Friday, January 9, 2015

Kindle Unlimited Running Over Self-published Authors?

Kindle Unlimited is Amazon’s subscription service where readers pay $10 per month to have unlimited reading privileges on books that are in the Kindle Select program. Amazon created the service to compete against ebook subscription services such as Scribd ($9/mo.) and Oyster ($10/mo.).
Kindle Unlimited is a sweet deal for readers. Especially avid readers who read a lot of books in any given period of time. If you read on average three or more books per month, then subscription services are for you. If you read fewer than that, you may want to sit down and look at what you are spending on reading and compare the result. It might actually be cheaper to just buy the books.
For authors… Kindle Unlimited may be proving to not be such a sweet deal.
First off, read this article by David Streitfeld of the New York Times, focused on the author H.M. Ward’s experience with Kindle Unlimited.
Seriously. Click on that link and read it. It’s very interesting.
Ward is an enormously popular author. She was a successful, traditionally published author for many years and decided to turn to self-publishing. She proved to be even more successful as a self-published author.
I had pointed out before that the Kindle Select program favored popular authors with a large following. Under the original lenders library program, an author like Ward should have done very well.
But Kindle Unlimited removed one key factor from the Kindle Select Library program. Under Kindle Select,  readers were limited in the number of titles that could be borrowed. With Kindle Unlimited, readers can consume as many books as they wish.
The way authors are paid is Amazon puts a certain amount of money into a pool, and then authors are paid from the pool a percentage equal to the number of reads they received relative to the number of reads done for the whole month of all the authors. So, if there were 500,000 reads by readers this month and my own book had 150 reads, then I would get a .03% share of the pool. That means, if there was $1 million in the pool, I would get paid $300 for those 150 reads.
Basically, $2 per book.
My book sells for $4.99, of which I get slightly less than 70%.
That creates a 40% reduction in my income. (Right now, authors are reporting the payout per borrow is hovering just over $1. So, the actual payout would be a lot less than my example $2 payout.)
Now, the argument is, if the reader really liked my book, then the reader will buy it. That’s a good argument. Not only would I make the $2 for the rent, I would also make my sales proceeds from the sale and I would end up with more money in my pocket than the book’s list price!
That would be awesome!
Of course there is a catch: the reader can read it again and again and again for free via Kindle Unlimited. What incentive does the reader have to actually outright buy my book?
None.
There is another catch to Kindle Unlimited: for an author to have books included in the Kindle Unlimited library, the author must be exclusive to Amazon for three months.
That means no selling books anywhere else. Not even on your own web page.
So what happened to Ward?
Her sales plummeted and her income dropped significantly. Roughly 75% of what it was before Kindle Unlimited.
This was where being a popular author worked against her. Many of her readers—she sells books by the millions—went to read her books for free. But what really destroyed her sales was she had to be exclusive to Amazon to have her books in Kindle Unlimited, that stopped her book sales through other channels. As a result, she suffered a far more significant loss in sales than what she gained from borrows in the Kindle Unlimited program.
She’s not the only big-name, self-publishing author who has suffered in this way. Others have been pulling their books from the Kindle Unlimited program.
And authors who do not participate in the program have had their sales effected as well. I’m one of them. When Kindle Unlimited was dropped into our laps without warning, my sales ranking began to tank. At this point, my sales rank is so low (#703,349 on the list at the time of this writing) my book is not found by Amazon readers when they are browsing through the lists.
No visibility means no sales.
So what could Amazon do to fluff up the Kindle Unlimited program for authors?
For one thing, offer real incentive to authors. Offer an 85%–90% share of the proceeds instead of just 70% for an ebook when it is exclusive to Amazon. Also, allow readers to only borrow any given title once from the Kindle Unlimited library. If they loved a particular story so much that they want to read it again? Then they have to buy it.
This creates a win/win situation for all parties. The readers can read as many books as they want for free and in theory should be encouraged to try newer and unknown authors' books. Authors should see an increase in sales—plus getting a little bonus for allowing their books to be borrowed for free—as a result of readers (hopefully) discovering their books. Amazon wins by seeing an increase in buy-in to the Kindle system and builds a larger customer-base as a result.