The second in our series of blogs looking at what authors earns looks at the statistics cited in Hugh Howey's Author Earnings report. As we might expect from an author who has benefited significantly from being self-published and is a prominent member of the pro-indie author lobby, he is more optimistic and more bullish about the earning potential of authors than the ALCS research we covered in our last blog.

The most recent data released by Author Earnings has scraped data on 30,000 authors and 500 new annual debuts and used this data to estimate how much debut authors could be earning from eBooks. The report acknowledges that this is partial in looking only at Amazon sales and only taking eBook revenue into account, but its projections suggest that some authors are doing very well out of self-publishing indeed. If we assume that Author Earnings' data is reliable (and it is something of a black box) then a greater proportion of self-published writers are earning $10,000 or more from writing than traditionally published writers. The proportion of self-published authors also increases the further we move up the income scale.

According to this data, of the 140 authors earning $100,000 or more from their Kindle eBooks, 100 of these are self-published, with just under 20 published by the Big Five publishers in the US. Howey goes on to extrapolate what that says about writers earning a living wage from their books, and makes the claim that self-publishing is the most effective way to do it.

Howey has published his research findings as graphs on Author Earnings. The graphs themselves are not particularly user friendly but worth looking at if you're interested in examining this topic in detail.

According to Author Earnings' data, c. 1300 authors who made their Kindle debut in 2013 are earning $10,000+ a year from writing. Of those, just over 300 are earning $50,000+ and 140 earned $100,000 or more from selling ebooks on Amazon alone last year.

When we break down the authors making $10,000 or more we see that just over 600 of them are self-published, 245 of them were published by 'Big Five' companies and a further 200 or so published by small or medium-sized publishers. When we look at the authors making $100,000 or more, however, a different picture emerges. Of the 140 authors achieving this level of revenue from Kindle eBooks, 100 were self-published and fewer than 20 were published by the Big Five.

This data seems to suggest that 2013 was a golden year to self-publish a book. The important caveat to put on it that it extrapolates everything from two data snapshots taken in February and April 2014, and thus its conclusions are bound to be weighted in favour of recently released titles.

As we saw when we looked at Author Earnings data back in January, before we accept its conclusions it's very important to take into account both the limitations of this data set and its methods, for the following reasons: -

1. There are still long odds on becoming a bestseller - While Howey writes forcefully about how more self-published authors than ever before are making serious money from their efforts, he is still talking about a tiny proportion of the market. 100 debut authors may have made $100,000 or more from publishing their books on Kindle, but recent Bowker research suggests that 391,000 eBooks were self-published in the US alone last year. The odds of becoming one of those 100 are still very small

2. Amazon is not the only game in town - Amazon may have 60% of the US eBook market sewn up if Hachette's market share breakdowns can be applied across other publishers, but this still leaves a lot of author earning potential uncounted.

3. Even 'low' earners are the lucky ones - One of the biggest disadvantages of Author Earnings' approach is that it bases its conclusions on how titles move up and down Amazon's bestseller lists. This means that it concentrates its analysis on the comparatively few titles that trouble these charts. Howey makes the point that in order to make a living you don't have to be in the top 200 but you might need to be in the top 2,000. But a title that reaches 2,000 is still in competition with the other 391,000 titles published that year and Amazon's historic catalogue of more than a million titles.

The scale of the challenge facing an author who wants to break into that Top 2,000 was starkly illustrated by RCS Libri's Marcello Vena in a whitepaper published on Digital Book World entitled The Lost Tail: The Myth of Book Publishing's Long Tail. The whitepaper is free to download and well worth reading. It argues that growing reliance on online sales has actually concentrated the power of a blockbuster rather than handed more commercial power to the long tail of low-selling titles. In RCS Libri's case, whereas in 2011 23% of titles were responsible for 80% of the companies revenue, last year it derived 80% of revenue from only 15% of titles.

The whitepaper then goes on to identify one chief reason for ever increasing mightiness of the blockbuster: over-concentration in the retail market. With fewer retail outlets to choose from, there are fewer chances for a greater range of titles to break through.