Kindle Unlimited paid out over $250 million to indie authors in H1 as APA reports total H1 ebook market of $500 million

26 thoughts on “Kindle Unlimited paid out over $250 million to indie authors in H1 as APA reports total H1 ebook market of $500 million”

1. The KU numbers are significant but they’re missing the monthly bonuses Amazon gives to top performers. So $500M a year is low. The big question with KU is what percentage of subscription revenue Amazon dishes out; it could be as high as 70% or as low as 30%. So KU is generating anywhere between $750M and $1.5B gross, to put it in the BPH’s metric of choice.

   And it would be shocking if KU were generating more in rentals than KDP in sales.
   A good WAG would put Amazon’s share of the ebook markets at over $1.5B, possible as high as $3B. With another 10-20% going to other channels. And that is a conservative WAG.

   The BPHs alone probably account for $2B despite trying to minimize ebook sales. So the APA can try to spin it anyway tbey want but ebooks are almost certainly a $4B a year (gross) business.

   Of course, Data Guy would have more accurate nunbers but he charges for them. 😀

   • I think there’s a large dose of Amazon Derangement Syndrome combined with too many liberal arts majors in traditional publishing.

     Electrons are effectively free although they do require some storage to reside on. How did the giant tech companies get started and grow so wealthy? Selling organized electrons – first on an inexpensive floppy disk, then online.

     The first copy of a computer program is quite expensive to create, but copies, especially delivered online, are close to free. You can sell thousands (or millions) of copies of computer programs with some hard drive space, a good internet connection plus a relative handful of poorly-paid tech support staff.

     But traditional publishing would much prefer to deal with all the expense and logistical headaches of printing, warehousing, shipping and receiving returns of unsold paper books.

     • Traditional publishing has no competitive advantage in electrons. Publishers do have a significant advantage in bound paper pages. They will ride that advantage as far as they can.

       One of the best examples is want-ads. For years newspapers made a fortune off those ads. Then CraigsList came with its electrons, and forced many out of business.

       • My home-town newspaper used to be 1/4 inch thick, minimum, every day, more like an inch on Sunday. or more. Now it is just a few pages and one company owns the ‘paper’ for the entire state (of Michigan.) Not just want ads, but page after page of ads for department store merchandise with a thin column somewhere on the page. All gone.

         • Do tbey run a website?
           With ads on parts and a deeper paywalled sector?
           It’s not just the NYT, WAPO, and USATODAY that have extended their reach by embracing digital.

           Here’s a portal listing many (though not all) that have state by state:

           https://onlinenewspapers.com/usstate/usatable.shtml

           Long list.

           Survivors adapt.

           • Adapters don’t necessarily survive. Those newspapers ‘embracing digital’ typically have smaller subscriber bases and much lower revenue than they had in the palmy days of print. It’s not a lucrative business, and hasn’t been since it lost the revenue from classified ads.

             • They also have lower costs.
               That is part of the adjustment: rightsizing, cold though it sounds and is. But it is necessary.

               A lot of papers were in trouble long before the internet. Most, in fact.
               Much like books, they were slowly losing audience to newer technologies: in tbeir case local TV news and cable: CNN (back when tbey were credible) and ESPN (today the leagues run their own sites and streaming services). And their costs were rising faster than they could raise prices. Just like books.

               And finally, yes, going digital was no panacea. Because just like pbooks their business was and is high volume/low margin. And high volume/low margin needs low costs to survive. Today that spells digital.

               Oh, and one advantage of digital: it is global. Local news sites aren’t local. Expatriates will pay when the locals won’t.

               • I used to buy the local Sunday paper for coupons, local school sports news, lining under the cat box, etc.

                 Nowadays, the junk mail satisfies my only use – wadding up to start my barbecue and fire pit.

                 (One politician, if I hadn’t already been voting for her, might have convinced me to switch – she was the only one that sent me stuff that I dare burn, instead of the slick pieces that everybody else bombarded me with.)

               • Last I saw free weeklies had muscled into the supermarket shopper and coupon business. They’re hurting too, around here. Paper prices. Online shoppers.

           • Survivors adapt, and adapters fail. There must be something else involved.

             We shouldn’t forget that one way of adapting is to get out of a given line, and direct future capital and effort in other directions.

             • Of course.
               Not everybody who tries to adapt survives.
               But everybody who doesn’t adapt fails.

               TORSTAR sold off Harlequin instead of trying to adapt. Fair enough: get out while the getting is good.

               The rest of the Manhattan mafia, however, is neither adapting nor getting out. We’ll see how that plays out with five years of 9-15% inflation.

         • My experience exactly, D.

     • “But traditional publishing would much prefer to deal with all the expense and logistical headaches of printing, warehousing, shipping and receiving returns of unsold paper books. ”

       And…

       “Traditional publishing has no competitive advantage in electrons. Publishers do have a significant advantage in bound paper pages. They will ride that advantage as far as they can. ”

       Over the past few decades the BPHs have moved their batch print operations from the US to Canada to China. All in the name of following cheap printing services to preserve their “competitive advantage” in story packaging. Given how China’s economy and the price of dead tree pulp are going that “competitive advantage” is rapidly becoming a disadvantage to the bottom line.

       The BPHs like to report gross revenue but they don’t report what it costs to acquire that gross revenue nor do they report what their overlords get to pocket, adjusted for inflation.

       Their obsession with print is based on protecting their traditional distribution channels from “eeevile” Amazon. Meanwhile, the other content businesses have dealt with digitalization by creating their own “electron” distribution channels and disintermediating the distributors, going direct to the consumers.

       But then, those folks don’t pretend to be “guardians of culture” just businesses looking to grow their markets and *net* revenues. And if the old channels go away, tough. They’re not going to commit suicide to keep posturing.

       • Not to mention the rather large opportunity costs when the supply chain from Red China was disrupted. (Still is, somewhat, and is likely to go completely belly up not too long from now.)

         • Still is.
           And *very* likely to go belly up. Last year the supply chain problems were the result of pent up demand and bad management. This year the problem is output disruptions that might lead to a total breakdown.

           The ripples of the drought shutting down entire provinces (and industry there), floods shutting down other provinces, and the recurring Covid outbreaks and now monkeypox, just haven’t yet reached California. It takes weeks.

           On top of that they have a blooming economic crisis, growing inflation, investment drying up (to which they responded by *lowering* interest rates, inflation be darned) and GDP running half of the promised rate.

           All that just a few months before the planned coronation of Xi. Who is losing face by the crazy american parading a stream of IdiotPoliticians™ doing photo ops with the Taiwan president, negotiating a free trade deal, and publicly reporting on the result of wargaming a war with China (heavy losses in return for total victory).

           Dunno ’bout you but I don’t get the warm and fuzzies watching whatever the Idiots are up to. All I know is any company dependent on chinese output is at serious risk of disruption.to

           “interesting times” and not in a fun way.

           • What’s even worse is the shipping problems. Books are too heavy to economically ship a modern printing plant’s daily output on a plane — that’s extra cost, even assuming air transport is available. And shipping inbound (that paper and ink have to come from somewhere) is at least equally problematic. Then there’s rail transport, personnel to manage mode changes, etc., etc., etc.

             The true “American Way of War” has always been to out-logistic the “opponent.” The PRC is about to find that out (hopefully without a shot being fired).

             • That reminds me: container prices have exploded. And shipping costs for 40 foot container have gone from $7000 to $20,000. And diesel isn’t getting any cheaper soon. Electronics can afford that or even to air ship $500 gaming consoles (which make the bulk of their income from digital game sales) but $15 books can’t.

               And if the China plants shut down to prevent civilian blackouts, where are the BPHs going to print? Back to Canada? Mexico? Brazil?

               As to China, I really really hope the AirForce is implementing Rapid Dragon and building Tomahawks, LRAMs, and pods by the thousand. Two weak rulers looking for a distraction from internal failings is not promising.

             • That reminds me: While Boeing etc are looking to rake in billions developing drone combat aircraft, the AirForce already has the QF15 and a thousand BONEYARD residents than can rapidly be adapted for a brilliant first strike swarm.
               https://www.popularmechanics.com/military/aviation/a40899974/air-force-undead-aircraft/

               (A bit more fanciful than the original source but more accessible.)

               The US has always been good at this kind of quick adaptation. The original MOAB comes to mind.

             • Speaking of China’s travails, here’s a compilation of their biggest problems:

               https://www.youtube.com/watch?v=HfEChpHysgU

               It’s a cut-n-paste production taken from several of his long seminars. Even folks that dispute his conclusion grudging accept the data. Again, anybody depending on China manufacturing and global shipping is way out on a limb in a storm.

       • Of course the competitive advantage of bound paper is disappearing. Fiction leads the way. They are squeezing all the cash out of it they can while maintaining the balance sheet.

         One doesn’t have to presume an advantage is long term to take advantage of it in the short and medium term. Managing decline can be very profitable.

         And Guardians of Culture? Does anyone thing Bertelsmann executives sit around figuring out how to guard culture? They are sitting up there posturing? Maybe they hire some guy to posture for authors when he’s not adjusting pronouns. That’s what authors and trust fund editors think about. Like other companies, they will use digital as a tool, but for publishing fiction, they are smart enough to see they don’t have a competitive advantage.

         Authors want the publishers to stay healthy so they have another outlet. Authors have one set of objectives for publishers. Publishers have another. When publishers don’t do what authors want, authors tell us how stupid the publishers are. Publishers don’t care. They have their own objectives.

         • A case can be made tbat authors trusting the ancien regime are about to get a rude awakening. Real. Soon. Now. It’s not just publishers who are asleep at the wheel…

           Tipping point collapses are like bankruptcies: slowly at first, all of a sudden at the end.

           • Not all bankruptcies are like that. The second Sears bankruptcy; Borders; Crown (the book retailer, not the publisher); the auto manufacturer formerly known as Chrysler; Montgomery Ward; the list goes on.

             The key point is that the “suddenness” at the end resulted far more from timing shenanigans built around quirks in the Bankruptcy Code than “when” bankruptcy became appropriate. Or predictable with a high degree of confidence. Borders, for example, “should have” declared Chapter 11 about six months earlier than it did… but then certain transfers to insiders and major creditors would have fallen inside the avoidance window, and been clawed back for the benefit of everyone (and, quite possibly, making plausible a confirmable reorganization plan). The Crown bookstore chain was even worse and resulted from an idiot not consulting existing loan call/maturity dates when making a bet-the-company loan, resulting in all available cash going out in a 45-day period three years later.

2. Well, $1.37 isn’t much as a royalty – until you compare it to $0.00 for each person that isn’t going to BUY your book.

   Now, I don’t know how much a tradpub author sees when their ebook is licensed to a brick and mortar library – but I suspect that, on a per-read basis, it is considerably less than $1.37.

   • There is a difference in the royalty amount, but KU encourages impulse “buying”. For authors of well-written series, it’s a golden gate to more sales.

     KU also encourages binge-reading of a series with some or all of the books available under KU. I’ve seen some traditionally-published ebook series that have one or two KU titles, then revert to charging the same (high) prices as Big Pub thinks it must get for ebooks.

     I haven’t heard how/if it still works, but some indy series authors used to have the first book in a series as “perma-free” for the same reasons – sales of other series titles.

   • Naturally, it depends on the contract between author and publisher, and the license fee extracted from the library by the publisher. So do not take this as “representative” or “predictive” or anything else; it is based upon a sampling that is not statistically sound or valid. But $1.37 per license is, in all probability, a serious underestimate for trade e-books.

     Keep in mind:

     • Libraries don’t get to obtain their copies at the ‘zon at the prices advertised at the ‘zon, at least not from commercial publishers. The median figure for [redacted] in 2019 was approximately $59 for “non-volume deals.” Some commercial publishers are not so rapacious; others, like PG’s former employer, are far worse (one essentially irreplaceable ebook carries a list price of $9,757 that nobody except libraries pays more than half of).

     • Some commercial publishers limit the number of times a particular license-unit (equivalent of “copy”) can be loaned; for its commercial trade imprints, for example, House of Mordor requires a “renewed permission” for the library-price-at-time-of-renewal after 25 loans. (For comparison, mass-market paperbacks have an estimated library life of 35-40 loans and/or 20 years due to paper/glue decay.)

     • The author’s purported share of e-book revenue depends on both contract terms and contract interpretation… not to mention shenanigans. If one followed the most-favorable-to-the-author interpretation of typical commercial trade-publishing contracts signed after 2014 or so and not amended since, the author would get 25% of the publisher’s share of the $59 (what? you think the intermediary-ordering-systems don’t take a healthy cut?).

     • Libraries are the single most reliable “discover an author and make the reader buy not necessarily this book, but others by that author” system around, and have been since the early 1970s when they caved in and started routinely buying mass-market paperbacks. I suspect that the associated sell-through rate is at least comparable to KU (as PG notes in his comment)… but I explicitly deny that anyone has reliable, replicable data that would allow analysis even at the (inherently, albeit this is due to the nature of the data and not a criticism of intent) unreliable analyses of “comparative author income” based on inferences from author/work rankings that have been put forth for years now.

     Put all of this together, and it’s fairly clear that even if commercial publishers stopped charging a “library premium”† and “just” charged libraries $26 (median casebound trade fiction) per license-unit with a modest 15% rake-off for the middlecreatures, each transaction should result in an author payment of around $5.50 — not $1.37. (With the bonus “additional sales” from the author’s backlist noted in the last bullet point above.) Unless the publisher has screwed the author by further reducing for “library sales” and/or applying another reduction.

     Should. But now we’re getting into the dark arts of royalty statement calculations. The Necronomicon is far less likely to harm its readers than delving into royalty calculations is to harm anyone who tries bwahahahahahahaha No! Don’t open that door — it says Tax Accounting on it!

     tl;dr The underlying math implies that $1.37/library transaction is most probably an understatement of the author’s share. What possible difference this does/should make to the author is for another time, because market sizes and intersections between {library} and {general reader} are undefined and undefinable. (Not to mention probably unique.)

     † It’s bad public policy. It’s also legally dubious.

     • I actually remember when OVERDRIVE’s primary business was setting up white label ebook sales sites. Microsoft Reader LIT being their preferred format. Later, Kindle and Adobe took over and they aligned with ePub out of necessity. Then the agency conspiracy killed the interoperable ePub market in the US. OVERDRIVE doubled down on the library business. And their cut isn’t small.

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