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Subscription Model Squabbles

29 December 2014

From John Scalzi:

So, authors, you’ll all remember when, in the middle of the Amazon-Hachette spit-fight, I noted that Amazon isn’t your friend, it’s a business entity with its own goals, which may only tangentially align with yours (and the same goes for Hachette)?

. . . .

Part of the issue, as I understand it, is that the payment Amazon doles out to many self-published folks who participate in Kindle Unlimited comes not from the percentage of a sale price, but from a slice of a pot of money Amazon decides to offer, called the KDP Select Global Fund.

. . . .

However, as Amazon gets to select the size of the pot, and the share of the pot is contingent on performance relative to other titles, how much that cut is can fluctuate substantially, as is noted in the article. The article also notes that as the cut is the same for any read (i.e., a short story and a Rothfuss-sized epic novel are the same in the eye of the Kindle Unlimited clicker), authors are chopping up larger books into several files, or writing books as serials (looks like The Human Division was on target for that model).

Given the nature of the payment game here, this is a rational response, but it’s a short term solution at best, as it explodes the number of titles in Kindle Unlimited (and commensurately the number of titles read). As more authors catch on that particular trick, the less useful it will be for everyone. And while Amazon says it will tweak the size of the pot “to make participation in KDP Select a compelling option for authors and publishers,” inasmuch as self-published authors are already griping about how much revenue they’ve lost, the question becomes whether it will ever become a genuinely compelling option.

. . . .

That said, the thing to actively dislike about the Kindle Unlimited “payment from a pot” plan is the fact that it and any other plan like it absolutely and unambiguously make writing and publishing a zero-sum game. In traditional publishing, your success as an author does not limit my success — the potential pool of money is so large as to be effectively unlimited, and one’s payment is independent of any other purchase a consumer might make, or what any other reader might read.

In the Kindle Unlimited scheme, the pool of money available to authors is strictly limited by a corporation whose purposes, short- and long-term, are not necessarily aligned with the authors’, and every time someone with a Kindle Unlimited account reads another author’s work, every other authors’ share of the pot  becomes that much smaller.

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Here’s a link to John Scalzi’s books

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124 Comments to “Subscription Model Squabbles”

  1. That said, the thing to actively dislike about the Kindle Unlimited “payment from a pot” plan is the fact that it and any other plan like it absolutely and unambiguously make writing and publishing a zero-sum game.

    That statement is absolutely and unambiguously false. If KU required total exclusivity (i.e. you couldn’t sell your KU ebooks at all, even on Amazon) and the number of subscribers were fixed, the statement might be somewhat truthful.

    • “… and the share of the pot is contingent on performance relative to other titles”

      I don’t use kindle unlimited, so I don’t really know, but is this true? If so it seems like an awful system. The pain just to get started until you’re selling big numbers seems worse than ever. No?

      • Yes, you’ve got that right — and Scalzi has that right.

        What he doesn’t have right is that he never understood the “pro” Amazon sentiment. The stuff he’s lecturing about is stuff that even the most pro-Amazon person already gets.

        What he doesn’t get (and to some extent neither did a lot of the people who are moaning now) is that KU and it’s Prime Lending precursor, were great temporary boons to people’s careers and pocketbook.

        It’s the “temporary” part that people miss:

        To Scalzi I would point out that, if you sign with a traditional publisher these days, you are signing for life. With KU, it’s a few months. And the temporary books to income could be worth that.

        To the Indies who are upset about KU now: You took advantage of a Gold Rush. A bubble. It’s the nature of the beast — publishing is a roller coaster. Everything cycles. Whether it’s traditional or indie. Sometimes it’s a long hard slog, and then for a while it will be great and golden, and then it’s a long hard slog again.

        The only thing indies can be criticized for is that so many actually thought 4-5 years of experience (or even 1 year of experience if it ended in success) made anybody an expert. Most of these people either have no idea how they succeeded, or they knew exactly how, but the conditions they knew so well are temporary.

        • Not to mention that I get more for a borrow than he gets for selling a paperback.

          • Boom.

            I hate the “Amazon is not your friend” meme, and especially the “You’ll remember I noted Amazon is not your friend” sentiment, as though anyone rational and reasonable actually thinks that at all.

            It’s bunk.

            And let’s be honest; especially in SF (Scalzi’s fandom), I’d wager authors think their publishers/editors are their friends, because so many of those relationships began before professionalism and contracts entered into them.

        • Very good comment.

        • Spot on, Camille. Thanks.

        • Well said, Camille!

        • A very good and thought out reply. Thanks Camille!

        • youre right Camille; the so called ‘gold rush’ is way over. But not sure it was ever there for more than a handful in terms of luck and decent-enough writing or great writing, that is, making a living to support family with some left over. Or a lot left over.

          But whatever it was for the few, it appears to have been over for quite some time as it takes an 18 wheeler quite a distance to roll to a stop after the ignition is turned off on a downhill slope. They dont call them suicide lanes for nothing.

          I can see from convos at conferences that many many did not see it coming. Not a year ago. Not two years ago. Not three years ago. I know several authors who quit their day jobs or who had the other spouse go to work, so they could write ebooks. They are looking for work as we speak, cant make it on the plunge, let alone a future roller coaster. They are good writers. It’s not that. It’s I think something else, not to mention what we knew was coming a HUGE avalanche of trad pub backlist and midlist books they have the digital rights to. Thats like you have a couple cows, corner the market on your road for milk, and all of a sudden a million guys show up with two cows apiece, selling to the same road. And the new guys have $$$$$ for promo for milk, displays, thousands of brick/mortar outlets in the US/ and are way willing to undersell, overhype you in publicity, as well as copy to the nth degree your trailblazings, the ways you have publicly stated you ‘do it all’ to pull ahead of you.

          Many who put everything into it, all their skin, have gotten hurt the most. Driving blind, just kept following whatever piper instead of paying strict attention to business facts. No one can do that for us. It’s not a one size fits all. It’s a d shame. Two are seeking trad deals and will likely get them too. I’ve learned too. Tho tempting to follow cheerleaders, better to study the factual films of the opposing football teams – then plan strategy. Rather than implement a strategy without testing, and then come up against a solid line of bonecrushers. Cant always win with Hail Mary passes.

          Watching and being in the midst of it all coming down, amz and its changing squeezes on audio and book authors [we wont even get into their selling of original art], their deals with audible, and other middlemen atop amz as middleman, the layers upon layers are stacking up like trad publishing. I imagine amz already has a version in mind of trad pub defunct book of the month club, exclusive releases, etc. All of that diminishes what used to be a possibly decent income. There are more facts that amz has not been the wonder some have claimed. It is just one of the very few games in town for indie authors.

          just my .02, amz is chipotle, and authors/artists are not growers, they are field workers. The growers are trad publishing and publishers who publish many authors, not just one. Looking at the lessons of United Artists film company is instructive too about when some break away from trad ‘systems.’

          The whole thing makes me sad especially for authors who are sole source of income, who have no spouse making time to market them, be their help, and who have young children and were taken off by all the rah rah, sprang for a chance, but without a net. I hope we can all find new ways that are based not only in trying to break through, but are insightful and foresightful about the ways capitalism and business /econ actually work. I’m still learning. And still have a s.e. day job all these decades. Just in case.

          • This happens all the time. There is what seems to be a great opportunity in microblogging, SEO article farms, selling supplements, Etsy, etc.

            All of these things CAN be a lasting business, but while they are hot, you should consider any income to be lottery winnings. Don’t quit your job, invest the money. Be sure to pay off debts, etc.

            But that’s the nature of working in any entertainment related industry. And especially as “talent.”

            • very wise Camille

              “but while they are hot, you should consider any income to be lottery winnings. Don’t quit your job, invest the money. Be sure to pay off debts, etc.”

          • …many many did not see it coming. Not a year ago. Not two years ago. Not three years ago. I know several authors who quit their day jobs or who had the other spouse go to work, so they could write ebooks. They are looking for work as we speak…

            Oh, that’s sad. My heart goes out to them. Makes me realize anew the wisdom of writers with careers decades long. Lawrence Block says, “Keep the nut down,” and, “Don’t take income for granted.”

            http://lawrenceblock.com/getting-by-on-a-writers-income/

            It also makes me realize that if you’re building a business in the midst of a bubble, it’s hard to know whether you’ve build something sustainable or whether your success is due to the bubble.

            For the first time, I’m glad that my readers are finding my books s-l-o-w-l-y. Finances are tight in my household – we could use more income (can’t we all! 😉 ) – but at least we’re not depending on my writing income for basic living expenses.

        • I shall continue to complain when Amazon treats my books differently from traditionally published ones. I consider the KU payment unfair, have never gained any benefits from being on KU, and was surprised that my books (all in Select at the time), were summarily put in KU without warning or an option. I took losses for 2 months before I decided to contact them and was allowed to opt out of Select. In my view that is no way to do business with your suppliers.

          • And yes, this site is pretty much a fan club for Amazon.

            • Considering how many times people have written variations of “I know Amazon is not my friend. They are a business. If the terms change to my disadvantage, I will go elsewhere,” it becomes apparent that reading comprehension is not one of your strengths.

              • Business works both ways. And Amazon is basically the only game in town.

                And you are rude!

                • I.J. I don’t want to start a pile on here or anything, but it was pretty rude to dismiss others as a “fan club.”

                  If you want your opinion respected, you’ve got to respect others too.

                • And no, Amazon is NOT the only game in town. It’s just that they make the whole game so much easier for us that it feels like the only game.

                  The fact is, the game is tough. Amazon has made it look easy, but they don’t do that for us. Their relationship is with their customers.

                  There’s nothing wrong with complaining about policies you don’t like, but they have no obligation to change them, and those policies are part and parcel of what makes Amazon such an opportunity.

                • If you dislike the way Amazon does things, you could always go to their competition (and yes, they do have some, even if you are not willing to check them out). It will take more work and more ingenuity on your part to figure out how to sell enough of your work to support yourself, but that’s part of a writer’s job anyway. Failing that, you could always start your own company to do it better. Maybe in 20 years your company would be a far better option than Amazon. Good luck.

            • And yes, this site is pretty much a fan club for Amazon.

              God Bless Amazon.

          • Am I remembering incorrectly? I thought Amazon put everything in Select into Kindle Unlimited, but also gave everyone in Select the option to end their Select terms early, if they so chose. Why did you wait two months before deciding to contact them?

            • I watched what was happening. This was something new. It took 2 months to see it would not work. I defy anyone to see the problem faster thanh that. I notice people on other sites are just now beginning to complaine.
              As for the option: you have to ask for it. Up until that time they do not offer it.

    • Maybe not absolutely. Like you said, you can still sell your books on Amazon. But within the program itself, there is a fixed monthly pot, shared according to the number of times the books were read. If you and I were the only ones participating, and we each had a book in the service, the more readers you have, the smaller my share of the pot.

      Isn’t that the definition of zero-sum?

      • But the pot isn’t fixed, it’s adjusted/manipulated by Amazon at the end of the month to whatever they want. If there was just you and William in it and you both moved 1 unit, then you’d get around $1.40 each not half of millions.

        • Don’t they announce what the pot is going to be for the month before the month starts? If they adjust the amount, do they ever adjust it down or only up?

          • You know, I’ve never paid attention to when they announce the pot. Thanks for bringing this to my attention; I’ll see what I find out, now. All adjustments have been upward, whether they’re announced mid-month or even after the month is over and before they payout amount is disclosed.

            I’m not interested in the total pot size; I’m only interested in what they payout per borrow is, and how many borrows we have. You see, we look at KU as, essentially, a perma-free promotion running parallel to our full-price sales. Borrows have not significantly cannibalized our sales: on the contrary, they appear to be keeping our visibility higher even as the months since last release grow.

            If I could be in KU while also being on other vendors, that’d be even better than getting our books into the library; KU subscribers can boost us through word of mouth (do also-boughts get influenced by also-borrowed?) while also paying us per borrow!

          • Al, they used to announce the pot on the fifteenth of the *following* month, so authors don’t know the payout until the month is over. But I never got an announcement for November (I saw it on the KDP boards).

        • When Amazon does it doesn’t matter. It’s fixed by them, based on a formula they do not divulge.

      • It’s not zero-sum.

        But we could make it zero-sum as follows.

        At the beginning of the month, all participating KU books pay $1 into a pot. This is the only source of funds into the pot. Nothing comes from Amazon.

        Now operate the game just like Amazon does today, but without increasing the pot at the end of the month

        Under this zero-sum system, at the end of the month, the gains to the winners exaclly match the losses to the losers. Add all the positive gains to all the negative losses, and we get…Zero. The sum is zero. That makes it zero-sum. If the sum isn’t zero, it isn’t zero-sum.

        The problem we face is zero-sum is just such a cool sounding term.

        • You’re right, it’s not a zero-sum game.

          It’s more of an Amazon-gives-you-money-and-you-complain-it’s-not-enough-because-too-many-people-are-playing game.

        • Of course, I should have looked to wikipedia for at least a starter definition:

          “In game theory and economic theory, a zero-sum game is a mathematical representation of a situation in which a participant’s gain (or loss) of utility is exactly balanced by the losses (or gains) of the utility of the other participant(s). … In contrast, non-zero-sum describes a situation in which the interacting parties’ aggregate gains and losses are either less than or more than zero.”

          I suppose, Terrence, that I’m fuzzy-headed about it, but I don’t see the difference between your example and Amazon’s. The pot is still fixed. A sale to Occum means less money to me.

          If the pot is $2 and we both sell a book, we each get a buck. If Occum sells three books to my one, he gets 75 percent of the pot and I get 25 percent.

          [After further thinking] I’m leaving the above in because I found a sentence in wiki that might clear things up:

          Situations where participants can all gain or suffer together are referred to as non-zero-sum.

          So here’s where Scalzi is wrong (if I’m reading William correctly). At the end of the month, based on all our sales, we all receive money. William still gets more because (in my examples) he gets more sales, but no matter how much he sells, I’ll still receive some money. Hence, under the blockquoted definition, KU is not a zero-sum game, and Scalzi is wrong to claim that it is.

          • I suppose, Terrence, that I’m fuzzy-headed about it, but I don’t see the difference between your example and Amazon’s. The pot is still fixed. A sale to Occum means less money to me.

            The fixed pot doesn’t matter.

            A sale to Occum does mean less money to you.

            But it does not mean you lose an amount of real dollars equal to what Occum won. That is the essential difference.

            Something you do not get is very different from taking a real dollar from your pocket and giving it to the other guy or putting it in a pot. What would you choose? 1) Not getting a dollar from me. 2) Giving me a dollar.

            Nobody enters KU at the beginning of the month and finishes with fewer real dollars in their pocket.

            Many enter KU at the beginning of the month and finish with more real dollars in their pocket. Their additional real dollars are not offset by a loss of real dollars from other players.

            Amazon does not take money out of anyone’s author account as a result of KU. They do not take money out because you did not get a borrow. If you get no borrows, at the end of the month, you leave the game with the same number of dollars in your pocket that you had when you entered the game at the start of the month.

            Another way to look at zero-sum: No value is created. That means the sum of the dollars in all the participants pockets is the same when they enter the game and when they leave it.

            If each of 100 players had $1 in their pocket when they started, then at the end of the game, the sum of the dollars in all pockets must be $100. Maybe 99 have zero in their pockets and one has $100. OK.

            With Amazon today, if the Amazon pot is $100, then the total in players’ pockets at the end of the game is $100 more than when they entered the game. Value is created. Not zero-sum.

            • “Nobody enters KU at the beginning of the month and finishes with fewer real dollars in their pocket.”

              Yes, that’s exactly it. Zero-sum is a completely closed system, and nothing really quite works that way. It’s a parlor trick.

              (People do the same magic math with income tax — they think that making more money will somehow cost them more because taxes. No, making more money only makes you more money.)

              Me, I don’t like KU because I don’t expect to make enough off it to be worth cutting off other avenues. But given the right circumstances, and the right offer (balancing term of agreement with expected take) I’d try it.

              • Poker is zero-sub, assuming it is being played away from a casino or other organized game that takes a rake.

                • So is futures trading. Each long position is matched by an equal and offsetting short position. Every time price moves up one tick, the long positions gain, and the short positions lose an equal amount. The exchange clearing houses balance to zero everyday. Money then flows in and out of federal reserve accounts to pay the winners and take from the losers.

                • I’m not sure what people here mean by closed systems.

                  In poker, players can come and go from the table. They can bring differing sums with them. They can leave and come back with more money.

                  In futures trading open interest can expand and contract, new traders can enter the market, and old ones can leave. Old positions can be covered, and new positions opened. Money can flow in and flow out.

                  No parlor tricks. That’s how it works with billions of dollars each day.

                • If I get your point, Terrence, being a “closed system” (however that is defined) is not pertinent to whether something is zero-sum or not.

                  I was going to suggest that term might be applicable to the discussion with a single poker hand being a round, equivalent to a single month of KU with whatever is “invested” being tied up and at risk for the round with no more investment during the round. That’s generally true of poker. Under most rules you can’t add to or remove money or chips from the table during a hand.

                  But if we consider the investment being made in KU as being tying up your book for month exclusively with Amazon, it isn’t true. You can unpublish it (so it isn’t available anywhere), your 90 day commitment to Kindle Select could expire mid-month and you choose not to re-enroll, or you could publish a new book mid-month and enroll it in Select.

                • Well, since I’m really not sure what folks mean by closed, I don’t know. I can dream up things that might be labeled closed, but they don’t negate zero sum.

                  The single poker hand is a very good example of a ZS. And if we say closed means no players or money can enter during a hand, OK. That works.

                  But the whole series of hands, from the first to last, can also be considered ZS. So I tend to dismiss closed as a pertinent variable.

                  And as far as author investment in KU, sure there are lots of costs. Tying up the book for 90 days is a cost. Exclusivity is a cost. Real lost sales are a cost. They are just not components of a ZS game.

            • I get it now. Thanks for your patience, Terrence.

  2. Like the computer in War Games, the only way to win is not to play.

    That’s a pretty limp **** way to solve any problem.

  3. “In traditional publishing, your success as an author does not limit my success — the potential pool of money is so large as to be effectively unlimited, and one’s payment is independent of any other purchase a consumer might make, or what any other reader might read.”

    That’s why traditional publishers don’t collude and agree on the timing of potential best sellers so they don’t come out the same week and hurt each others sales. And that’s why traditional publishers don’t collude to raise prices so the competition can’t undercut them. And that’s why traditional publishers don’t pay money to make sure their books are put more prominently than others so they sell more…

    Oh, wait. They do all that. Never mind.

    • Yeah, most trad pub authors I meet are pretty delusional when it comes to the tricks trad pub tries. I think it makes them feel more special if they believe they did it all on their own, that they ‘won’ on their merits. In reality, everybody is trying to get an advantage and they’re just part of that game like the rest of us are.

    • Traditional publishers have a limited pot of money they can spend as well, but it’s limited up front. And as with Amazon the size of the pot can vary with their profits, but there’s still a limit.

    • This also seems to betray a lack of knowledge about how businesses work and how corporations are run. No corporation has an “unlimited” bottom line.

      Heck. I learned about corporate publishers’ Profit & Loss (P&L) sheets from Theresa Nielsen Hayden, who’s married to Scalzi’s editor. Well. Last I checked. I don’t really follow Scalzi’s stuff much. Not a fan of his books, and stopped enjoying his blog a long while ago.

      And this is why. He’s deliberately naive/obfuscating when it serves his agenda.

  4. That makes me think that I’d better serve my favorite authors by reading only my top five favorites and skipping the 200 mid-fave authors, so that the best at least have a shot at getting something worth counting. Now and then, I take a chance on a self-published author I’ve never heard of before. I didn’t realize that this actually takes away from the pot that gets divvied up between my favorite authors, so I guess no more taking chances on unknowns for me.

    • Wow! Really? Really, really?

    • The best way to support your favorite authors is to buy the book if you liked it after borrowing it. If you take a chance on a new author and like it, buy their book and tell someone else who might like it.

    • If you like an author, just buy their work. That’s still the best way to support them. If you’re only willing to pay the top 20 authors, then I guess you really don’t like the other ones that much. If you’re not willing to ‘take a chance” on other self-published authors, then I guess your needs are being met by the ones you already read. Which is fine, I guess. But just be aware that you’re going to have a tougher job replacing them if you ever need to. Authors need readers supporting them financially in order to continue writing in most cases.

  5. I know everyone seems upset with the payment from a fund – that amazon sets the fund amount. And that the size and price of the work doesn’t factor into the payment for hte borrow. But if you look at it from Amazon’s point of view, can’t people game the system if Amazon were to pay a percentage of list like the other subscription services?

    Wouldn’t people be able to price their small story at an unreasonably high price (8.99) and know they will never make a sale at that price. But if Amazon were to pay say 60% of list, the result would be the author gets paid 5.39 for a short story that someone borrowed.

    How would that system be sustainable? Paying a percentage of the list price would be a strong incentive for authors to price their work higher. I think Amazon has shown they will fight very hard to lower prices, not to encourage authors to raise prices.

    That’s my two cents as to the complaint regarding being paid from this fund that is a zero sum game. Might not be a great system, but I think the alternative is open to even worse abuse in my opinion.

  6. Regardless of how you feel about Scalzi’s assertions in this article, hopefully Amazon is paying attention to the fact that a very large number of diverse authors are not thrilled with KU.

    • I strongly suspect, Libbie, that it matters not a whit to Amazon how we suppliers feel; it’s not our friend or our enemy, but a business. I suspect it matters very much to them what their customers do in response to what we do.

      How do Amazon’s customers feel about KU, and what do they do about it?

      • I’m sure Amazon is aware that if authors leave KU in droves, KU customers will be less satisfied with their subscription.

        I don’t know if authors are leaving in droves, though. I know some high-profile authors are leaving, but I don’t know the overall statistics.

        • The big problem with this is that it’s the self-published authors who are leaving in droves. The trad-pubbed folks are in the hands of their publishers who have no reason to leave KU. Consequently subscribers have access to bestselling authors. KU will flourish with trad-pubbed titles.

          • most of the well-agented contracts from way back said trad pub cannot pub ebook without author’s consent.

            So technically many trad authors have a say so

            however, today, the contracts I’ve seen look like indenture rather than two party contracts. You WILL pub an ebook or no deal. It is madness. Complete madness.

            The issue is there are few to no alternatives that the average writer [with young family, elder parents, health challenges, all the ‘stuff of life’] can earn a living with/through without becoming a james patterson factorite, or having little life other than trying to grind out the writing. Surely joy has a place even when one is a writer. Ought not be a drudge. At least I dont think so.

          • I believe that there are very few traditionally published books in KU. At least there are very few from the Big 5. So to offer some well known titles as loss leaders, Amazon has to pay them the same price as for a sale.

        • Here’s the question I have: are there books by the big publishers (what are they now, the Big Five?) in KU? Because if they are, it won’t matter. There will be plenty of books that are desired.

          The thing to remember is that this is about demographics.

          What matters is not how Amazon is choosing to pay for it, but what audience is buying the product. When it’s YOUR audience, you will do well, even if Amazon doesn’t have terms that you particularly like. If your audience has moved on, then you need to move on too.

          And frankly, that is what I think has happened to the incomes of all those writers. Their work was so focused on a lucrative audience that they weren’t prepared when it turned out that the audience was fickle.

          The most lucrative audiences ARE fickle. They go for what is hot right now, and then they get bored, and run to the next thing.

          • Agree.

            But I’m not sure they are fickle. Present them with an innovation, and a certain percentage find they prefer it to the old way. In a macro sense, this is what the eReader did. It was presented to all those paper readers and they found they preferred it.

            Maybe they just lack loyalty to any particular retail experience. This is nothing new. We went from craftsmen making one-at-a-time to assembly lines, department stores, Walmart, Big Lots, Amway, online shopping, two-day shipping, etc. Producers tied to one system will resent the introduction of another. Note the enthusiasm traditional authors exhibited toward independent authors. It is similar to the enthusiasm for KU we see from independent authors.

            I suspect Amazon has found a subset of consumers prefer KU to all the alternatives. Given Amazon’s history, we should expect them to cater to this subset.

            Down the road, Amazon will institute the XYZ program, and again upset lots of suppliers. The suppliers will tell us how droves of them will migrate to undefined greener pastures. They always travel in droves. But Amazon will also satisfy an incremental subset of consumers.

            They may end up with a dozen different programs, each the favorite of some subset of consumers. Each may be loathed by most authors, but there are so many books available that each program will be well stocked.

            • I meant fickle only from the writer’s point of view.

              The audience who is most easy to capture for a new product (i.e. indie writers) is a demographic that is looking for new things. After a while, you’re no longer a new thing.

              That audience is loyal to forever seeking new things. They always behave the same way. But when what they are buying up madly one year is sexy vampire apocalypse fiction, it’s hard for the writers to tell the difference between that “best seller” audience and the audience that is actually loyal to sexy vampire apocalypse fiction.

              One audience is loyal to the genre or subject or author, but that audience is very hard to get through to via the kinds of techniques that indies use to promote. (They are hard to get through to via ANY promotion. They hate promotion, because it puts things in front of them that they aren’t interested in.) The other audience is the one that turns books into best sellers — because they’re looking for new things, and one part of that audience tends to act all together — pouncing on what is cool in their group.

              But that audience is loyal to the group vibe, and not loyal to the author or genre or subject.

              From the writer’s point of view that is fickle.

              • Isn’t that just part of the business though? There are probably millions of readers who change what genres/subject matter they read on a yearly basis. I’m one of them. I used to only read in a few genres, and then I started reading a lot more widely once I got a Kindle. But honestly, I tend to get interested in different things just by hearing about them more as I get older. I suspect this is natural for people who are naturally interested in readers. It’s something writers just have to deal with and it’s one of the reasons I guess we can’t blame trad pub for encouraging their authors to write-to-trend. It makes sense on some level. The problem is their time to market does not for the write-to-trend strategy. It makes more sense for indie authors. Maybe some combination of the two is best. Write some things that are on trend and other genres have a stable foundation of books you know there is a loyal audience for. I see some authors doing this and I think it’s a good way to go.

          • Here’s the question I have: are there books by the big publishers (what are they now, the Big Five?) in KU?

            Mostly not, and I don’t think any of the big five are in it. There are a few publishers using it — Algonquin, Open Road, Kensington, Scholastic . . . but I don’t think you’ll find anything from, say, HarperCollins or PRH in there.

            Which is why I’m pretty sure IJ is wrong up there. I don’t think there really are any corporate titles in KU.

        • It’s going to be hard to figure that number out, because while a lot of authors are leaving, other authors are taking books and chopping them up into serials. So the overall number of “titles” on KU is likely to explode, even though the overall number of complete novels (when you download all 10 parts ;p) is probably shrinking.

          I do think the short story and short non-fiction stuff on KU will just keep rolling merrily along. I mean I’ll take a buck per read for a non-fiction essay, that’s a good deal. It’s novel-writers most negatively impacted.

    • a very large number of diverse authors are not thrilled with KU

      I bet the consumer thrills matter more.

    • I’m sure they are. But I’d bet it matters more what customers think.

      As a customer, I still find books I want to read in KU so I keep re-upping every month. When that stops happening, then I stop paying my money.

      • Exactly, and I don’t find what I want — have never found what I wanted in KU or Prime Lending — so those authors were always just fine staying out.

        It’s all about demographics.

        • Probably so. I just sound a series that wasn’t in KU so I bought it. Some people do both. I still frequently buy books. I’m just more picky about the ones I’m willing to pay for. if they grip me from the first chapter and hold a lot of promise, I pay pretty quickly for them and browse KU for others.

  7. “In traditional publishing, your success as an author does not limit my success — the potential pool of money is so large as to be effectively unlimited, and one’s payment is independent of any other purchase a consumer might make, or what any other reader might read.”

    Of course the success of one limits another.

    A consumer has a budget of $10 per year for books. On January 1,she spends that $10 on Book-A. All other books have lost any benefit from that specific segment of the market. They won’t get anything from that segment of the market.

    No success can come to any other book from the market segment defined by that single consumer.

    Now, multiply our consumer by zillions. Consumer spending is limited. Any dollar spent on Book-A cannot be spent on Book-B.

    Consumer book spending is a variable, but limited pie. Eat one slice and there is less left for everyone else.

    I agree the potential pool of money is very large. However, we have to look at it compared to the potential pool of books offered in the market. And that pool is very, very large. The economic function of the gatekeepers was to keep the pool of books in balance with the pool of money. Now they are gone.

    Let the games begin.

    • I don’t agree that the function of gatekeepers was to keep supply and demand (the pool of money) in balance, Terrence. For myself, the supply the gatekeepers offered filled little of my personal demand. So although I had money I would’ve been willing to spend on books, I found few I wanted to buy– or at least buy at the price they ask.

      • The balance was accomplished by managing shelf space, publishing costs, and the number of books that could support a price to keep them all making money. That was a complex system that had to have a choke valve up front.

        This kind of system is happy to ignore the preferences of half the potential customers if they can make a good buck on the other half.

        Producers don’t want to compete. They are forced into it. So, if they can get a comfortable system running, they are content to sit back and reap the rewards.

        And what happened? Amazon came along, threw open the gates, refused to hire gatekeepers, let the market find its own balance, and here we are today hurling poop at KU.

    • A further problem is that Scalzi is looking at this only financially.

      It’s more than that. It’s attention span.

      It’s not even about a budget. Budgets vary. Some people have $10 per month and some have half that or double that.

      We all have 24 hours in a day. And if someone spends, say, six hours reading my novel, that means that day they have only, what, like 18 hours for other books? Sorry. My math’s never been awesome.

      The fact that Scalzi is concentrating on a pool of money demonstrates just how hopelessly outdated his whole argument basically is.

      • So true. When I am doing heavy overtime and only have ten minutes here, fifteen there to decompress, long-form fiction is generally crushed by its main competitor: the sudoku app. It really doesn’t matter how much money I have in my budget when the choice is between mindless fun and having to work at it.

        Of course, when I last started a really good book, sudoku completely lost out to M C A Hogarth’s Mindline. It has the twin advantages of being fairly easy to follow even when read in small bits over a week and a half, and compelling enough I’m motivated to keep going back in order to find out what happens next.

        • Ha, as I read your comment about the sudoku app being the competition for reading, I thought of my own busy life and realized that I usually fill those short periods of free time with something other than reading — in my case, often Candy Crush. Something that doesn’t take a huge investment of my conscious mind to play at. When I have more time, it’s filled with reading or practicing piano or guitar or whatever (often reading time comes at the expense of writing time).

      • Good point. That’s my biggest struggle as a reader. There are SO many books I’d LIKE to read, but last I checked, there are still only 24 hours in a day and…well I still have a job to go to unfortunately. 🙂

  8. In traditional publishing, . . . the potential pool of money is so large as to be effectively unlimited, and one’s payment is independent of any other purchase a consumer might make.

    Sounds like a great deal. Where do I sign up?

    Edited to add:
    On a serious note: Is it possible that Amazon wants as many books as possible priced as low as possible, ie $2.99. That’s where the incentives seem to be. So If you are writing a 100,000 word novel, you have to take the market incentives into account. This could mean 3 smaller books released as a series or one book marketed at 4.99.

    I have no evidence one way or the other, but I’m sure Amazon has economists working on this and they’re advising Amazon on pricing, elasticity of demand, market power, game theory, statistical models, probability curves, you name it.

  9. Not so. Scalzi’s analysis is flawed. He assumes the pot is set by Amazon before the monthly borrows are tabulated. But that has not been the case so far. The total pot, base amount plus what is added buy Amazon, is determine, for November, for example, on December 15th–long after the number of KU borrows for November are tabulated and known. It is NOT a zero sum game because the total pot is stated AFTER the borrows are made and not before.

  10. For the time being KU is causing some Indie Authors to abandon exclusivity. To stay in KU requires that you write short stories. KU also may increase the amount of eBooks being released. Also KU is enforcing the believe that eBooks are inexpensive, and it has to be that way for Kindles to sell and dominate the market.
    Each one of us, Indie Authors, will have to make his or her own decisions: to stay in KU and continue exclusivity with Kindle, if the the financials are positive, or exit and broaden the distribution through other channels.

  11. The best thing to do is to fill the pot so high that it tips over. It’s simply unsustainable, and authors need to force Amazon’s hand, or accept once and for all where they belong in the pecking order.

    • Plenty of authors not in Select or KU are quite happy with their place in the pecking order. If authors choose Select/KU then they’ve chosen their own place, not someone else.

    • May as well save time.

      Amazon says jump, and I ask, “How high, Sir?”

    • Seriously?

      “Force their hand”? “Pecking order”? Talk about your false choices.

      Of course we can’t force Amazon’s hand – nor can they force ours. From the entrepreneurial perspective, Amazon is just a series of opportunities – you assess them and either jump in or pass it by,

      The fact that many authors have unrealistic expectations of Amazon is not Amazon’s fault.

  12. In my view, the size of the pot has nothing to do with the problems I’m experiencing with KU. Or I should say with the commencement of KU, because I’m not in KU. The problem is that sales on Amazon have dried up—completely. 17 items for sale and now 0 sales per month, whereas before KU I was around 10 sales per month. I don’t think it’s coincidence. It may be that, except for certain mega-bestsellers and well-known authors, most e-book sales are actually to Amazon Prime members. Now that they have unlimited borrows, why buy anything?

    • Now that they have unlimited borrows, why buy anything?

      Exactly.

      • There are people who only buy books and people who only borrow books and people who both buy and borrow books. That’s three different audiences. Some kinds of books are of interest to one kind of audience and not to the other kinds of audience, and so on. The success of an author with one or two or all three markets depends on the kind of book and how it is written. Too much of the discussion here involves pretending all books are the same and also pretending there is only one market. The pretense gets you nowhere. The audiences are varied and the books are varied and the variation needs to be considered. The only authors who might be losing money since the advent of KU are authors who are not in KU and who write category entertainment fiction that appeals to high volume buyers of such fiction because these buyers save money by subscribing to KU. If you write fiction or nonfiction that is scarce in KU, your sales should not be affected by KU. And if you do write what people in KU like to borrow and your books are NOT in KU, why not? Are you interested in money or platitudes about “value” or “exclusivity” or whatever? If you are a category fiction author, you presumable write for money, so it’s only your revenue that should be important. And if you write other things and you do not write for money, the KU audience is likely NOT your audience, so stay away from it. If, for example, you write quality serious fiction, can you really make a case that the existence of low-grade pulp fiction reduces your income?

        • “If you are a category fiction author, you presumable write for money, so it’s only your revenue that should be important.”

          No. Not really. What’s important to me is my career as a writer that includes the goals I have set to complete in terms of what I want to write and where I want to be as a writer over the long-term (and I don’t have a ‘fixed’ definition for what the long-term is, I just know that it’s not tomorrow or next year or even the year after that).

          Revenue is important, but it’s not the only thing of importance.

    • And I’m not in KU and my sales have stayed the same. I think we’ll need data from the next Author Earnings report to form a coherent overall picture of the effect of KU.

      • Ditto.

      • Yeah … the only thing is that the Author Earnings report uses sales rank to estimate number of sales. If everyone’s sales drop, it won’t be able to pick that up.

        On the other hand, if Daniel (upthread) is right, then only certain types of books should change rank.

        • And also, since borrows via KU apparently count as a sale, I would expect author earnings will have a hard time estimating the effect of that in all their computations. For example, if they know a book “sold” 100 copies, was that 70% of the $4.99 list price or $1.33 for a borrow.

    • Now that they have unlimited borrows, why buy anything?

      Because the book I want isn’t on KU?

    • Except David, they don’t have unlimited borrows. From the customer viewpoint, they are two completed different programs.

      Amazon Prime still only allows a single borrow per month which is only a minor part of its appeal. It has many other benefits and costs an annual membership fee. (FWIW, I have Amazon Prime and have had for two or three years and have borrowed, at most 4 or 5 books.)

      KU is strictly a borrow program and has (more or less) unlimited borrows. This has a monthly fee (and a year’s worth of monthly fees is about 50% more than the fee for Amazon Prime).

      • It was my impression, as a Prime member, that I no longer had access to borrow books. If I still can Amazon sure keeps mum about it.

        • Only one a month, Camille, but it is still one of the potential perks of Prime.

        • Same here, Camille. I’ve looked for the “Borrow this Book” button on several books that show up as available for KU, and can’t find one.

        • The borrow button no longer appears when I browse Amazon via my computer, but is still an option when I search via my kindle. I have Prime, but not KU, and borrow something every month. I also usually find at least one of the kindle first books offered each month worth a read – two free books per month definitely helps the budget, and I’ve found several new authors that I’ve gone on to buy.

          • I went and checked out the Amazon communities. It looks like most prime borrowers are incredibly annoyed, because Amazon has made such books so much harder to find, now.

            I’ll have to check out the Erle Stanley Gardners again. (It’s just that my Kindle keyboard, which I love above all of my cool toys, is sooooooo freeeeaaaking Slooooooooooooow when browsing around for stuff. )

          • Yes, you can only borrow a book on Amazon Prime by browsing on a Kindle (ereader or tablet), not on a computer. That is why the program is called the Kindle Owner’s Lending Library or KOLL.

  13. And just to stir the pot a bit, I’m finding that my sales have not changed at all since KU appeared. I’ll have to do a post with numbers from the past year (don’t worry, they’re not breathtaking by any means).

    • I don’t believe KU has had any affect on my sales either. They are lower this month, but my last release was Nov. 1st, so it’s off the 30 day list.

      Readers who want your book will buy it, if it’s not in KU, whether they use KU or not.

    • For a few months after I went into KU, borrows were 2/3 of the action, and sales were down. Over the last couple of months, sales have become 3/4 of the action and have gone up. It’s only been half a year–less?–since KU launched, and I think it might be more useful to compare year-on-year. I feel terrible for those who are losing money, and I also suspect we’re not hearing much from those who are not.

      • …I think it might be more useful to compare year-on-year.

        Exactly! There can be a lot of variability from month to month. Easy to make a decision based on a short term variable, if one looks at only a few months.

  14. Kindle Unlimited makes me money. I doubt those who borrowed those books would have bought them, even if they’d had no other choice. We’re talking about a completely different mindset.

    My sales haven’t suffered and I’ve at least doubled borrows. Those complaining about KU probably complain about libraries, too.

  15. I am not doing poorly with KU,although there was a dip in the autumn months. Since my last release in early December I have about twenty to thirty borrows daily, and on average fifteen or so sales. That is quite good by my modest standards as a relative beginner. My income this month will be about 50% from sales and 50% from KU borrows, assuming at least a 1.20 payout. I think they are different market segments, and being in KU is not a disadvantage, it even helps discovery.

    One reviewer wrote she was hooked and glad all my series is in KU, or it would be “prohibitively expensive” (at my quite low prices.) I am still grateful to her, and would likely not have earned anything from her without KU.

    • In late October Amazon made their deal with Simon and Schuster, and then on Nov. 13th they finally worked it out with Hachette. Amazon obviously was steering readers away from Hachette books (or at least not steering them to). And clearly part of the deals with both companies had do to with paying for more prominent placement.

      Is it possible that some of the downturn, at least recently, might not be because of KU but because Amazon is now promoting more trad books? Particularly since the trads are becoming a little more rational about pricing?

  16. I wish there were more emphasis in all these articles on the fact that Scribd and Oyster are paying fairly by percentage based on unit price. This is a completely different model for the author/publisher than Amazon’s unpredictable kitty/lottery formula.

    If you can’t fight the subscription fad, at least join the right subscription programs and ignore KU until its gets its payment structure sorted out to the authors’/publishers’ advantage.

    Indies can’t be this dumb, obsessing non-stop about Amazon.

    • Many indies still haven’t gotten much traction on the other platforms. That’s why they talk about Amazon so much and while I don’t agree with your tone, I agree that people should try the other subscription platforms as well. They might do better than in KU. It might be interesting to put different books in different borrowing systems and just see what works.

    • I went wide with my distribution from the beginning, but 90% of my sales still occur on Amazon.

    • Indies can’t be this dumb, obsessing non-stop about Amazon.

      I am indeed that dumb. Always have been. I anticipate subscriptions will one day dominate book distribution, and I doubt stand-alone models that pay 70% of list can survive financially.

      So, as a semi-literate member of the lumpen class, I embrace KU and all it promises for the future.

      And since there is such a huge supply of books, nobody really gives a hoot what I think when I put on my tweed jacket with elbow patches.

      In economic terms, I am a price taker. That means I navigate the existing market as best I can, realizing my market power is far too weak to influence it.

      And what should other independent authors do? Anything they want.

      God Bless the dumb, for they have the imagination lacking in the nuanced sophosticates.

      • There was an interview recently of the CEO of Scribd where he said that the average number of books borrowed per member of their service was slightly less than 1 per month. At that rate, they may have a viable business model, but it could be that the number will change also.

        • I read that interview. But I don’t believe it. I don’t think the fundamentals are there. There is lots of stuff companies say that I don’t believe. Happens everyday. I’m responsible for my own results, and that means I have to decide what to rely on.

          On the other hand, Amazon’s model is self-correcting. They set the total payout at less than their prior month’s revenue net of expenses, and it can go on forever.

  17. I am befuddled by the majority of indie author reactions to KU. So far, the only rational responses I’ve seen are from Louisa Locke and Lindsay Buroker. Locke assessed the situation, looked at her assets (3 novels and a few short stories, all in the same series) and took the course of action that seemed best for her situation. Buroker just happened to be in the middle of an experiment with a new pen name when KU came along and was able to see how KU worked for an unknown author. Instead of obsessing over the per unit payout, wallowing in conspiracy theories, or agonizing about any short-term drop in income, these two authors recognized that this change required them to reevaluate their strategy and react accordingly. I’m sure there are a lot of other authors doing the same thing, but they wrote about on their blogs, shared their data, and explained their reasoning.

    The danger to indie authors from KU has absolutely nothing to do with the per unit payout. It has everything to do with the potential disruption to Amazon’s algorithms. I can’t understand why nobody is talking about this. This will impact you whether you are in Select or not. The behavior of Amazon’s customers who are in KU (especially the ones who aren’t yet paying the subscription price) is very different from those who aren’t in it. This is changing the results of the alsobots, the calculation of the subcategory best seller lists, and the size of the potential pool of readers available to you.

    • This. I can’t agree more. It’s been especially sad to see the authors who have let themselves sink into conspiracy theories. It would also be nice to hear more productive talk about how KU affects business decisions without authors insinuating that Amazon is the illuminati.

    • The danger to indie authors from KU has absolutely nothing to do with the per unit payout. It has everything to do with the potential disruption to Amazon’s algorithms.

      Yep. That precisely.

    • Thank you, William. I appreciate your clear-eyed assessment of the situation.

    • This will impact you whether you are in Select or not. The behavior of Amazon’s customers who are in KU (especially the ones who aren’t yet paying the subscription price) is very different from those who aren’t in it. This is changing the results of the alsobots, the calculation of the subcategory best seller lists, and the size of the potential pool of readers available to you.

      This — this is it in the nutshell. How does the tweak to Amazon algorithms in advance of KU affect books in KU and books outside of KU? It’s really hard to know this at this point since we have data for only 6 months. When is the next AA report due?

    • This is changing the results of the alsobots, the calculation of the subcategory best seller lists, and the size of the potential pool of readers available to you.

      Kudos for pointing this out.

      Related: someone smart on KB was writing about diminishing returns from Bookbub, and his point was not just that the Bookbub ads were bringing in less profit of late, but that his recent Bookbub ads had completely screwed up his alsobots.

      Instead of being, say, a group of solid readers in his genre, his alsobots had instead become a group of bargain hunters, people who wanted cheap books in whatever genre.

      Something similar could be happening here.

      • This just happened to me. I had a Bookbub promo for one of my perma-free titles, and now all of the also boughts are a hodge podge of unrelated titles, and not one of my other titles that are for sale show up on 11 pages of also boughts. That would seem to limit the benefit in terms of indirectly promoting my books for sale.

        It would seem that Amazon would tweak the algorithm for the also boughts to account more for the relevance of the titles to the free ebook, as it should benefit them more if people who are looking for more books like the free one can find my titles more easily.

  18. “The danger to indie authors from KU has absolutely nothing to do with the per unit payout. It has everything to do with the potential disruption to Amazon’s algorithms. I can’t understand why nobody is talking about this. This will impact you whether you are in Select or not. The behavior of Amazon’s customers who are in KU (especially the ones who aren’t yet paying the subscription price) is very different from those who aren’t in it. This is changing the results of the alsobots, the calculation of the subcategory best seller lists, and the size of the potential pool of readers available to you.”

    ^^^This is what people really should be paying attention to. I’m more worried about how readers are able to find my books than I am by borrows.

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