As The KU Exodus Grows, How Much Longer Before Amazon Puts All KDP Titles In Kindle Unlimited?

DiversifyIn2015

In a telling comment over at The Passive Voice this week it was noted that

“On Christmas Day Amazon was offering a huge sale on ebooks, with a big splashy banner on its front page telling customers about $2.99 ebooks. Every single one of them was a Hachette title.”

Compare that to the situation a few months back when Hachette was evil incarnate and indie authors were being begged by Amazon to side against Hachette in a dispute we were not involved in. Many indie authors did as Amazon asked, happy to have a go at the Big 5, never stopping to ask who, when the time came, would fight our cause for us when we indies were at odds with Amazon.

And so it comes to pass.

Amazon rewarded our loyalty with Kindle Unlimited, a subscription service that, unlike rival subscription services Scribd and Oyster, punishes indie authors by first demanding exclusivity, second cannibalizing their sales, replaced with borrows, and third paying the authors a pittance decided on Amazon’s whim each month.

Hugh Howey gave us all a pre-Christmas laugh with his ludicrous suggestion Amazon treats us as second class because we are all scammers and pirates who treat Amazon customers as second class. Howey declined to explain why Amazon therefore continues to treat the Big 5 as first class despite them being convicted of conspiring to give Amazon customers higher prices. In fact, as we see with Hachette, it seems the more problems the trad pub causes Amazon, the more favourably they get treated.

Safe to assume Hachette paid Amazon big money for the placement on the homepage on Christmas Day, but also safe to say Hachette got a ton of sales at the expense of indie authors at similar prices.

Anyone still dreaming that Amazon needs us indies to offer cheap fodder for the masses needs to wake up. 2015 just got whole lot harder.

Add to this Bezos is reporting 10m new Prime members this Holidays season. That takes Prime membership to anywhere between 30m and 60m, depending on whose guestimates you prefer. True most of these will have signed up for the free trial to get the Prime benefits over Christmas, and Amazon won’t be telling us how many cancel when the trial is up. But let’s take a mid-way estimate to work with. Let’s assume Amazon now has 45 million Prime members.

And let’s work on one third of them being readers. Say 15 million.

A safe bet few of them are currently subscribed to KU (another $120 a year on top of the Prime subscription). Many of them will be reading full-price ebooks and Amazon will be paying out its standard rate to publishers and indie authors. Many more will be buying print books, for which Amazon will be not only paying out the standard return to publishers (strange isn’t it, how we don’t call the money Amazon pays the Big 5 a royalty, but we call the exact same payment to indies a royalty) but also paying all warehousing, packaging and shipping charges, as Prime offers free shipping.

Prime members already get unlimited free streaming of music and video. They do so because it’s a great attraction to justify that Prime subscription (once in Prime, customers are far less likely to shop elsewhere, and several reports indicate they spend more). What better way to make Prime even more attractive than to offer unlimited ebooks?

Obviously that isn’t going to happen unless Amazon can get enough cheap content enough to make available, as it clearly has done with music and video. How cheap is cheap? Our guess is, below a dollar a shot as compensation for suppliers.

By no coincidence we’ve seen Amazon force down the pay-out for KU titles month after month after month.

But don’t panic! Check your dashboards on January 15 and there will surely be a small increase in the KU pay-out. Not enough to make any real difference. Just enough for the Amazon cheerleaders to assure us all is well and Amazon has listened to our concerns. “Hey guys! Stop the exodus. Rejoice! We’re getting shafted a little less this month!”

But what happens in the months after that? A return to lower and lower KU payouts, that’s for sure. And when Amazon gets the price down where it wants it, we can likely expect all KDP titles to go into KU and KU to be free to Prime members.

Why? Because those 15 million Prime member readers will then be buying a lot less titles from the Amazon store, both ebook and print, saving Amazon a small fortune on the payout.

Yes, Amazon will have to drop the exclusivity clause for KU participation. But Amazon has already effectively conceded that point as it watches big indie names like Holly Ward and Joe Konrath, along with countless lesser mortals, vote with their feet.

Look at almost any blog nowadays – even the loyalist strongholds like The Passive Voice – and aside from those with short stories and 99c titles the verdict is pretty unanimous. Almost everyone is pulling out of KDP Select as their latest 90 day session ends and they are signing up to other retailers to try salvage their careers.

When we said, back as KU launched in Britain, that KU was nothing more than a stealth royalty cut (LINK), we were pilloried for being anti-Amazon – by the same Amazon loyalists now deserting Select in droves as Amazon twists the knife because of the stealth royalty cuts that is KU.

But we’re not anti-Amazon. far from it. We just believe it’s in the best interests of the indie movement to call foul when we see one, not to look the other way and change the subject, as the Amazon cheerleaders do.

Let’s be clear. We are all in favour of Amazon. Amazon is the single most important ebook retailer in the western ebook market. We are all in favour of ebook subscription services. Or rather, ebook subscription services that treat their content suppliers fairly.

But it was obvious from day one Kindle Unlimited had no intention of doing that. From day one it was clearly it was a two-tier system in which indies were there to make up the numbers and that, a handful of privileged top-sellers aside, we were going to get shafted with payouts.

That’s not being anti-Amazon, anymore than the indies now deserting Select and signing up with Apple and Google Play are anti-Amazon.

Nor is it anti-Amazon to look at the very real possibility that Amazon is planning to put all KDP titles into KU and make KU free for Prime members.

No, before the nay-sayers jump up and scream it, we are not saying the sky is falling. Those of you who want to believe Jeff Bezos lies awake at night thinking how he can help each individual indie author are welcome to your delusions. But Amazon is a business and Amazon will do what is in Amazon’s interests. As and when those interests coincide with ours, that’s great. We’ve all benefited and we are all grateful.

But as Kindle Unlimited shows pretty conclusively, when Amazon’s interests and ours do not coincide, there’s only one winner.

 ~

Back in early October we reported on indies seeing their non-Select titles getting KU borrows, and asked the obvious question: Was Amazon trialling the software to put all KDP titles into KU? (LINK)

It was speculative, of course, and we got slammed as being anti-Amazon for even thinking such a thing, but two months on the landscape has changed beyond all recognition.

The battlefields now are littered with the KU wounded, in fast retreat and heading for the safety of multiple retailers.

At the same time both Oyster and Scribd have seen their title count on the up and up, meaning the gap between KU’s much-vaunted 700,000 titles (now a lot less as indies flee en masse) narrows by the day. When Macmillan puts its backlist in the quality gap will soar still higher and the quantity gap will be negligible.

Amazon needs more titles to keep that gap big enough to draw prospective subscribers away from Scribd and Oyster. Fact.

It can’t win on content quality, because the Big 5 have no intention of coming anywhere near KU, while three of the Big 5 are now either in, or will shortly be in, Scribd and Oyster. Fact.

And it gets worse.

The current exodus of indies from KU is seriously upsetting the financial scales that makes KU viable. The indies who are leaving are exactly the ones Amazon need in to attract readers to pay that subscription fee. The bigger names. The top sellers. Those with high-priced titles and full length books.

Instead we see everywhere – even in the Amazon loyalist strongholds – indies agreeing that short and cheap titles are staying in KU and everything else is coming out. Pronto!

Think that through. As the ninety-day sessions expire, out come the big names and the expensive titles and the longer works, while more and more indies jump on the bandwagon with short titles to grab that ill-conceived payout that means Amazon is dishing out more than list price for what is no different from someone using the Look Inside feature.

A reader can download anything in KU, flit through to see if they are interested, then return it and try another. And every time that flit through crosses the 10% marker Amazon has to fork out.

The whole Kindle Unlimited master plan is coming apart at the seams.

Kindle czar Russ Grandinetti is no doubt spitting blood. But he’s not stupid. There’s s simple solution, and one likely as not that has been on the cards all along,or at least since non-Select titles started appearing in KU and showing up in non-Select authors’ dashboards.

Put all KDP titles into KU as standard, whether Select or not, and make KU free for Prime members.

It’s a no brainer for Grandinetti and Bezos.

Yes, it will cause a few weeks of ill-feeling in the blogospshere, but since when did Amazon take any notice of its content suppliers’ concerns? Just look at Hachette. By dropping the exclusivity clause and letting the non-Select authors stay on other retailers it will keep the whining b******s quiet and give the Amazon cheerleaders something to shout about.

Those who stay exclusive in Select will continue to get the bonuses like extra visibility with the KU algorithms, the five days free promo, and of course Countdown. And maybe something new to sweeten that chalice.

The rest of us get shafted with low visibility all round, just as now, as Amazon drives traffic to exclusive KU titles.

Indie authors will be able to sell on Apple and Nook and Google Play, etc, and also still get a few regular sales on Amazon, while watching their Zon income plummet as millions of Prime members download their works for free, on top of the downloads already happening through regular KU subscribers.

 

Yes, Amazon will throw a ton of money in the pot and make sure we all know it. but it will stay deathly silent about the payout, and as usual we won’t even know what it is until it happens, but a safe bet the indie authors will get paid even more of a pittance than is already on offer, instead of the “royalties” they signed up for.

Here’s the thing: None of us are going to walk away from Amazon if Grandinetti does this.

Yes, we’ll make lots of noise. Lots! Gosh, will we be noisy! And yes, we can all grandstand now about how we are pulling out of KU and Select. That’s easy.

But who among us will pull out of Amazon itself?

Amazon still has 60%-65% of the US ebook market overall and, thanks to an unhealthy focus on Amazon at the expense of other retailers these past five years, most indies get a lot more than 65% of their sales from Amazon. Further, most indies have loyal Kindle fans collected over many years. Those fans – especially the ones with Kindle e-readers – are not going to change devices and sign up to another retailer just to get our next book.

So we’ll make a lot of whining sounds, the same as usual, and then carry on, the same as usual, only with a lot less Zon cash heading our way.

Luckily our indie spokesfolk will be there for us.

Joe Konrath will do another post on how evil trad pub is. David Gaughran will do another post on Author Solutions. And Hugh Howey will explain how indies are such bloody ingrates for not staying in KU voluntarily that we deserve all we get, and by the way, KU is working fine for me. What’s the problem?

 ~

No, we are not saying it will happen. The future’s not ours to see.

But the future is ours to plan for.

What we are saying is that Amazon putting all KDP titles into KU and making KU free for Prime members is a realistic possibility. Amazon will do what is in Amazon’s best interests. Period.

Hope for the best. Prepare for the worst.

Diversify in 2015!

 

Ebook Bargains UK

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10 responses to “As The KU Exodus Grows, How Much Longer Before Amazon Puts All KDP Titles In Kindle Unlimited?

  1. I’m not sure when Amazon asked indies to lobby on its behalf against Hachette– most took it upon themselves to raise their red flags and climb to the top of the mountain. It was kind of amusing. I was far from impressed with Authors United (Not) but its all business.

    I didn’t understand Hugh Howey’s blog at all, other than to be shill for Amazon. Whom he does quite well by. That’s understandable. We all like the hand that feeds us. When I was interviewed by the reporter for the NY Times for the recent article on Amazon, I mentioned that Howey had a different view of things and the reporter asked me if I had top ranking Amazon people on speed-dial. Hmm. Anyway.

    Here’s the article. http://www.nytimes.com/2014/12/28/technology/amazon-offers-all-you-can-eat-books-authors-turn-up-noses.html?hp&action=click&pgtype=Homepage&module=first-column-region&region=top-news&WT.nav=top-news&_r=0

    I already got called a “bozo” hack in the comments accused of lying about my publishing credentials. We live in interesting times.

    What’s going to happen is KU is going to be flooded by shorts. I’ve already contributed to that as noted in the article. At the same time most of us are pulling out novels out of KU. But ultimately, KU isn’t the problem. It’s the content glut and not sure if there is any solution to that other than a zombie apocalypse.

    • I totally agree with you, Bob. The tsunami of books is the problem, book discovery is the challenge. As I just said on my blog, the latest number of titles in the Kindle Store is…3.8 million (it was 3.4 million back in August)

    • https://www.change.org/p/hachette-stop-fighting-low-prices-and-fair-wages

      The above will help lock in the date.

      +++ Amazon usually gives self-published writers 70 percent of what a book earns, which means a novel selling for $4.99 yields $3.50. This is much more than traditional publishers pay, a fact that Amazon frequently points out. +++

      Amazingly enough, DAVID STREITFELD, who should know better, repeats the same silly assertion that Amazon is paying you a royalty. It’s not “paying” you anything. It’s charging you a download fee and that’s it.

      +++ But ultimately, KU isn’t the problem. It’s the content glut and not sure if there is any solution to that other than a zombie apocalypse. +++

      The solution is for the pubishers and the indies to open up new markets and genres and start to put in a framework/infrastructure to reach it. It’s time to consider innovating in how books are sold. Here’s one idea:

      In the previous article I mentioned that paper is a trap for publishers. I stand by that statement, but I’m not only talking about the inevitable demise of print at the hands of digital. I’m talking about missing and experimenting with new venues and ways to sell books while focusing too deeply on managing a legacy business model (which the major publisher do need to do).

      Here’s an example of what I mean. I went to see Edge of Tomorrow this summer and loved it. The movie is based on a well-written manga, All You Need is Kill. I wondered on Mke Shatzkin’s blog the other day why you shouldn’t offer the manga, or perhaps a novelization of the book, to people who went to see the movie. I call this “Point of Event” distribution. Walk in the theater, download the publication to your smartphone and read the book after seeing the movie. This adds more value to your movie ticket and potentially offers new marketing awareness for both the book and the movie derivative. Or perhaps when you visit William Sonoma, offer a copy of a hot new recipe tome when you buy that latest, can’t resist rubbing sauce? How about an art book during a major touring exhibit at your local museum?

      These are just some ideas. There are more opportunities out there. But, of course, this concept can only be executed if you’re thinking digitally. Won’t work with paper. Too much risk.

      http://www.rule-set.com/ricks-blog/what-hugh-howey-wont-talk-about-but-should-the-publishers-and-amazon-part-ix-the-last-part

      rick

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  3. Brilliant analysis! Ties up the strings too, very well done. As to the future, I don’t know how much we can actually diversify and make it, particularly those of us who have most if not all fans on Amazon…Other sites don’t seem to be as well organized as Amazon in terms of search algorithms, sub-categories to please every taste, etc etc. My biggest gripe with Amazon is in another area: customer reviews. Even though they’ve set up the Vine Program, it doesn’t have reviewers that have been selected for their ability to deliver professional, literary reviews. Until Amazon improves its environment for book discovery and stops focusing exclusively on commercial “genres”, poor, unknown, “genre-crossover” writers like me don’t have a fighting chance. Happy New Year to you!

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