Home » Amazon, Ebook Subscriptions » There’s a Question We Should Be Asking Re Kindle Unlimited and Its Impact on eBook Sales

There’s a Question We Should Be Asking Re Kindle Unlimited and Its Impact on eBook Sales

29 December 2014

From The Digital Reader:

For the past month or so, Kindle Unlimited has been one of the hot topics in digital publishing. A number of indie authors are reporting that their revenues have dipped since KU launched in July.

. . . .

As I sit here writing this post Sunday morning I can see that, even though a month has passed on this story, no one is asking the right question.

Right now everyone is asking whether KU is worth it for indie authors, and that is not the right question.

What we should be asking is whether traditional publishers are seeing a similar impact on their sales.

. . . .

Yes, I know that all of the talk is focused on indies and KU, but that is not the problem itself; it is just the way that the problem is expressed in the market.

When you get down to it, the actual cause of the drop in revenues is a shift in consumer book-buying behavior as consumers sign up for ebook subscription services and stop buying as many books at retail.

. . . .

But leaving my doubts aside for the moment, if a radical change is occurring then it would most likely affect a consumer’s entire book-buying behavior.

This means that if a consumer really does buy fewer books after getting into Kindle Unlimited or another ebook subscription service, they’re buying fewer books over all – including ones published by legacy publishers, indie publishers, and indie authors.

Now do you see why I want more data on trad pub ebook sales?

Link to the rest at The Digital Reader

Amazon, Ebook Subscriptions

54 Comments to “There’s a Question We Should Be Asking Re Kindle Unlimited and Its Impact on eBook Sales”

  1. The problem is that trad-published books are getting paid the same amount per loan as they would per sale, so unless their overall loan/sales numbers have significantly decreased, the authors won’t know what’s going on. Their statements probably won’t break it out for them–when they finally get enough numbers to know what’s going on, which isn’t as fast as indies know what’s going on.

  2. What we should be asking is whether traditional publishers are seeing a similar impact on their sales.

    The degree of concern I have for traditional publishing is equal to the concern they have for me.

  3. Why does this matter? I’m not in KU and don’t intend to (although I like the idea of submitting a novella instead).

    Let’s say we get an answer to the question. Yes or no: Does it matter? Would either answer change my intent to write and publish books readers want? Would it change my pricing? Maybe that, although I doubt that changing between 2.99 and 4.99 will make that much of a difference.

    • It matters because:

      “This means that if a consumer really does buy fewer books after getting into Kindle Unlimited or another ebook subscription service, they’re buying fewer books over all – including ones published by legacy publishers, indie publishers, and indie authors.”

      I asked on Twitter Saturday night and a lot of people seem to be missing that point, which is why I wrote this post.

      • I think nate is right in that it matters when looking at the entire book publishing landscape – whether it afffects your business decisions right now or not doesn’t mean the information is irrelevant. I would like to know if readers are buying fewer books OVERALL or only buying fewer indie titles.

    • That might be good to know, but on a practical level, does it still mean anything to me?

      If people are spending less on ebooks, it’s not going to make me quit writing them. It’s not going to change my marketing strategy (which should be more than what I do now anyway).

      It’s not like people are going to stop buying ebooks. Not everyone is going to move to the subscription model. Just like a similar move with people going to Netflix isn’t going to change the way Hollywood makes movies.

      So I’m not saying you’re conclusions are incorrect, just that it’s not going to make a difference in what we do, except with regards to subscription services.

      • Exactly.

      • Well, we are talking e-book sales here, right? Since trd. publishers get full royalties, they will count borrows as sales, because there won’t be a difference. In other words, this will not impact them at all.

        Self-published writers, however, will see a decline in e-book sales across the board, even if the are not in KU. This is because a reader who can borrow a book, even a substitute book, will not buy the writer’s version.

        I believe we have been shafted by Amazon. Presumably they don’t mind getting rid of us since they are now on close terms with trad. publishing.

        • Surely this does impact trad publishers. If you borrow one of their books and read it, they get paid. If you decide to reread it next year and borrow it again, will they not get paid again, full price, for the additional borrow? Paid twice instead of paid once for a sale would be quite an impact for them — a positive one. (Not so much for self-pubbed writers, since two borrows might still not make up for one sale.)

          Also, their new, expensive books are more attractive for borrowing; it will feel like a bigger treat to read a $20 book for free than to read a $5 book for free (even if the $5 book is actually a better book).

      • Actually, Netflix (and Amazon Prime) have changed the way Hollywood makes movies, or at least television. When House of Cards hit the market I was struck by the director and producers saying how excited they were to create something outside the typical ABC, NBC, CBS television serial box. Streaming has allowed content providers that couldn’t get past the traditional gatekeepers to find an audience.
        This type of change is already happening in the book subscription model. Content is being tailored to get the most out it. Thus your novella comment.


        • One article I saw said that big names are more willing to do a streaming series because there is no risk of getting cancelled and looking like a loser. They make 13 episodes, with no retooling from execs, and then decide later if they want to do more.

      • I care.

        I’m about to launch my first book and I like all the information I can get.

        In reality, the trad pubs don’t care a lick about me and my new book.

        In my head, I’m engaged in a battle against them for literary domination. They have all the advantages, except for my speed and cunning. I want to know if they are doing good, or doing bad. Particularly as it relates to this subscription stuff. I want data.

        Here’s my guess. Subscriptions are really bad for them. Like Cheetos. Cheetos are tasty, but ultimately they kill you. Still you can’t stop eating them. The trad pubs are completely committed to tiered pricing. They want to charge a ton for the hot new titles, then a little less, then a little less, and then less as they get dumped into a back catalogue. Seems like subscription services could seriously wreak that plan. IF they become popular, which is still a big if, the big pubs can’t charge a lot for new releases and put them in the services. If they don’t put them in the services, they might not sell. And if everyone is reading from services, they are damned if they do and damned if they don’t. Odds are they can’t resist the easy money of subscriptions, so they’ll eat Cheetos until they die.

        What about me? Should I put my first book into KU? If that’s where everyone is reading, probably. If those services die (because indy writers are pulling out) maybe it’s not so good. Or maybe it’s really good because my book will stand out.

        Also, if I’m going to put my epic into KU, what do I price it at? I was assuming low prices were good for Kindle sales, but if everyone is going to read it on KU anyway (if at all) why not price it higher? Then they think they got a deal getting it for free.

        Much to consider on my path to world book conquest. So I appreciate Nate’s quest for answers.

  4. Not sure, but looking at amz pricing on various trad pub’d authors this morning, many of their kindle books sell for anywhere from 5.99 to 7.99 for midlist/backlist, and 9.99 up to about 14.00 for better known authors–with some academic presses pricing sky high–$24/38/48 dollars per.

    So assuming 70% of trad pub ebk at say 10.00 comes to pub, and of that 17%-25% comes to agent who takes his/her 15%/20%, and whatever is left on the bone, goes to author finally. So on a 10.00 trad ebk, 7.00 goes from amz to pub, who then gives agent, say 25% of 7.00. Which is 1.75? and agent takes say 15%, and author winds up with 1.48 per book? Is that about right?

    and KU gives on a 9.99 or 10.00 ebook, how much to publisher who then sends whatever to agent, who takes his/her share and author winds up with…?

    The royalty statements of some of my trad publishers break out everything; it’s just that it’s in code that rivals the nuance-guessing of the Vatican.

    Just as an aside, speaking to a few trad pub’d authors… It would appear the more readership one has for an author as a ‘brand’ –not just the content of the book– the less fall in sales.

  5. margaret rainforth

    I just took a quick survey of three teens I know who have a movie subscription service. While they all love the service and would like to be able to use it exclusively, they admit that there are certain favorite DVDs that they’ve looked for and are not available. So they will continue to purchase DVDs as long as the movie offerings on the service are limited.

    • I have this experience with Netflix all the time and I’m not a teenager. There are certain movies that the subscription services seem to have trouble getting and I have to go out of my way to see. The same happens with books. But the trick is, whether it’s a book or a movie, it has to be special enough for me to put in the extra effort. Movies are a little rarer so when there’s something I really want to see, I do what I can to see it. I think this is going to keep happening with subscription services. They really are better off treating suppliers well, but the model itself makes that difficult.

      I love my Netflix, but I’ve totally run out of things to watch over the last few months and Netflix doesn’t introduce decent movies as often as it used to. So I, like any consumer, am looking for other things to spend my time and money on to fill that void. This is the concern I think indies rightfully have for KU. Authors are going to pull out the really good stuff if Amazon doesn’t make it worth their time. Maybe Amazon has already factored that in though. I’m inclined to think they probably have and they’re just willing to take that risk.

  6. Doesn’t it also depend how much of the book is read? Isn’t it 10% before it gets classed as a ‘sale’, so people might be accessing the same number of books, but it now matters when they are read.

    Historically, I’d buy a stack of books, some of which I’d never get around to reading. With KU I believe that the author only gets their royalty once the book has been read to a certain point. That could also affect how profitable KU is from an author’s perspective.

    • Now that is a good point.

      I hadn’t considered it, but you’re right that services like Scribd/oyster/KU are reading focused and not sale focused. Authors can no longer simply focus on making a sale and moving on; they’re going to need to get readers drawn in to a book.

      And that is itself a shift in the landscape.

      • I have never focused on sales, Nate. I have always focused on telling a compelling story. There’s no sea change, no shift in my landscape.

      • I agree, Nate. Imagine payouts based upon how far someone reads in your book. That would certainly change content. Serials, anyone?

      • Amazon’s problem here. for shorter titles, is that KU subscribers will download a title rather than bother with the Look Inside feature. They can then flit through the book, decide they aren’t interested, and return it unread, having triggered a payout if that flit is 10% more.

      • Authors have already figured out a way to get around that obstacle. Break a novel into separate parts, put each part into KU, then the reader has to read even less of the book in order to hit the 10% payment threshold.

    • Good point. Also, if KU paid on the download, and the Amazon pot remained the same, rates per book would be lower than the current $1.39

      But that brings up an interesting idea. For purchases outside of KU, suppose Amazon only charged consumers when they had read X% of the book. That way the purchase depends on consumption. Consumers would love it because those impulse purchases that don’t get read don’t cost them anything.

      How would it work? The consumer is charged when they order, just like today. If they don’t get X% into the book after Y days, their money is refunded, and the book disappears from their devices.

      Authors and publishers would hate the idea. Consumers would love it. And Amazon? Who knows. They still don’t call to confide.

      How could it avoid all the objections? Amazon sets up a new service, and books are enrolled by rights holders. Or they pay 80%. Or they just throw all of KDP Select into it on a Tuesday morning.

      It’s also insurance for the consumer. If the book sucks, and he determines than before reading X%, he gets his money back. That would address the concerns many have for the conusmer who is saddled with a poorly edited book.

      I don’t think we have even scrathced the surface of what the new technology can offer.

      • Consumers would love it.

        Some consumers might like it. I would hate it. I’ll often purchase a book that I know I want, even though I also know I won’t be reading it for several months. I’d be really annoyed if it had disappeared from my kindle when I finally got around to it.

        Having to re-purchase it would be a drag. What if I was in a zone without wi-fi? I’d go to open the book, and it wouldn’t be there. One major reason why I like ebooks is that I don’t have to worry about finishing a book while I’m waiting at the doctor’s or my child’s soccer practice or wherever. The next book is always ready.

        • I’m with you. I’d hate it. I buy way more books than I can read for a number of reasons. I don’t want them yanked because I didn’t read them based on someone else’s “schedule/deadline”. It’s bad enough knowing the books I “buy” could be yanked at any time for some unknown reason because I’m licensing a book not buying it.

      • As another long-time buyer of multiple books, I would hate it too. I like knowing that the book is there, available and mine, whenever I finally get around to it. Also, it would never work for the retailer/publisher to have to refund automatically, the system could only function if the payment was first collected when the reader passed the 10% or whatever – which might encourage readers to throw in the towel prematurely. And what if the price had changed in the meantime?

      • Wearing my consumer hat, I would hate it too. I buy eBooks for all kinds of reasons – mostly word of mouth recommendation, sometimes as part of a series, sometimes Amazon or review site recommendations. I want them there, on my Kindle (or cloud) when I want them. It might be next week, but if past experience is anything to go by, it could be three or six months or even a year later. It all depends what distracts me at the time.

      • Not to mention the headache of keeping my checking account properly balanced! (and buying on sale vs reg priced…and buying when i have that 3.99 in my checking only to have it ACTUALLY charged when i don’t…). I download samples for when i only maybe want a book. When i buy it i expect it to be BOUGHT same as a physical book.

        • This is one reason they’d have trouble with me ‘buying’ ebooks from Amazon, they proved a while back that they can ‘pull’ a bought and paid for ebook back anytime they want to (1984 and animal farm I think they were.)

          And the ebooks files I do buy/get go into my PC and are transferred to my kindle by USB (wireless on kindle is left off) so they’d never know if I ever opened that book, read 9% or read the whole thing in one sitting …

      • If it was a separate service in Amazon, those who hate the idea wouldn’t use it. Those who like it would.

        As an unschooled member of the lumpen class, I’d love it.

      • Isn’t that basically turning all of Amazon’s ebooks into a subscription service model? Except that the consumer would pay more based on more reading, and less on less reading?

        I’m content with the way it works now (as a reader), but newer readers might have a different opinion, coming up with the experience of Netflix and Pandora and whatever else. (I still buy most of the DVD’s if I really want to see the movie…but I often wait for them to drop in price at Target or something like that…)

    • That’s a good point. I have books waiting to be read and I’m more conscious of actually getting to that 10% mark these days with each book I download. It also helps authors that you can only check out 10 books at a time though. If it weren’t for that limit, we’d really be in trouble.

    • Hadn’t thought of that. I have purchased dozens of books that I haven’t read. I may never!

  7. The question of what the Trad-pubs are seeing is something to ponder. They get more money from borrows than Indie Authors, and they are not required to go exclusive with KDP Select. Actually I’m not sure about that. But if that’s the case Amazon is treating differently the Trad vs. Indie.
    Already Indie Authors are thinking on producing shorter novellas to maximize the revenue on the amount of work they need to write a book. And all this because of KU.

  8. “What we should be asking is whether traditional publishers are seeing a similar impact on their sales.”

    The BPHs probably don’t even whisper these results in-house. And if they’re getting paid the same amount per borrow as per discounted sale, it’s a difference that makes no difference. Why then should they pay attention?

    Not so with us. I’m bailing on Select next month and my next release will not be placed in that program. I’m not saying it’s KU that’s sunk my sales so low, but I have no evidence either way.

    Maybe my $2.99 e-book will compete successfully with KU’s trad-pub romance offerings. Maybe not. I can, and will, make that decision without knowing how it affects trad-pub.

  9. I asked this on a previous thread last week and had no responses, but I’m really curious if anyone who has dropped out of KU/Select because of disappointing sales has seen their sales rebound at all once out of KU. I suspect most borrowers are not likely to pay full price for most books anymore, which would mean dropping out wouldn’t likely boost your sales back to previous levels. Does anyone who has dropped out have any data to share?

    • If traditionals are seeing a decrease in income post KU, it comes from a loss of unit downloads*, where downloads include both purchases and borrows. They get the same payment for both purchase and borrow.

      If 1) independents are also seeing a decrease in total downloads*, and 2) consumers are reading just as much as the did pre KU, then we are seeing a significant change in consumer behavior.

      *Download = purchase or reading of 10% of borrow.

  10. Smart Debut Author

    The most unpalatable aspect of KU is Amazon’s unfortunate decision to make indies subsidize traditionally published participants. Sad, really.

    • Kind of ironic when you think about it, given all the indie discussions about trad pub over the last several months. It also kind of proves that Amazon really is amoral when it comes to financial matters despite what people claiming that indies are kissing Amazon’s butt and the trad pubbers hating on Amazon say. Amazon is still Amazon and Amazon is doing what it can to compete.

  11. I think Nate makes a good point here in the question of not only how KU is affecting indie ebook sales, but sales overall, including tradpub. Because if it’s affecting *all* sales, the dynamics of how to approach KU completely change.

    If everyone’s sales have fallen, this suggests that a lot of readers have moved over to the subscription service. The question then becomes not, “Can I afford the lower payouts offered by KU?” but instead, “Can I afford NOT to be in KU?” Because if people are preferring to “rent” rather than buy, and my books aren’t available for rent, I’ll lose that revenue entirely.

    • I suspect there is a large segment of consumers who borrow, yet have never made a decision to move over to KU.

      Each KU borrow I have made happened when I went to a book page with every intention of buying the book. I get to the page, and it says the book is free because of my KU membership. Click.

      I’m not looking in KU. I don’t even know how. I have changed nothing about my book selection practices. What has changed is the price I pay when I get to the book page.

      • After you borrow one of the books you intended to buy, how often do you then go back and buy the book so you can have it when you want it? Or are there books you just don’t delete so it becomes a permanent borrow?

        • Never. These are novels, and I don’t save them or read them again. In paper days, they went in a box that eventually traveled to Goodwill.

          Books I want to keep are usually not in eBook format, and I don’t want them if they are. They are nonfiction with charts, graphs, maps, etc.

  12. Another question I’d like answered is this: What percentage of people who use KU for the free first month remain subscribers after that? The low payments from the pot may be a reflection of low subscriber numbers.

    • Excellent question! I’d love to know that.

    • Good point. More people should be discussing that. I went on to become a paying customer in KU, but I do wonder sometimes how many others do. I find enough books that I like, but I’ve also seen books I just didn’t get around to reading pulled from KU. If authors are pulling books, that’s probably going to affect the pool of customers willing to convert to paying customers. I also don’t think it’s a coincidence that Amazon decided to start with their All-Star bribing.

    • Since I am terminally lazy, I didn’t take the time to cancel KU after the first free month. That’s how they captured me. As noted above, I just found books I intended to buy had no incremental cost since I was in KU.

      I am still buying books. When I get to the book page, I take the KU price if it’s offered, or pay if it isn’t. For many books, they are giving me a choice on the book page to pay $3.99 or zero.

      I learned that with absolutely no change in behavior, I was saving money. So, I let the KU subscription ride.

      • Terrence, I’m confused. Are you saying if you belong to KU you get a better price on a KU book? I didn’t bother to join since my TBR pile already exceeds my life expectancy but….

  13. I just crunched my numbers for 2014.

    My Amazon revenue declined by 42% in the third quarter of 2014 and by 39.4% in the 4th quarter vs. both the first quarter and second quarter. There are several factors involved in this decline:

    1) I pulled all my books out of KDPS in June to put them on other retailers because everyone was saying how dangerous it was to be exclusive.

    2) Amazon changed its algorithms in June or thereabouts in advance of unleashing KU.

    3) Amazon unleashed KU.

    4) I had no new releases between March and late September.

    My sales on other retailers didn’t quite make up for the difference nor did three 99c Bookbubs that saw my rank jump from <10K to top 20 / 30/ 50 in the Kindle store for all three books.

    It seems, at least in in my analysis, that pulling out of KDPS meant a loss of visibility for my books just when Amazon had tweaked its algorithms and released KU. I have no idea how I would have done had I stayed in KDPS, but the first and second quarters of 2014 averaged $14K per month. The last two didn’t crack 5 figures, despite 4 new releases and 2 Bookbubs.

    Perhaps that was just the result of inevitable book sales declines, but I suspect I really lost a lot of visibility when I pulled out of KDPS and it is hard to get traction on other sales channels, even with Bookbubs. The other retailers just don’t have the same skill at selling my books that Amazon has.

    Now, I am once again all in to KDPS/KU, but my last quarter has been <$10K months, which is still decent all things considered, and many indie authors would be really pleased with my numbers for Q3 and Q4. The thing is this: if the decline in income is due to the quality of my books or their appeal, I have to know that and hopefully adjust. If the result is because of KDPS / KU / Amazon tweaks, etc. I need to know that as well, so I can adjust accordingly.

    I'm doing this indie publishing gig full-time now and want to keep making my living at it so I need to understand the marketplace and how changes in it affect my bottom line. And adapt.

  14. “…shift in consumer book-buying behavior…” Any data on whether there was a book-buying surge during the holiday season and whether that affected revenues?

  15. “In a world where reader have signed up to a subscription service…”

    ^^^ Read that in a deep, rumbling bass voice-over voice.

    I’ve read what other writers are saying about how they’re doing with KU. Some are doing better, some worse. It seems to me that this is within the normal range of results anytime something changes in the publishing world.

    I don’t believe all readers will switch to the subscription model. Unless they are voracious readers, it wouldn’t pay for them to do so.

    So for me, I’m watching how things work out, and making a decision based on how I think KU will work for me. We don’t really know what Amazon plans for the program, so the final project may look completely different from what we see now.

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