8 August 2015 - 4:49 pm

Amazon vs Independence: Kindle Unlimited

(Picture: not mine)

(Picture: not mine)

Part of the Amazon is not your friend series. 

I’ve had this post percolating in the background for a while now, quietly collecting feedback and opinions, and ruminating on what I think it all means. As much as the name of this series might suggest a bias, I strive towards objectivity.

(I have to say: Amazon have yet to prove the title of this post series inaccurate.)

Let’s start at the beginning, then, and look at the path that the Kindle Unlimited program has trod.

How it started

It opened around the middle of last year: a shiny new subscription service for Amazon customers, whereby customers could pay just US$9.99 per month to borrow as many books as they wanted. It’s only available to KDP Select authors (that means only books exclusive to Amazon), and it is paid for out of the KDP Select Fund (which I have written about before).

How authors are paid is interesting, and has changed recently (more on that below). Originally, it was paid per ‘borrow’, which Amazon determines to be whenever a customer has read more than 10% of a book. At the end of the month, Amazon would tally up all the borrows in the KU program and Lenders’s Library, divide the total KDP Select Fund amount by that number, and then divvy out the money according to how many borrows each author had that month.

Sounds fair and logical, on the surface. But there were a lot of concerns raised about what it would do to the book market, and what it would mean for authors. A few months into the program, Smashwords’ Mark Coker raised the important question of: was this devaluing books? The amounts paid out per-borrow were proving to be very low, and not related to the value of the book in the paid market: it could be a 5,000-word short story or a 100,000-word novel; it could cost 99c or $9.99 to buy; regardless, borrows were all paid the same (typically, much less than they’d get paid for a sale of the same book).

Some authors saw an increase in earnings, but many were abandoning the program due to the massive drop in earnings they experienced, some as much as 75%. The success stories remain the exception to the rule, just as any success stories in publishing are.

KU has other problems as well. Its navigation is poor: customers have to search for regular, paid books, and then navigate to the KU version (if it has one). There’s a general feeling that the listings are too limited, which may be partially caused by the Big 5 publishers’ backlogs not being included, and partially by the KDP Select (and its exclusivity) requirement. (Sources: this review of KU, and one subscriber’s reasons for cancelling).

So, authors are being short-changed and readers aren’t having a great experience. The New York Times attributed at least some of this to loss leading:

“Amazon, though, may be willing to forgo some income in the short term to create a service that draws readers in and encourages them to buy other items. The books, in that sense, are loss leaders, although the writers take the loss, not Amazon.” (source; emphasis mine)

(I predicted this a while ago; they are like a supermarket in that way.)

Then there are the impacts of the pricing model, and the publishing behaviour that it started to drive. Authors are paid per-borrow, no matter how much their book is worth or how long it is. So, it was encouraging authors to turn out a lot of short books or chop them up into serial offerings to get more borrows.

The new KU

Recently, Amazon changed its pricing model for KU. For subscribers, nothing has changed. For authors, the story is quite different.

From July, KU now pays per page read, not per ‘borrow’.

This is expected to reward writers of longer works with more money, and thus curb the impetus to create more shorter works to ‘game’ the system.

Some claim that this will encourage writers to write better-quality stories, so that readers will stick with them for longer, but I think that’s somewhat hopeful. Writers should already write the best stories they can, so that readers pick up more of their books. I can’t see this making a huge difference in this regard.

There has been a lot of speculation about what this change will really mean. More money for authors! Less money for authors! Personally, I think both of these predictions are useless: not because they’re wrong (they’re actually both wrong and both right), but because they miss the fundamental truth that the amount of money being paid out to authors isn’t changing; only how it is being split up between authors.

It doesn’t help that Amazon used a really ridiculous example of what the payout would mean when they promoted this to authors. Their example used the price point of $10 per page. Predictions state that a more realistic figure is 1c per page, but it’s actually likely to be much less than that. It’s also likely that the KU borrows will still not produce anything like the revenue that an actual book sale would, too.

Amazon has also standardised what a ‘page’ is, to make the new payment system fairer. This is the only way to make the system work. I don’t think it’s worth worrying overmuch about what the exact definition of what a ‘page’ is, because what authors end up with is still a relative percentage of a fixed pot of money.

Some sources have questioned the ethos behind this move, likening it to only paying for the amount of a meal you eat at a restaurant. Others say that it means authors should earn every page read they get (i.e. write better stories). It’s also worth pointing out that, by making authors split a fixed amount of money, Amazon is limiting the amount that any author can earn from their work, and they’re forcing authors into direct competition with each other.

Something that I love about writing communities is how supportive and non-competitive they are. Encouraging readers to read more is never a bad thing, even if they aren’t reading our work. Amazon’s system doesn’t enable a supportive community: it does the opposite. It enables a competitive market, where to get ahead means pushing someone else down; to gain more, you have to take from someone else. That’s a sad turn of events in my mind.

This also harks back to a concern I’ve raised before: the KDP Select Fund is an arbitrary amount that Amazon decides to allocate to the program. It’s not tied to sales, subscriptions, or any other part of their actual business model. That means it’s not sustained by the book market, and is an artificial limit that Amazon have placed on authors’ revenues. This isn’t good for authors, any way you look at it; it’s good for Amazon. As Amazon encourages more readers to read more, the limited fund is splintered even more. Great for Amazon, but where’s the authors’ payout? It’s especially concerning when coupled with the fact that Amazon has never made any actual money: so, how can it be sustainable?

(Note: other subscription services like Scrib and Oyster tie their payments to their subscription income, and so their success is dependent on their business model. The royalties to authors are also a percentage of the sale price of the book, not an arbitrary amount. This is an ‘open’ system, where the more readers they have, the better for everyone. Amazon is a ‘closed’ system, where the success of the subscription service doesn’t flow through to the authors at all.)

So why all this fuss over the payment model? Why did they change it? Speculation seems to be on the side of Amazon trying to counter the ‘gaming’ of the 10%=borrow system that encouraged more short books. I suspect that’s true. On the surface, it produce a fairer system for short books vs long books.

But what about different genres that typically earn different amounts? Erotic shorts, for example, tend to be higher-priced than non-erotic shorts (if you buy the book outright rather than borrow it). This move doesn’t attempt to address the disparity between the value of the actual book and the revenue returned to the author. There have also been concerns raised about how this might impact non-fiction books, which may not be typically read from cover to cover, and choose-your-own adventure books.

What I find most disturbing about this change is that it’s proof of how much information Amazon is collecting about its customers. Not only do they know what books we have in our library, but how many exact pages we’ve read of them. What other data are they collecting?

(Interestingly, several of the authors I’ve read blog about this subject have said that the exclusivity requirement means they won’t go into KU any time soon. This is also my position.)

The rumblings that I’m hearing on the grapevine indicate that authors are becoming increasingly disillusioned with KU and leaving in numbers. The big publishers opted out before it started. I can’t see this particular change having any impact on this trend.

As far as I’m concerned, Amazon is a leopard that hasn’t changed its spots: it’s still a wild thing interested only in its own survival. Use with caution and look after yourself!

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  1. Francisco says:

    The privacy implications of e-readers is one of the reasons that I will NEVER get an e-reader. The other is the fact that books on e-readers can be deleted (and by implication amended) at a moment’s notice without the knowledge of the owner of the device.

    August 9th, 2015 at 2:39 pm

  2. Mel says:

    Yup, that’s just the tip of the iceberg for what they can do with an e-reader. I think there are Kindle apps out there as well, and I’d be concerned about putting it on any device. Maybe tracking reading habits isn’t all that scary in the scheme of things, but who knows what else they’re collecting?

    Microsoft has some really scary data gathering policies built into Windows 10, too. None of it makes me comfortable or happy.

    August 9th, 2015 at 4:23 pm

  3. Leslie Slightam says:

    And, since it s streaming sampling, there s no guarantee that any of the Kindle Unlimited customers will then become part of your core audience and follow you to Kindle Select or Kindle regular. So again, the issue is are the extra marketing and publicity services of Kindle Select worth putting all your eggs in Amazon s basket and letting them farm you out for revenue that mostly goes to them and may not increase or even possibly decrease your non-streaming buying audience.

    September 2nd, 2015 at 6:33 am

  4. Mel says:

    Hi and welcome, Leslie!

    That’s so true. Some authors have found better returns with KU, but I haven’t seen much about knock-on sales. A lot of authors are seeing a drop in returns, and many have been leaving KU as a result. So I guess it’s starting to show just how good it really is.

    September 2nd, 2015 at 8:47 am

  5. Amazon vs Authors: Review policing : : Adventures in Text says:

    […] There are a couple of things about this that deeply disturb me. First (and probably least), Amazon is gathering a lot of information about its authors and customers, in order to be able to identify these relationships. It’s unclear if this data-mining is done purely through Amazon’s site (and links from author pages to blogs, Twitter feeds, etc), or if it casts a wider net. Just how much is it watching us? (Though this is hardly surprising in light of what we know it can scrape off its customers’ Kin….) […]

    September 2nd, 2015 at 6:30 pm