Amazon KDP & Kindle Unlimited: What It Means for Authors and Publishers

From Written Word Media:

Kindle Unlimited (KU), a subscription service through Amazon that allowed readers unlimited access to books for just $10 a month, was unveiled by Amazon in July 2014. The reception by readers was mostly positive, finally a Netflix for Books! The reaction from authors and publishers was mixed. Kindle Unlimited was doing to independent authors what Spotify did to musicians. By offering their work for free to subscribers, they were potentially lowering the revenue that an author or publisher could make from each book. In this article we explore how KU has evolved over the past 5 years and its current impact on authors.

Kindle Unlimited & KDP Select: A History

Since the inception of KDP Select, there has always been a KDP Select Global Fund, which is a pot of money that goes to authors whose books are downloaded for free through Amazon’s eBook programs. Authors who enrolled their eBooks in KDP (Kindle Direct Publishing) Select prior to the launch of KU could have their books downloaded for free by Kindle owners who were allotted one free eBook per month through the Kindle Owners Lending Library. In the days prior to KU, the Global Fund totaled around $1 million, and was divided proportionally amongst the authors who had their books downloaded.

In July 2014 with the introduction of KU, the Global Fund increased to $2.4 M, and over the next year as more readers signed up for KU and more authors enrolled in KDP Select, that Global Fund increased to $11.5 M by July 2015, and today sits right around $25 M.

A whopping $267.9 M was paid out to authors through the KDP Select Global Fund in 2018. If the pot stays at its current size ($25.6 million per month) for the rest of 2019, Amazon will pay out $299.4 M to authors this year. It is possible that the Global Fund will continue to grow in the remaining months of 2019, which would make the total Global Fund payout for 2019 north of $299.4 M.

For the first year of KU, the payouts were simple: Each author was paid every time someone downloaded and read at least 10% of their book.

When KU was a year old, in June 2015, Amazon announced that they would begin paying participating authors by pages read, instead of by the number of books downloaded. At the same time, they introduced KENPC (Kindle Edition Normalized Page Count), which accounted for type size and line spacing to prevent anyone from cheating the system and artificially making their books longer. Amazon calculated the payout per page by beginning with their monthly KDP Select Global Fund and dividing it by the total number of (KENP) pages read. That first month it was decreed that each page was worth $0.005779.

As more readers and more authors entered into the KU system, the Global Fund size did not compensate for the increasing number of pages read every month, so the payout per page read dropped steadily in 2015.

In January of 2016, Amazon announced yet another change in how they were going to pay authors with the introduction of KENPC v2.0 (Kindle Edition Normalized Page Count). This was supposed to standardize for additional spacing and text features. Some authors saw their page counts, and thus their total potential payout per book, drop, while others saw them rise. Amazon claimed that the average change across all KDP titles would be under 5%, but individual authors saw up to 10% changes in page length.

An additional change implemented in V2.0 was the capping of payouts at page 3,000 for longer titles. This affected mostly dictionaries and large reference books but did have some implications for larger boxed sets as well. Since these changes, the payout per page has increased back up toward $0.005 per page.

Take a look at how these changes have affected payouts from the past year:

Calculating Payout by Book

Under KU, using July 2019’s payout numbers, these are the maximum payouts per book based on total pages read:

KENP Pages Read	Payout Per Page*	Max Payout
150	$0.004394	$0.75
300	$0.004394	$1.50
450	$0.004394	$2.25
700	$0.004394	$3.50
1,000	$0.004394	$5.00
3,000	$0.004394	$15.00
6,000	$0.004394	$15.00

*based on payout numbers from July 2019

Looking at these numbers, it is easy to see why many authors were upset by the change to pay per page. Before KU, if you wrote a 150 page eBook, and priced it at $2.99 you would make $2.09 (after Amazon’s 30% royalty) off of a sale of that book and you would realize that revenue as soon as a reader downloaded the book. Under KU, that same book nets you $0.75, and that is only once a reader completes the entire book, which may happen within 24 hours or 6 months of the reader borrowing the book. Additionally, as an author, you do not know what the payout per page will be until the following month, so it’s hard to determine what the max. value of your book in KU is in any given month.

Authors do have a choice of whether or not their book is included in KU. An author can simply opt-out of KU altogether by not enrolling their book in KDP Select. This decision proves agonizing for many authors, and there are authors who make good arguments for both sides.

Hugh Howey, a successful indie author, offers some perspective in his blog post Why KU Short Fiction Still Makes Sense. He argues that the KENP system is leveling the playing field among indie authors. The amount of work that goes into writing 60,000 words is the same, regardless of whether or not you publish those 60,000 words as one novel or six, 10,000 word short stories. Under the KENP system, both scenarios are compensated equally, instead of being skewed in favor of short stories, which were often priced the same as full-length novels before. Howey is supportive of Amazon, and sung their praises in a recent interview with Digital Book World:

“Kindle Unlimited is just one example of the enormous sums of money an author misses out on by going with a major publisher. We’re talking $150,000,000 a year going directly to authors, and if you sign with a major publisher, you are taking yourself out of that pool.” – Hugh Howey

However, some authors argue that inclusion in KDP Select (and by extension, KU) authors are losing out on other revenue streams and becoming increasingly more reliant on Amazon.

Link to the rest at Written Word Media

PG says, “Do what you want. Whatever floats your boat.”

One of PG’s major problems with traditional publishing is that everything . . . goes . . . so . . . slowly.

It takes forever between when you finish a polished draft to deal with your agent reading and pitching it to the year-long process of the book going through all the stages (and people) traditional publishers use to ensure “quality.” Then, there’s a lot of busywork the publisher assigns the author to do in order to market the book.

PG’s not a guy who suffers inefficient organizations quietly. “We will sell no book before its time,” drives him crazy, just like waiting in long lines to get in anywhere does.

Plus Mrs. PG likes being the boss of her own writing career. That career has gone forward much faster and better and been far more profitable than it would have been had she stuck with traditional publishers.

PG suggests that a writing career should depend on how many stories you have inside you instead of how many corporate drones need to say yes before one of your stories finds its readers.

And he doesn’t mind it one bit that Amazon provides authors lots of different ways to make money from their books.

UPDATE

Additional PG comment the day following his posting: He apologizes for not noticing the date the OP was published. His excuse is that he was pulling together numbers for his accountant for the Covid-delayed income tax deadline. Doing that kind of thing kicks his OCD into high gear and he can’t multitask in the same manner he’s accustomed to doing.