The Smart Contract Future: Freeing Creatives from Amazon Forever

How do I Hate Thee, Amazon? Let Me Count the Ways. The technology I’m about to discuss will inevitably blow Amazon out of the creative content market, and the list below, of how awful Amazon is to content creators, is why it’s going to happen so much faster that the tech alone would dictate…

As a self published writer and audiobook producer for five years now, I’ve seen every ugly trick Amazon has up their sleeves. They’ve finished their Walmart-ization of the ebook publishing industry, luring us all in with absurdly high KU royalties for exclusivity, destroying all competing platforms, and then, just like Walmart, saying to their suppliers, “We’re the only game in town now, so we’re cutting the price we pay you and you can like it or… well, go out of business.”

But there’s hope for us, not in the form of a new website, but a new technology, one that’s as truly “disruptive” to old content provision models as Amazon itself once was to shopping.

I became interested in blockchain technology when I started researching Bitcoin for Marc and Jesse’s second adventure, Strength in Numbers. Basically, a blockchain is an online set of records that nobody can destroy, or doctor, because copies of it exist on countless thousands of computers, each of them updated with the latest transaction. I won’t get into all that can be done with that, but I’ll just jump ahead to how it affects us, content creators, and you, content consumers.

One version of this blockchain technology is called Ethereum. This allows people to create “smart contracts,” a way of doing business without any intermediaries – no banks, no routing systems… and no retailers. A “smart contract” is a program that, once written, can’t be tampered with. And it executes the whole routine every time its first requirement is fulfilled (like you making a book purchase, for instance).

So that none of this involves a bank or a government currency, a cryptocurrency is used for the transactions, called Ether. You can buy it on exchanges just as you could any foreign currency that you needed to go on vacation, only you keep this currency online..

Let’s say I write a new book, and rather than subbing it to Amazon, I create a “smart contract” that’s set up to sell the book. You’ll need some of that Ether to buy my book.

Edit: buying that ether will probably be easier than I thought, now that I think about in-app purchases already done on your phone or tablet. The transfer from your credit card in app purchase into ether, and then ether to me will be transparent to the user.

Just as you do with your Kindle now, you’ll have a software program that lets you “one click” a new book (Amazon’s patent on one click expires this year), add it to your library, and read it wherever you want. The contract will take your money, send a signal to my web hosting service, and it’ll send a copy of my book to your device.

But here’s where it gets better for you. First off, unlike Amazon’s TOS, if I say so in the contract, that ebook belongs to YOU. If you want to resell that used book on the open market, or give it to a friend, or donate it to a library, just like we all do with paper books, nobody’s stopping you. There’s nobody to arbitrarily close your account or pull the books off your device, or make it like pulling teeth to read something on it you didn’t buy from Amazon.

OH, and you’re not locked into one app for reading. People who are comfortable now buying books off sites other than Amazon are used to this idea, that books come in a generic format (EPUB) and there’s all kinds of software you can choose from to read them with. If someone makes a change to a reading app and you say, “Oh I hate this,” unlike Kindle’s mandatory software, you can just… switch.

Just like one-clicking on Amazon, delivery is instantaneous, because the software initiates the delivery as soon as you’ve paid. (That’s why the smart contracts are called “trustless” because there’s no opportunity for anyone to take the money and run without delivering.)

And why, some people might ask, would this ever happen? I’m a customer, and I’m happy with Amazon. Why should I change?

That’s easy. Because those of us whose content you’re consuming? We’re gonna change. We’re gonna GTFO Amazon Junction as soon as we can.

Take a look at all the reasons we’d want to do that.

Let’s start with “delivery costs”

Here’s a picture of one of my royalty reports. Each title over .99 has an “average file size” and an associated “delivery cost” based on that.

So. Every $2.99 copy of Given the Circumstances is charged a $0.07 “delivery cost” off the price, before royalties are calculated. Which means my royalty is $2.04 instead of $2.09. And Amazon’s claim that they pay a 70% royalty? Bullshit. In this case, it’s 68% after that hidden charge.

Yes. Electricity, Internet access and data storage are so tremendously expensive that it costs Amazon SEVEN CENTS every time you download that ebook. Five cents of which are passed on to me. The USPS can deliver a letter across the country for 46 cents, but it costs Amazon up to 9 cents to deliver one of my ebooks over the Internet?

What this means for you is lower ebook prices. If I’m making 100% of the sale price and not 70… er, 68%, I can afford to sell it to you at $2.25 instead of $2.99, and I’m still making more than I did off Amazon.

The “Green Eyeshade” Scam

This is by no means exclusive to Amazon, but extends across all media. Once upon a time, a publishing house had a rational reason for putting out royalty statements, and checks, every six months. It would take six months for all the sales data to come in from across the country, and then another six months for a little old man in a back room, wearing a green eyeshade, to push the buttons and turn the crank, over and over, to run the numbers.

That report would then have to be typed up by the typing pool, who’d then send it to accounting, who’d then run the checks once a month, and put it in the snail mail, where it would eventually reach an agent and then, the lag time depending on the overall snakiness of the agent, sooner or later reach the author. The whole thing was so complex, it could only be done twice a year.

But now? Amazon updates my ebook sales figures with a lag of only a few hours. I can see when a promotional email from BookBub started hitting inboxes, because sales numbers would rise exponentially over the course of the day. And Amazon is collecting that money, in real time. There’s no bookstore chain getting invoiced with 90 days to pay. There’s no distributor keeping a “reserve on return,” the old estimate of how many books would be returned unread, that unscrupulous publishers still hold back on royalty statements.

No. If 1,000 copies sell on June 1, Amazon gets the money on June 1. But you, the author? You get paid 60 days after the sale month. You get paid August 31. (After the “delivery costs” have been subtracted, of course.)

Why? Because the old model still works for them, the publishing industry (and the film industry, and the recording industry), even though the accounting is done instantaneously. They get to sit on that money and earn interest on it, or invest it, while you sit and wait for it.

BUT in a Smart Contract system, I get paid the minute you make a purchase.

That’s right. There are small costs to me (a site to host the book files, a programmer to write the contract), but other than that? That’s it. The money goes from your wallet to my wallet (A “wallet” is the file you use to hold your cryptocurrency). And I can turn around and spend it, that day. Not 90 days from now. Not minus some bullshit “delivery costs.”

Edit: this also protects authors and readers from clusterfucks like the AllRomanceEbooks collapse that left authors without royalties and many readers without their saved books… 

The Whispersync Vampire

Amazon’s audiobook subsidiary Audible prices audiobooks on the basis of “words by the yard.” A book under 5 hours will be priced at $14.95, 5 to 10 at $19.95, etc. Audible’s Audiobook Creation Exchange (ACX) lures you into thinking that you’d be wise to go exclusive with them, and have your audio distributed exclusive through Audible, Amazon and ITunes. After all, you see a 40% royalty on exclusivity, rather than the 25% you get if you “go wide,” and use other distributors or sites like Audiobooks.com.

But. If you’re an independent content provider, you don’t have any control over pricing on what Amazon calls “Whispersync.” This is an ebook reader’s option of adding the audiobook to their ebook for a fraction of the price, as long as the audiobook is a word-for-word copy of the ebook.

I can set up a 7 hour, ACX-exclusive audiobook, that gets priced at $19.95… but all the book’s previous buyers can now add a “Whispersync’d” version for $3.49. And all a new reader needs to do is buy a $4.99 ebook and then add the audio for $3.49. Oh, and wait. If you put your book on sale for $.99? Your Whispersync version price will drop to $1.99. And stay there.

So instead of $8.00, or 40% of a $19.95 sale, or of $14.95, the default amount used when a user spends their monthly Audible credit, I get $1.40 or less for a whole audiobook purchase.

With a smart contract, I have complete control over pricing. No retailer can whimsically decide to change the price on me.

And more than any other reason to leave Amazon… The Kremlizon Itself

And when something goes wrong in your business relationship with Amazon?

Trying to get any information from Amazon on… anything results in Death By Form Letter, with each complaint or request for information answered with a new form letter, triggered by your replying to the last one. Until eventually your ragged persistence gets you an email from (maybe?) an actual person, who will answer you for the most part in paragraphs cut and pasted from policies and procedures.

If, as is happening recently, pirates put your Amazon-exclusive books up on iTunes, Amazon brings the hammer down on… you, for violating KU TOS, and threatening to close your account. Convincing them that this isn’t your doing is a full time job in itself.

Then you have Amazon’s policy on what constitutes unacceptable content. It has and always will be, “What we deem offensive is probably about what you would expect.” What who expects? Mike Pence? The standards on what they will “block” (CENSOR being a doubleplusungood word they don’t use that… means the exact same thing) are therefore something they can change from day to day without explaining to anyone what those standards are now, that they weren’t yesterday.

Amazon has made major compensation structure changes with one week’s notice. They’ll ignore our shouts and cries about scammers gaming the compensation system, and then, after months of silence, they’ll abruptly change that system in a manner that punishes the just and the unjust alike.

Amazon’s return policy is, for authors, completely insane. Unlike tradpub ebooks, indie ebooks can be returned… forever. I’ve seen books that were years old, not even available for sale anymore, returned for refunds.

In conclusion… There is no reason any sane content provider will stay with Amazon the minute we don’t have to.

Smart contracts are the future, in business, in law, in entertainment. Amazon will be tomorrow’s MySpace, at least in the creative realm (I’m sure they’ll keep selling lots of discontinued crayons on Prime Day for ever).

Imagine this: The smart contract could divide percentages of royalties among author, editor, cover designer, sales and marketing team, etc. This will allow a newbie author to break down one of the biggest barriers, their inability to pay for sharp covers, good editing, and aggressive and effective promotion… AND, it would free them ALL from a publisher’s Green Eyeshade Compensation Method 😊.

Just as narrators and writers do a “royalty split” now on audiobooks, the narrator betting on the success of the product, so too can writers split with a high quality team, with the lure of “forever residuals” for all parties.

Is this science fiction? Nope. There’s already a startup called SingularDTV that is aiming to do this for film and TV content providers. They’ll be hosting content, and that content will be set up with smart contracts so that the investor, the director, the actors, even down to the gaffer and the gofer, can get a piece of the action. And… yes, the minute their movie is rented or purchased, the money goes to their Ether wallets. Not years after Hollywood’s creative accounting “proves” there never was a profit.

So listen up, Jeffie. I know you don’t care, because you’re making so much money now on detergent and whatnot, but, your reign of terror in the ebook world is coming to a close. And not a minute too soon.

5 Comments on The Smart Contract Future: Freeing Creatives from Amazon Forever

  1. Reblogged this on Love's Last Refuge and commented:
    Great post!

  2. What an incredible idea! I’m eagerly looking forward to seeing this implemented. I have 3 areas of questions for you.

    1. What kind of devices can use the ePUB format? I have a Kindle (several, actually) which is much easier to use for reading than a computer, but it only accepts mobi files or Word and PDF files for conversion. I would feel much better having my reading material on a device that isn’t controlled by Amazon. Would such a device also be able to convert Word and PDF files? It would be ideal to have all my digital reading material in one place. What about books I’ve already purchased from Amazon? Would it be possible to load them onto this ePub device?

    2. I’m totally clueless about buying eMoney. What is the symbol for Ether? Can it be purchased through a traditional broker like TD Ameritrade or Scottrade? Which exchange is it listed on? Where is it “stored?” If I buy it through a broker, won’t the broker have to report it to the IRS when it is used/sold?

    3. Will you be able to get your existing books back from Amazon and if so when? Do they currently have exclusive rights to sell your work?

    I know you’ll keep us updated on this new technology and am looking forward to learning more!

    • Thanks! 1,any Android or Apple phone or tablet. Lots of free apps, I like Moon Reader. There are already kindle apps for them, so you could keep reading your Amazon purchases there. Calibre is free software for PC that creates ebooks from word docs, I use it to create my EPUBs. Of course, you’re still stuck with the Amazon software to read Amazon purchases…

      2, it’s for sale on specialty exchanges now, coinbase is the easiest to use, I think Bittrex is the most secure, though. It’s initially stored on the exchange like money, though there’s lots of reasons to move it offline, way too complex for me to get into here, but Google offline crypto wallet and you’ll get lots of info.

      3. They’re exclusive 90 days at a time, so I can take them out of Kindle Unlimited and then sell them elsewhere.

      Great questions!

  3. The only caveat is that BitCoin hasn’t gained the traction it once garnered in the press. It was seen as the way forward and to a degree its met that, but it hasn’t been the big financial panacea that many envisioned. It’ll be interesting to see where this tech goes and if it gains the following that it deserves. The old system is a dinosaur but it’s also so large that unseating it won’t be an overnight thing. Not by a bloody long shot.

    • True but Amazon destroyed Barnes & Noble, Facebook destroyed my space, Etc. Ethereum is a much more stable community of developers that bitcoin, though it has its own problems with some wild west get rich quick schemes right now. Big Banks and governments are already using the fundamental blockchain Tech of ethereum so there are lots of Developers emerging and lots of acceptance of the platform. It didn’t take long for Facebook to kill Myspace though 🙂

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