About a year ago, I wrote a blog post about how rising ad costs are leading to the reconsolidation of the indie publishing space. As the market for indie published novels has become over-saturated, indie publishers are relying more and more on advertising to gain visibility for their books.
This has coincided with Amazon’s decision to compete with Google and Facebook for the multi-billion-dollar online advertising market. And Amazon, like Google and Facebook, owns Internet real estate where many parties want to place virtual billboards.
This has inevitably given rise to new forces of consolidation: Many authors are joining cooperatives (otherwise known as content mills). On the ad side, ad brokerage firms like AMSAdwerks have arisen. For a monthly fee, these companies will manage the day-to-day, hour-to-hour complexities of managing large ad spends on the Amazon platform.
This is a far cry from indie publishing as many people envisioned it a decade ago—solo author-entrepreneurs putting their books up for sale, and readers organically finding them. What we are seeing now in indie publishing is the peak of a bubble economy—not unlike the dotcom bubble that occurred at the turn of this century.
Rising ad costs are a major factor behind the bubble; and they’ll likely be the factor that finally bursts the bubble, leading many indie authors to either quit, or resign themselves to being hobbyist/weekend authors.
Oh, and Kindle Unlimited is also a factor. Kindle Unlimited has trained readers to devalue books, and authors to compete on sheer volume.
In recent years, the formula in indie publishing has been: a.) write a long series b.) dump that whole series into KU, and c.) spend heavily on advertising, in the hope that KU page reads exceed advertising costs.
To be sure, some extremely successful indies and writer collectives have been making this formula work; but even the big dogs of indie publishing are now starting to balk at high advertising costs.
Case-in-point: Mark Dawson, the author of the bestselling John Milton series, revealed that he spent $500,000 on Amazon Media Group ads alone in 2019. Even Dawson (who also runs a popular ads course for authors) calls this amount “ridiculous”.
Dawson also noted (in a roundabout manner) that the high ad spends now necessary on Amazon amount to a sort of double payment to the retailer. All Amazon vendors (which is all indie authors are) pay Amazon a commission on goods sold on the platform. When we pay for Amazon-based ads, that represents another payment. (Or, if we buy ads on Facebook, etc, we’re subsidizing Amazon’s traffic.)
Such are the realities of the “pay-to-play” model that has emerged in recent years. To be clear: There is nothing sinister or fraudulent about any of this. This is simply supply-and-demand at work.
Amazon owns the most successful retail platform in the world. The company has learned that in some sectors (like indie fiction publishing) it can often make more money from an eager seller willing to buy advertising, than it can from a customer who might purchase that seller’s product.
Indie authors are now becoming a significant profit center for Amazon. Some, to be sure, are making money for Amazon by selling large numbers of books. But more, I suspect, are making money for Amazon through their purchases of Amazon ads.