Wednesday, February 8, 2012

KDP Select—A Good or Bad Idea?

Here's a question for everyone: do you have an ebook reader? I would really like to know. I know three people who have Nooks, two who have Kindles, and one who has an iPad. I'd like to get an idea of how many people out there have what. So, I've set up a survey on the right. Please click on one of the answers.
With the release of my book fast approaching, I'm looking more closely at the various distribution options. One of which is a program offered by Amazon.
Amazon has produced an intriguing carrot to dangle before authors: their KDPSelect Fund. Amazon sets up a monthly fund (currently $600K) for authors who agree to allow their book to be borrowed for free by Amazon Prime members and give Amazon a 90-day exclusive on the book. In exchange, during each of those three months the author gets paid a percentage from the fund equal to the percentage that his title was borrowed by prime members. If 100,000 prime members borrowed books in one month, and 1,500 of them chose my book, then I would get paid 1.5% of that month's fund amount. That would mean that my 1.5% of $600K would be $9,000. And if someone likes my book, that person can buy it, so I technically get paid twice for one sale. Bonus!
I could actually make more money by letting people borrow my book for free than I would selling my book! Without excluding the possibility of the sale. It may sound too good to be true, but that is how Amazon has set it up. The KDPSelect program truly does work that way.
Amazon Prime members pay $80 per year for extra privileges and perks. One of these is access to the Kindle Owners Lending Library. This library differs from the program that allows a Kindle owner to lend a title the owner purchased to a friend. This library is for prime members and gives them access to a library from which they can borrow an exclusive title for free.
Amazon benefits as well, getting an $80 sale for each member, plus they get exclusive distribution of a given ebook title for 90 days before any other distributors can offer that ebook title. Amazon gets a head start, and it encourages consumers to look more closely at buying a Kindle because of the possibility of hot titles being available on that platform first. Amazon customers who are avid readers get the benefit of being able to read the hottest new titles—exclusive from Amazon—for free. And the authors benefit as I outlined above.
So, if this is such a Win!-Win!-Win! program, why am I being so hesitant?
Because like anything else that sounds too good to be true, there are some catches and gotchas, and they are very well hidden. And where they are hidden are in the market statistics.
There is market share in the fiction market. According to statistics published by the Romance Writers of America, the Science Fiction/Fantasy market share in fiction titles sold is around 15%. I remember someone in the industry noting that Fantasy tended to have about twice the market share of hard Science Fiction. So, I'll hazard a guess that out of that 15%, Fantasy will ring in at 10% of the fiction market share. Ignoring non-fiction sales, that means out of Amazon's hypothetical 100,000 borrows from the Lending Library, at best I have a shot at 10% of those borrows: 10,000. Ten thousand potential borrows is still a pretty damned good number!
But, there is something dark and sinister lurking in the background. That thing is Amazon Prime subscribers are only allowed to borrow one title per month! Subscribers pay $80 for the privilege of having access to borrowing twelve exclusive titles through the year. You can bet that they are going to be picky about what they choose to borrow for any given month. As my ebook would be available for three months, they have three chances to choose my ebook for borrowing over another ebook. In any given month, given a one-out-of-three choice, that means that there may only be about 3,300 potential borrowers of my book.
If a popular author in any genre releases a book in any given month, given the choice between my ebook and the popular author's ebook, it's pretty good odds that the borrower will want to expend his one borrow for the month on a title by an author that he has been looking forward to reading. If George R. R. Martin, Steven King and Steven Erikson decided to release a new book at the same time I released my book into the Lending Library, I will be totally screwed. My ebook would be tied up for three months and readers would only have three borrows available. At best, I might only end up with a couple dozen borrows in exchange for leaving my ebook locked up in an exclusive for three months.
Then there is pricing. My aim is to charge $4.99 for my ebook when released. The $80 per year breaks down to just over $6.60 per month. Folks would actually be losing money borrowing my book. I could just bite the bullet and push my pricing up to  $6.99, making the borrowing a bargain. But that price could also make people think twice about buying my ebook. (It could be argued that someone interested in my book would borrow something else and buy my book outright, considering it two books for a bargain price.)
Last, there is the actual number of ebook readers that have been sold. Amazon is very tightlipped about how many Kindles have been sold. A year ago, analysts guesstimated that Amazon had a 58% of the market in ebook readers. But huge sales of Apple's iPad and Barnes & Nobles Nook through 2011 have eroded Amazon's share considerably to less than half of the total installed market. Amazon might still be the 480-pound gorilla in the ebook reader market, but do I want to risk ignoring the 520 pounds of chimpanzees and monkeys in the rest of the market for three months?
This is why I set up my survey, to determine how many people who find my book interesting have an ebook reader and what kind.
My personal conclusion is that the KDPSelect program is good for authors who already have a following and are guaranteed that readers will want to borrow their book when it is released. If you are a new author without any following, the program will probably work against you. Especially if readers are faced with the choice between your book and one released by a popular writer. Having your ebook locked up for three months while it languishes against hot and anticipated titles might not be worth the payout.
I still have a little longer before I have to make my final decisions.