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Making money from Kindle publishing

Posted on 28 Jan 2013 at 14:16

Kevin Partner investigates whether Kindle publishing could be a lucrative sideline for small businesses

Today’s online markets are rather like icebergs, where page one of a Google search is the only visible part and everything else is drowned below the water line; it’s important to make sure your product sits on that visible tip. For iOS apps you need to be in the first eight iTunes results, and for Android apps you must be near the top of a smartphone screen. Understanding how each of these tech behemoths orders its search responses has become a crucial business skill.

Regular readers will know that I’ve been researching the factors that Apple and Google use to rank app results, but I’ve recently become fascinated by Amazon too. The device formerly called Kindle 3 (before being renamed Kindle Keyboard) really was a market changer. It launched in the UK in October 2010 at roughly half the price of its predecessor.

I pre-ordered mine and was so keen that I spent delivery day looking out for the courier. Within 30 minutes of loading my first book, I’d forgotten it was an ebook – it had totally changed my reading habits. Then, at a Kindle press conference in September, Amazon CEO Jeff Bezos revealed a statistic that set my business mind whirling.

But first, a little background: the Kindle Direct Publishing (KDP) programme allows authors to self-publish their books for the Kindle. It pays up to 70% royalties, and the process of submitting the book and having it appear worldwide takes a matter of hours. Which is all very nice, but I’m not interested in "vanity publishing" and have, until now, felt that if you couldn’t get someone else to print and distribute your book, and pay you to do it, then you weren’t much of an author.

There’s still some truth in this – mainstream publishers reject books not up to their quality level, while KDP applies no such filter and so will publish a good deal of dross. However, even good authors will struggle if traditional publishers consider the market for their work too small to support a sufficient print-run and marketing push. This was a point Bezos was keen to make, and he quoted from rejection letters received by Stephen King and Dr Seuss, among others. But then he dropped his bombshell: 27 out of the top 100 top-selling Kindle titles were self-published!

It could be a lucrative channel for small online businesses to exploit

Naturally I take figures such as this with a pinch of salt, and I did notice that all 27 appear to be fiction titles mostly aimed at the female market (I doubt my historical-fantasy novel of post-Roman Britain would trouble Kindle’s charts even if I could be bothered to write it). What it does demonstrate, though, is that the Kindle platform itself is no impediment to sales, which is a big deal since it democratises the publishing market in the same way that mobile app stores did for software development. In short, it could be a lucrative channel for small online businesses to exploit.

There’s nothing new about selling information online, and it’s still regarded by many naive newcomers as the best way to make money. However, the traditional methods rarely work nowadays because internet users expect a default price of zero. Even if you sidestep this prejudice by providing information that clearly isn’t available elsewhere in the public domain, you’ll still need to build proper marketing and payment platforms to profit from it.

But now the advent of ebook readers – the Kindle, in particular, has made such devices mainstream – has muddied the water to the potential benefit of sellers of information. For many people a Kindle publication is just as much a "book" as a paperback, and they expect books, even ebooks, to come at a price (in fact, price is regarded – especially for non-fiction – as a measure of quality just as it is in many other markets).

The essential difference between Amazon's ebook market and Apple's App Store is that in the latter, prices were driven to rock-bottom almost immediately, perhaps because there was no pre-existing model for comparison. The ebook, on the other hand, has a clear real-world equivalent that can be used to derive a sensible relative price. Given that the physical cost of storing and delivering an ebook is practically zero, customers expect Kindle version prices to be comparable to, but a bit cheaper than, their paperback equivalents.

But back to Jeff Bezos, who spent almost half his press conference talking exclusively about E Ink devices and the ecosystem built for them, despite the fact that he had a new range of considerably more sexy Fire tablets to unveil. I came away feeling that Kindles (and potentially Barnes & Noble’s Nook devices too) represent huge opportunities for online businesspeople with specialist knowledge, because they present far lower barriers to entry than does app development. So I decided to run an experiment by setting aside more than 100 hours to produce a book.

It’s difficult to work out exactly how much time to devote to such experiments – too little and a poor product will invalidate the results; too long and it becomes unaffordable. What I needed was an efficient way to create a worthwhile product – the obvious one was to write about something I already knew (can you hear the trap snapping shut around my ego?). It had to be something that would sell, of course, and it so happens I’ve been receiving emails for around two years from customers of my craft-retailing business, asking for advice on starting up their own home-based enterprise – usually selling candles. My first idea then was to turn that advice into the book.

The main experiment, then, is to see whether KDP can be used as a platform to generate a decent income

But then I had a sudden attack of unaccustomed humility (or perhaps simply a failure of confidence) and rather than merely ploughing ahead with what I thought this book should contain, I decided to email 1,000 of our most active customers and ask them which questions they’d like the book to answer. Within four days I had received more than 100 contributions, and I created a mind map of the points they raised, grouping them together wherever possible and keeping tally of the most popular ones, from which I was able to build an outline for the book.

I researched the market on Amazon.co.uk, looking particularly at the most critical user reviews of rival publications to find areas of weakness. Armed with this information, I locked myself away and spent ten working days writing 50,000 words. For me at least, setting aside a dedicated period is the best way of making sure such a project gets finished, even at the expense of sore fingers and late nights. And most helpfully, it became apparent as I wrote that the content I was creating would be worth something, whether or not this specific experiment proved profitable.

The Kindle model

Amazon offers two tiers of royalties, 35% and 70%, and to qualify for the higher rate your book must be priced between £1.50 and £7.80 (bands defined by the dollar price). At first sight this might look counter-intuitive, but it seems Amazon wants to discourage very cheap books, in an attempt to prevent an App Store-like race to the bottom, while also suggesting an upper limit that makes Kindle books just cheaper than printed ones. The higher rate makes Amazon’s commission exactly the same as for apps, while leaving you a far larger royalty than a traditional publisher would offer.

Just how big is the market? Back in August, Amazon announced that it now sells more ebooks than paperbacks and hardbacks combined, but what it didn’t say was which of the two, digital or paper, generated more cash. It did exclude free downloads from the figures, but even so, many Kindle purchases (especially of classic fiction) would have been very cheap – the complete works of Charles Dickens, for example, can be bought for less than £2.

Furthermore, it doesn’t break down the figures into fiction and non-fiction, let alone sub-dividing factual books into the massive category of biography versus everything else. Suffice to say, the proportion of the market I’m targeting is tiny, and it’s by no means certain that my audience will prefer a Kindle version to a paperback.

Nevertheless, I wouldn’t have invested so much time if I wasn’t confident that I could use the content generated to make money one way or another: my first target may be Kindle Direct Publishing, but I’ll also be creating a printed version via Lulu.com’s on-demand service to compare sales across media. The content could also be deployed to create an online course, an audio book or, failing all else, a series of blog entries.

The main experiment, then, is to see whether KDP can be used as a platform to generate a decent income. The first phase was to write the book, edit it rigorously, format it for Kindle and publish it. For many authors this will be where their effort ends, and so I wouldn’t be surprised if a large percentage of all the Kindle books published sell no more than a handful of copies.

One marketing option is to drive traffic into Amazon from the outside, either by advertising to an existing, relevant, audience or through an external website. In my case I’ve done both, by emailing the customers of my craft retailer and also placing banner ads on our main site. I’ve built a companion website www.yourcraft business.co.uk, too, which both publicises the book and contains all the links referred to in the text. However, to begin with at least, this will result in only modest referrals to the Kindle book page.

The key to having a successful Kindle book is to rank well in searches on Amazon for the appropriate keywords. As for any other business or product, part of the setting-up process is choosing a focused market and identifying the search phrases your potential customers use.

There’s no point writing the book if you can’t do this. Non-fiction therefore has a big advantage over fiction, since although the market is far smaller, it’s possible to carve out a niche from a standing start. Fiction, on the other hand, is to books what games are to apps: a huge market where the odds are against any individual publisher; there are high-profile successes, but the majority of products fail.

Once it had appeared on Amazon, I created a spreadsheet and noted the book’s ranking for its most important search phrases

Given that it’s essential to rank well, the first step is to understand how Amazon sorts its search results – for your book to sell well, it must be visible to its potential audience, which means a front-page position. From Amazon’s point of view, it wants to present visitors with books most likely to result in a sale. You might also expect it to prefer higher-priced books, since that would result in more commission, but I’ve seen no evidence of this.

Prior to launching the book, I’d analysed the search terms I’m targeting to see whether I could work out how they’re organised, and it became immediately obvious that the title of the book plays an important role – the top few titles returned all matched the search phrase closely. A second important factor appears to be popularity, as measured by sales, reviews and "likes". While getting the title right is a matter of researching your keywords, increasing popularity is more difficult, but also more vital as sales will trump keyword match every time when it comes to ranking.

One option is to create a second Amazon account and then review your own book as if you were a customer. However, this not only breaches Amazon’s terms of service and undermines your book’s credibility, but it’s also the last resort of the desperate. A better approach is to directly ask customers to review your book, either by emailing them as part of your publicity drive or by asking them within the text of the book. This was a lesson I learned when experimenting with app promotion – you mustn’t be shy.

I’ve formed one other hypothesis – namely, that Kindle owners know that ebooks vary widely in quality and one of the cues they employ is price: a low price suggests a low-value product. They’re also probably influenced by whether your book is the Kindle edition of a paperback or a standalone ebook (the former having more credibility than the latter). I could have waited the six to eight weeks it will take to publish a paperback version, and would have expected to see a bump in sales when that happened, but I didn’t want to delay the ebook.

Instead, I made it look like a version of a paperback – which indeed it is, but I’ve just published the Kindle version first – by carefully following the conventions relating to the title and verso pages. Above all, I created the sort of professional cover image that might adorn a paperback, as a poor cover is the single most obvious clue that a Kindle book is of amateur origin.

Finally, I knew that many potential buyers download the free sample before purchase: Amazon creates this sample as part of the publishing process and doesn’t allow you to specify where it ends; it generally represents the first 10% of the book. It’s therefore essential that those sections persuade a reader to buy.

With an appropriate title, cover and a marketing plan in place, I published Your Craft Business: A Step-by-Step Guide in October 2012. I also enrolled it in the KDP Select programme: this means it qualifies to be borrowed through the Kindle Owners’ Lending Library, which was launching around the same time (I get paid for each loan).

Once it had appeared on Amazon, I created a spreadsheet and noted the book’s ranking for its most important search phrases – both in the Kindle store and across books in general – and the first lesson learned is that it doesn’t take much to improve your position in a niche market.

One of my targeted search phrases is "home craft business", and as a result of a few sales and a handful of "likes" the book ranked in position three within five days, having started at 20 (and therefore being off the front page). The same sort of improvement was noticed across the other search terms.

As I’m writing it’s been up for only a few days, so it’s too early to say whether the project will prove to be a commercial success. Not surprisingly, no reviews have yet been published, and it remains to be seen whether enough members of my target audience use Kindles to make it viable. However, the book is at least visible and will become more so as I further promote it and encourage reviews.

So, the least I’ll gain from this experiment is a better understanding of whether Amazon’s publishing platform truly represents a profitable opportunity for online businesses, or whether it’s better left to writers of saucy fiction.

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User comments

Good move

You do have one key advantage over most of us, in that you've just got yourself free advertising through PC Pro, a magazine with a circulation of 100,000. Good move. What we'd give for exposure of that kind.

By 0thello on 28 Jan 2013

Maybe the profits are going to a charity to avoid a conflict of interest as pointed out :)

By snoog on 29 Jan 2013

@0thello

Thanks for your cynical comment. Do you think there's a big crossover between PCPro readers and craft business entrepreneurs then?

If you paid attention you would spot that none of my experiments feature demographics typical of the PC Pro audience since that would invalidate their results.

By KevPartner on 6 Feb 2013

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Kevin Partner

Kevin Partner

Kevin is a contributing editor to PC Pro. He's managing director of NlightN Multimedia, a Milton Keynes-based company specialising in web application development and internet marketing.

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