Monday, June 22, 2015

Kindle Unlimited Is Changing Their Payment Structure and Why I Think That's Awesome

I was on a sort-of vacation last week (well, as close to vacation as I get), so I didn't hear about the newly unveiled Kindle Unlimited payment structure changes until my (not actually publishing related) friend mentioned it to me at dinner.

Since any change to KU is the definition of Relevant To My Interests, I proceeded to be very rude and looked it up right there at the table, and you know what? I really liked what I read, and here's why.

Amazon's imagery was more right than they knew. It's a wild sea out there.

Unlike many authors I talk to who tend to see Amazon'g book subscription service as EEEEVIIIIIIIL, I've been a pretty big fan of KU since Amazon announced it last year. I wrote a post breaking down the math of why KU should make everyone a lot of money back when it was first announced, and my opinion is pretty much the same now as it was then: the Amazon exclusivity requirement sucks, but overall KU participation should be a good deal for most authors.

I'm pleased to report my own experience with the program has been largely positive. I've been in KU for a year now, and while it's been much better for my fiction than 2k to 10k, I don't really have complaints on either score. That said, I will be taking my books out of KU later this year to try out other venues (gotta try new things!), but that decision is based entirely on wanting to reach out to new, non-Amazon markets, not because I'm dissatisfied with the program.

BUT (you knew there was a but, right?), as much as I personally love the idea and most of the practice of KU, it's no secret that the payment system was notoriously easy to game. Scamming was ridiculously rampant, and that's the problem this new KU payment system seeks to remedy.

How Kindle Unlimited Worked

Kindle Unlimited pays authors out of a fund set up by Amazon. Think of it as a large pie that Amazon slices up and doles out to its authors based on how many KU subscribers read their books. Previously, your slice of the pie was calculated based on how many KU readers borrowed your book and read to at least the 10% mark. Short story, graphic novel, epic Fantasy tome, doesn't matter. So long as they made it to that 10% mark, you got paid the full borrow amount (usually about $1.33), regardless of how long your book was or whether or not that reader actually finished it.

I'm sure you can already see the problems inherent to this set up. Almost as soon as Amazon posted these rules, the online bookstore was flooded with ten page "novels" written by people like "James Paterson," "Steven King," and "Norah Roberts." These titles were deliberate scams designed to trick KU readers into clicking on what they thought was a new release by a mega bestseller. Under the old KU rules, it didn't even matter if they instantly realized they'd been scammed. With a 10 page book, they only needed to look at one page in order for it to count as the 10% read the scammer needed to get paid the full KU payout.

Since all KU authors are paid out of the same pot, these scams hurt everyone. Not only were scammers sucking money away from legitimate authors, they were infuriating readers and making KU itself look bad. Amazon knew this and ruthlessly cracked down, but it was like fighting a hydra. Strike one scammer down and two more would pop up in their place. So, in order to save Kindle Unlimited (and themselves a ton of policing), Amazon changed the rules.

How Kindle Unlimited Will Work Starting July 1, 2015 (and Why It Rocks)

Starting next month, Kindle Unlimited will now pay out by pages read. Showing that Amazon has learned from their mistakes, this new system works off an algorithm that averages ebook page counts by total wordcount (so you can't just give all your books huge fonts and tons of white space) and starts the reader on the Prologue/Chapter 1 (so you can't just add tons of obviously skip-able front matter to pad your page count). In order to get paid the maximum borrow amount, a book will have to have quality content that captures and holds the reader's attention all the way to the end. (You know, the stuff that should be there anyway.)

Personally, I'm a HUGE fan of this change. I love the idea that Amazon is literally paying KU authors for being good writers instead of just good marketers. Under this system, authors who write good books people want to read are the ones who reap the maximum reward.

I also love that it incentivizes longer books, because I really dislike the current practice of chopping up would would otherwise be a single novel into multiple "serial" segments to maximize revenue. Not that I think any author who did this is evil or a scammer. Business is all about figuring out ways to get the maximum profit from your investment, and there is no arguing that you made a lot more money from borrows and sales off five 20k titles priced at $2.99 each than off one 100k novel priced at $4.99. But while some authors love the idea of serials and wrote them legitimately, KBoards and other self pub hangouts were constantly barraged with authors asking if they should cut up their novels into serial format simply because of the situation I described above, and I think that sucks.

When a system encourages artists to put their work into a format readers hate (and make no mistake, readers HATE serials. Just look at the reviews for any top selling serial and and you'll see what I mean), that's a bad system. It's bad for readers, it's bad for authors, it's bad for the book business in general. You want people to be happy when they finish your story, not pissed because they're having to buy/borrow 5 books to get one novel's worth of story.

I think Amazon became very aware of this, and the new KU borrow system is a step toward addressing it. Now, instead of encouraging authors to put out as many titles as possible, length be damned, Amazon is financially rewarding authors who tell good stories, regardless of format. When it comes to KU at least, the 100k word novel sold as one title will earn exactly the same as the 100k novel divided up into five 20k segments, encouraging novelists to write in the way that best suits the story.

As a writer who firmly believes that a story should be exactly as long or short as it needs to be, and as a reader who loathes arbitrary serial fiction (again, not talking about stories that are actually written to be serial format, but books that have been obviously chopped up just to take advantage of Amazon's payment structure), this is a HUGE change for the better. I am fully behind these new KU changes, and I hope Amazon takes more steps like this in the future.

But Rachel, How Can You Support the New KU Changes When They're Hurting Short Story Writers?!

When you look at the complaints leveled against the new KU, almost all of them come from two camps: short story writers, and authors who feel they should be paid for any amount of reading, regardless of whether or not the reader finishes the book.

Of these two groups, my heart goes out of the short story writers the most. Short stories are a very demanding form of fiction, and I fully respect the work that goes into them. That said, I don't think Amazon's new system is unfair, because no matter how much you put into your short fiction, it's still short. A short story might be deeper than the abyssal trench and more beautiful than a rainbow at sunrise, but the fact remains that it still takes less time to read and produce than a novel-length work of comparable quality.

In that light, I feel that the new system is actually more fair to authors since it rewards novelists and short story writers equally for their efforts rather than paying the same for 1,000 words as for 100,000 as was the case before. It's also more in line with the rest of the industry that has always paid by the word for short fiction. Plus, you can still charge whatever you want for people to buy your story, so it's not like Amazon's taking away your ability to make money off your short fiction. I do sympathize with the fact that you can no longer make $1.33 off a borrow on a $0.99 short story, but we all knew that gravy train had to dry up sometime ;).

But while I admit this new system is less advantageous to short fiction, I still think it's a good change over all. Fewer scammers gumming up the KU library improves the discoverability of quality books, and that means more borrows and more money for everyone!

As for the second group, the ones who feel they should get a full borrow price for any reading regardless of whether the reader finishes or're entitled to that opinion. I don't agree, of course, but I'm not going to tell you how to feel. Personally, though, I think that if the KU part of your business model depends on getting your money up front because you're not confident readers are going to read your book all the way to the end, you have a much bigger problem than how KU borrows are calculated.

Wow, That's a Lot of Praise. So Are You 100% Behind the New KU?

Well, about that. I've always thought KU was a pretty good program, and these new changes make it even better. But while Amazon has addressed some of the problems with the KU model, they haven't touched what I see as the two greatest problem with the program: the Amazon exclusivity requirement, and fact that payments are still made out of the KDP Select Global Fund.

Where Things Get Less Awesome

While I love love LOVE the idea that KU has abandoned as single payout at 10% in favor of paying a small bounty per page read, just how much this per-page payment will be is impossible to say since Kindle Unlimited pays authors out of a fund that changes every month.

Let me be blunt: I REALLY f-ing hate this system. If you need a refresher for why it sucks, here is how Amazon explains the rules.

We base the calculation of your share of the KDP Select Global Fund by how often Kindle Unlimited customers choose and read more than 10% of your book, and Kindle Owners' Lending Library customers download your book. We compare these numbers to how often all participating KDP Select titles were chosen. For example, if the monthly global fund amount is $1,000,000, all participating KDP titles were read 300,000 times, and customers read your book 1,500 times, you will earn 0.5% (1,500/300,000 = 0.5%), or $5,000 for that month.
Obviously, this part of their website hasn't been updated with the new KU rules, but you get the general idea. How much authors earn from enrolling their books in KU fluctuates from month to month based on how many titles are currently in the program, how many readers are borrowing, and how much money Amazon's Magic 8-Ball tells it to put into the fund. This volatility plus the fact that participating in KU means making your titles exclusive to Amazons makes it extremely difficult for authors like me to say whether or not borrow payments from KU are worth taking our titles off every other vendor.

When you earn your living off your books, that is some vitally important math. I know it seems weird after spending this entire post singing the new KU's praises, but this complete lack of reliable numbers and the odious Amazon exclusivity requirement is why I've decided take my books out of KU when the agreement expires later this year, and why One Good Dragon Deserves Another will not be included in the program at all in the foreseeable future.

Again, it's not because I haven't been making money--I've made lovely money off KU over the last year--it's just because that money isn't enough to outweigh the cost of not making my book available in every other market. And that's really kind of a shame, because my novels are exactly the kind of books that would do the best under the new KU system.

So Is the New KU Worth It?

That depends on you. 

When I first signed up for KU, I was seeing one sale of my self-published titles on other vendors for every one hundred I was getting from Amazon. By that math, KU was totally worth it for me. Even at an insanely low $1 per borrow (a worst-case scenario that KU has never actually hit), I only needed about 10 borrows a day to make up all the money I lost by taking my books off other vendors.

A year later, though, I don't think this is the case anymore. My self-published series is much more well known and my ability to advertise has grown with it. With these two factors, I'm hoping that I can the sales on non-Amazon vendors that will blow past the money I was making in KU. 

Will it work? I have no idea. But part of the joy of being self published is the freedom to try new things. If I put my books on the other vendors and they flop, I might be coming back to KU, because it is a very good program. But whether or not it's the right program for me right now--or for you, or for any author--completely depends on our own unique situations. 

That's why discussions like these are so important. Businesses, especially cottage industries like self-publishing, are all about knowing when to take smart risks, and determining what makes a risk smart or dumb is entirely a matter of information. No one can look into the future and predict if a novel will soar or flop, but the more we know and the deeper we understand how the modern book selling machine functions, the more confident we can be in our choices. And really, what more could you ask for?

BONUS! An Unexpected Benefit!

In addition to all the stuff I said above, there is a new, insanely cool new feature coming in with the new KU payment system, and that is Amazon's promise to report much more detailed KU borrow information!
"When we make this change on July 1, 2015, you'll be able to see your book's KENPC listed on the "Promote and Advertise" page in your Bookshelf, and we'll report on total pages read on your Sales Dashboard report." - From the new KU Announcement
I'm not sure exactly what the above means, but I'm ready for any expansion to the current "X number of borrows per day" tally. The best thing that could happen would be some kind of chart that would show you exactly where the average borrowing reader put your book down. 

Just think what that kind of information could do for your writing! It would give authors a window into where we lose people. I mean, just imagine if you could see the exact point where 50% of your readers quit. Clearly, there's something wrong with that part of the book, and while that would suck to see on a finished work, knowing where the problem is means you can fix it. I'm not saying we should go back and obsessively edit finished books, that way lies madness, but the option would be there if we wanted it, and that is a miracle compared to the old Traditional Publishing system of releasing a book into the wild and being trapped with that version forever. 

If nothing else, I'd be happy just to get some more information. Anything's better than the current report, which is just a number of borrows with zero context.

And That's It!

I hope you've enjoyed this in depth look into the pros and cons of the new KU! If you disagree with my conclusions, or if there's an aspect you feel I left out, please leave it in the comments below. I'd really love to hear how these changes are affecting other writers on the front-lines of self publishing. 

Thank you as always for reading, and I'll see you on Wednesday for another Writing Wednesdays post!

Hearts and ponies forever,


jimney said...

Hi Rachel

Thanks for the great summary of the new KU! I've been waiting for this post for a while - you're the only person who manages to discuss this rather dry and math-y stuff (I can't maths to save my life) in a way that doesn't put me to sleep after two lines. (This is supposed to be praise!)

I have to say: I agree with you. I don't really get why most authors complain about this (although... people do like to complain, don't they?) to the extent they do. I'm thinking this change will make KU better for authors - at least the serious ones - who get paid by the actual merits of their craft rather than simply because the book was pre-read (10%. You can read 10% of most books on amazon without borrowing it as well. It's the sale afterward that counts, IMO.).

Plus: short stories. They are shorter (no kidding!), yes, but they also take very little time to finish/polish to a publishable standard. This means one can create more of them than one can books - and this in turn means there'll be more content more quickly to be bought/read by readers.

The people who complain ought to be those who a) are inexperienced (a little experience goes a long way in the speed of content output) or b) have lots of "day work"/are otherwise too busy/occupied to create much. Then again... you only reap what you sow anyway.)

- jimney

Rachel Aaron said...

Thanks Jimney! I'm glad you liked the post.

Marc said...

Hi Rachel and thanks for this very interesting post. I agree with you about this new system, it seems more fair to me too but only for books with written content. As a webcomic author selling on Amazon, I must say I'm a bit worried. My comic books are less than 100 pages, but drawing is a hard and long work so it takes me about 18 months to produce 1 comic book. And I don't want to see this hard and long work devalued by this new system.
Anyway, thanks a lot for your recurrent insight about KU. :)

Davida Chazan (The Chocolate Lady) said...

Thanks for this, but I'm not convinced. My problem is that when someone sells a print version of a book, they get full royalties - and no one checks to see if I've read it or if I'm using it as a doorstop. I get the "pay for quality, not quantity" idea, but it still doesn't seem right to me.

Kai Herbertz said...

Davida, it's the same for ebooks: If you sell the book, you get full royalties. This change only affects KU, which is - as far as I can tell - a subscription model to borrow and read books.
Not all of the books that are sold on amazon are available on KU and being on KU does not affect regular sales of books.

To me, the KU change sounds like a good and necessary step.

Veronica Sicoe said...

I love your level headed reaction, the way you understand business, and your undying enthusiasm. I thought I'd just throw that in here, since I have nothing intelligent to add to your post's topic, as you've covered it all. :)

LHandLG said...

I agree this change was necessary to deter mass produced shorts peddled by clever marketing gurus.

What I don't agree with, is penalizing short stories. I wrote my short story to be included in the Short Read section of kindle store. Readers need this to evaluate how much time they have to read if they're traveling or at the doctor's office. There's a market for shorts otherwise Amazon wouldn't have bothered with this detailed section.

It's not because I don't waste space describing every piece of furniture, color of walls and textures of drapes, that I should be penalized. I serve my stories straight up. Just the facts.

But with this new system, I might just revisit my books and add unnecessary fluff to pad the count. As I'm sure, many will do also.

And the quality problem remains...

Anonymous said...

I'm with you on the serial chopping thing as a way to make money. Let that be said.

But, there's an issue when you end up at 1,000,000 words (I know crazy writers) of pure amazingness and won't get published because it's way too long. I think it does make sense sometimes to chop. Right?

Anonymous said...

LHandLG said...
But with this new system, I might just revisit my books and add unnecessary fluff to pad the count. As I'm sure, many will do also.

And the quality problem remains...

You would be shooting yourself in the foot, instead of making more money. Your readers would sense the fluffiness and abandon your writing. Instead, write a second story! Don't write 2000 words into a story that wants 1000, write two 1000-word stories.

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