I am not an expert in game theory but I have watched a lot of game shows. A few years ago, there was one on British TV which involved two strangers having to negotiate with each other before secretly selecting either to share or take all the money. If they both agreed to share the prize, they would do so. If one of them said they would share while the other said they’d take it all, the sharer would get nothing and the take it all person would take it all. If they both said they’d take it all, they’d both lose.
Classic game theory. It’s the prisoner’s dilemma. Of course they ought both to say they’d share. And of course, most weeks, one or both of them would get greedy and want it all.
Here’s a thing that self-publishers have to decide: to go exclusively with Amazon or not.
Amazon really want you to sign up to their exclusive programme (Select). If you’re in Select, they’ll let you run promotional days with your book available for free. They’ll let readers borrow your book and pay you for it. They’ll promote your book more via their own algorithms. And, as of today, they’ll sign your books up for Kindle Unlimited, their new subscription reading service. But if you’re in Select, you can’t sell your book anywhere else. You can’t give it away anywhere else. You’re not even really supposed to have excerpts on your own website, though I don’t think they enforce that one. You’ve agreed to make the book content exclusive to Amazon. That’s great for Amazon, obviously.
In the short term, it’s also been good for a lot of self-published authors. They’ve found that they can make more money from the Kindle lending library than they do in sales from other retailers. They like the extra boosts from the promo ops and the free days. They’ll probably make some money from the new scheme as well.
In the long term, I think it’s a disaster for self-publishing, and for most self-published authors. Amazon want to be the only game in town. They want exclusive content because they want to be the only online bookseller. That’s their end game. And once they get there, they’ll be in a position to dictate any terms they want to authors. Earlier this year they announced a drop in royalties on self-published audio books from 50-90% to a fixed 40%. For non-exclusive content, that dropped even lower, to 25%. They could do that because, for most self-publishers, the Amazon service is really the only way to get audio books made and distributed. Authors had no choice but to accept Amazon’s new terms, because they had nowhere else to go.
At the moment, I make about half my income on my self-published books from Amazon, and half elsewhere. If Amazon’s terms become too heinous, I can leave. I’ll lose out, but I won’t lose everything. If too many authors (especially the big name sellers) also found the terms too heinous and decided to leave, it could be enough to make them reconsider. Amazon needs content, especially for things like Unlimited, which means they need content providers. I don’t think they’re yet at a stage where they would risk dropping royalty rates on ebooks, or at least not by much. But if everyone were to sign their books up to Select, that would effectively put B&N and iTunes and Kobo out of the self-publishing marketplace. And that gives Amazon exactly what they want: power. Authors couldn’t pull their books, or threaten to, because there would be no alternative retailer to take them.
It’s in the best long-term interests of all self-published authors for there to be a competitive marketplace. Even if you don’t sell much at B&N, you are still better off because they are there. Even if your book is currently in Select, you are better off because B&N is still there.
And that’s the point about game theory. It’s true that you can make the quick grab now by giving Amazon exclusivity. But you can only do that because enough other people are sticking with the other markets and keeping Amazon honest (for some value of honest). If we all go for the grab, if we all throw all our books in with Amazon alone, we’re all going to lose out in the end.
Probably. I mean, I’m neither an economist nor a business analyst nor a game theorist. But I’m a farmer’s daughter. I know what it means to be a tiny supplier in a market dominated by huge corporate retailers. It’s bad enough trying to get a fair price for milk when there are five big supermarket buyers. But if there were only one? I shudder to think.
So, I’ll be keeping my books up on all available platforms, and I’ll be encouraging other authors to do the same.