Kris Rusch blog post on "Rethinking the Writing Business"

[Ghost5]

I thought I'd share Kristine Kathryn Rusch's latest Business Musings blog post entitled, "Rethinking the Writing Business". It's part one of what looks like will be a series of posts and information.

Good stuff, IMO.

Here's the link:

https://kriswrites.com/2019/06/26/business-musings-rethinking-the-writing-business-part-one/

 

[Kate Elizabeth]

I read the post a couple of hours ago. Good stuff to think about.

[PJ Post]

I've been saying this for a couple of years now. Not the bit about licensing, but that books are nothing more than packaging. The thing we're selling is the story - what KKR refers to as the entertainment IP. And while she's getting closer, that's not really the truth of it either.

What we're really selling is access. The book, as we know it, is an artifact of the Market of Things. Whether we're aware of it or not, we've transitioned into the Market of Access. No one needs the physical package anymore, be it a paper book, a kindle file or even a CD, MP3 or DVD. In order to enjoy our entertainment choices, we just need access to the narrative IP experience, which includes music, film and written stories. Think Spotify, Pandora or Netflix. But it’s not the streaming technology that makes this so revolutionary, it’s that we, as consumers, never take possession of anything.

As a result, the entertainment business model has dramatically changed. But not publishing. We’re woefully behind.

[Shoe]

I read through it twice and still don't know what the message is. What's a good one-sentence summary?

[Post-Crisis D]

I read through it twice and still don't know what the message is. What's a good one-sentence summary?

"Stay tuned for the next post."

[Vidya]

Shoe, I agree with you. KKR has made a lot of useful posts about agents, publishers, and contracts, but this one seemed vague. However it seems to be, as Dan suggests, more of an introductory post and I assume far more useful info is forthcoming in the next few posts.

[JRTomlin]

Thanks for the link. 

[123mlh]

I read through it twice and still don't know what the message is. What's a good one-sentence summary?

This is what I took from it: If you think of the book as the be all, end all, you're missing a tremendous amount of opportunity. The characters and world you create are the real value.

All you have to do is think about Harry Potter to see how that can play out. Candy? Food? Amusement Parks? Video Games? Plays? Clothing? Toys? All of those are licensing arrangements based on the HP IP that most authors never even consider as options. If an author goes past the basic novel they usually do specialty versions, a movie or TV series, or a graphic novel. They're still wedded to the story as being the main value and it's not.

[Demon_Lord]

Thanks for sharing. It's a good reminder that this might be a craft, but it's also a business. We often forgot the later.

[OfficialEthanJ]

Somewhere between the above-linked article and the stuff that usually gets posted in roundups at the Book Designer blog lies a post or article that delivers salient points without being either barely filling a thimble or being couched in a meandering stream of consciousness that I may or may not have the patience to sift through.

Star Wars is a terrible poster child for KKR's epiphany that "Licensing your IP is the thing!" Yes, that happened, but no, none of it would have spread into other licensing deals (action figures, comics, clothing, etc) had the movie failed to catch fire.

Avatar might be more apropos, in that there's a dedicated section in Disney's Animal Kingdom to the world of Pandora, and there were AVTR soda cans IIRC back when the movie was first-run but the story seems secondary, at this point. Does anyone really give a flip about Avatar, the movie (besides James Cameron)? Hanging out in Pandora-land is its own sovereign experience, to the point where having seen the movie is optional.

I'm not sure that's how I want to approach my books. I mean, if people are clamoring for Diane Pembrook socks and backpacks, I'm open for negotiations, but I didn't write her stories to cast them aside in favor of licensing her name and image.

Maybe I'm a dinosaur.

[Post-Crisis D]

I'm not sure that's how I want to approach my books. I mean, if people are clamoring for Diane Pembrook socks and backpacks, I'm open for negotiations, but I didn't write her stories to cast them aside in favor of licensing her name and image.

Star Wars is just a BIG and recognizable example.

And, yes, authors probably can't jump right into toys and backpacks and stuff.

But there's still a wide range of licensing possibilities.

I would say comics are indeed a possibility.  Not necessarily in terms of Marvel or DC but smaller companies looking for their break.  Or talented comic artists that can draw the heck out of stuff but can't write.  If you have a solid novel or series that might interest comic readers if adapted to the form, then you have a licensing possibility.

Also, games.  Again, you might have some talented game developers that need IP to make into a game.  If you have a storyline that could be adapted into a game, there's another licensing possibility.

And so on.

I think sometimes authors get wrapped up in the idea that there's only one path to licensing IP and that's to sell lots and lots of copies of your book(s) until someone in Hollywood gets the notion to make a movie out of it and then, once the movie's made, then--cha-ching--comic tie-ins, action figures, trading cards, t-shirts, limited edition soda cans, etc. all happens.

But that's not the only path.  There are other, smaller licensing possibilities, many of which are likely far more achievable than hoping a book ever gets made into a movie.  And all those smaller licensing options add up and may prove more lucrative than a movie deal.

[Cathleen]

I read the post, and it was interesting and all, but I don't see how it applies, except that I don't want a trade deal. But I already knew that. And I have all my rights since I'm an SP writer.

I guess KKR is excited because maybe her stuff is big enough that she can get a piece of that marketing accessories pie. But I don't see it as any kind of real issue in my life, at least not now.

[Alice Sabo]

I don't think it's just action figures and games. I think she's saying that the mind-shift to licensing also changes the way she negotiates new contracts for say German audio books or French graphic novels. She wants authors to stop being the beggars at the door and now be business professionals licensing their brands for good income. Just having that example in the back of your mind will change how you react when a dodgy business approaches you for complete rights to your work. Because if you sell/license the US print rights and the German ebook rights and the French audiobook rights you are building up income streams that might pay all the bills. I think that's the jist of Dean's Magic Bakery course.

[JRTomlin]

I don't think it's just action figures and games. I think she's saying that the mind-shift to licensing also changes the way she negotiates new contracts for say German audio books or French graphic novels. She wants authors to stop being the beggars at the door and now be business professionals licensing their brands for good income. Just having that example in the back of your mind will change how you react when a dodgy business approaches you for complete rights to your work. Because if you sell/license the US print rights and the German ebook rights and the French audiobook rights you are building up income streams that might pay all the bills. I think that's the jist of Dean's Magic Bakery course.

I also thought this was what she was trying to get at.

[Crystal]

Somewhere between the above-linked article and the stuff that usually gets posted in roundups at the Book Designer blog lies a post or article that delivers salient points without being either barely filling a thimble or being couched in a meandering stream of consciousness that I may or may not have the patience to sift through.

Star Wars is a terrible poster child for KKR's epiphany that "Licensing your IP is the thing!" Yes, that happened, but no, none of it would have spread into other licensing deals (action figures, comics, clothing, etc) had the movie failed to catch fire.

Avatar might be more apropos, in that there's a dedicated section in Disney's Animal Kingdom to the world of Pandora, and there were AVTR soda cans IIRC back when the movie was first-run but the story seems secondary, at this point. Does anyone really give a flip about Avatar, the movie (besides James Cameron)? Hanging out in Pandora-land is its own sovereign experience, to the point where having seen the movie is optional.

I'm not sure that's how I want to approach my books. I mean, if people are clamoring for Diane Pembrook socks and backpacks, I'm open for negotiations, but I didn't write her stories to cast them aside in favor of licensing her name and image.

Maybe I'm a dinosaur.

Avatar had one of the biggest box office takes of all time (almost three billion). I'm pretty sure it's still number one. In fact, part of the recent re-release of the last Avengers movie (with a new post-credits scene) is an attempt to surpass Avatar's box office numbers.

We should all be so lucky to be that forgettable.

[elleoco]

Maybe I'm the only one. It struck me as oh, boy, it's a cycle: (1) traditional publishing, (2) indie publishing (and look how many burned out, failed, etc.), (3) licensing (which is back to working at selling stuff to someone else).

[LilyBLily]

My spouse teases me about one of my characters becoming a licensing bonanza. It's not outside the realm of possibility, but I am a writer, not a licensing agent. I could hire an entertainment law firm and with its help find the right agent to go about hawking my character's possibilities. I'm not terribly interested in doing so.

Perhaps, once I have many more books written and published, I might have the seeming psychological distance from them that KKR always presents. Her business musings are interesting, but they never make me want to read any of her books. In this musing she expresses annoyance at the $90k she missed because of a certain deal that changed back in the day--without any suggestion that she regrets having been unable to write certain stories about those characters.

She adjures us to think big, which is not a bad idea, but aside from scrupulously retaining all rights to my creative endeavors, I'm not interested in all the other deal-making possibilities. Just not interested. It's a different job description. 

[PJ Post]

I read the post, and it was interesting and all, but I don't see how it applies...

The larger point is that we're not selling books: paper, binding and glue, mobi or e-pub files. We're bringing ideas to the entertainment market, something legally known as Intellectual Property. Amazon, traditional publishing and the Agent ecosystem want us to embrace the 20th century way of doing things. They want unique queries, unique products and unique promotional campaigns - strategies and tactics designed to better financially exploit the writer.

I'm not sure where KKR is going with this series, but this is the fundamental problem. Writers need to rethink our products, their value and how we want readers (customers) to engage with them. Every other entertainment industry has embraced this new future.

We’re standing flat-footed, totally unprepared, just like the Big 5 were when digital and self-publishing showed up. Sure, we can reject traditional publishing for the illusion of independence, but Amazon isn’t really any better.

Change starts with redefining our industry, and our place within it.

[LilyBLily]

I read the post, and it was interesting and all, but I don't see how it applies...

The larger point is that we're not selling books: paper, binding and glue, mobi or e-pub files. We're bringing ideas to the entertainment market, something legally known as Intellectual Property. Amazon, traditional publishing and the Agent ecosystem want us to embrace the 20th century way of doing things. They want unique queries, unique products and unique promotional campaigns - strategies and tactics designed to better financially exploit the writer.

I'm not sure where KKR is going with this series, but this is the fundamental problem. Writers need to rethink our products, their value and how we want readers (customers) to engage with them. Every other entertainment industry has embraced this new future.

We’re standing flat-footed, totally unprepared, just like the Big 5 were when digital and self-publishing showed up. Sure, we can reject traditional publishing for the illusion of independence, but Amazon isn’t really any better.

Change starts with redefining our industry, and our place within it.

I don't think you are wrong. I just am not interested, which is different. In another lifetime, I worked in licensing and with licensed products. They can be a gold mine, no question, but only for the capitalist owners. Which really means we should buy stock in Amazon (preferably on a day when the market is down) and not worry too much about our sales figures. Maybe hire a Hollywood agent, too.

Authors run their own businesses; we are in a position to exploit the IP we own, but far too many of us are desperate to have someone else take care of the business stuff and let us just write all day. We're also chasing after a dream we might have had when we were mere children, a dream reinforced by media representations of writers as living an ideal and wealthy life merely by typing (and drinking a lot of Scotch). Those dreams do not include cell phones and the internet and licensed products.

George Lucas is an outlier, as was Walt Disney. "Disney" now is a corporation that doesn't take even one tenth the risks Walt Disney himself took. Not many authors also have entrepreneurial business training or skills. You can see how much resistance authors have to marketing their books to readers. Imagine how much resistance they have to learning how to become dealmakers or to repositioning their books to be exploitable products! Effective salesmanship is not a skill that just anyone can learn, either. Some authors will hire the wrong agents, too.

Yes, people will get mowed down as the business changes, but, as with music, there will still be people interested in doing it even with no profit involved. I think that's where most authors are headed. We will become, in essence, what poets have become in modern times. Irrelevant to the mainstream, artistic, and incapable of earning a living from our trade. Possibly, somewhat figures of fun, too.

[Bill Hiatt]

My takeaway from the article is not to part with all rights. License only what needs to be licensed for the immediate project (because you never know when some other kind of licensing may become available and valuable. It's important to remain open to future possibilities.

That said, licensing is a future hope rather than a present reality for most of us. You'd have to already be selling really, really well in order for those lucrative license deals to come along. Brands like Star Wars and Disney are indeed outliers. Put another way, no one is going to be interested in making toys, lunch boxes, or whatever that represent characters and worlds that aren't already commercially successful. A bestselling book or a box-office-hit movie can easily spawn deals like that. Somebody's prawny masterpiece, even if it really is a good book? Not so much. I'll remember not to encumber rights unnecessarily, but other than that, until people in my sales range start to get lucrative licensing deals, I'm not going to worry about it beyond that.

[PJ Post]

The bottom line is that for those of us that want true independence, who actually want to run a business and have control over our IPs, we need to get out from under Amazon. I've been saying it for a while now and I'll continue to say it until it happens. We'll never be able to compete against the dollar store mentality of Amazon, but that still leaves a lot of competitive ground exposed.

It’s important to note that this opportunity doesn't require an overt hard-sell approach.

Market success begins with process design. Like I said, we have to redefine our industry, or at least the different segments. Traditional publishing is one, the online retailers are another. We need to find space around them, as well as different monitization methodologies. Unfortunately, the top earners, the ones with enough leverage to drive such an initiative aren't going to. Because no matter how broken and exploitative the current system may be, it's working for them. And in some cases, excessively so. And good for them. It didn't come easy.

Yes, people will get mowed down as the business changes, but, as with music, there will still be people interested in doing it even with no profit involved. I think that's where most authors are headed. We will become, in essence, what poets have become in modern times. Irrelevant to the mainstream, artistic, and incapable of earning a living from our trade. Possibly, somewhat figures of fun, too.

You may very well be right about this.

I hope we, like Indie musicians, can find another path that gives us the freedom of expression, market access and the ability to earn something, and if we're lucky - as it's always been - do well.

[Arches]

What I take away from KKR's blog is that writing as a business sucks, and it's only going to get worse as authors are forced to move away from the hopefully fun task of writing and  into more promotion and now licensing. The basic problem is that writing fiction is a line of business where there are basically no barriers to entry, and that means it's intensely competitive. That won't change, and Amazon, Bookbub, and Facebook have realized they can make a ton of money providing advertising for desperate writers.

The economics of writing fiction as a career are daunting at best for most authors. And it doesn't matter whether you are in KU or wide or trying to sell books on your own website. The problem is too many people actually tell decent stories, so there are lots of books out there for consumers to choose from.

Like LilyBLily, I once worked in the licensing world, and I can assure you that managing intellectual property is just another office job. As a business, it can be very lucrative, but it isn't an outlet for expressing creativity most of the time.

I prefer to enjoy write as a hobby rather than to try and earn my daily bread from wordsmithing. For most authors, working at a hamburger joint will pay more per hour, and its steady work.

[PJ Post]

I think many writers are attempting to escape cubical work, even if they could do it in their pajamas. I also think that one of the reasons so many self-publishers have retired is because they were spending more time on the cubical work than the artistic stuff.

The basic problem is that writing fiction is a line of business where there are basically no barriers to entry, and that means it's intensely competitive. That won't change, and Amazon, Bookbub, and Facebook have realized they can make a ton of money providing advertising for desperate writers.

So the better direction isn't to fight against this reality, but to sidestep it altogether. And that means a curated inventory, where the competition is greatly reduced, an inventory with zero hatting, plagiarism/counterfeit books or bad formatting/editing. It means an inventory and cat list readers can trust. It also means that the third-party ad sites, and especially the CPC scams, are no longer relevant.

[Arches]

I think many writers are attempting to escape cubical work, even if they could do it in their pajamas. I also think that one of the reasons so many self-publishers have retired is because they were spending more time on the cubical work than the artistic stuff.

The basic problem is that writing fiction is a line of business where there are basically no barriers to entry, and that means it's intensely competitive. That won't change, and Amazon, Bookbub, and Facebook have realized they can make a ton of money providing advertising for desperate writers.

So the better direction isn't to fight against this reality, but to sidestep it altogether. And that means a curated inventory, where the competition is greatly reduced, an inventory with zero hatting, plagiarism/counterfeit books or bad formatting/editing. It means an inventory and cat list readers can trust. It also means that the third-party ad sites, and especially the CPC scams, are no longer relevant.

I'm not trying to be contrary, but it comes unbidden. What you're describing is a book store, or its more modern versions, penguinrandomhouse.com or the Nook Store. Amazon is slowly, relentlessly crushing that business model. Any business plan you have that includes getting rid of Amazon as a necessary element is doomed to fail. So is any business plan that includes you somehow siphoning away a substantial percentage of Amazon's customers.

That's the bitter truth. If you're going to make a decent living in the long term as a self-published author of genre fiction, you're going to have to figure out how to do it with Amazon as a major account. Probably the major account. Or you're going to figure out what no one else has managed to do, except JK Rowling. Amazon cut her an incredible deal. I hope others can become similarly successful, but I haven't seen proof of it.

[Dormouse]

I think many writers are attempting to escape cubical work, even if they could do it in their pajamas. I also think that one of the reasons so many self-publishers have retired is because they were spending more time on the cubical work than the artistic stuff.

Makes sense.
Bad enough to be square but square² has to be awful.

[PJ Post]

I think many writers are attempting to escape cubical work, even if they could do it in their pajamas. I also think that one of the reasons so many self-publishers have retired is because they were spending more time on the cubical work than the artistic stuff.

The basic problem is that writing fiction is a line of business where there are basically no barriers to entry, and that means it's intensely competitive. That won't change, and Amazon, Bookbub, and Facebook have realized they can make a ton of money providing advertising for desperate writers.

So the better direction isn't to fight against this reality, but to sidestep it altogether. And that means a curated inventory, where the competition is greatly reduced, an inventory with zero hatting, plagiarism/counterfeit books or bad formatting/editing. It means an inventory and cat list readers can trust. It also means that the third-party ad sites, and especially the CPC scams, are no longer relevant.

I'm not trying to be contrary, but it comes unbidden. What you're describing is a book store, or its more modern versions, penguinrandomhouse.com or the Nook Store. Amazon is slowly, relentlessly crushing that business model. Any business plan you have that includes getting rid of Amazon as a necessary element is doomed to fail. So is any business plan that includes you somehow siphoning away a substantial percentage of Amazon's customers.

That's the bitter truth. If you're going to make a decent living in the long term as a self-published author of genre fiction, you're going to have to figure out how to do it with Amazon as a major account. Probably the major account. Or you're going to figure out what no one else has managed to do, except JK Rowling. Amazon cut her an incredible deal. I hope others can become similarly successful, but I haven't seen proof of it.

Identifying obstacles is how we further the conversation, so I'm good with contrarianism. With that said...

Bookstores depend on the traditional publishing and distribution system, which I'm suggesting has no bearing on the future of self-publishing. As for Amazon, they're also a bookstore - specifically, a 19th century, mail-order business model version of a bookstore - they just added self-publishers to the mix...and all of the hatters, as well.

I understand your argument, but it's philosophically grounded in the 20th century Market of Things - selling IPs based upon packaging. Windowing is an example of this strategy: hardcover, trade, mass-paperback, movie version, limited editions and box sets. All the same IP, the same words - just different packaging...and therefore, different prices, which leverages different levels of demand. The Market of Things is based upon scarcity. The Market of Access, on the other hand, is a post-scarcity market environment. And that's where we are now. So...



As for Amazon's distribution channel dominance, they're extremely susceptible to competition right now because they're failing all over the place. And while I'm aggressively supporting a new and fundamentally different approach to monetizing literature, I'm not suggesting anyone abandon Amazon, or any of the other distribution channels.

The one constant I've seen for 2019 - and this goes for all creatives - is to be everywhere possible; which means - create as many revenue streams as possible. And I think this is part of where KKR might be going. Don't limit yourself to the existing financial boxes we've been indoctrinated to believe in. We used to believe that the Query-Go-Round was the only way. Get an Agent. Get a Publisher. Wait years while you perfect your only manuscript. Now we believe we must publish frequently, hit the main genre tropes, chase trends, live in the long-tail commodity bin, all the while spending huge percentages of our profits on visibility.

In this model, the distribution channel is taking a percentage off the top, but there's only a top to take from if you pay them for visibility. How is that better than the traditional model? There's no independence. If Amazon shrinks our percentage what are we going to do? If they add a flat fee to get our books listed, in addition to AMS, what are we going to do? It's their court, their basketballs, their rules. Take it or leave it.

Any business model that depends on Amazon as a primary distribution channel is doomed, I don't care what they're selling. The key is differentiation - what isn't Amazon doing well - or at all?

[Arches]

To be honest, I have no idea what you're proposing to do, but I'd love to be proven wrong. I'm not comfortable with having one company, no matter who it is, with so much control over self-publishing. And I while I appreciate the chance to put my books up for sale, I'm keenly aware of the problems with Amazon's bookstore. I just don't have the vision thing, as George HW Bush once said. Go for it!

[DougM]

Amazon is already shrinking our percentages by being an advertising business, the only difference being that we're volunteering to give them more money. (We don't have to give them money, just like we don't have to sell anything.)

[PJ Post]

To be honest, I have no idea what you're proposing to do...

Me either. 

Amazon is already shrinking our percentages by being an advertising business, the only difference being that we're volunteering to give them more money. (We don't have to give them money, just like we don't have to sell anything.)

I would love to know how much Amazon is making off of AMS compared to their retail store, profit-wise.

[Bill Hiatt]

To be honest, I have no idea what you're proposing to do...

Me either. 

Amazon is already shrinking our percentages by being an advertising business, the only difference being that we're volunteering to give them more money. (We don't have to give them money, just like we don't have to sell anything.)

I would love to know how much Amazon is making off of AMS compared to their retail store, profit-wise.

I can offer a partial answer to that. The stats are from Geekwire, May 1, 2019: First-party online sales 49.5%, share of third-party sales 17%, AWS 13%, physical stores 7%, subscription services 7%, other (mostly advertising) 5%. (That equals 98.5, probably because decimal fractions are only shown on the first item. https://www.geekwire.com/2019/first-time-amazons-online-sales-make-less-half-entire-business/ The original article includes, among other things, raw dollar figures and how much each segment is growing.

The figures appear to be revenue, not profit, so depending on expenses in various divisions, the final picture could look different, but at least this is a start. 

[Vijaya]

Interesting article and not surprising at all. In the children's book world there are a lot of toys and games attached to story books.

[Jeff Tanyard]

I would love to know how much Amazon is making off of AMS compared to their retail store, profit-wise.

The e-commerce store isn't profitable at all.  It loses money.  AWS and Prime memberships are the cash cows that subsidize the store.

Here's an article from last year about the breakdown:

https://www.thestreet.com/opinion/amazon-is-losing-money-from-retail-operations-14571703

[PJ Post]

It's not the AWS division that I was interested in, it was this part - AMS.

From the article Bill linked to:

Other: And then there is everything else. This group is largely made up of the advertising business that is quickly becoming a threat to incumbent digital powers in Google and Facebook. The Other group makes up 5 percent of Amazon’s overall business, posting $2.7 billion in revenue in the first quarter, up 34 percent year-over-year.

I would think the revenue here is mostly profit since AMS is primarily an automated service. The numbers seem to imply that they don't really need our books, but they do need us bidding against each other for visibility. Is it me or is that reality a bit wonky?

[Jeff Tanyard]

It's not the AWS division that I was interested in, it was this part - AMS.

I know.  My point was that "profit" is something of a misleading term since AMS is an inseparable part of the e-store and the store loses money.  At best, AMS mitigates the losses.

As to the topic at hand...

I don't think it's just action figures and games. I think she's saying that the mind-shift to licensing also changes the way she negotiates new contracts for say German audio books or French graphic novels. She wants authors to stop being the beggars at the door and now be business professionals licensing their brands for good income. Just having that example in the back of your mind will change how you react when a dodgy business approaches you for complete rights to your work. Because if you sell/license the US print rights and the German ebook rights and the French audiobook rights you are building up income streams that might pay all the bills. I think that's the jist of Dean's Magic Bakery course.

Thanks for that summary.  Like some of the others here, I wasn't quite following her.

[She-la-te-da]

In this model, the distribution channel is taking a percentage off the top, but there's only a top to take from if you pay them for visibility. How is that better than the traditional model?

It isn't better. For that we can blame other authors. Or SEO people charging in to be "authors". Most of what's happened in indie publishing can by laid at the feet of indies. Those who want to make huge amounts of money (six figures a month, really?), hit all the charts, make all their "letters", and be damned with the cost to anyone else.

Those of us who've been around have watched it happen. Remember when we wondered if we'd ever get readers to buy our books? If we'd ever be able to charge more than .99? If there would ever be a way to promote easily? Well, we got all that. And then the hawks swooped in and suddenly it was about the big money, the Hollywood dream money.

Oh, well. What I was hoping to get out of self publishing hasn't changed. I still want to tell my stories (not some write to market cookie cutter whatever is selling now) and make a modest living. I get it, about keeping rights, that's sort of the indie thing. I don't think we need to start thinking like the traditional folks do, that it's all about getting a property that will become a cash cow. If we start thinking of it that way, we might as well do trad pub, with a good agent and some insider pull in Hollywood.

My feeling is, you (general you) do it your way, and let me do the same. There's still room for all of us here, even if we don't want to spend our time being marketing experts instead of writers.

[okey dokey]

QUOTE:
"I prefer to enjoy write as a hobby rather than to try and earn my daily bread from wordsmithing.

MY OPINION FROM THE RIGHT FIELD:

I would hate to have a tax examiner see that statement as he examines my tax deducations for a business I said I would do as a hobby instead of trying to make money.

[LilyBLily]

QUOTE:
"I prefer to enjoy write as a hobby rather than to try and earn my daily bread from wordsmithing.

MY OPINION FROM THE RIGHT FIELD:

I would hate to have a tax examiner see that statement as he examines my tax deductions for a business I said I would do as a hobby instead of trying to make money.

IANAL or a CPA.

However, if you read the IRS rules or just google some online advice, you'll see that hobby businesses are allowed to deduct expenses. They simply aren't allowed to take losses. If you break even or make a small profit, you should be fine. The problem with all home businesses is that most of them lose money and then the person involved--or the spouse--wants to take that loss against other taxable income. That is when the hobby determination comes into play. 

By the way, gamblers are allowed to deduct all their gambling losses against their winnings if they itemize, and there are plenty of hobby gamblers doing just that. If you see someone picking up tickets at the track that others have thrown down in disgust, you know that person is taking extra gambling losses. Now that casinos want all customers to have special cards and give them yearly printouts of their gaming, it's not as easy to get away with, but I'm sure some people still do.

I agree that someone who doesn't make a profit as an indie and who wants to deduct losses against other income should be careful about what is said publicly. The people who consistently take losses have historically been high on the IRS's hit list--but most of the time, the IRS goes after the ones whose businesses generate a lot of cash but little or no profit. The IRS is looking for big chunks of money first of all, although it does have a chilling history of spite audits of small fry.

So the easiest way to stop worrying about the hobby rule is to make a profit. 

[Arches]

QUOTE:
"I prefer to enjoy write as a hobby rather than to try and earn my daily bread from wordsmithing.

MY OPINION FROM THE RIGHT FIELD:

I would hate to have a tax examiner see that statement as he examines my tax deducations for a business I said I would do as a hobby instead of trying to make money.

Thanks for the advice on what to keep quiet about on a public forum, but Amazon has already blabbed to the IRS about all the money I've been making. The IRS wants some of those royalties, whether I consider writing a hobby or not.

As LilyBLily described, the tax rules are complicated, including hobby loss rules. Basically, they don't apply if you're making a net profit. I have had to learn a lot of new tax law to know what I can deduct, etc.

The main point I was trying to make remains the same--don't quit your day job to become a full-time writer. At least, don't quit until you're absolutely sure you can keep the money flowing as a writer for years to come. Publishing can be a very frustrating and unpredictable way to make a living, but it's a great hobby. From time to time, you might even find it very profitable , as I have.