Monday, March 07, 2011

Ebooks Ain't A Bubble

Elsewhere on the internets, I've heard the current ebook boom being described as a bubble. One that will eventually burst.

That's incorrect.

A bubble is when people invest more money in something than it is actually worth. Real estate, technology, dot com companies, housing, the stock market, etc. all are investments that might not pay off, and have been called bubbles.

Ebooks aren't an investment. We're not dumping money into them, hoping we can sell them at a profit later on.

Rather, ebooks are more like a commodity. But not quite, because they don't conform to the rules of supply and demand, as there is an endless supply. But I believe there is also an endless demand. I come to this conclusion by looking at other digital media, and seeing the never-ending, constantly regenerating market.

An ebook is forever. Forever is a long time to find readers. I'm selling over 1000 ebooks a day, but it would take me forty-one years to completely saturate the current Kindle-owner market (assuming there are currently 15 million Kindle owners.)

However, people read ebooks on more than just their Kindles. There are Kindle apps, Nooks, Kobos, smart phones, computers, tablets, and so on. I could sell 10,000 ebooks a day, and it would still take the rest of my life to saturate the current market.

But the market won't stay current. Ebooks will become the dominant format for reading fiction. They'll proliferate the US and Canada, the UK and Australia, and eventually the world.

There's no ebook bubble. There is only unlimited potential sales. I referred to it in an earlier post as a Gold Rush. But, unlike a Gold Rush, where there is limited gold available, I don't see this gold vein ever running out. The gold is readers, and there are billions of them. It doesn't matter how many miners are trying to get rich. There is enough for everybody, assuming writers work hard and stick with it until they get lucky.

Now, while I consider the ebook forecast for the next few years to be bright, with a high chance of riches for me (I'm currently earning $1300 a day), there is a tech precedent that might show otherwise.

http://en.wikipedia.org/wiki/North_American_video_game_crash_of_1983

That article is worth reading, because it shows what could happen in the ebook world once there are no longer any gatekeepers. If the market gets flooded with crap, consumers could stop buying ebooks and instead do something else with their time and money, just as they did with videogames.

But there are some key differences.

First, there is now unlimited retail space, and consumers and etailers have made it easy to find the worthy books.

Second, while there are competing ereading devices, authors can make their work easily available on all of them without an extra time or money investment.

Third, there is no boom/bust bubble, because we don't have to dump money into development, advertising, or speculative stock trading. We don't have to spend money to make money.

Also, even though the 1983 video game crash ruined many companies and temporarily soured the public on videogames, by 1985 videogames were back, and they've been growing ever since. Videogames now make more money than Hollywood.

I've also seen some authors who are doing both self-publishing and legacy publishing, calling it diversification.

That isn't diversification. It's buying a ticket on the Titanic.

I could make a logical, persuasive case for chain bookstores disappearing (as chain record stores and video stores have), and then draw the obvious conclusion that ebooks will replace print as the dominant format, but I've done that often enough to bother repeating it all here. Go back to April 2009 and read my blog from then until now if you want a blow-by-blow report of how the publishing industry is collapsing and ebooks are taking over.

Instead, I want all authors reading this to ask themselves two questions.

1. Will ebooks eventually outsell print books? (hint: they already are in many cases)

2. Do you want to give up 70% royalties and instead accept 14.9% royalties by signing with a legacy publisher? (assume you'll be locked into the contract forever, because you will)

How you answer those questions is how you should approach the next legacy publishing deal you're offered.

For years, I've talked about the importance of luck. You can't succeed without it.

But writers need to fight Stockholm Syndrome and escape the siren song of legacy publishing. For decades they were the only game in town, and trying to get accepted by the gatekeepers has become imprinted on our brains. Getting lucky meant finding a publisher.

These days, signing with a publisher, who will give you an advance in return for the majority of all your royalties, forever, isn't lucky at all. It's like signing a balloon loan, where the payments get bigger every year. Or a life insurance policy, where you keep paying more annually for fewer benefits.

A much better route to take is self-pubbing. At least there, if you get lucky, you get to keep most of your money.