Monday, July 21, 2014

Yet Another Opinion on Kindle Unlimited…

Amazon just opened up their new reader subscription service, Kindle Unlimited.
Kindle Unlimited is essentially a subscription digital book service. A customer pays $10 per month and in exchange can download as many ebooks as they want to/can read.
Amazon created a library for Kindle Unlimited from the Kindle Select program. They say they have over 600,000 titles.
Most of those titles come from independent authors—writers such as myself who have chosen to self-publish rather than go through the traditional route of being published by a large company.

For The Reader:

For the avid reader, Kindle Unlimited is an awesome bargain! For just $10 per month, you can read all the ebooks you want.

If you regularly read four or more new books per month, this is the bomb! I know some people who read three or more books a week! For them, this is an absolute boon and a major budget affecter.
All the books you can read per month for just $10. The Kindle Prime Lending Library only allowed readers to read one free title per month. Kindle Unlimited allows unlimited reading.
Booyah!
If you are an avid reader, go buy a Kindle,  join Kindle Unlimited and start reading like crazy. Your Kindle will be paid for in about two months, depending on how many books you regularly buy. Spending just $10 a month for books instead of $100 or more a month will result in a lot more cash accumulating in your savings accounts. In fact, you ought to include a book about investing so you can be creative with all the cash you will have accumulated at the end of the year.
For the average reader, someone who reads three or fewer books per month, Kindle Unlimited might not be such a bargain. Ten dollars each month is probably more than you spend on books to begin with, regardess of whether digital or print. Amazon is probably hoping many average readers will sign up for the service, because they really won’t use it much. That’s pure profit for Amazon.
For the light or occasional reader, don’t bother.
Any reader should study their reading budget and determine whether or not the $10 per month saves money.
The downside is that this is a subscription service, and books that were available at one point might not be available at another. Also, if you decide you are done with the service and stop subscribing, all the books in your Kindle that were part of the program will disappear.
Truth is, for some readers this isn’t an issue. They don’t like to read the same book over again. Then there are others, such as myself, who have a selection of books they enjoy reading many times over. For these readers, I’d suggest if you find a book on Kindle Unlimited that you really enjoyed, buy it outright.
I feel that this service will be a good money saver for many readers and good business for Amazon.
It might not be good business for the writers. And this may affect what readers get as far as what kind of selection is available for reading on Kindle Unlimited.

For The Writer:

This is where it gets messy.
We don’t know.
Huh? You do business with Amazon? How can you not know?
That would be because Amazon dropped this on the writing community like a bombshell. We—well, the independent writers (Self-published)—had only three days warning before Amazon announced Kindle Unlimited to the world.
There is much opinion and speculation, but precious few facts and no hard data on how this will work out for authors. Give it a few months, and we’ll have much better data collected as payouts begin to appear. Until then, many independent writers are going to be like penguins standing at the shore, waiting to see if the first few made it past the sea lions before diving in.
To say this has created chaos and confusion among independent authors would be an understatement.
It all boils down to how authors are compensated.
Ever wonder how much money an author makes? At least where ebooks are concerned?
Time to let the cat out of the bag.
Look at the price you pay for any given ebook. Amazon pays a self-publishing author 68% of the sale for each ebook. So, if a given ebook sells for $4.99, then the author gets paid $3.39 for each book sold.

Sale Price X .68 = Author’s compensation

If you are wondering, that’s pretty damned good!
If you ever overhear and author say how many books he sold in the last month or last year, pull out your calculator, look up the price of the book, and you’ll know how much money he made. That will either make you want to drop everything and start writing your own novel, or walk up to the author and give him a hug saying, “I am so sorry…” and slip a $10 in his pocket for the bus fare home.
Now, for Kindle Unlimited, traditionally published books get compensated at the full sales compensation share for each read.
This is very important: the reader does not have to read the book through for Kindle Unlimited to rate it as a read. The reader needs only to read to 10% of the novel to be considered a read and the author gets compensated.
Now, the first thought that came into most people’s mind is, “Wow! The author gets paid 68% the list price each time the book gets read in Kindle Unlimited!”
No, that’s not the way it works. Amazon would go bankrupt in a hurry if that were the case. Amazon has put all the risk onto the self-published authors.
Self-published authors get paid from a global fund. A “kitty” fund. At the end of the month, the number of reads are tallied up for each author and their percentage of the kitty is determined by the number of reads the author got compared to the total number of reads for everyone. 

(My Reads/Total Reads) X Kitty Fund = Compensation

So, if there were 750,000 reads for the month, and 285 of those were mine and there was $1M in the kitty, I would get paid $380 for the month. (That’s what most people are paid per week.)
If those 285 books were bought outright, I would be paid $966.15 for the month.
That’s $1.33 per book instead of $3.39 per book. That’s an almost 62% reduction! How would you like it if you looked at your paycheck and it was almost a third of what it should be? You wouldn’t be happy.
One author figured that for Kindle Unlimited to remain reasonably profitable for independent authors, Amazon had to guarantee that the payout per read for any given book would not go below $2. If it does, it doesn’t work well for the full-length novel writer and provides no incentive for such a writer to include books in the Kindle Unlimited program.
There is another side to this argument. That a reader, if they like the book well enough, could always buy it for their own personal library. If that happens, then I would actually make more money on that one purchase because the reading payout from the global fund plus the proceed share from the purchase. But I have to be realistic. As long as the reader has free access to the book via Kindle Unlimited, there is no incentive for the reader to actually purchase the book. Also, the number of people who enjoy reading certain books multiple times is a minority among readers. (This brings up a way around this situation by simply rotating popular books from Kindle Unlimited. I’ll address this below.)
There is another restriction on independent writers: to have one’s books in Kindle Unlimited, the independent author must be part of Amazon’s Kindle Select program; which means to agree to give Amazon an exclusive on those books for 90 days. That means the books can’t be sold anywhere else except on Amazon, not even the author’s own website during those three months. (The only exception to this I know of is J.K. Rowling, who only sells ebooks from her own web site.)
So, I would have to cut off all other sales channels for a minimum of three months. That would mean that I would have to shut down availability of my books to other retailers and cut off readers who use those retailers. That could have the affect on sales through those channels as putting a bucket over a flower.
In my mind, giving an exclusive to any one party without a guarantee of acceptable compensation is like cutting off my left foot so I can wear a nicer shoe on my right foot.

There is a great deal of speculation going on right now as independent writers try to figure out how to use Kindle Unlimited without causing themselves to lose money on the deal.
One school of thought is to simply to put one book of a series—usually the first—in the Kindle Unlimited program. If readers want to read the rest they will have to buy the other books. This is the loss leader approach to selling books. Many independent authors already use this method by offering the first book of their series free. Putting the first book into Kindle Unlimited would actually generate some income with each read. Still a loss leader, but not as much of a loss as something is always better than nothing.
Another approach grew out of the point that series always do better than single books. Readers like a continuing story. Or, if there is no series, they like a selection of several books from a given author. This creates a problem for new authors. Until they have multiple books out, they get largely ignored by the public. That makes it incredibly difficult to support oneself with writing until one has released multiple books.
The solution would be to take the one book, break it into pieces, and release each of those pieces as an individual release. Instead of one book with 20 chapters, release it as 20 pieces as part of a serial series. Before you bristle at that thought, bear in mind this is how many books were released up until the mid-twentieth century.
The third thought, stop writing large pieces of literary prose and turn to releasing the equivalent of pulp fiction novellas. Once the number of reads of the serial showed that the story had pretty much run its course, the author could then take all the pieces, remove them from Kindle Select, and then assemble them into a single novel.
Many writers feel that this approach could mean that KU could potentially end up being filled with short stories, novellas, and back stories instead of fully developed, broad-spanned, full-length novels. Or, what gets put into KU might not be the authors’ best works. Independent writers may choose to put lesser work in KU to be read for free to draw readers to their better stories that are only available for purchase.
Last, many independent writers have suggested this as a good place to put their backlists. A backlist is the list of stories that are no longer selling.
Word on the street is that the big name publishers are slow to sign up for the Kindle Unlimited program. This means that it is possible that nearly all of KU’s library is composed of works from independent writers. And that means KU depends strongly on the independent writers’ success.
If the independents don’t see KU as being financially advantageous and a good tool to increase sales and income, they are going to walk away from it.
All this is a worse case scenario for Amazon. They want the top list and newer titles to be available for readers. Not the stuff sitting on the back shelf in the writers’ offices.
Even though it was Amazon that opened the floodgates for self-publishing and really gave the industry the kick in the ass it needed for all this to happen, there are many independent writers who don’t trust Amazon’s intentions. They feel that Amazon is merely working to squash out all competition, and then they’ll turn on the writers, cutting proceed shares and saying, “If you want your book to be sold, you’ll have to accept our conditions.” Writers subscribing to this belief feel that KU is merely the first step in reducing the share.
Amazon Kindle Unlimited also has established competitors, Scribd and Oyster. Both companies warmly welcomed Amazon to the subscription market. Rather than just be competition, Amazon’s presence brings justification to the subscription reading market. Where the big publishers might have ignored Scribd and Oyster in the past, they won’t be able to now. The Big-5 are still paying for that huge mistake of ignoring just how important (and wildly profitable) the ebook market would become. To keep Amazon from completely dominating the subscription market like they do the ebook market, the “Big-5” publishers will have to play ball with both Scribd and Oyster. This means new cash flow for those two companies
Scribd and Oyster are very happy indeed that Amazon is entering the subscription market.
Scribd and Oyster have an advantage in being established in book subscriptions. The also pay authors a full share on proceed share whenever a reader reads a book, which gives authors a good incentive to avoid Amazon’s exclusivity demand.
However, Scribd and Oyster both refuse to work with authors directly, choosing only to deal with publishers and middlemen. Amazon allows independent authors to directly offer their ebooks for sale. 
Amazon’s biggest advantage is having a deeper library for readers to choose from. The other two could match that, but they must open channels for the authors to directly upload their books and not force them to go through middlemen. If they do this, it could have a positive result for writers by keeping competition for their product (stories) alive.

In the end, the authors who will benefit most from KU are the ones with a large following of fans. They will put their books up in the KU library, their fans will read those books, and each author’s read count will result in a decent payout. Plus, dedicated fans are much more likely to purchase the author’s book, even after they read it before.
It has been suggested that KU will be a good place for beginning authors to gain visibility. There is a better chance for that than in the Kindle Prime Lending Library, because in KU there is no limit to how many books the reader is allowed to read. With no limit, readers will be more inclined to give an unknown a chance. Under Kindle Prime, readers had to carefully budget their reading.
As I am a new author and I don’t have a following of fans yet, it is not financially advantageous for me to take part in the KU program. Also, because I am in that dark valley between published and discovered, I can’t take any risk to sales of my books through all the channels. I don’t sell enough copies to keep my books high enough on the charts to be noticed. And limiting my sales channels by signing an exclusive with one retailer would be financial suicide.
For that reason, Aggadeh Chronicles will not be appearing in the KU lists.
KU will be a godsend for avid, high-volume readers.
KU will be a cash cow for Amazon where low volume readers come into the picture. These are people who sign up for the service, but don’t use it much. In fact, the fewer people read, the more Amazon makes money because they won’t have to pay authors a share of the pool. What doesn’t get paid, stays in Amazon’s accounts.
Amazon will have to be careful not to upset independent authors. They must also take care to ensure that there is enough incentive to get authors signed up or independent writers will turn away from the program.
This is going to be very interesting to watch over the next few months.