Ebook Direct Sales, Part II

24 hours later, and I’ve discovered several things about doing direct ebook sales online. Not the least of which was that Payhip’s fancy little “Buy Now” widgets don’t come through on LiveJournal and other automatically-mirrored sites. Oops!

More significantly, there are two areas I wanted to talk about based on comments, emails, etc.

1. But Jim, most readers don’t want the hassle of sideloading files onto their e-reading platform.

Selling ebooks directly means you get the .mobi, .epub, and .pdf files. Not everyone knows how to get those files onto their e-reader of choice. I get that. This isn’t for everyone. Some people — maybe even the majority of people — will prefer the convenience of one-click buying at Amazon and having the story automatically appear on their Kindle. (Or B&N –> Nook, iBooks –> iPad, and so on.)

Then I read comments like:

It doesn’t matter how easy it is for us to set-up; if a reader can’t figure out how to sideload the book, the first sale will be the last. There are far too many who don’t know how to get the most out of their e-readers and tablets, and side-loading may be beyond their skills for whatever reason. And even fewer will download Send to Kindle.

I’m not linking to this one, because I don’t want to argue with or put a spotlight on the person who said it. It’s felt to me like the message wasn’t, “a lot of people prefer to buy ebooks from Amazon and other vendors,” but “direct sales are a waste of time because too many readers don’t know how to load the files.”

It’s not an either/or thing. My Bookstore page still has links to Amazon, B&N, Kobo, Indiebound, and so on. As of yesterday, it also has links for people to directly purchase my self-published work. Since it’s relatively easy for me to set up and costs me nothing now that the links are out there, I’m not seeing the downside. I’ve had 28 sales in the first 24 hours. Maybe I’ll only get a handful more this year, now that the initial wave has passed. But that’s still a handful of sales I might not have gotten otherwise.

And there are some people who like the security of owning the actual e-book files, as opposed to having them stored and hosted by a company that could theoretically engage in shenanigans and delete those books from your device.

(I do think I may write up some basic instructions on how to load files into various e-readers and add that to the .zip file bundles, though.)

2. Sales Tax.

Aw, crap. I’m selling stuff directly. That means I have to figure out tax stuff.

Obvious disclaimer: I’m not a tax lawyer, accountant, or anything like that, and you should not take any of this as personal tax advice.

For sales to certain other countries, that means Value-Added Tax (VAT). Author Juliet McKenna is part of EUVATAction, which has a lot of useful information on how VAT works. McKenna has also been campaigning against the law, because it’s an elephantine pain in the ass for small businesses.

If you’re located in the U.S. like me, then  yes, you have to worry about VAT for European Union countries. Fortunately, Payhip takes care of that automatically, adding the applicable VAT to the purchase price and making sure that money gets where it needs to go.

Payhip does not, however, take care of State Sales Tax. And state tax laws vary from one state to the next, which means you have to figure out things like:

• Does my state charge sales tax on electronic books?
• Do I have to collect sales tax on sales within my state?
• What about sales to other states?

Do your research, and get help from people who know what the hell they’re talking about.

Right now, it sounds like roughly half of the states in the U.S. tax sales of e-books. Michigan does not appear to be one of them. Michigan sales tax law states, “A Michigan sales tax license shall be obtained by every person selling tangible personal property at retail.” (Emphasis added)

In Michigan, sales tax needs to be collected on tangible goods, which excludes things like e-books. As long as I don’t start doing mail-order sales of physical books, which I really don’t want to get into, I’m good for the moment. I would not be surprised at all to see this law change in the not-too-distant future, though.

What about sales to people in other states? The way the laws appear to work is that you have to collect sales tax for any state where you have a physical nexus — in other words, if you’re physically located in a state, have a warehouse in that state, or travel to that state to sell stuff. This means yes, theoretically, if you fly to Alaska and hand-sell some of your books at a convention, you’d be expected to collect and remit state sales tax. (Assuming Alaska collects sales tax? I dunno, and I’m feeling too damn lazy to look it up right now.)

So, I stay in Michigan, and someone from Alaska buys my ebook directly through my website. My understanding is that I don’t worry about sales tax, and when that person fills out their state tax forms next year, they mention paying $2.99 for an ebook from another state, and pay Alaska their sales tax as part of their state tax return. (If you do your own taxes, you might remember that question about purchasing items from other states that you didn’t pay tax on.)

I will be following up with the Michigan Treasury Dept. tax folks to make sure my understanding on this is correct. I can’t emphasize enough the need to do your own research and talk to the experts. But I think (hope), for the moment, it’s a non-issue for me.

So, anything I missed? Or anything I’ve managed to get completely wrong?