Extra, Extra Read all About it. Authors are Selling Direct.
Have you noticed that more and more authors are selling directly to their readers. For Indie publishers, Amazon used to be the only game in town and was a springboard for becoming an Indie author. Indie authors could publish their book(s) on Amazon for virtually free, set the price and voila, people could buy their books. As competition increased, Amazon had to up its game to remain a near monopoly. For example, Amazon introduced Kindle Unlimited or KU back in July 2014. Kindle Unlimited is a subscription based program where customers can read tens of thousands of different Kindle eBooks for a monthly subscription fee (currently $11.99 a month). Amazon noticed a revenue opportunity to sign up avid readers who would pay a monthly fee to read to their hearts content. If authors enlist their book(s) in KU, KU pays the author monetary compensation for each page read. That amount KU pays authors varies from month to month but it can be “good” money. For example, in May 2020, KU paid the author approximately $.004203 per page read. In July 2023 that amount per page was $.003989. Notice that more than two pages must be read for the author to make $.01 but if an author has over 1,000,000 page reads a month that equates to over $4,000 a month. If an author participates in KU, that author must be exclusive to Amazon for at least 90 days. The author then has an option to sign up again for another 90 days.
KU and KDP Select are sometimes used interchangeably. KDP Select is a free 90-day program for Kindle eBooks which gives an author the opportunity to reach more readers through Amazon and Kindle promotions. All authors are eligible to participate. When an author enrolls one of their Kindle eBooks in KDP Select, it is automatically included in Kindle Unlimited (KU). An author can enroll more than one book at a time. In addition to KU, authors also get a 35% to 70% royalty for each book sold on the Amazon platform. The 70% royalty requires the book to be priced at a minimum of $2.99. Being exclusive to Amazon, Kindle Select, KU can have many perks for an author so why the sudden uptick in authors selling direct?
My wife and I have been involved in the creation process of publishing books for several years. We have both noticed more and more established authors are selling direct. Why?
10 Reasons Why Authors are Selling Direct and What Indie Authors Should Know?
Reason #1 - Cash Flow
Amazon does not pay the author for 60 days. So if you sell a book on Amazon’s platform between January 1st and January 30th you will not be paid until sometime in April.
Reason #2 - Limited Sales Visibility
Amazon does not provide any insight into who bought your book. You will know in which country your books were purchased and on what day but no other insight.
Reason #3 - No Demographics Data
Amazon does not provide any demographics on who has purchased your book(s) so it is difficult to know who your audience is, what's their demographics, will pricing promotions and marketing campaigns increase sales? Answers to these questions are hard to know if you have no idea about your readers and their demographics.
Reason #4 - Arcane Pricing Capabilities
Amazon does provide some rudimentary pricing and promotional tools but you are not able to do advanced pricing rules such as buy one get one free, buy one get 50% off you next book, etc.
Reason #5 - No Bundled Sales
Selling other merchandise such as t-shirts, mugs, stickers, etc., is not possible with links to your books through KDP. Bundled sales means a higher sales and more money in your pocket.
Reason #6 - Exclusivity
If you enlist in KDP Select you cannot sell your books on any other platforms such as Barnes & Noble or your own direct sales channel. In other words, you cannot go “wide.”
Reason #7 - Learn Valuable Insights
Selling direct allows authors to know who their readers are (names, email address, gender, etc.) and how they can better serve them.
Reason #8 - Make More Money
Selling direct lets authors set up pricing strategies and merchandise offerings to increase sales and make more money. If you wanted to sell a book and a coffee mug in the same transaction it is not possible through Kindle Direct Publishing (KDP),
Reason #9 - Instant Access to Your Money
Selling direct provides almost instant access to your money after a sale. You no longer have to wait 60 days or longer to see your sales money in your bank account. Sometimes quicker access to your money can be the difference between eating beans on toast or a filet mignon.
Reason #10 - Fees Kill Your Margins
Amazon charges fees – VAT, delivery fees and other overhead costs. For example, a book listed at $3.99 can lead to a royalty payment of $2.68 after fees.
Why are not all authors selling direct you may be thinking?
It comes down to one key point in my opinion – critical mass. For an Indie author to take the direct sells channel and go off KDP Select's exclusivity it requires a large number of followers to be worth the risk and to be able to make up the difference in your loss of revenue from KU.
Below are a few caveats to consider:
Caveat #1 - Need a Store Front
Authors need to have a website and set up a store front to sell their books and merchandise. This is more difficult to create than just providing a link to your book on Amazon.
Caveat #2 - Advertise Your Store Front
Authors will need to advertise their store front to encourage readers to purchase their books there. This means your store front needs to be live and working. Plus you now have to pay to advertise your web presence.
Caveat #3 - Marketing
Marketing to your readers is no easy task. It takes years for an accomplished author to gain readership and have a following. This is why tools such as MailerLite and BookFunnel are so important for new and established authors.
Caveat #4 - Fullfillment
Fulfillment (shipping, delivery, downloading) of the books and merchandise is now done by you versus Amazon. This could lead to customer complaints that YOU have to address if things do not go smoothly.
Caveat #5 - International Taxes
Internationals sales will add an additional wrinkle to the fulfillment and bookkeeping process. You may now be responsible for keeping track of your taxes for sales to other countries.
Caveat #6 - Are you an Accountant?
Keeping track of taxes - domestic and abroad, sales, shipping fees, etc, will require bookkeeping and accounting skills. You may need to hire an accountant which now increases your costs per sell.
Caveat #7 - Lose Money
Not participating in Kindle Select removes a revenue channel that can be a sizeable portion of your income. (More about this later)
Caveat #8 - Customer Service
You are now the customer service department.
Caveat #9 - Best Seller
Amazon does provide some “free” advertising to an author especially when an author is in the top ten for Best Seller Rank in a specific category which may be more difficult to achieve when selling direct. (See example below)
Caveat #10 - Credit Card Fees
Be prepared for credit card fees and other overhead costs when doing direct sells to eat into your margins and ultimately your profits.
Caveat #11 - Business 101
An author will now need to understand business concepts versus just writing books. (As a side note successful authors usually enlist others to assist them in book and cover creation, editing, proof reading, etc.) Authors will need to be more business savvy.
I happen to know quite a few Indie authors and the graph above is not uncommon. You will notice that anywhere from 60% to 70% of their revenue comes from KU if they are enrolled in Kindle Select. The other 30% to 40% comes from normal books sales. Thus, if an author is making approximately $5,000 dollars a month with Amazon and that author chooses to sell direct, approximately 60% to 70% of his/her revenue or $3,000 to $3,500 a month must be made up from other sales channels. That is a sizeable amount of money to lose and can be difficult from which to recover.
So, what are authors doing when considering going direct? Many have a list of subscribers with whom they correspond on a weekly, bi-weekly or monthly bases where they inform their readers/subscribers about the release of a new book or other promotions. This allows authors to steer their readers to their website for direct sells. In addition, advertising is key to generating more sales. Successful authors advertise every day to drive up their sales.
Some authors are also doing a hybrid of selling direct while having some of their other books on KU. They may sell their newly released book through their website (direct sells) for a 60-day period and then consider putting it on Kindle Select. The reason for this approach is to maximize their profit and then tap into the KU readers after a short hiatus.
"How many subscribers should I have to sell direct?" – Asks everyone.
What is the minimum number of subscribers/followers an author should have to consider selling direct? It depends on your long-term strategy, current name recognition and future changes Amazon may make. At a minimum you should have between 10,000 to 20,000 or it just may not be worth it. For example, if you sell direct and only make $200 more in total, is it worth the time and effort? Maybe but only you can answer that. Most authors I know want to “move the needle” so it has to be more sizeable than $200. Once again you have the control and hopefully the data to decide. I would certainly not recommend the direct sells approach to novice or just starting out authors.
Why are Authors Doing Kickstarter?
Join me next time to learn why authors are doing kickstarters? Is it another way to make money and possibly bypass Amazon?