Back when the possibility of publishing online was just a gleam in the eyes of some of us, we started trying to figure out how this would turn into money we could live on. These discussions took place online and at every convention I attended, and involved a lot of brainstorming. Publishers were just starting to demand electronic righrts, even if they had no immediate plans for producing e-books. We knew some readers wanted to read books on their computers; we knew others did not (hated reading on screen.) We knew that effective e-readers were years away, largely because the technology for really light, very readable screens, and devices with very long battery life, weren't there yet. But we were not "head in the sand"...we were trying to figure out which way the bandwagon was going to start rolling, and when to jump on it. We could already see the downside: with the lowered cost of scanners and OCR software, people were beginning to scan our books and share the files with others. And no, boys and girls, this did not result in a bump in our actual sales figures. Instead, some of us (including me) got snarky emails trumpeting the fact that "I read your new book and I didn't pay a penny for it, ha-ha-ha!" That dampened the enthusiasm of some (not all) for the new model-less business model.
Several of the ideas launched in those early discussions among writers were tried out with short fiction and later with books. Several problems emerged. One was that the internet was beginning to flood with a lot of non-professional reading material, all of it free for the reading. The writers of this were glad to have any readers; they'd never expected their writing to make them money. A few of them were very good. Most of them would never have achieved publication by magazines or book publishers. Internet readers vary in their discriminating tastes, let's say, and for some this glut of not-so-great was good enough--and it was FREE--and they began to complain about the cost of professional fiction. One response to that was to consider how to offer online readers a guarantee of quality. Thus online magazines were born, with editorial staff and a payment scheme for the writers. Another response was to consider having websites shared by several writers, all of them professionally published, with stories/books available there for download. Another problem, though, was that anything on the internet could be, and was, instantly copied elsewhere and shared elsewhere--which was a leak in the money-collecting bucket. Turns out an astonishing number of people think writers are overpaid and underworked, and that they "should" write just for the satisfaction of having readers. (So maybe power companies should give us free electricity just for the joy of seeing so many homes light up at night...and farmers should give away their crops just for the satisfaction of knowing people have enough to eat...and politicians should work for free just for the satisfaction of creating good government...sure.)
The first idea that I saw show up was the internet equivalent of the "loss leader." A loss leader is an item sold below cost to get people into the store. Loss leaders work for most merchandise, but there's a problem when customers start thinking the loss leader price should be the regular price. "If you can sell if for 30% off today, why can't you sell it for 30% less all the time?" (Because you'd go broke, that's why. Or, like Wal-Mart, you'd have to pressure your suppliers to cut costs to the point where their workers aren't making a living wage.) And not everything can be a loss leader. Books are particularly problematic. It takes me a year to write a book, on average--and it's a full-time job. Some people are faster (2 books a year) and some are slower (a book every other year or so.) If I treat a book as a loss leader, that's a long time to live with no income. Stories are easier (quicker to write) but some book readers don't like short fiction. Hmmm. (There was a lot of "Hmmm" in those early discussions.)
So: free stories as loss leaders. Initially, with mostly pro writers doing this, a lot of people read them and some (not all) produced additional sales. Individual experiments in putting up fiction "free" had varied results, largely dependent on the writer's fan base and ability to communicate with them...to get them to the writer's website and actually reading the offered material. Without the social media we have now, that meant the writer spending time on emails, listservs, email newsletters, etc. A little later, blogging on their own or another's blogsite. The idea was that free fiction would introduce the reader to the writer's work, and then at least some of those readers would go buy something somewhere. For writers whose works appealed to "early adopters" of reading online, this sometimes worked, but not for everyone. The reading experience online--in those days, always sitting at a computer and reading (at best) simple HTML or pdf--was unpleasant for many readers (and still is.) Some writers gave up on the notion; others thought later tech and internet changes might make it viable. Many writers now have some free fiction up on some (all) of their sites. (And most writers have websites now.)
Then came "free with request for donations if you like it." This was supposed to evoke the wave of money from grateful readers that some of us were told early on would bury us in cash. Early experiments (all this is before e-readers and nearly all social media--there was no MySpace or Facebook or Twitter and I think LiveJournal was later than I'm talking about now) showed that in order to get anything equivalent to a print publication out of a "please donate something" button, you had to attract an unlikely number of readers to that site and for that piece. Several online magazines went down the tubes that way--people simply did not donate enough to keep the site alive, let alone pay contributors. (Online newspapers have found the same thing--people will happily read free material and they won't pay voluntarily at a rate to pay for the site.) These magazines might have succeeded if they had had a huge readership to start with, but starting from scratch to build one, and having no other funding source, they did not have anyone (but the founders) already committed to their financial survival. The same is true of individual writers, of course. Building a fan base that cares whether you have money for the phone bill or your cat's visit to the vet takes time. Most people do not throw money at every "please donate if you like this" button on the internet...they don't like it that much. Moreover, some people react badly to donation buttons, storm off in a huff, and complain that the writer is nothing but a money-grubbing hack.
A third experiment involved the 'storyteller's bowl' model, something we felt would only work for writers with a name and following already, in which those who wanted the story would contribute upfront, and when a set amount had been reached, the story or books would be written. In fact, this method (now called "crowd funding") has been used, and is in use now, in several variations. As expected, it has been most effective for those who already had a fan base, and least useful to those with none. The fan base did not have to be for the writer's previous fiction: several bloggers with large readerships for their nonfiction blogs were successful with internet funding a fiction book--their fan base was big enough, and willing to support their fiction. Writers have tried out "whole funding first" (waiting to produce the book until they had the "advance") and "serial funding" where they write each chapter as it is "paid for". The latter has worked for Sharon Lee and Steve Miller in their Liaden Universe books (which were orphaned by the collapse of their former publisher years back.) It got them over the bad patch and back into traditional publishing, but it was a squeaky thing. They offered extras for those who donated more to the "bowl"--such as a print version of the final book--but have commented that there were hitches in that getalong they had not anticipated. (As with any print publication, a rise in the price of paper, or shipping, can erode the profit margin.) They are still doing self-publishing online (typically with shorter works related to their long ones--side stories); the pure "donation" model brings in something, but not usually equivalent to professional markets and not enough to live on, and they're publishing conventionally as well.
The rise of social media has improved the chances for a free-donation-funded publishing project to work but (drawing on comments from writers I know who have tried it, right up to the present) the results are still highly variable, dependent on the writer's previously-acquired fan base size and the exact nature of the project. And some blind luck. It is much easier now to let people know about your new story or book; writers typically have multiple social-media accounts. There's still a problem that some people are offended if a writer's social media site (or website, for that matter) is focused all (or more than that person likes) on the writer's business of writing. Others are upset if it isn't all about the books/stories/writing. And despite websites, blogs, social media...some people still will not get the word that there's information out there from that writer. For some writers, the time it takes to post in the various social media, update the website, and format the work available on their site is not repaid by the money that comes in from donations. For others it is. Writers, like anyone else, continue to do what's worked for them, if it's still working...so if they hit it with their first free-but-please-donate project, they'll do more of that, and if they don't, they'll try something else.
Along with social media, the development of useful e-readers (something we writers saw coming years before they made it to market--the developers would come to conferences and talk about their latest projects) has enabled writers to penetrate the book-reading market more independently than before. By this time, many writers were adept with computer files and changing formats. Many of us had worked with Adobe products, coded our own websites with HTML (and some hadn't--I quit doing that to write more fiction and hired a friend to do the coding. My days were full already.) Once upon a time, when publisher let a book go out of print for the last time, all a writer could do was revert the rights and try to find another publisher. Sometimes works--one of mine was picked up by another publisher. More often, these out of print books languished with no outlet. But not now. Older books can be e-published by either a speciality e-publisher or by the writer. What was once a liability (a backlist out of print) has become an asset--available for experiments in e-publishing.
Many writers are experimenting with self-publishing as e-books (or as a mix of e-books and print-on-demand)--either original fiction or books to which they have the rights reverted. This corner of the market has grown with the growth of both social media (allowing much easier communication with the fan base, both to let them know what's coming and to get their reaction to things) and the e-reader market. Along with that has come the ability to create marketable (marketable just like any other book) e-books that can be purchased through known outlets like Amazon. And another benefit is the ability to create "covers" for these e-books as attractive as the covers on the original books (which can't be used without permission of the original publisher and the artist.) Some writers are good enough photographers and artists to make their own covers, but a niche market for digital artists has arisen doing covers for self-published e-books. I have a friend who's been instrumental in developing the website and the back-side stuff for a lot of self-published backlist e-books (and has a number of her own up now.) One of the things learned from individual and small-group attempts is that it takes time--years, in fact--to build an audience willing to pay money for fiction on a given site, in an environment where there's a ton of it out there for free. Some of these sites and groups are beginning to get traction now, but they're several years old at this point.
Over the past decade and a half, I've heard of the success or failure of many ideas of generating income from writing fiction online--like many other writers, I'm not only in "open" forums like this one, but in closed listservs of writers who are, and have been, trying to figure out how to continue to make a living as storytellers. As those groups are not thrilled when a member reveals all to the outside world...I'm not revealing anything you couldn't find out elsewhere: no names, no pack drill. (Lee & Miller have written extensively about their experiments on their own open site.) We're not pretending change isn't happening, or refusing to get our heads out of the sand--but we're also not risking our survival on unproven bright ideas. What the gurus of the internet told us--that we should admit that storytellers won't ever make a living again and we should teach, or do journalism, or some other form of not-doing-what-we-do-best--has so far not been true, though it's become harder to make a living. And though traditional publishing is regularly announced to be dying, it still provides--for those who can hang on--a more stable income flow than otherwise. (Keeping in mind that writer income has never been as stable, as predictable, as a regular paycheck. For full-time writers, with no other income source, this uncertainty is one of the few predictable things about writing for a living.) Recently (as in, the past six months) with the growth in the sales of e-readers, sales of the backlist books and new books published by established writers have gone up--an excellent thing for writers.
It's still more difficult for writers without an established fan base or some way of attracting one (other than just writing good stories.) This is troubling, as new writers start out without that fan base--unless they're famous for something else. And being pretty or a good singer or a comedian or getting your wilder escapades on YouTube does not necessarily translate into being a good writer...while many good young writers are (as good young writers have been in general for a very long time) just not that good at anything but writing. Getting good at other stuff too takes time...and time away from writing. People just don't pay unknowns that much (on the whole--yes, there are always exceptions, outliers.) Neither did trad publishing, but at least they got the name and the book out there into bookstores, where people expected to find new books.
But. The fact remains that one model beloved of the early internet-fiction enthusiasts--that putting something up for free would automatically generate tons of income from grateful readers--hasn't worked at a level that allows writers to pay the bills year after year. Maybe it will someday. But not yet. The crowd-funding approach has worked for some and shows promise for more. E-books selling through Amazon and other online outlets is showing more promise now than a year ago. Pilot projects trying out variant funding methods have been going on and are still going on, and as conditions change any one of them may turn out to be a viable model....for some, at least. In the meantime, readers should understand that writers are trying to both write their stories and find new models of distributing those stories that will pay the bills. It is simply not true that writers are ignoring the present (and future) and doing nothing.