KDP Select’s Impact on Amazon.com’s Book Sales Price Point

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

In many ways, KDP Select has been the salvation of many titles. Between the revenue from the Kindle Owner’s Lending Library (KOLL) and the ability to control “Free” promotions, KDP Select has raised those participating titles’ royalties by 26 percent.

As one of the top-ten authors in KOLL during December, I can speak fluently on how the program helped me.

However, what impact has KDP Select had on the rest of the Amazon eBook sales platform?

The reality is that, overall, KDP Select has decreased the average price point across the sales platform.

How?

KDP Select’s impact is widespread. While I do not have insider information, I do monitor about 100 books on a nearly daily basis and have identified numerous factors for this decreased price point.

#1 – The program has created a glut of not just free books, but higher-quality free books. All of those authors who were not willing to “force” free are now hurrying to join the “free” rush. The selection of quality free books has risen astronomically.

#2 – After a free run, your title gets the most “bang” for its free ride by coming into paid status at 99 cents. This has created a new, huge pool of quality 99-cent titles.

#3 – The KDP Select rollout occurred during the same window as the Christmas season; therefore, all of those new Kindle owners see the large free and 99-cent pool as normal. Unlike last year, when the flood of new Kindle owners entered the buying market at the $2.99 or above price point, this year they are bargain-shopping at 99 cents more than ever.

#4 – KOLL is diverting purchases into lends. Again, I do not have the internal statistics from Amazon; however, it appears that people are taking their lends very seriously (as they only get one per month) and browsing far more in the library than they are out on the sales platform.

#5 – Since the KDP Select authors are now exclusive to Amazon, all of their promotional efforts are focused on the Amazon platform. Since KDP Select is an indie pool of participants, the average price point is much lower than the traditional houses’ titles.

#6 – Ironically, the overall lower price point is forcing higher priced titles to price pulse down to $2.99 or 99 cents to maintain rankings—sustaining the lower price point.

Where is the math behind these assumptions?

Let’s look at the Top 20 Paid Kindle titles. At the time of this writing, out of the top twenty titles (those usually selling tens of thousands of units per day) seven were priced below $5.00, and six were priced under $2.99.

Nearly a third of the Top 20 Paid Kindle titles were under $2.99.

Now let’s look at the Top 100 Paid Kindle Titles. A whopping 50—count them, 50—titles were $5.00 or less. A full 42 were $3.99 or less, and 38 were $2.99 or less.

If ever you needed proof that the price point has lowered, there it is.

Now, before the indie-bashing gets started (you know, “indies are ruining publishing,” “indies have ruined it for us all,” “let’s get our pitchforks and torches and burn down the indies’ castle”), let’s remember that this price point has decreased because of consumer spending.

Consumers have clearly gotten over (if they truly ever did have ANY aversion to the 99-cent price tag) whatever qualms they may have had regarding 99-cent titles.

It turns out that they like them. A lot.

Why is this important to understand? Because, in a low-price environment, the successful authors/houses will focus on product. Getting it out as quickly as possible. Building up backlists as rapidly as is feasible.

Not turning out hack products, but simply accelerating their publishing time line.

It’s simple math. If you are selling for a lower price, you must sell more units.

So you can yell and raise your fists to the heavens about the unfairness of it all, or you can get to writing and publishing.

I recommend option two.

As always, I will be subscribing to the comments and will answer any as quickly as possible, I also strongly recommend that you subscribe as well, since many times, way more information comes out in the comments than even the article itself.

6 thoughts on “KDP Select’s Impact on Amazon.com’s Book Sales Price Point

  1. Dale Copps

    Carolyn,
    I read your piece with great interest. I have been following KOLL from its inception, primarily because I see it impacting the future of public libraries.

    Unfortunately, Amazon has not yet released numbers for January as they did for December, but I am in touch with another KOLL participant who has extrapolated from his numbers to estimate there were about 435,000 loans in January (as against 295,000 in December), and the payout was about $1.60 per loan. Not bad, if true.

    You say KOLL is diverting purchases into lends, and yet my other contact, and Amazon itself, have contended that KOLL has actually increased sales rather than inhibited them. In either case, if you are receiving $1.60 to $1.70 (December) for each KOLL loan, for titles which may otherwise be priced for sale at $.99, who could object?

    I am more concerned about the exclusivity of KOLL titles–my understanding is they can only be borrowed to be read on Kindles and sold (print or digital) by Amazon. This now involves over 113,000 titles, which authors cannot sell through any other venue, even their own web sites. Nor can these books be sold in any format except Amazon’s mobi. This does not bode well for the future.

    The industry is in a state of high flux, no doubt about it. Price points, hackwork vs. quality material, the soon-to-be explosive growth of self-publishing in the face of publishers’ unwillingness to grow with the times–these are all issues that will ferment in the marketplace for some time to come.

    And here comes Bilbary–an Amazon killer that has the backing of five of the Big Six publishers as well as hundreds of others, and that is wooing indies as well. If their lending program is implemented, which they expect to unwrap shortly after their site goes up (scheduled for March), then there will be a further commercialization of book lending, and public libraries will suffer, possibly to the point of extinction.

    The End of Libraries
    http://alltogethernow.org/showtag.php?currid=85

    Reply
    1. Carolyn McCrayCarolyn McCray Post author

      Let’s clarify a few things.

      First it is only the digital version that must be exclusive to Amazon. Not the print. The print can go anywhere.

      Also remember that sales and royalties are not the same. Yes, I am selling more units, however at a lower price than last year due to the drag of KOLL along with other factors like so many other books in competition on the site.

      And if there is any downfall of the public library it is simply in the conversion to digital, making physical book reading more of a collectible hobby than their primary reading source.

      Remember KOLL is for kindle owners only. That population more than likely were not hard-core public library users anyway.

      And I would be extremely hesitant to call anything an “Amazon Killer” before it is even launched, since the biggest question is…how is the author going to make their money? And how are they going to get readers.

      The Big 6 are now dependent upon Amazon and other on-line retailers for up to 35% of their revenue right now. If anyone thinks they can replace that with Bilbary… well… we will just have to wait to see 🙂

      The point of this article was highlight the current trend on Amazon which is that the price point has lowered therefore to make the same royalties we will need more product 🙂

      Reply
  2. Bob MayerBob Mayer

    I’ve found Select to work well. Atlantis hit #1 in science fiction on free and 22 overall. I’ve had a couple of titles hit #1 in the same genre as you: war fiction.
    I price no ebook over $4.99. I have two at .99 as reader hooks. Even at .99 I make almost as much as I used to get from a mass market paperback via a traditional publisher.
    The reality is we’re getting rid of the excess in publishing. Authors create content. Readers consume content. As we say at Who Dares Wins Publishing: Lead, follow, or get the hell out of the way.

    Reply
    1. Carolyn McCrayCarolyn McCray Post author

      Yes, Select went very well for me as well (ranked in the Top 10 KOLL authors for Decemeber) and is still performing well in units, however 30 Pieces of Silver which carried a $4.99 price tag last year. This year it can only hold a $3.99 price tag without a significant dip in unit sales.

      Plus I have access to data on nearly another 100 titles and most are having to decrease their sales price to maintain ranking/discoverability.

      Don’t get me wrong. I love Select it has just had effects over the entire sales platform that I thought should be discussed. 🙂

      Reply
  3. Stephen Ames Berry

    Thank you for a superb article, Carolyn.

    There’s nothing new under the sun. Amazon is successfully implementing WalMart’s ancient business model: destroy or marginalize competition and dramatically lower prices to consumers by squeezing suppliers. Kindle publishers are forced into a race to the bottom as they fight for visibility and pray for profit.

    Having indirectly lowered income to most publishers through KDP Select, Amazon will further increase its profits by scaling back royalties–whatever mechanism they’ll employ, for the majority of publishers 70% will become a fond, distant memory. Amazon can soar as a de facto monopoly so long as it can continue stifling viable competition. (Its aided in this by the chuckleheadedness of its competitors, who lack Amazon’s vision, daring and resources.) Frustrated, many Indies will pack it in. Blinded by hubris, legacy publishers will continue as the walking dead on the road to oblivion.

    Indie publishers with large back lists will, as you note, continue on, but over time at greatly reduced profits: they too must complete in the race to the bottom by ultimately reducing their prices and writing faster-but-well.

    As he suggested here, I yesterday followed Bob Mayer’s lead, making one of my books Free! on Kindle, as he has his AREA 51. We vied for #1 all day as Free! in the Thrillers’ arena. And we both made the same profit on our respective titles. (Konrath trumped us both with his Free! title.) Bob and Konrath, as former legacy publishers with large back lists, can afford to continue offering up sacrificial books; I can’t.

    As to those doing well in KOLL, true to its WalMart model, Amazon made its KDP Select pie smaller in February, reducing it from $700k in January to $600k, even as more diners came to the table.

    Is the WalMart business model sustainable as a publishing model? Probably not: a large selection of decent Amazon content will fade away and viable competition eventually arise, most writers believing as did old Samuel Johnson that No man but a blockhead ever wrote, except for money.

    Until then, an unintended consequence of Amazon’s myopic WalMart model will be, that like the legacy publishers it’s replacing, Amazon’s limiting writing as a vocation to the very few.

    Reply
  4. Serious Contender

    In much simpler terms Amazon has the largest pie on the playground, the fat bully, whose getting greedier. Sooner or later though that new kid shows up who knocks that bully out. I’m an up and coming self published author. Just finished my E-book on Sigil will launch probably in the next few weeks. Reading as much as I can about the pros and cons of KDP and other self publish programs and services.
    Mr. Berry excellent observation. One thing I’m seeing more and more is most authors are averse to business issues. The only way anybody would’ve opted into KOLL in the first place is by not fully understanding the big picture. Being a business man myself, I also got the Walmart feel from Amazon. In South Africa I’ve learned one thing, all things being equal , in general – the poor man’s hero, is the nation’s enemy. Same goes in self publishing and most other industries. We can draw solace from the fact that the true Amazon killer will be Amazon itself as their greed creates gaps in the market.
    Thank you and God bless the free market system, but more over God bless common sense…;-)

    Reply

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