Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.
On Friday, Amazon rolled out its Kindle Unlimited feature, in which, for a fixed fee of $9.99 a month, readers can read as many books as they want from a certain subset of the ebooks sold by Amazon. It also includes a limited number of audiobooks from Audible.com. Here is how the numbers break down:
— 2,769,500+ ebooks in Amazon
— 645,790 books in Kindle Unlimited (about 23%)
— 2,157 audio books (about 0.3% of the Kindle Unlimited Books
— 2,773 books in KU are free (even if the reader isn’t subscribed to Kindle Unlimited)
How a title gets into Kindle Unlimited
Before I discuss the two-tier system, let me explain how an author’s book gets into Kindle Unlimited.
— Kindle Direct Publishing (KDP) titles enrolled in Select: This is by far the largest group of ebooks in Kindle Unlimited and is mainly self-published titles, although I suspect there are a fair number of small-presses that use KDP to list their books with Amazon. For those who don’t know, Select titles have added features, such as the ability to be sold for free for five days out of 90, ability to do time-bound sales, can be borrowed from the Kindle Owners’ Lending Library, and now they are available to those who are subscribed to Kindle Unlimited. While that’s a lot of advantages, it comes with a big down-side: you must be EXCLUSIVE to Amazon. You can’t sell those titles anywhere else. Not your own site. Not Barnes & Noble. Not the iBooks store.
— Top-selling self-published authors who are enrolled without the “exclusive” restriction: Examples include books by Hugh Howey, which are available in KU as well as B&N and the iBooks store, as well as many of the big romance best-sellers.
— Harry Potter books: Back when Amazon started the Kindle Owners’ Lending Library they made a special licensing deal with Pottermore to allow the books to be included. As they are also in KU, that agreement was either expanded or a similar arrangement was made.
— Amazon imprint authors: Not surprisingly, any author published through the Amazon imprints such as 47North (science fiction/fantasy), Montlake (romance), Thomas and Mercer (mystery and thrillers), have their books in KU. There are 14 Amazon imprints, which you can learn more about here.
— Publishers who have opted-in one or more their books: The ones I’ve noticed so far tend to be small independent presses (Open Road Media, Nightshade Books, etc). Open Road has impressed me with being innovative and aggressive with various distribution channels, they even recently did a Humble Bundle. I’m not too surprised it signed on.
— Books Amazon has added without publisher’s consent: We know from Publisher’s Lunch that Suzanne Collins’s Hunger Games books fall into this category (confirmed by Scholastic spokesperson Kyle Good). We don’t know how many titles are in without consent, but I suspect most of the big titles fall into this category as no publisher has a press release indicating they are on-board with KU.
How a publisher/author is compensated
— For books enrolled in KDP & Select: Amazon has a pool of funds which is established at the start of each month. This is the same fund that has been used for “borrows” for people who are enrolled in Prime (they get 1 borrow a month). The fund does not take into account the size of the book or it’s price. Instead it takes the total amount of the pool divided by the number of borrows to calculate a unit price. This unit price is then multiplied by the number of times an author’s books are borrowed. Historically, the per unit price has been about $2 (sometimes a bit more, other times a bit less). The “downloads” from KU will be treated like a “borrow” once the reader gets past the first 10% of the book.
— For publishers/authors who opt-in to KU: they are paid the same price that they would receive if the reader had bought the book outright. Again, this amount is only credited once the reader has passed the 10% mark.
Editor’s Note: It has been brought to the attention of Digital Book World that not all publishers are being compensated as detailed in this article. Certain publishers have negotiated agreements with Amazon for their participation in the KU program with alternate compensation arrangements.
— For titles added without consent: Publishers are paid as if a regular sale were made without any minimum reading requirement.
Second class status
Historically, Amazon has been good about treating self-published authors and traditionally published authors equally. There are some exceptions (for instance traditionally published titles can be pre-ordered, and most self-published authors cannot get this feature. Again there have been exceptions made for best-selling self-published authors), but for the most part both self- and traditionally published authors have enjoyed equal treatment. They share similar exposure on best-seller lists and top-rated lists, and Amazon’s “cut” from sales have been the same for both groups (30% under the agency model). In fact, when the agency model went into affect, Amazon raised self-publisher’s royalty from 35% to 70% to match what traditional publishers were getting. But now with the roll-out of Kindle Unlimited, we see two very different treatments:
Self-published authors MUST be exclusive to Amazon (except for a handful of best-selling authors) and can’t sell their books on other sites. Traditionally published books have no such exclusivity requirement and can be sold wherever the publisher wishes.
Self-published authors are paid from a pool set by Amazon each month. They have no idea how much they will be paid per book. Traditionally published books get paid exactly as they would if a sale were made. They know exactly what the unit price will be for each book and are not relying on the Amazon’s whim as far as what their unit price will be.
Why the difference?
Whenever I speak about a situation where an entity (retailers or publishers) treat authors poorly the answer is always the same: “because they can.” The publishers would never agree to the terms the self-published authors are getting. What Amazon is offering traditional publishers (full wholesale price without exclusivity) is a pretty good deal. A deal I’m sure most self-published authors would appreciate, myself included. They are giving publishers such a fair deal because there is no way the publishers would agree otherwise. Even with such attractive terms, I suspect the big-five won’t opt in their titles. But the self-published authors can be had for much less. They have been conditioned through several years of Select and those in Select are more than willing to give up other venues for higher visibility on Amazon. I can’t help but think I’m Jimmy Stewart in It’s a Wonderful Life, trying to tell people at the Bedford Savings and Loan that Potter isn’t offering them a deal; he’s buying them cheap.
To add insult to injury, the current payout system has self-published authors subsidizing the payments of the traditionally published titles, much the way best-selling titles subsidize books that aren’t commercial successes. By this I mean that one party is getting less to offset the costs of someone else’s works.
I’m disappointed with Amazon for not offering the same terms to both self- and traditionally-published authors. Authors have grown accustomed to poor treatment from Publisher’s, and because of the way Kindle Unlimited has been rolled out, they can add Amazon as just one more multi-billion-dollar company taking advantage of them.
To get all the ebook and digital publishing news you need every day in your inbox at 8:00 AM, sign up for the DBW Daily today!