Ever since the rumors started about Amazon's $9.99 a month unlimited ebook subscription service, Kindle Unlimited (often described as a "Netflix for Books"), there's been a great deal of speculation and doomsaying about what this will mean for book sales. Specifically self-published and small press book sales since the Big 5 publishers aren't included in Kindle Unlimited's initial offering.
The basic breakdown goes like this: readers pay $9.99 a month for unlimited access to the Kindle Unlimited library, which currently boasts upwards of 600k titles, including bestsellers like The Hunger Games, Life of Pi, and every self-published title currently enrolled in Amazon Select, Amazon's exclusive publishing option. (Note, several big name indie authors like Hugh Howey don't have to play by the exclusivity rules. This is great for them! For the rest of us, though, being in KDP Select/Kindle Unlimited means we can only publish on Amazon. More on that in a sec.) Self published authors with books in Kindle Unlimited are paid their usual royalty when a reader hits the 10% mark. (UPDATE! I got this wrong!! Select authors are paid a fixed percentage of the global fund just like it was for the Kindle Lending Library, not their royalty. Last month, this worked out to $2.40 per borrow, which was fantastic for people selling $0.99 books, like myself, but not so great for authors with higher priced books who would normally earn more than that with a sale. I'm updating the rest of this post to reflect this information for the sake of accuracy, though my general argument remains unchanged. Sorry about the mix up!) Small publishers have different deals--some are paid when a reader first opens the book, some are paid at 10% like the rest of us--but everyone gets paid at some point when a Kindle Unlimited subscriber reads their book.
Now, if you're following the math above, you might notice a gap between the $9.99 monthly subscription price and the usual cost of books. Plenty of books start at $9.99. Even if you're buying all indies at $2.99 a pop, that's still only 5 books before you hit ten bucks and start getting books for "free." So how is it, then, that Amazon can afford to let people read all they want and pay authors their usual royalty on the books for only $9.99?!
Up until now, the answers I've seen to this question have either been "They're going to cut royalty rates on borrows! We'll all be getting paid pennies in no time! DOOOOOOM!" or some variation of "Relax, Amazon knows what they're doing."
Personally, I'm not really satisfied with either of these. I don't believe Amazon will suddenly slice the royalty rate on the authors that create all the content they're now selling. Authors, I might add, they've been working very hard on wooing away from traditional publishers for years now. Why would they undermine that just to shore up Kindle Unlimited? That's robbing Peter to pay Paul. It just doesn't make sense, especially not for a company as smart and far seeing as Amazon. On the other hand, I also don't believe in blindly trusting giant corporations to have my best interests at heart.
To truly understand why Amazon decided to launch Kindle Unlimited and how they hope to profit off it (and, hopefully, how we can, too), we need to understand the math behind the Kindle market itself. Naturally, of course, we don't have any exact numbers (Amazon doesn't share those with anyone) but we do have a lot of percentages and derived figures, and those numbers paint a very interesting picture, indeed.
But first, let's start by figuring out how many ebooks Amazon actually sells.
The basic breakdown goes like this: readers pay $9.99 a month for unlimited access to the Kindle Unlimited library, which currently boasts upwards of 600k titles, including bestsellers like The Hunger Games, Life of Pi, and every self-published title currently enrolled in Amazon Select, Amazon's exclusive publishing option. (Note, several big name indie authors like Hugh Howey don't have to play by the exclusivity rules. This is great for them! For the rest of us, though, being in KDP Select/Kindle Unlimited means we can only publish on Amazon. More on that in a sec.) Self published authors with books in Kindle Unlimited are paid their usual royalty when a reader hits the 10% mark. (UPDATE! I got this wrong!! Select authors are paid a fixed percentage of the global fund just like it was for the Kindle Lending Library, not their royalty. Last month, this worked out to $2.40 per borrow, which was fantastic for people selling $0.99 books, like myself, but not so great for authors with higher priced books who would normally earn more than that with a sale. I'm updating the rest of this post to reflect this information for the sake of accuracy, though my general argument remains unchanged. Sorry about the mix up!) Small publishers have different deals--some are paid when a reader first opens the book, some are paid at 10% like the rest of us--but everyone gets paid at some point when a Kindle Unlimited subscriber reads their book.
Now, if you're following the math above, you might notice a gap between the $9.99 monthly subscription price and the usual cost of books. Plenty of books start at $9.99. Even if you're buying all indies at $2.99 a pop, that's still only 5 books before you hit ten bucks and start getting books for "free." So how is it, then, that Amazon can afford to let people read all they want and pay authors their usual royalty on the books for only $9.99?!
Up until now, the answers I've seen to this question have either been "They're going to cut royalty rates on borrows! We'll all be getting paid pennies in no time! DOOOOOOM!" or some variation of "Relax, Amazon knows what they're doing."
Personally, I'm not really satisfied with either of these. I don't believe Amazon will suddenly slice the royalty rate on the authors that create all the content they're now selling. Authors, I might add, they've been working very hard on wooing away from traditional publishers for years now. Why would they undermine that just to shore up Kindle Unlimited? That's robbing Peter to pay Paul. It just doesn't make sense, especially not for a company as smart and far seeing as Amazon. On the other hand, I also don't believe in blindly trusting giant corporations to have my best interests at heart.
To truly understand why Amazon decided to launch Kindle Unlimited and how they hope to profit off it (and, hopefully, how we can, too), we need to understand the math behind the Kindle market itself. Naturally, of course, we don't have any exact numbers (Amazon doesn't share those with anyone) but we do have a lot of percentages and derived figures, and those numbers paint a very interesting picture, indeed.
But first, let's start by figuring out how many ebooks Amazon actually sells.
WARNING! MUCH MATH!