It’s been over a month since Amazon launched their Kindle Unlimited (KU) program, which gives readers unlimited access to 600,000 titles and audiobooks for the price of $9.99 per month.
During this time, there has been varied opinions on what this program means to both authors and readers.
On one extreme, there are people with the “Chicken-Little-the-sky-is-falling” mindset who feel this is yet another example of how Amazon is destroying books.
And on the other end, there are the people who praise every change that Amazon makes to their publishing platform.
Also during this time, I’ve had a number of people email me, asking my opinion on Kindle Unlimited. Did I see an increase in downloads for my habit books? Or am I seeing a negative impact on sales?
To be honest, I have mixed feelings about KU. While I love the idea, I do think there are some negatives to this program that might hurt authors in the long term.
So in today’s post, I’ll go over 12 thoughts I have about KU—both the good and the bad. Plus, I’ll cover a few strategies you can use to get the most out of this program.
Let’s get to it.
Thought #1. The Payout is Decent (For Now)
When KU was launched, my first reaction was that Amazon had to keep the payout near the $2.00 they offer for Kindle Owner’s Lending Library (KOLL) borrows. Otherwise, authors might leave the KDP Select program and move to competing platforms.
Two weeks ago, the first payouts were announced and authors saw around $1.81 per KU download. Not quite $2.00. But still pretty good because many authors saw their total borrows skyrocket. So while the payout isn’t quite the same, many authors increased their total revenue.
Example: In the weeks before the launch of KU, I was averaging 60 to 100 borrows per day. Then, after the launch, I’ve seen anywhere from 160 to 1,800 borrows per day. Obviously, there are major outliers like the 1,800 borrow day on August 1st, but overall, I’d say my average borrows have more than tripled.
Here’s a pretty graph to show what I mean:
(Click the image to enlarge)
While the payout per book isn’t as good as a sale or the $2.00+ KOLL borrow, the total volume of KU borrows more than makes up for a lower payout.
Thought #2. Amazon’s Math Doesn’t Add Up
I’m no math whiz, but it seems like Amazon’s calculation don’t quite add up. From their email sent to Kindle publishers on August 14th, it seems like they had to “find” a lot of extra money in order to reach this $1.81 payout.
To start, here’s the second paragraph of their email:
Kindle Unlimited (KU) is off to a great start with a strong early response from customers. Due to this early surge in demand, we are adding a KU “launch bonus” of $500,000 to the KDP Select global fund for July 2014. This is on top of the base fund amount of $2 million in July. This brings the total funds paid on borrows to $2.5 million, which is more than double the size of payments in June.
And then there’s this section:
For July we have decided to extend payment to all KU books downloaded and opened in July, even those not read past 10%. To support this, we will add an additional $285,000 in July payments, making the funds paid to authors in July $2,785,000.
We all like bonuses, but it’s not a good sign that the KU program can’t pay for itself. Perhaps they underestimated the volume of borrows. Or maybe they’re willing to lose money in the short-term to bury Scribd and Oyster. Or perhaps the payout will be substantially lower in the months to come.
All of this is pure conjecture, but right now, I’m not convinced that the $9.99 subscription will completely pay for the royalties given to authors. So where will the money come from?
Thought #3. Amazon Really Wants Authors in the KDP Select Program
The biggest drawback to KDP Select is the 90 day exclusivity clause. This is a huge drawback for many authors. So, Amazon must continuously roll out new tools that incentivize authors to stay in the program
First it was the free days with KOLL borrows. Then it was Kindle Countdown Deals (KCD). And now it’s KU. (Sidenote: Don’t worry…I also get confused with all these K-acronyms.)
The reason self-published authors stick with KDP Select is because they see a strong financial benefit behind this decision. So I’m willing to bet that Amazon doesn’t mind losing money in the short-term to keep authors happy. Sure, this won’t help the bottom line of KU, but it might help Amazon maintain their dominance of the eBook market.
Thought #4. KU Helps Catalog Businesses
My recommended strategy to Kindle authors is to build a catalog of eBooks. Instead of trying to hit a home run with one book, you should create shorter titles (15,000 to 25,000 words apiece) that thoroughly solve one problem. It’s like blogging. Each entry drills down into a topic and provides an in-depth answer. From what I’ve seen, KU really helps authors who follow this catalog approach.
To illustrate this point, let’s go over some fictional numbers…
Pretend you have a catalog of 10 books, that each cost $2.99. You know that your average reader will purchase three books, which costs them $9 and adds $6 to your total revenue (per Amazon’s 70 percent royalty rate.)
With a KU subscription, if a reader really likes your content, there is no additional “purchases” he or she has to make in order to check out your entire catalog. So, in theory, they could borrow all 10 of your books, which generates $18.00. That’s three times what you would have made on sales.
Obviously, these numbers are completely fabricated. But I’ve received at least ten emails from readers who say they’ve picked up my entire catalog simply because the books are now “free” through KU. These are the kind of emails you want to get.
Now, I’d still be happy even if KU borrows dip to $1.00. The more people who download my books, means more long-term customers and subscribers. While you don’t make as much per unit, you get a heck of a lot more exposure and discoverability.
Thought #5. KU Borrows Improve Category Rankings
So far, I’ve seen strong evidence that every KU borrow acts as a sale in Amazon’s ranking algorithm. That means your books will move up the category charts (and get more exposure), simply because they’re part of the program.
Unfortunately, I don’t have any hard data to back up this claim because six months ago I stopped worrying the ranking of my books. But I do know that before KU, one or two of my books were in the Top 100 for Business & Investing category. Now I see about five on this chart. Really, the only “change” was the introduction of the KU program.
Overall, my gut tells me that Amazon treats a KU borrow just like a sale. So, if you’re looking to improve your exposure or category rankings, then the program can help.
Thought #6. KU Might Cannibalize Sales
According to my charts in the last month, it looks like the KU borrows cause a decrease in sales. Think of it this way…It’s not like Amazon flipped over a rock and discovered a new crop of book readers. The KU subscribers are the same people who used to buy your books. So odds are, borrows negatively impact sales.
For instance, in the few weeks leading up to KU, I was averaging anywhere from 430 to 1300 purchases (once again, there were a few “outlier” days where I ran a special promotion.) After KU launch, I now see anywhere from 250 to 560 sales.
Now, you could explain that the diminished sales are partially due to the fact that I took off the last seven weeks and went on vacation. But I also feel that some of the decrease is due to customers borrowing books instead of buying them.
Thought #7. Some Authors Will Game the System
Amazon was really smart with one rule for KU. In order to get paid on a borrow, your readers must complete over 10 percent of the book. Unfortunately, I feel this will lead to a glut of “Kindle gurus” who recommend dodgy gimmicks to game this system.
For instance, I’ve already seen advice about adding lots of front-matter (to encourage readers to flip through the book) or to write shorter books (a smaller page count to reach the 10 percent threshold.) Not only will these tactics tick off subscribers, they will add to the growing negative reputation of self-published books.
Do yourself a favor… Avoid any tactic that tricks readers or leads to an inferior reading experience. Instead, write quality content that solves a specific problem. In other words, focus on the fundamentals that I mentioned in this post.
Thought #8. Authors Might Become Too Dependent on Amazon
I’ll be the first to admit it’s dangerous to build your business around one platform. I’m taking a huge risk by keeping my books in KDP Select, but I made this decision fully knowing what could happen.
Now, with KU, there is yet another benefit to sticking with KDP Select. But there’s an inherent danger to thinking that the good times will always last. With KU, I can easily see authors relying too much on the Amazon platform.
History has shown that nothing stays the same. In the last decade, we’ve seen many “can’t miss” income strategies collapse. Once upon a time, you could make good money with Google Adwords, Adsense, EzineArticles.com and Facebook. But, something changed with each site, which put many folks out of business. The same thing could easily happen with Kindle. If you’re in KDP Select and expect the payouts to last, then you might wake up one day and get a nasty surprise.
While I depend on KDP Select for the bulk of my income, I’m also a realist. I own all the rights to my books, I’m growing a sizeable email list and I’m looking beyond Amazon for additional revenue streams. In other words, I’m building my own platform.
Right now, the payouts are good for KU borrows and Amazon has the strongest platform. But don’t expect it to last forever. My advice is to take advantage of these good times by building your own following.
At a bare minimum, start an email list. Then grow your audience by providing free content on a platform like a blog, podcast or YouTube channel. The more you can do to build your audience, the stronger position you’ll be in if (or when) Amazon changes a major rule. (Check out my case study to learn how I’ve built my own platform for Develop Good Habits.)
Thought #9. KU Has a Limited Selection
On the surface, 600,000 sounds like a lot of books. But besides a handful of famous authors (i.e. Michael Lewis, Hugh Howey and Suzanne Collins), the books are mostly comprised of self-published titles. This could be a problem if readers don’t get the books they want to read.
For instance, in the past month, I’ve really gotten into the Ryria Revelations series by Michael J. Sullivan. So when I first subscribed to KU, I didn’t want to read the 32,000 books listed in their fantasy category—I simply wanted the next chapter in the adventures of Royce and Hadrian. (Since these books are published by Hachette, I don’t see them being part of KU anytime in the future.)
Many readers feel the same way. While some might enjoy “discovering” new authors, most want to read specific books by specific authors. And if they get don’t see them in KU, then there’s little incentive to stay subscribed.
Down the road, this limited selection could become a big problem if Amazon doesn’t add more popular books to the KU program.
Thought #10. KU is a Two-Tier System?
I’ve also heard the argument that KU has basically created a two-tier system. The argument here is that certain traditionally published and popular authors don’t have to play by the same rules like self-published authors. Instead, they get two major advantages:
- Full royalties on each KU borrow like they would with a sale
- No exclusivity rule—they can publish their books on other platforms.
I have mixed feelings about this argument. While I think it’s a good thing to get as many popular books into KU as possible, the math simply doesn’t add up. If Amazon is paying out $7 per borrow to a traditionally published author, then it doesn’t leave much money for the rest of us. Plus, it’s another reminder that different rules apply to different people.
Nobody knows what will happen in the future, but it will be interesting to see what happens when/if Amazon starts adding more popular titles into the KU catalog.
Thought #11. KU Bounty Program?
Amazon has shown they want KU to succeed. So what will they do to make this happen? I could easily see them set up some sort of “bounty program” similar to ACX.com. On ACX, authors get $50 when their audiobook is the first purchase made by an Audible listener. Will Amazon create something like that?
We probably won’t receive a $50 payout, but I think it would a great idea to allow authors to set up a special “KU Landing Page” that promotes their books. Instead of telling readers to buy books separately, we could market the KU program as a way to get a dramatic price break on our entire catalog. The authors gets a bounty with additional borrows and Amazon gets another KU subscriber. Everybody wins.
Thought #12. KU is Worth Trying…For Now
Like everything else in life, results will differ. While I see many positives in the KU program, some people feel it will damage their sales. My advice? Try it out and see happens.
Think of it this way… A book in KDP Select requires a 90 day exclusivity contract. Now compare this to a multi-year contract from a traditional publisher. 90 days isn’t that long of a time. You can try it for a few months and see if it positively impacts your book sales. If it doesn’t, then you can move your book to other platforms.
For now (late August 2014), I’m sticking with Kindle Unlimited. The payout is pretty good and the program helps grow my audience. But there are some negatives to the program. At the end of the day, you have to carefully weigh both the good and the bad to see what makes the most sense for your business.
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