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Monday, December 29, 2014

Mailvox: Kindle Unlimited

Will Best wonders if I've changed my mind:
I was interested if VD has changed his opinion on Kindle Unlimited since his July post? The NYT via drudge seemed to put it in a pretty negative light, and its concern as it relates to distorting story length does seem legitimate.
Well, I suppose I should find out what my opinion was back in July, as I don't rightly recall the details. Let's see, I wrote:
  • My initial impression is that this is excellent for serious readers.
  • Casual readers, book collectors, and fans of particular authors aren't likely to be too fussed about it.
  • It is horrific for the Big Five publishers and their writers, as their unwillingness to participate indicates.
  • It's neutral to modestly positive for independent publishers, their writers, and self-publishers.  
Now let's compare it to the New York Times story:
  • It may bring in readers, but the writers say they earn less. 
  • The author H.M. Ward says she left Amazon’s Kindle Unlimited program after two months when her income dropped 75 percent.
  • “Your rabid romance reader who was buying $100 worth of books a week and funneling $5,200 into Amazon per year is now generating less than $120 a year,” she said. 
  • Amazon usually gives self-published writers 70 percent of what a book earns, which means a novel selling for $4.99 yields $3.50.... But Kindle Unlimited is less generous, paying a fluctuating amount. In July, the fee for a digital “borrow” was $1.80. It fell to $1.33 in October before rebounding slightly to $1.39 in November.
It appears I was correct about the first three points and wrong about the last one. I wasn't aware of the relevant math, but it is entirely clear that $120 < $5,200 and $1.33 < $3.50. The math doesn't work for the writer. I don't see how the math works for Amazon either.

I have to confess that Kindle Unlimited hasn't really been on my radar because Castalia House withdrew nearly all of our books from the Kindle Select program in order to be able to sell them from the Castalia House store. We never considered Kindle Unlimited at all. So, besides that initial post, I haven't given it any thought. But the more I look at the math, the more I wonder if Amazon hasn't made a serious mistake here based on the false assumption that every author has to be on Amazon. It looks to me like a classic corporate overplaying of a strong hand.

Everyone wanted to be on Amazon because that has been where they were able to earn the most money. But already, both we, and perhaps more importantly, our associates, are seeing that Castalia can sell between 10 percent and 20 percent of Amazon's sales of a newly released book. And since the author makes more money on each Castalia sale, that's the equivalent of up to 28 percent of the revenue derived from Amazon. The math still favored Amazon, obviously, but if one then reduces the Amazon revenue by 62 percent, suddenly the total Amazon revenue is only 35 percent more even when the unit sales are 400 percent higher. This means that with Kindle Unlimited, Amazon is rendering themselves considerably less relevant to writers, which strikes me as a counterproductive long term strategy.

So, my revised conclusion is that Kindle Unlimited is likely to prove massively unpopular among successful self-published writers, of no interest to independent publishers and their writers, and off-limits to mainstream published writers. Barring significant changes, I wouldn't be surprised if Amazon ended up discontinuing it within two or three years. If they don't, Kindle Unlimited will likely become a digital books ghetto filled with little more than romance, porn, and conspiracy theory written by unknown authors who can't draw interest from independent publishers.

The only writers to whom I think it might be useful are those new writers who don't have an audience and simply want to throw stuff out there in the hopes that one will find them. But even there, you're probably better off going with Select than with Unlimited.

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36 Comments:

Anonymous Cryan Ryan December 29, 2014 8:33 AM  

Good Heavens!

Are there really a significant number of 'rabid romance readers' that spend $5200 annually?

That's $14 (3 books a day)

Anonymous Heh December 29, 2014 8:40 AM  

"a new Amazon subscription service that offers access to 700,000 books — both self-published and traditionally published"

All the books that suck - the ones that used to be on the trolley outside Barnes and Noble - for $9.99 a month!

Anonymous Orville December 29, 2014 8:48 AM  

For what it's worth I'm a Kindle user who didn't know you could buy books from a non-Amazon source until Castalia House came around. I think the key is continued promotion and education about Calibre E-Book Management and similar software. Once Kindle users see how easy it is to stick free or paid content on their Kindle they won't necessarily buy only from Amazon. Since September I haven't purchased any fiction from Amazon.

Anonymous Laz December 29, 2014 8:53 AM  

"If they don't, Kindle Unlimited will likely become a digital books ghetto filled with little more than romance, porn, and conspiracy theory."

In other words- a pinkshirt heaven.

Anonymous . December 29, 2014 9:14 AM  

H.M. Ward says she left Amazon’s Kindle Unlimited program after two months when her income dropped 75 percent.

From the photo, this doesn't seem to have curtailed her consumption of ice cream and potato chips very much...

Blogger Plump Pleasant Plumber December 29, 2014 9:35 AM  

I'm an avid reader. Been that way all my life. Kindle unlimited is a great deal for me, as I read 2-400 pages a day. Scifi is a favorite. In fact, u read the best part of two books yesterday....rainy weather:))))) There are a lot of books on unlimited that seem to be unpolished. Kinda like practice runs, if you will. I can see why a big time author wouldn't want anything to do with Amazon, but realistically, most authors never make it big. That being said, the reviews are generally spot on. I'm a big fan of consensus reviewing. Amazon is going to get bigger, imo. The reasons are many, to be sure, but I buy some books. Especially if they are part of an interesting series. Here's the point.....I'm 58 years old, white MGTOW, and I grew up reading. Sadly, most young people don't anymore. I've been on the net about 14 years now. Most younger folks don't seem to be able to reason very well. To be a good reader, you have to be able to insert your self in the story. True, some people can, but most of the folks graduating from high school nowadays are functionally illiterate. Bottom line is, reading is going to be a lost art.

Anonymous 204 December 29, 2014 9:57 AM  

Why so quick to concede the last point? Is it not possible that there are heaps of authors who are now receiving more because no one would have bothered paying for their books before? And that these authors far outnumber the ones who are receiving less now?

Blogger Positive Dennis December 29, 2014 10:02 AM  

John Norman's Gor books are available for free! Oh, wait, that is in the porn catagory isn't it?

Blogger Brad Andrews December 29, 2014 10:07 AM  

Would it not still have merit to put the first in a series under the Unlimited brand to get people hooked on the series? "First one is free..." is a powerful marketing ploy.

I would still tend to want to read a full series, rather than just the first book in several series, for example. Thus it could make them money. It sounds similar to the pricing on Wright's Count to a Million Series. It escalated with each book. It is a small step from there to the first one being free.

I don't see Kindle Select as being that valuable as a reader. I can only get one book a month and I almost have to jump through hoops to change which book that is. At least that is my impression of the program as a long-time Amazon Prime user. Not much value there.

Anonymous REG December 29, 2014 10:44 AM  

I don't think this is being covered well by most any article. The numbers are misrepresented, the position of Amazon and writers is misrepresented as well. I'm getting ready to put some books on the net. The best advice I have received so far that for a new writer is to put out a couple of shorts to stir up interest in my writing. Have the first book in a series at a lower price to entice the reader to take a chance on me. Amazon's and some other articles research have stated that smaller novels in Ebook format are better than goat gaggers due to the fact that they are on a screen rather than paper. So, I can put out a short novel on KU, rent it at a discounted price and make less than two dollars in the hope of someone liking it and going to the regular site and buying the bigger non-discounted books. Or I can put the shorter or discounted books on regular posts and make less than two bucks on each sale in the hope that will draw them in. In other words, it makes no difference to a beginning writer and the best bet is to put a couple in KU and a couple of lost leaders in regular sales. Cover your bases.
Established writers have to have a different strategy, think in terms of why does one put their books into the public library where the books are loaned free. You don't even get the buck thirty-nine you get from KU. The author is the one that has to make that choice. In the article Vox referred to, I believe the author who experienced a drop in sales made a statement that authors have to look out for themselves. DUH. I don't know the future of KU, but, I don't know anyone that is paying five thousand dollars a year for Ebooks either. We need to get realistic.

Anonymous Heh December 29, 2014 11:04 AM  

John Norman's Gor books are available for free! Oh, wait, that is in the porn catagory isn't it?

Classic literature! I remember reading it during high school English class.

Sure, it wasn't the assigned reading of the class...

Anonymous indpndnt December 29, 2014 11:35 AM  

I wasn't totally sold on kindle until I saw what Calibre could do for converting pdfs and epubs, and managing them on the Kindle. Now I'm finally able to throw lots of money at Castalia and read all the pdf books I've been accumulating.

Anonymous Anonymous December 29, 2014 11:35 AM  

Eh, Amazon is favoring short fiction with the program, they even have their own Kindle Singles program that promotes only short fiction. They also use internal categories for short story length fiction by estimated amount of time to read and they are heavily pushing shorter works into those categories.

Kindle Unlimited is fine if you have a zillion short stories, as borrows pay way more than the 99 cents or 1.99 most people charge for a short story or novelette.

--HIJK

Anonymous Anonymous December 29, 2014 11:44 AM  

The KOLL program is not Kindle Unlimited. KOLL is one borrow a month for Prime users who own a Kindle device. KU is 10 books borrowed "out" at any one time as long as the user is enrolled in the program (usually) paying 9.99/month. Two different programs.

--HIJK

Blogger tweell December 29, 2014 11:52 AM  

$100 a week for a romance reader? And they say men get addicted to porn, but women don't?

Blogger Josh December 29, 2014 11:58 AM  

And they say men get addicted to porn, but women don't?

It's "literary erotica", not porn...

Anonymous Jack Amok December 29, 2014 12:02 PM  

Yeah, I'm dubious of the $5200 / year figure too. Sounds like the woman writing the NYT piece just made up a number.

I joined Kindle Unlimited a couple of months ago. I don't make massive use of it, but so far, I've read one boon on KU I would have bought and three others I would not have. So at this point, I guess I'm in it for $20 and have only made $6.99 use of it. Not sure I'll keep it up.

Anonymous Thuvia December 29, 2014 12:02 PM  

A great deal for me so far. Some good examples:

Gun Control in the Third Reich: Disarming the Jews and "Enemies of the State by Stephen P. Halbrook

What the Modern Martyr Should Know: Seventy-Two Grapes and Not a Single Virgin: The New Picture of Islam by Norbert G. Pressburg

How the West Won: The Neglected Story of the Triumph of Modernity by Rodney Stark

Not to mention TT Flynn westerns.

Thuvia

Anonymous Sheila December 29, 2014 12:13 PM  

I'm finishing up my free-30 day trial of Kindle Unlimited - and I don't plan to continue or pay for it. I'm a pretty fast reader, and constantly looking for something new and/or entertaining. Thus far, most of what I've found and read on KU has been absolute crap. Even with the reader reviews, and trying to be picky, it's been a waste of time. It does seem to be a fairly common practice for authors to have the initial book of a series free on KU and the others need to be purchased (albeit usually at a moderate price). I've found one author whose second book (the first was extremely rough grammatically and syntactically but was entertaining) significantly improved on the first in every regard. FWIW, this was a male author (survivalist/TEOTWAWKI story) . . . the female romance ones have been abominable and each successive one has been worse, not better. Let's not even mention an entertaining story - how about a little bit of logical consistency in a character and a tiny bit of historical accuracy re time travel (amazing how every bathroom in 1902 America had hot and cold running water AND an en suite bathroom - who knew?!).

Anonymous Stryker December 29, 2014 12:30 PM  

Bezos is enamored with the philosophy of the 'loss leader' to ramp up cash flow and 'grow' his business. It's kind of an 'internal ponzi scheme' using increasing market share to paper over earlier losses. The hope is to raise revenues or cut costs later to transition into a more profitable model.

Anonymous ? December 29, 2014 1:10 PM  

For those who know...

The books in the kindle prime "lending library" are absolute dogshit. Are the ones in kindle unlimited a lot better?

OpenID lostsailor32 December 29, 2014 2:19 PM  

I agree that Amazon has likely made a mistake with the Unlimited program and may indeed discontinue it. But I think their reasoning for creating the program is not about having "every author" on Amazon. I don't think Amazon cares one whit for authors just as they don't care one whit for publishers.

In my estimation, it's more likely that Amazon's reasoning was to get every reader on Amazon. I doubt they'll succeed, but if they were to capture and lock-in readers to Kindle (their initial goal) and offer books at very favorable prices to those readers (the goal of their pricing war), the authors will necessarily follow as it's the only game in town (so I estimate their thinking). And based on their playing hardball with publishers over the percentage they pay, I have no doubt that if they were to succeed in capturing those authors, they wouldn't hesitate to reduce the author's percentage as they see fit.

But with increasing alternate options in ereaders and ebook sales outlets, not to mention independent publishers such as Castalia House, it's probably a failed strategy. As other have noted, Amazon hasn't really cared about losing money on ebooks, but that, too, may change; I suspect much of any new focus on raising ebook revenue will fall on the backs of authors. They've trained their readers too well on low ebook prices.

Blogger ashepherd December 29, 2014 2:52 PM  

I agree with "Heh": All the books that suck - the ones that used to be on the trolley outside Barnes and Noble - for $9.99 a month!.

I read 30+ fiction books a year, plus technical stuff, but I'm selective. I've looked over the Amazon Unlimited and don't find anything worth the price. They seem to be following the cable TV model which assumes that everyone is impressed with the wide selection without regard to the value of the content.

Blogger RobertT December 29, 2014 3:40 PM  

This is how this stuff works for Amazon. I used to look at their pricing model and think they were out of their minds. But I was thinking in terms of Walmart, I should have been thinking in terms of the United Nations. Amazon's model is to take over the world, They will continue to cut prices until they own ever rabbit hole in the world, then they can charge a penny a month rent and make a tidy profit, and no budding competitor has a prayer of getting traction before they go out of business. Any time they want to they can cut their prices and eat Castalia House alive. The only survivors will be little boutiques who can charge more or who have something else going for them. Is this legal? No. But we'll see how that goes when it happens. I don't think a legal challenge has much hope as long as their profit margin is as low as it is. With Amazon in the market, the last thing I would want is a merchandiser or bookseller of any kind. Castalia House may turn out to be one of those surviving boutiques. Ali Baba is going to have issues on quality control that Amazon doesn't have.

Anonymous VD December 29, 2014 4:36 PM  

Any time they want to they can cut their prices and eat Castalia House alive.

No, because unlike most publishers we are not dependent upon our book sale revenues. And, in fact, it should be interesting to revisit this in about 18 months.

Blogger Markku December 29, 2014 4:38 PM  

We're not a competitor to Amazon. Due to the huge cut that PayPal gets for processing the transactions and dealing with all the security side of it all, we don't get all that much money from sales through our website than we get from sales through Amazon. Our site basically exists just because Amazon doesn't allow us to offer the formats that we want to. Epub is impossible through Amazon, and DRM-free mp3 at the quality of our choice (considerably higher than the highest offered by Audible) is impossible too.

Sure, Amazon offers DRM-free version of the Kindle format, but it's still a proprietary format. Epub, being completely public domain, is guaranteed to be supported by devices practically indefinitely. There is zero chance of vendor lock-in, ever.

Blogger Markku December 29, 2014 4:42 PM  

So, nobody should feel bad about purchasing our books through Amazon as opposed to our site.

BUT, should at any time in the future Amazon manage to get you by the balls trough the .azw format, then we're going to say, hey, we DID give you a choice...

Anonymous Reading Is Fun December 29, 2014 4:58 PM  

Is $5200 per year unreasonable for a serious romfic / p0rn reader? I can't run any numbers but I've been in used bookstores when women come in with a stack of hardbound romp0rnfic that 2 to 3 feet tall, and later they walk back out with a similar sized stack.

Not everyone shops used bookstores. It's not that hard to drop $100 on a smaller stack of new hardback books at Barnes or some other chain bookstore. Single / divorced women with too much time on their hands?

There's a reason why romfic writers churn those things out like an assembly line. Go to Barnes and look at the romfic section some time, it's like a warehouse shelf.

All to satisfy demand, mind you. So is an average of $100 / week excessive for a middle aged woman with no other hobbies, I wonder?

Anonymous Rhys December 29, 2014 7:12 PM  

@ Positive Dennis: Don't be a snarky little rabbi. Go and actually read a Gor book. Norman is one of the better fantasy writers and manages to emerge you in a world completely different from Earth, unlike most fantasy which is modern, sensible upper middle class leftists transplanted in a world with token elves and a politically incorrect villain. He is also one of the few fantasy writers who understands battles.
Then again I suspect your real problem with Norman is that he writes unapologetic masculine and feminine characters.

Blogger roundeye December 29, 2014 7:42 PM  

People create art for fun. There are community theater groups that depend ob donations and volunteer prop builders, let alone the performers. But great art is rare. And those artists can demand a premium.

I tried to write books. I wrote three. All crap. But if I could self publish for free, why not?

Blogger Bogey December 29, 2014 8:09 PM  

No, because unlike most publishers we are not dependent upon our book sale revenues. And, in fact, it should be interesting to revisit this in about 18 months.

That's a bit confusing, I would have thought a publisher lives and dies on book sales.

Blogger Markku December 29, 2014 8:21 PM  

If you looked at our company registration, you would see that publishing is registered as a side business....

Anonymous maniacprovost December 29, 2014 9:10 PM  

It's funny, when Vox announced First Sword, I thought, "he's going to need slush readers, an editor..."

Blogger Markku December 29, 2014 9:22 PM  

Yeah, and then Marcher Lord Press got sold, so we had to scramble and put up a publishing company to keep Vox's IP's in our control. It took much more time and effort than we would have liked, but now the plan is in a position to come together MUCH better than originally intended.

Anonymous maniacprovost December 29, 2014 10:31 PM  

Incidentally, i hope 1st Sword doesn't suck. It has potential, but there are so few light online games that are actually good... for example, Neptune's Pride. Not for example, Mutant Gladiators.

Blogger Bogey December 30, 2014 7:24 AM  

Thanks Markku, I understand now.

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