the ebook quickly and easily. The minute it’s done, it’s ready to be sent out and readers can get it the next day – No printing, no shipping, no distribution, no shelving, no complicated business deals.
  6. Total Time: 5 to 9 months.

Whereas Publishers take 1 to 2 entire years to respond to a How New Market, Indie Authors can respond within 5 to 9 months. A few Indie Authors are even faster.

What is that Hot New Market going to do in the Interim?

Here’s the timeline –

  1. Day 1: Book X launches.
  2. Year 1: Book X proves the existence of a Hot New Market. So an entire legion of readers discover and fall in love with this Hot New Market.
  3. Year 1 and Year 2: All these readers, who now love this Hot New Market, wait for more. But there’s NOTHING for them.
  4. Opportunity for Indie Authors: During Year 1 and Year 2, there are not going to be ANY Publisher published books catering to this market. There might be a sequel to Book X – that’s it.
  5. Publishers: Take their 1 to 2 years. By end of Year 2, or perhaps as late as Year 3, they launch books that cater to the Hot New Market.

Indie Authors get 1 to 1.5 years where they have –

  1. A Hot New Market that is DEMANDING more books to satisfy it.
  2. Publishers unable and/or unwilling to meet this STRONG DEMAND for the entire 1 to 1.5 years.

Basically, Indie Authors become the only Hamburger stand at a Carnivore Convention.

Meeting Demand Quickly is more important than Price

Publishers seem to fixate on ‘low prices’ of books by indie authors. However, the real danger indie authors pose is SPEED.

  1. Speed at which Indie Authors can react to a Hot New Market.
  2. Speed at which Indie Authors can publish sequels and series.
  3. Speed at which Indie Authors can switch from one market to another.

For that 1 to 1.5 year gap, when the Hot New Market is waiting for ANY Book that will satisfy the insane demand, Publishers have nothing to offer. Price isn’t even a factor.

Indie Authors, on the other hand, can deliver quickly and repeatedly. It will take Publishers 1.5 years to 2 years to refocus an existing superstar author on the new market opportunity, polish the book, and ship it. In that same time period, a superstar Indie Author can deliver an entire 3-book series. The first might arrive within 6-9 months.

It’s not even a contest.

That Hot New Market can either wait for 1.5 years, or it can read the books Indie Authors are delivering. A LOT of readers pick the Indie Authors. That’s why we see a non-stop stream of ‘Billionaire’ indie titles hitting the Top 100. It’s a trend that’s going to get much stronger – Indie Authors are getting better and better at catering to Hot New Markets long before Publishers can.

Are Indie Authors 12% of ebook sales? 25% of ebook sales?

The Bookseller is using data from Bowker Market Research that claims 12% of all ebook sales are indie author sales.

It also adds this gem –

 the self-published share of e-book volume sales more than 20% in areas such as crime, science fiction and fantasy, romance and humour.

The one strange thing about this survey is that it claims ebooks were 13% of total book sales in Q1, 2013. This is directly at odds with what Publishers themselves are reporting i.e. 25% of book sales in 2012 were ebook sales.

Update: Thanks to Thad for clarifying this. Bowker is UK. So UK is seeing 13% ebook sales and US is seeing 25% ebook sales. Then it makes everything else fall into place. In UK indie authors are 12% of ebook sales and in US they are 23% to 27%.

There’s a comment at The Digital Reader that add some interesting figures about ebook sales share for indie authors (The B&N one I’ve seen and is precisely what B&N said, the rest I didn’t know about) –

The obvious answer is to go by what the retailers willing to talk tell us:

B&N has been bragging that 25% of their sales are indie/self-pub.
Amazon is going to be higher, say 30%.
Kobo is reporting their Writing Life self-pubs are 10%. Add in their share of Smashwords and it could easily double.

Factoring in the retailers’ market share, I’d peg the number at 25%, minimum. It might even be as high as 30%.

Well, let’s make some guesstimates and see where we end up.

Please Note: We aren’t trying to win a Nobel Prize in Statistics or Economics. Just making some guesses.

What percentage of eBook Sales are Indie Author Sales?

The one hard fact we have is B&N’s claim that 25% of its ebook sales are indie authors and published authors who have become indie.

Let’s look at the Top 100 Lists and see if actual sales rankings reflect this –

  1. Kindle Store has 3 indie titles in the Top 10, 7 in the Top 20, 20 in the Top 60, 27 in the Top 100.
  2. Nook Store has 3 indie titles in the Top 10, 6 in the Top 20, 15 in the Top 60, 23 in the Top 100.

Note: I’ve not included Publishers like Crimson Publishing, Chronicle LLC, Modern Mythology, etc. where I had no idea whether they were indie or existing smaller Publishers.

If we look at these figures we get some rather striking data points –

  1. 30% of the Top 10 and 30% to 35% of the Top 20 are indie titles.
  2. 23% to 27% of the Top 100 are indie titles.

The Top 100 Lists in the Kindle Store and the Nook Store would suggest that indie titles account for 20% to 25% of unit sales. This matches what B&N is saying (25% of sales are indie authors) and somewhat matches what the survey found for genres like romance and fantasy (20% of sales are indie titles).

However, it clashes with the claim that indie author sales are just 12% of total ebook sales.

Asides

An interesting observation: There are LOTS of books from Amazon Publishing Imprints in the Top 100 in the Kindle Store. Never seen that before. Do they deserve to be there? Is this the beginning of Amazon using its power in the Kindle Store to pump up its own published titles? Who knows.

Another interesting observation: The existing Big Publishers are trying lots of discounts. First time I’ve seen them have 10-20 books under $5 in the Top 100, including lots at $1.99.

Are Indie Authors 20% to 25% of eBook Sales? Or are they 12%?

Bowker’s Research says 12%.

However, B&N has claimed 25% and our rather unscientific study shows 23% to 27%.

This suggests that the actual share Indie Authors have of the eBooks market is closer to 25%. It’s quite stunning actually –

  1. 25% of total book sales are now ebook sales.
  2. 25% of ebook sales are now indie author sales.

Could it be possible that in 3-5 years we see –

  1. 75% of book sales are ebook sales.
  2. 50% of ebook sales are indie author sales.

I wouldn’t bet against it.

We have Amazon using its marketing prowess to push up its own published titles (which is just wrong, no matter how you look at it – there has to be separation between store and publishers). We have the Big Publishers fighting with $1 and $2 and $3 and $4 books. However, my money is on indie authors. They are relentless, they are hungrier, and they are infinite.

The Relentless Fall of eBook Prices – 55% of Top 100 below $5, 25% below $2

We are in the midst of a relentless fall in both the value perception of books and in the actual prices of books in the Top 100 Bestsellers List.

It’s easy to get distracted by the Big 5 Publishers’ $13.99 new releases and assume nothing has changed. However, the hard facts indicate a massive upheaval is going on.

Let’s take a quick look at prices of the Top 100 Bestselling books in the two top ebook stores – Kindle Store, Nook.

Kindle Store – 55% of the Top 100 are below $5, 24% are below $2

  1. Kindle Store Top 20 – 11 books below $5 and 4 books below $2 in the Top 20. That’s 55% below $5 and 20% below $2.
  2. Kindle Store Top 40 – 24 books below $5 and 11 books below $2 in the Top 40. That’s 48% below $5 and 27.5% below $2.
  3. Kindle Store Top 100 – 55 books below $5 and 24 books below $2 in the Top 100. That’s 55% below $5 and 24% below $2.
  4. Kindle Store Summary – 1 out of every 2 books in the Top 100 is $5 or less. 1 out of every 4 books in the top 100 is $2 or less.
  5. To put that in perspective – In 2008, there were just 2-3 books below $5 in the Top 100. Additionally, at that time there were hardly any free kindle books from indie authors and small publishers.

This is really quite stunning. Keep in mind that Amazon uses weighted algorithms to try and keep cheaper books out of the Top 100. It obviously isn’t working.

Perhaps having 55% of the Top 100 below $5 means that we are, in effect, approaching a world where the best-selling books will be in the $3 to $5 range. Of course, we then look at the fact that 24% of the Top 100 books are below $2 and a scary thought strikes – perhaps the end result will be a world where best-selling books are all in the $1 to $2 range.

Nook Store – 56% of the Top 100 are below $5, 25% are below $2

  1. Nook Store Top 20 – 11 books below $5 and 8 books below $2 in the Top 20. That’s 55% below $5 and a massive 40% below $2.
  2. Nook Store Top 40 – 21 books below $5 and 14 books below $2 in the Top 40. That’s 52.5% below $5 and 35% below $2.
  3. Nook Store Top 100 – 56 books below $5 and 25 books below $2 in the Top 100. That’s 56% below $5 and 25% below $2.
  4. Nook Store Summary – 1 out of every 2 books in the Top 100 is $5 or less. 1 out of every 4 books in the top 100 is $2 or less.
  5. I don’t have figures from 2009 for the Nook Store. However, in 2009 and 2010 there used to be just 3-6 books below $2 in the Top 100 in the Nook Store. Now there are 25.

This is even more stunning.

B&N doesn’t have weighing algorithms to hide cheaper books – so you would expect cheap books to have more of a shot. However, most people who want lots of free books flock to Kindle. Amazon has focused on free kindle books for the last few years and it has attracted most of the free-seeking crowd. B&N has always had a less price-sensitive crowd. If you don’t believe me, think about it for yourself – Everyone knows Amazon has cheaper ebook prices. What does that say about people who choose Nook? That they are probably less sensitive to price.

How on Earth are the figures so similar for Kindle Store and Nook Store?

What’s uncanny is how close the figures are –

  1. Kindle Store has 55 books below $5 in the Top 100 while Nook Store has 56.
  2. Kindle Store has 24 books below $2 in the Top 100 while Nook Store has 25.
  3. This might just be a coincidence or it might mean that the two top ebook stores are seeing the exact same trends. That they are evolving in the exact same manner as far as the value perception of books and the price of bestselling books are concerned.

I really don’t know what to say.

It’s quite stunning that 25% of the Top 100 are $2 or below. It’s even more stunning that 55% of the Top 100 are $5 or below.

We’ve talked about how books might settle in the $3 to $7 range in the long-term. Well, the change is already happening. Furthermore, the prices seem to be shifting to two bands – Below $2, between $3 and $5.

Are we going to continue to see ebook prices drop in the Top 100 Lists?

My assumption would be – Yes, definitely.

  1. There are obviously two price bands that are gaining traction. The first is $2.99 to $5. This is already 25% of the Top 100. The second is $1 to $2. This is also 25% of the Top 100.
  2. The first possibility is that we reach an equilibrium with both bands present. 30% to 40% of the Top 100 will be books in the $2.99 to $5 range. Another 35% to 45% will be in the $1 to $2 range.
  3. The second possibility is that we keep seeing a drop in prices and stabilize only in the $1 to $2 range. Imagine that – a world where 80% of the books in the Top 100 are $1 or $2. For $100 to $200 you could buy all 100 books in the Top 100 Bestsellers List.
  4. The third possibility is that the stores try extreme measures. B&N has tried to hide prices of Books in the Top 100 in the past (this is on the Top 100 List). Amazon does algorithm manipulations and handicaps cheap books. I doubt these will work – you can take a horse to the water but it might just kick you if you try to force it to drink.
  5. 55% of books below $5 means a lot of the change has already happened. This isn’t a blip or a temporary thing. It’s obvious that something big is going on. Something so big the stores are powerless to stop it (trust me, they have tried and are still trying).

The more you think about it, the more it seems that an irreversible change is taking place.

An unstoppable wave driving ebook prices to $1 and $2?

Everything I have seen and read over the past 5 and a half years is screaming to me that the end point is going to be a world where 80% of the books in the Top 100 are at $1 or $2.

Why?

Because there is infinite competition.

The world we’ve been sold is a world manufactured by Publishers and Booksellers. That there are a select few authors who are worth reading and their books are worth $10 to $25. After that there is a massive and steep fall. All the other authors aren’t even worth reading. So say Publishers.

  1. What if instead of a cliff there is a slope? What if the Authors who just missed the cut with Publishers are only 5% worse? What if there are thousands of such authors – good enough to be read and willing to sell their books for $1 and $2?
  2. What if instead of a cliff there is a slope rising upwards? What if Publishers are terrible at picking winners and the Authors who missed the cut completely are actually better? What if there are tens of thousands of such authors – better than Published Authors and willing to sell their books for $1 or even give them away for free?
  3. What if there are an infinite number of authors and the separation between them is miniscule? What if Publishers are picking up only a fraction of the best ones?

My assertion would be that all three of these lines of thinking are true. Publishers are missing most of the best authors, the separation between authors is miniscule, and there are a very large number of authors who are good enough to be read. Far larger than what Publishers or Published Authors would have us believe.

The second myth is the polish and magic and fairy dust that Publishers supply.

  1. What if giving an author artistic freedom is worth more than Publisher spit and polish?
  2. What if authors writing what is in their hearts is worth more than what Publishers think will sell?
  3. What if Publishers are just chasing profits and not publishing the best books?

Publishers fail more than they succeed. Publishers often miss absolutely great authors. Publishers often make a hash of things.

It’s a crazy assumption that there would not be great books without Publishers. Even if it isn’t crazy, it’s still an assumption.

If the only people making this assertion are Publishers, their stable of Published Authors, and their partner stores and distributors – then we have to wonder what the truth is.

Free Market + Infinite Competition = Prices Fall to Zero or the Lowest Amount Possible

With the walls between authors and readers down to imaginary ‘Stores’ run by Amazon and B&N. With readers able to buy ebooks from anywhere. With anyone able to distribute and sell ebooks. We are rapidly moving towards a world of Books that is a Free Market.

Authors can sell to any Reader. Readers can buy from anywhere.

That’s the first part of the equation – A Free Market.

The second part is the ever-increasing number of books and authors that are worth reading.

With a near infinite supply of authors. With an ever-increasing number of good indie authors. With ever more carelessly published Publisher ebooks. With ever larger number of published authors going solo. We are rapidly approaching a world where there are a very large number of good authors – with very little to separate them.

That’s the second part of the equation – Infinite Competition.

If Author A is 93/100 and Author B is 94/100, guess who wins? The one who goes from $9.99 to $7.99. Except these are ebooks – Author B cuts prices, then Author A cuts prices more. Then this continues until they both hit $1.

Note: If Author A and Author B strike up a chat and agree to stick with $7.99, then Author C and D cut prices and steal sales.

Prices keep getting cut until we reach $1 and $2 and just can’t go any lower. Of course, some authors will go for free too. The vampire hunger to be read is not to be underestimated.

Free Market + Infinite Competition = Prices Fall to $1 and $2 (or worse, they fall to $0).

That’s the thought I’ll leave you with. 55% of the Top 100 Bestselling Books being below $5 and 25% of the Top 100 Books being below $2 are a sign of things to come. This isn’t equilibrium – this is the beginning of a wave. The end point is a world where either $1 and $2 books rule, or where $0 books rule.