A Royalty Cut By Any Other Name… Kindle Unlimited Launches In The UK.

Go Global In 2014

As Kindle Unlimited is launched in the UK today, it’s clear the Big 5 boycott is holding steady.

No major trad pub titles are in apart from the same handful of selected big names like Suzanne Collins and J K Rowling, and a selection of heavyweights from another era, like Arthur C. Clarke and Kurt Vonnegut.

Amazon has been able to muster 650,000 titles for Kindle Unlimited’s US and UK sites by pulling in Select titles, nearly all of which are in English.

But what happens when Kindle Unlimited goes “international” and extends its reach to Germany and France, and possibly other European Kindle nations like Italy and Spain, as is widely expected next month?

A safe bet the Big 5’s EU operations have no more intention of getting in bed with Amazon on this than their US and UK counterparts.

This puts Amazon in a difficult position, as there are far fewer local-language KDP Select authors to pad out the European KU offerings than there are English-language titles. A KU France or KU Germany launch that asks readers to pay for access to a handful of French or German titles and a ton of foreign language (English) titles is not going to have readers stampeding to sign up.

The UK version of KU, by contrast, should do very well, at least at first. But will it benefit indie authors long term? Somehow we doubt it.

Oyster isn’t in the UK at all and Scribd, while it can be used by Brits, is almost unknown this side of the Atlantic. It means Amazon has an open goal in Britain.
Bear in mind readers who are not indie authors will have no idea that the three big names used for promo are pretty much the only three big names. It will probably take several months for the penny to drop, as readers exhaust the handful of names they do know, and are tempted to try those they don’t.

It’s a clever ploy by Kindle chief Russ Grandinetti – the most dangerous man in publishing right now – to play this as an opportunity for readers to try new authors they might otherwise have avoided. At face value it sounds like Grandinetti is supporting both readers and indie authors.

Unfortunately, given the quality of much of KDP Select’s offerings, many readers will find out the hard way, using up their monthly download limit instead of using Look Inside, that for every top notch indie title that can compete with the best trad pubbed titles, there are a dozen NaNoWriMo first drafts with a home-made cover that should never have seen the light of day.

With the first month free Brits will be rushing to sign-up and try it out, and as with the US launch, Amazon will be giving heavy promotion to KU titles to make sure it looks like a success.

No coincidence this UK launch is one month from the dreaded Q3 financial statement, which will report Amazon’s worst losses ever.

The surge of Brits signing up to KU and the inevitable ton of downloads that result, will be a major news item to deflect attention from the financial mess Amazon is in. And you can bet your grandmother’s bottom dentures Amazon will forget to mention that the first month’s sign-up was free, so totally meaningless.

But for indie authors getting all these downloads from KU this is great, right? As Hugh Howey delighted in telling us, he saw absolutely shed-loads of KU borrows after Amazon thoughtfully included his titles in the scheme.

But there’s the thing. Howey didn’t volunteer his tiles for KU. He couldn’t. He was non-exclusive on multiple retailers, and the KU rules are quite clear that indie authors, unlike other publishers, have to be exclusive with Amazon to get any preferential treatment.

So Amazon put his titles in KU anyway – hey, they make the rules, they can break them – and then made absolutely sure Howey got maximum visibility so the KU borrows would mount up, knowing Howey would then let the world know how well KU had done for him.

And lo and behold, it came to pass.

Howey’s borrows soared, but of course his income didn’t.

As we’ll explain further below, KU is an integral part of Amazon’s stealth royalty cuts programme. A KU borrow pays out around $2. A sale of the same title gets 70% of list price. For a $4.99 title a KU borrow means a drastic cut in income over a sale.

Not very helpful for keeping the top-selling authors in the loop. If they are going to lose money on every borrow they may as well stick to direct sales on Amazon and stay on other retail platforms as well.

But Grandinetti had already thought of that, and introduced the Kindle All-Stars jackpot payments, so the big names in KU will get a substantial cash hand-out from Amazon to make up for their lost income through the KU borrows.

But why is Amazon so desperate to keep indie authors in KU in the first place?

Quite simply, because while for the handful of top names the All-Star cash handouts will more than recompense any likely losses from KU, for the rest of us it’s a royalty cut by stealth.

Consider: While a few shorter and cheaper titles will pay more than the standard payout, most indies will be losing out when they have a borrow instead of a sale.

A $4.99 ebook sold at list price nets $3.50 for the author. A $4.99 ebook borrowed via KU nets the author around $2. Probably less because the pot will need to be shared between more authors.

It’s a simple trick for Amazon to rig the charts so more higher-priced and longer-length KU titles get noticed. Higher-priced because they pay out the same money whether a borrowed book is 0.99 or 15.99. Longer length because a subscriber can easily get through ten short stories in a month and result in ten pay-outs. The same reader may get through only two 400 pagers, or one 1000 page box set.  Far less pay-out for Amazon.

Hugh Howey proved the point. Amazon increased his visibility to maximize his KU borrows and sure enough they went through the roof.

Yet almost all KU users are existing Amazon customers. There’s no evidence to suggest readers from other sites deserted in their droves to join KU. And for those with epub ereaders that would be totally pointless anyway.

What is happening is that KU users are downloading ten titles at a time where previously they would have downloaded one. And of course they focus on the first pages of the charts, where sure enough all the big names like Howey are being heavily promoted by Amazon.

These top “sellers” dominate the upper echelons of the charts and of course stay there because visibility begets visibility.

A look at the new Kindle UK KU page is instructive. Check out the Editor’s Picks and sure enough most of them are Amazon imprint titles. Check out the recommended titles and it’s the usual handful of Amazon-imprint titles, Amazon cheerleader titles and a few better-known names from mid-sized publishers that threw their hand in.

Common or garden indies like you and me? Do be serious.

The only thing lesser indies are on Grandinetti’s radar for is cutting our royalty rates by driving all sales through KU where the payout for indie authors is far less.

And with a secondary benefit that KU users who can access these ebooks all month are far less likely to go and buy a print book from a store, or buy a print book from Amazon which Amazon will have to ship.

Luckily we indies currently have the choice. We can be in KU and earn far less for a borrow than for a sale. Or we can stay out of KU.

But for how long?

Let’s return to the problem Amazon faces with KU in France and Germany. But let’s instead pose that problem as one that might shortly confront KU US and KU UK.

Here’s the thing: With 650,000 titles in KU, the Amazon US subscription service is ahead of Scribd and Oyster, but not by much.

And without the Big 5 on board, volume is Amazon’s ONLY real selling point in making KU more appealing to readers than Scribd or Oyster are.

But Amazon only got to that 650,000 figure by hauling KDP Select titles into the frame. And Amazon only has 500,000 exclusive titles in all.

What happens when Scribd and Oyster sign up the next tranche of Big Pub and small pub titles and hit 700,000 titles each? Or more?

At the moment only HarperCollins and Simon & Schuster have titles in these two subscription services. But Macmillan is currently experimenting with Skoobe in Germany.

And for two reasons it’s really only a matter of time before Macmillan, Hachette and Penguin Random House decide to put their back-list titles into Scribd and Oyster alongside the two Big 5 publishers already on board.

First, because of the proven success of the model. By all accounts Simon & Schuster and HarperCollins have done well out of the deal.

But more importantly, as with the boycott of KU, the Big 5 can significantly strengthen their own position by simultaneously not being in KU and actively supporting the two key rivals to Amazon’s subscription service.

f the other three members of the Big 5 each loaded up their back-list titles to the Scribd and Oyster catalogue the gap between KU and Scribd and Oyster could be seriously narrowed, and put the focus back on content, rather than volume.

You can be sure Grandinetti already has that fully planned for.

It’s pretty obvious Amazon has already pulled out all the stops to get publishers on board, and failed abysmally. The boycott holds.

To boost KU numbers above Scribd and Oyster again, if they bumped up their numbers, the ONLY option available to Amazon will be to put ALL the KDP titles into KU.

The sop to authors will be that this time they won’t have to be exclusive. But this will be one HUGE stealth royalty cut when it happens. The algorithms will be rigged to make sure the higher-priced, longer-length Select titles get the extra visibility, just like now.

More KU downloads of indie titles. Far less royalties being paid out to indie authors for sales. Especially those who refuse to tow the line and choose to still sell on other retail platforms.

Make no mistake, KU is a stealth royalty cut. Period. And as Shakespeare once almost said, a royalty cut by any other name will stink just as much.

But don’t expect any protest from the Amazon cheerleaders if it happens.

As they will tell us deadpan, struggling to keep the smirk off their face, “Hey look guys! We’ve got tons more downloads from KU, and Amazon have paid us a shit-load of cash on top. It’s so easy, anyone can do it.”

 

 

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3 responses to “A Royalty Cut By Any Other Name… Kindle Unlimited Launches In The UK.

  1. Back in July, you lambasted Mercy Pilkington for referring to the money that Amazon pays indies as “royalties”: “Since when is the fee left over from a retailers’ sales commission a royalty?” If the payment isn’t a royalty, how can Kindle Unlimited be a “royalty cut by stealth”?

    On a related note, if “royalties” aren’t the correct term, what is? I’ve seen plenty of people say that Amazon et al don’t pay royalties to indies, but none of them ever said what the correct term is.

  2. Pingback: Is Amazon About To Put All KDP Titles Into Kindle Unlimited? | Ebook Bargains UK Blog

  3. Pingback: As The KU Exodus Grows, How Much Longer Before Amazon Puts All KDP Titles In Kindle Unlimited? | Ebook Bargains UK Blog

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