Welcome to disruption. 26-year old Amanda Hocking is the best-selling "indie" writer on the Kindle store, meaning she doesn't have a publishing deal, Novelr says.
And she shouldn't. She gets to keep 70% of her book sales -- and she sells around 100,000 copies per month. By comparison, it's usually thought that it takes a few tens of thousands of copies sold in the first week to be a New York Times bestselling writer.
The comparison isn't entirely fair, because Hocking sells her books for $3, and some $.99. But that's the point: by lowering the prices, she can make more on volume, especially impulse buys. Meanwhile e-books cost nothing to print, you don't have to worry about print volumes, shelf space, inventory, etc. And did we mention the writer keeps 70%?
Previously one of the best selling Kindle writers was J.A. Konrath, but it was assumed he was popular because he previously had a publishing deal and so already had notoriety. That's not the case with Hocking, who published stories on her blog before turning to Kindle. In fact, out of the top 25 best-selling indie Kindle writers, only 6 were previously affiliated with a publishing house.
Back of the envelope math suggests that selling 100,000 copies a month at $1 to $3 a pop and keeping 70%, Hocking can make millions per year, straight to her pocket.
Welcome to the new era, the one that scares traditional publishers to death and will make the world better for writers and readers alike. Congratulations to Amazon for making it possible. And congratulations to Ms. Hocking on her success.
I think is marvelous that the author can get paid for what they do, and not end up getting rejected by the "they" at the publishing company.
But will Kindle publish Stegner fellows' avant garde dissertations? Will they publish experimental fiction?
By which I mean, how exclusive are they?
The question is, and I don't know the answer: is Kindle really "indie"? By which I mean, how exclusive are thy? Several blogs have been parlayed into book deals by larger publishers, so this girl's story isn't an anomaly. But will Kindle publish Stegner fellows' avant garde dissertations? Will they publish experimental fiction?
But engineer, you're the one losing out, not the authors.
but I think the price will eventually be at the point where everyone could afford one if they wanted it.
Prices will continue to go down (remember your first inverse polish notation calculator and how much it cost?), quality will improve, access will increase.
But engineer, you're the one losing out, not the authors.
I agree, but the question was "what do you see as the potential downfall of this type of publishing?"
To me the downside is that I would no longer be able to get books in a format I enjoy reading. That is only true if traditional authors stop publishing in print, but that is my potential downside. I'd toss in another downside that not everyone can afford a kindle, but I think the price will eventually be at the point where everyone could afford one if they wanted it.
One of the early economics lessons you learn in any competent intro econ class is the concept of elasticity. The basic concept is how much does demand increase for a product if you lower the price. If a product is highly elastic, decreasing the price can often earn you more money. A simplified version of this: I have a widget that I want to sell for $100 dollars, but only one person is willing to pay that price. With that pricing, I'd make $100 (gross) on the widget. However, if I were to drop the price to $1, let's say 1,000 people are willing to buy at that price. Then, I'd make $1,000 (gross) on the widget. So, even though producers often fear lowering the price, if there's strong elasticity, lowering the price can often make you much more money (and, yes, the marginal cost matters here as well).
We've seen over and over again that video games appear to have very high price elasticity of demand. Two years ago, we wrote about some experiments by Valve, where it tried lowering prices of games by 10%, 25%, 50% and 75% -- and saw the increase in sales at a stupendous rate. While the 10% decrease only resulted in 35% higher gross revenue (already pretty good!), at a 75% discount, the gross revenue shot up by 1470%. Think about that, for a second. Basically, dropping the price by 75% increased revenue by almost a factor of 15. Not bad.
Last year, we saw a similar experiment that also had great results. An online video game store in Sweden tried dropping its prices by 75% and saw an increase in sales of 5500% (in unit sales). When looking at the gross revenue, it appears that it came out approximately to a similar 1300% increase.
And now we have some more examples. Capitalist Lion Tamer points us to an article that looks at some super popular iOS (iPhone/iPad) apps that drastically cut their price, but saw their gross revenue shoot way up because of it.
Street Fighter IV for iOS recently slashed its price by a breathtaking 90% overnight, from £5.99 to 59p. Within 48 hours its position in the overall Top-Grossing chart (that's the list of all apps, not just games) instantly rocketed from 116 to 2. Coincidence or magic? You decide. But that's not all.
And just to reiterate -- we're monitoring the Top-Grossing chart, ie the one measuring money made, NOT the ordinary number-of-sales one, where SFIV currently sits comfortably on top of everything else. What that means is that the game's sales have increased by dramatically more than 1,000% (because it would have had to sell 10 times as many just to hold the No.116 position at the new price, never mind climb 114 places).
And yet, time and time again we hear how execs at big entertainment companies feel the need to keep raising prices. Hell, we just mentioned how Nintendo's President Reggie Fils-Aime was complaining that cheap games might kill the industry. Apparently, they don't teach basic economics to folks who become president of Nintendo.
Quote:But will Kindle publish Stegner fellows' avant garde dissertations? Will they publish experimental fiction?
it's up to the authors of the dissertations and experimental fiction
here's how you're going to get your work onto kindle
you're going to decide if it gets onto kindle
Amazon will get a cut of the sales, but you put the book out there.