Making Money From Writing, Part 3: Sales Channels

For the last two days we looked at the various markets where you can sell your short stories and novels.

Yesterday we covered the reasons why you should be cautious before you self-publish your work.

Today we are going to look at the various sales channels where you can sell you self-published stories: Amazon, Barnes & Noble, Smashwords, Kobo, Apple, Diesel, and Xinxii.

You should be publishing on all of them. It requires very little work once you have done your formatting, and if you don’t you are cutting your sales for no good reason.

While Amazon dominates the market, it’s share is falling, and they aren’t quite as strong internationally.  This is a global business, worth $80bn, and you would be foolish to limit yourself to selling on Amazon USA.

Even in non-English speaking countries, there are lots of ex-pats, as well as plenty of people who want to practice their English by reading novels. It costs virtually nothing to sell to them too, so you should be doing it if you want to maximise your income.

Amazon (KDP)

Amazon control the vast majority of the e-book market, as well as selling the most popular dedicated e-reader.

Kindle Direct Publishing (KDP) is open to all international writers, and you are free to sell your work in all the territories that you hold rights for, which will be everywhere, unless you have signed a publishing deal of some sort for that work and given away the e-rights.

Amazon pays a 35% royalty rate across the board, except on sales which qualify for the higher rate. If you price your work between $2.99 and $9.99, you will receive 70% royalties, but only if the customer is in the US, Canada, UK, Germany, Austria, Liechtenstein, or Luxembourg.

Despite some misinformation out there, it’s important to note that it does not matter where the writer is from, they can still receive the higher rate.

The territory to which the increased royalty rate applies is expected to expand as KDP rolls out to additional countries.

For US, UK, and German writers, Amazon will pay you by electronic transfer. For all others, you will be paid by cheque. Payment is made 60 days after the end of the month in which sales occur.

Amazon only accepts e-book files in the .mobi format which it then converts to Kindle ready-files on upload. I will be explaining how to produce all the various files you need next week, as part of my continuing series INDIE PUBLISHING FOR INTERNATIONAL WRITERS. For now, just be aware that different channels require different file formats

DRM is optional with Amazon.

Barnes & Noble

The largest chain of bricks-and-mortar bookstores in the US also have a significant online operation, and are the makers of the second most popular dedicated e-reader in America, the Nook, and have the second most popular e-bookstore in the US.

PubIt is their digital publishing arm. However, only US or US-based writers may sign up with PubIt. If you can, it’s worth doing direct. They require .epub files.

Pubit pays 65% royalties on all e-books priced between $2.99 and $9.99, 40% outside of that, and they pay monthly.

Barnes & Noble customers can only purchase books with a US credit card.

International writers can get into the B&N store by publishing through Smashwords. However, please be aware that you will receive reduced royalty rates (but only in the $2.99 to $9.99 range, they are bigger outside of that) as well as reduced visibility, as B&N’s algorithms seem to give display preferences to PubIt authors.

Smashwords

Strictly a distributor rather than a retailer (although you can buy direct from them, through Smashwords, you can publish to Apple iBookstore, Diesel Store, Sony, Kobo, and Barnes & Noble.

They are planning to offer an option to publish to Amazon in the near future and are trying to convince Google to do the same.

For this, they take a cut of your royalties (after the respective channel takes their cut).

You can also sell direct on Smashwords, in any of the major formats. Sales are small through their channel, but you have certain options you don’t have elsewhere. You can give stories away for free (handy promotional tool), and you can allow readers to sample up to 50% of your work (rather than 25% on Kindle).

Royalties are paid 30 days after the end of each quarter, by cheque (US only) or PayPal.

Smashwords require a .doc file, but it needs to be stripped of all of the extra, hidden code that your word processor adds in. I will also be showing you how to do this next week.

They will then convert this into virtually any format you choose so the owners of any e-reader can buy from here, but some writers have complained about the formatting that the Smashwords system produces, and are annoyed they can’t upload their own perfectly-formatted files, like they can to KDP.

Smashwords pay you 85% of list price on sales through their site, regardless of price. Through the rest of the retailers, it’s 60%, regardless of price. This means that if you are selling outside the $2.99 – $9.99 price range, you will get higher royalty rates through Smashwords than through PubIt or Amazon.

US users, publishing through Smashwords, should turn off the Barnes & Noble distribution channel in and publish direct with PubIt as described above, unless they are publishing 99 cent books, where they will make more going through Smashwords (but lose some visibility – I recommend experimenting with both to see what works for you).

The main disadvantage with Smashwords is that, because of how their system works, formatting may not look as professional as it does with PubIt and KDP. For this reason, I recommend that if you are giving away free review copies, stick to Amazon.

All Smashwords titles are DRM-free.

Apple iBookstore

You can publish direct with Apple, but they don’t make it easy, you need a Mac, and it’s not for the faint-hearted. I strongly urge you to publish on Apple through Smashwords, unless you already know how to do this.

You will also need an ISBN (which Amazon don’t require), but Smashwords can provide you one, for free, if you publish through them.

You still should list with them, it costs you nothing, but it definitely isn’t worth purchasing a Mac and an ISBN (which is expensive itself), and then going through all the extra hoops they make you jump through, just to list direct.

The iBookstore has potential. There are 100 million iPhones and maybe 20 million iPads out there, worldwide, but Apple don’t seem to sell a lot of e-books.

The only real effect from their entrance into the marketplace has been to force Amazon to offer the higher royalty rate described above (followed by the rest).

This may change, but at the moment, most iPad and iPhone users seem to use the free Kindle app to purchase e-books. Apple are trying to make it more difficult for their users to buy through Amazon, so this could change fast.

Sony, Kobo, Diesel & Google

At the moment, Google’s eBookstore doesn’t allow indie authors at all.

And, there is no way for an individual self-publisher to publish direct to the rest of these stores (unless you have a long publishing history with them). You must publish through Smashwords.

While sales are small through these channels, Kobo is growing, and is making big moves in the international marketplace.

They just secured a new round of funding, have local-language stores planned for this summer in Germany, France, Italy, Spain, and the Netherlands, and have already made inroads in Australia, New Zealand, Canada, and Hong Kong

Xinxii

Xinxii are the new kid on the block, and I was hesitant about including them. It’s a German site, just rolled out into English. Xinxii’s royalty rates are similar to Amazon, you can publish with them direct, and it costs nothing to list there.

Sales are extremely low at the moment, but given the absence of a strong pan-European e-tailer, it might be worth listing there, or at least keeping an eye on it.

Payment is made by PayPal, whenever you like, once you have 20 Euro ($30) of royalties in your account.

International Writers

There are a few things that international writers will have to deal with. All of the above retailers (with the exception of Xinxii), will withhold 30% of your income until you file tax forms with them.

The amount of this 30% that will then be released depends on the tax treaty your government has with the US. You can find a list on the IRS website.

For a handy guide on how to resolve your tax situation with Smashwords and Amazon, please visit here. Just note that you cannot sort out your tax situation until your books are actually on sale.

Before resolving your tax situation, 30% will be withheld by the retailer until the end of the tax year when it will be passed to the IRS. You can still get it back at that point, but it’s extra hassle.

Amazon only pay writers by cheque (unless you are in the UK, US, or Germany). This can lead to delays in getting paid, and extra fees with your bank which are huge in some countries, and vary from bank to bank – shop around.

If you have any way of obtaining a US Social Security number and opening a US bank account, it will save you a lot of trouble.

For most international writers, this isn’t an option, but it’s an area where we could put pressure on Amazon, if we came together as a group. You can bet they don’t pay the big publishers by cheque.

As I detailed in a previous article, in the EU, the higher rate of VAT (sales tax) applies to all e-books sales (but not print book sales), usually around 20%. This has a depressing effect on your European sales, and is wrong for all sorts of reasons.

This is a situation where a little people power could have a big effect. If you care about it, don’t just moan, write to your local politician.

EDIT: If you don’t know what DRM is, please see my post on piracy here.

About David Gaughran

David Gaughran is Irish, living in Prague, and the author of Mercenary, A Storm Hits Valparaiso, Let's Get Digital, Let's Get Visible, and this here blog.
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13 Responses to Making Money From Writing, Part 3: Sales Channels

  1. JB Toner says:

    This is a brilliant post, and very helpful.

    A note on DRM might be useful. I think I know what it is, but do I need it?

    JBT

    Like

  2. Hi JB,

    I am strongly against it, but some feel differently, each writer must decide for themselves.

    I covered DRM (Digital Rights Management) in a post on piracy here: https://davidgaughran.wordpress.com/2011/04/13/yo-ho-ho-and-a-bottle-of-rum/

    If you need any more detail, leave a comment here or there and I will respond.

    Dave

    P.S. I will also update this post with a link – thanks for the suggestion.

    Like

  3. Eve Langlais says:

    Interesting blog. I’d never heard of XinXii and will check them out. You forgot to mention e-tailer Omnilit. They’re actually a great venue for books, well romance anyways lol but they also offer fiction etc.
    Eve🙂

    Like

    • Hi Eve,

      They seem pretty smart in terms of social media, and the payment options are better than anyone, but remember that sales are low, so don’t expect much for now at that end. I don’t see any drawbacks for listing on there though, and if it grows, it could be good to get in early. I did forget Omnlit (not my genre, but still), and thanks for pointing that out.

      Dave

      Like

  4. Will says:

    Very helpful post as usual, David. I’d never heard of XinXii either, but it’s true that with no dominating publisher in Europe they might be worth keeping an eye on.

    Like

    • And if you are listed elsewhere, there is no harm in listing there too. They seem to be proactive on Twitter and Facebook in promoting their author’s books, their CEO seems like a very smart woman, so I don’t see any drawbacks.

      Like

  5. Pingback: Indie Publishing for International Writers, Step 4: Format Your Story | David Gaughran

  6. Tony Slater says:

    Great stuff again Dave!
    I must say, I wish your blog had been around a few months ago when I started looking onto this stuff! I found out all this info at great length, made lists of bookmarks and notes in my journal – so take heed readers! This info, amassed all for you in one convenient place, is a treasure trove. And I know how much effort you must have put into researching it to Dave. Good effort!
    Tony

    Like

  7. Sasha Barin says:

    Great info, thanks for sharing – will be following for updates!

    Like

  8. Pingback: Indie Publishing for International Writers, Step 5: Market Your Story Part 1, Websites & Blogs | David Gaughran

  9. olusegun78 says:

    Hi Dave,
    I’m new to ebook publishing. I’m glad I stumbled on your posts…keep it up.

    Olusegun

    Like

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