Amazon Rakes In More Cash, And Spends It Wisely

Amazon announced its Q2 results yesterday, and the growth was stunning – net sales were up 51% on 2010, topping out at $9.91bn for the three month period ending June 30.

Founder and CEO Jeff Bezos said that “low prices, expanding selection, fast delivery and innovation are driving the fastest growth we’ve seen in over a decade.” He also noted that the Kindle 3G with Special Offers (priced at $139) quickly became their bestselling Kindle. As usual, no exact numbers were given.

Those deep pockets just keep getting deeper. But what are they doing with the money? Despite this staggering growth, profits are down 8% on the same period last year. Why?

Some of the details from Amazon’s press release give us a clue.

International sales, which includes Amazon sites in the UK, Germany, Japan, France, Italy, and China (but not Canada), increased to a phenomenal $4.51bn.

This means that international sales are now approaching parity with North American sales ($5.4bn for the same period, which will include many international sales from countries without a dedicated site).

Amazon, unlike Barnes & Noble, are reaping the benefits of finding and exploiting the potential in international markets. They have a strong presence in seven ex-US countries, and they are planning more, investing heavily in international expansion.

India, with a fast-growing population of over 1.1 billion, is next. While full details of the plan are yet to emerge, it looks certain that they will have a website presence there and have already purchased facilities in Mumbai and Chennai to add to their existing Kindle development team in the country.

I’m not sure if a full-on Kindle Store will be the next step (my guess would be that they will roll out other e-commerce operations, including print books, first), but a Kindle Store is sure to come at some point.

There are also lots of rumors that Amazon is hiring for Spanish, French, and Italian Kindle teams. The Spanish language market, in particular, has huge potential, encompassing Spain, Mexico, all of Central America, most of South America, and some of the Caribbean.

If Amazon rolls out these four new Kindle Stores, that will be well over 1.5bn people who will be able to purchase Kindles without heavy import duties and delivery charges (which make the cost prohibitive). They will also have access to cheap e-books for the first time (as they will then escape the $2 Surcharge Amazon levies on most e-books internationally).

While only a quarter of a million people in India classify English as their mother tongue, an estimated 30% of the population speak it to a greater or lesser degree – including most of the burgeoning middle class, the ones who will have the disposable income to purchase e-readers.

While there is a market for English books in all the above mentioned places, sales will always be dwarfed by local language works. As such, to fully exploit international markets, some writers may begin considering translating their works. Joe Konrath, in a blog post yesterday, was quick to spot the potential.

Times have changed. The potential to make money world-wide is an unprecedented opportunity for vast riches that makes current ebook sales pale by comparison. There are billions of people in 196 countries. More and more have acquired computers, cell phones, and mp3 players. Ereaders will come next.

He also notes that one of the few indie writers to gain success in the German market is Scott Nicholson, who is currently riding high in the charts with a translated edition of The Skull Ring.

However, this is where most indies run into a problem, as evidenced by the comments on Joe’s post. A proper, professional translation will set you back between $10,000 and $20,000. That may only be a one-time cost, but it’s a significant investment.

Self-publishers may cast around for a solution, thinking this might be a case where sharing the risk and giving up a percentage to a third party may be prudent. But we don’t need to reinvent the wheel here.

Every few weeks, an indie writer posts on Kindle Boards checking the bona fides of a European publisher that wishes to purchase foreign rights (often before they have been approached by any domestic publisher).

While there may be far more money and control in going it alone, most writers don’t have the cash lying around to risk on an expensive translation that may or may not be recouped. Selling the foreign rights to a publisher may be a much more prudent option.

This is one of the areas where agents could carve out a niche in this new world (rather than ill-conceived attempts to move into publishing). The exploitation of subsidiary rights is one of the core roles of an agent. I’m surprised that agents aren’t scouring the Kindle rankings looking for writers with foreign sales potential.

Then again, very few seem to be scouring the rankings at all. I know indie writers who have sold tens of thousands of e-books (in the last year) who have never been approached by a single agent or publisher.

That stuns me.

If a self-publisher is shifting tens of thousands of e-books, and hasn’t made a dent yet in print, that’s as close as you can get to a sure thing in publishing. We aren’t talking about a self-publisher who is demanding too much in terms of an advance or royalties, they have never been approached at all!

Some agencies have moved swiftly to sign some of the bigger fish, but others, including some of the largest agencies, don’t seem to be interested in indie writers at all.

Amazon, however, know where the money is, and how to get it. They aren’t just investing in international expansion, they are beefing up the rosters of their imprints so they have lots of books to sell to all these new customers.

As I announced yesterday, J Carson Black has agreed a deal with Thomas & Mercer, joining Joe Konrath, Blake Crouch, Barry Eisler, and the potentially lucrative backlist of Ed McBain.

On top of that, Stephen Leather, who has sold over 200,000 e-books, has been signed by Amazon Encore. 90% of Leather’s sales have been in the UK, and Amazon must feel that he has a huge potential audience in the US (and elsewhere) that he hasn’t been able to reach yet.

Success doesn’t always “translate” across the Atlantic, but Leather will have some very deep pockets to give him the best possible chance.

EDIT: Some commenters have indicated that the suggested translation cost above might be a little high and for some languages a short novel can be translated (by an experienced professional) for $5,000+. While this is still a significant investment, and would put it out of reach of most writers, it does significantly reduce the amount of books you would need to sell to cover the cost. More details in the comments.

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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27 Responses to Amazon Rakes In More Cash, And Spends It Wisely

  1. Josephine Wade says:

    Good timing with your post, I was just taking a break and looking for something good to read when you popped up in my inbox — and as usual you’ve given me lots of interesting things to think about.

    Amazon sure has been busy. Their publishers must be breathless at the pace of the world they set in motion.

    Like

  2. It will be interesting to see what else Amazon has in store. Hopefully, these changes will not only benefit readers but indie authors as well. Great post once again, David.

    Katrina

    Like

  3. patricefitz says:

    David: Thanks so much for taking the time to keep up with the news, and for sharing it quickly and clearly. Many of us in the indie book boat are so busy trying to spread the word about our books that it’s hard to read everything.

    Know that your work is appreciated.

    Like

  4. You’re right, David. It is amazing that these indies haven’t been approached. It seems that people in trad publishing are and have always been slow to catch on. This is why Amazon is steamrolling them.

    Like

    • Yeah, you would think if you have sold nearly 50k books that people would be beating down your door. It’s not like the Amazon rankings are hidden and no indie ever shares their sales figures.

      Like

  5. Too bad translations are so expensive, but I can see why.

    I would like to see an indie service exchange — a place for people to exchange services like proofreading/copyediting for formatting or cover art. Pay a reasonable, one-time fee to cover a basic skills test (proofread or format a short story, for example), and then register on the site, where you would list what you are looking for (cover art), what you can exchange (proofreading), and your credentials.

    Like

    • patricefitz says:

      That’s a really good idea — the concept of service exchange for indie writers. Or even a vetted list of service providers to share. If we created such a community, quality work and reliable on-time payments would both be easier to ensure.

      Like

    • I’ve heard of lots of indies bartering their services that way. A formalized site where you could do it (and check the qualifications of the provider) could be a fantastic idea.

      And the cost of translation is expected when you think of the amount of time it would get to do it perfect. The person would need to be (a) a great writer (b) 100% fluent in both language (c) a great editor and (d) a great proofer.

      Like

      • “I’ve heard of lots of indies bartering their services that way. A formalized site where you could do it (and check the qualifications of the provider) could be a fantastic idea.”

        Dave, I see another tab on your site….

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      • If I had spent any time in the military, I would say, “In the military we used to call this ‘mission creep’.”

        My haikus are hanging in by their fingernails. One more tab and they will be condemned to oblivion. They are the cheap sheen that hides my pure hackery.

        Like

  6. Just read this. Amazon does deal with Italian publishers to sell 2,000 Italian language e-books in the Kindle Store. Must be opening an Italian Kindle Store soon. Mio Dio!

    http://www.mediabistro.com/ebooknewser/mondadori-to-release-italian-langauge-ebooks-on-the-kindle_b13923

    Like

  7. Werner says:

    WOW. The untapped potential is stunning. My head is swimming with the possibilities of the new service businesses that will spring up in conjunction with this incredible industry.

    David, where do we find out about translation services? Even moreso, how do you find out about becoming a English-to-Spanish translator of American ebooks. My fiancee is U.S. born, but speaks as well as any naitve Spanish speaker. She is a Spanish teacher, a writer and has done translation work in the past.

    Like

  8. J.A. Konrath says:

    Your blog is quickly becoming a must-read. Just bought Let’s Go Digital. Good on you for being a steadfast voice of logic and reason in the morass of misinformation, hype, and ignorance.

    FWIW, I’m going to pay .06 cents a word to get a 70,000 world novel translated into German. That’s $4200. If it does well, I’ll pay higher rates in the future.

    I expect it to do well.😉

    Like

    • Hey Joe,

      Thanks very much. You may get a mention or two in the book, along with all those other troublemakers you hang around with.

      $4,200 is a lot more attractive than $20,000. You must have picked which title you are gonna roll with first, but I guess you’ll save that for your own blog🙂

      Good luck with it, I’m sure it’ll sell like hot strudel.

      Like

  9. CJ Archer says:

    These are fast-moving and intersting times. Thanks again, Dave, for an informative post. I think the India news is a Big Deal. With 30% of 1.1 billion people speaking English (and hopefully wanting to read in English too), well the maths says it all. I think translations are out of the question for rmost indies but it’s certainly an area where savvy agents can carve out a niche – broker foreign rights, movie rights and all those other things that are outside the skill set of most writers. I can’t wait to see what the future holds.

    Like

    • Hiya CJ,

      Yeah India is a biggie. Huge potential market. I have more of an eye on the Spanish language market though. More than 400m Spanish speakers worldwide. And my next release (hopefully in a month or two) is an epic historical set during Argentina’s war of independence from the Spanish Empire. Think I might know a translator who I might be able to cut a deal with. Very interesting.

      Like

  10. Lacy Camey says:

    Thanks, David for posting this! Very encouraging and I love seeing possibilities. I just tweeted your post.🙂 My hubs is fluent in Spanish. Maybe I should get him to translate my new debut? Haha…that would be fun… You made me think of something I never even considered.-Spanish language market. Have a great morning!

    Like

  11. Stefan says:

    As J.A. Konrath pointed out, the $ 10k figure for a translation is a little bit on the high side, especially as far as German is concerned. In Germany, translators have been treated like slaves by publishers since forever and are fighting hard to get better payment, without too much success.
    According to the latest figures from the German translators’ association (2004-2008), average pay for a 70k novel would have been $ 6.000 for hardback, and $ 5.136 if it’s only for a paperback edition. (I guess that in J.A. Konrath’s case both sides see it as an investment into possible future business.)
    Obviously, even $ 5.000 are quite an amount for the aspiring self-publishing author – and don’t forget that the translation should be checked (proof-read), even if it’s done by a professional – and it should be done by a professional, no question about that. If you get 70% of $ 2.99, that would mean 2,381 copies sold to recoup the $ 5.000 only… As David hinted, there will probably be new business models in the future, the translator doing his/her work for a lower fee and a percentage of sales, but translations will always be an investment first.
    I’m not sure about the future role of agents in selling translation rights: of course, that would be nice (depending on the contract – remember: e-books are forever, even translated ones…), but one shouldn’t forget that the rise of e-books generally means the fall of publishers: publishers will be hit outside the English-speaking countries as well, so who will be there to put money up front for your translation rights (especially when they will have to pay the translator, too, before they can make any money with your book)?

    Apart from translation, there is another aspect of the new markets to keep in mind: Of course, they are great business opportunities, but even if you stick to your existing product (the original English version), you will have to spend some time to keep track (upload, check etc). There might be local e-book distributors as well, so you might want to be with them, too… And if your opting for translations, you’d also have to have your blurb, keep your author’s profile updated in the foreign language etc.
    All this keeps you from doing what you are supposed to do (writing), so I guess there might be an opening for service providers who do these things for authors on an international basis…

    Like

    • Hi Stefan,

      That’s all very interesting. Based on what you and Joe said, it looks like my cost estimations were a little on the high side, so I put a note at the bottom of the post to indicate that, and for people to check the comments for more detailed informaton.

      With regard to foreign publishers, that’s a good point. However, I think we are a few years away from seeing most foreign markets exposed to the same disruptive change we have seen in the US. Some may learn the lessons from what is happening now, but when I see how many European publishers are operating, it just seems like they are doubling down on the same errors.

      I’m sure some small publishers (like in the US) will thrive in this new environment, and it may afford them much greater opportunities to sell their work as they are often banned from distribution channels in Europe (which are pretty tightly controlled by larger publishers).

      They could fill the void, but they may not have the deep pockets to finance a lot of investment in foreign titles – which can be hit-and-miss.

      I’m sure some entrepeneurial translators (or the agencies that employ them) will be already thinking along these lines, and it will be interesting to see what develops. And you are right. There is a lot more to it than translation. You need keyword tags, front and back matter, blurbs, author bios, and promo all in the local language. Something to think about.

      Dave

      Like

  12. Hi David,
    Today, I read some stories in July’s Multilingual Compliance Newsletter (available by email subscription from Foreign Exchange Translations) that brought to mind this post of yours. The first story had pointers on preparing your English writing for translation. These include: avoid contractions and apostraphes; clarify buzz words; and specify whether proper names, addresses, and company names are to be translated. There is also a link to an amusing essay written by Mark Twain about the disastrous translation results (English to French to English again) of his short story, The Notorious Jumping Frog of Calaveras County. Guess overspending isn’t the only possible peril!

    Like

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