Kindle Unlimited (KU), a subscription service through Amazon that allowed readers unlimited access to books for just $10 a month, was unveiled by Amazon in July 2014. The reception by readers was mostly positive, finally a Netflix for Books! The reaction from authors and publishers was mixed. Kindle Unlimited was doing to independent authors what Spotify did to musicians.  By offering their work for free to subscribers, they were potentially lowering the revenue that an author or publisher could make from each book. In this article we explore how KU has evolved over the past 2 years and its current impact on authors. 

Kindle Unlimited & KDP Select: A History

Since the inception of KDP Select, there has always been a KDP Select Global Fund, which is a pot of money that goes to authors whose books are downloaded for free through Amazon’s eBook programs. Authors who enrolled their eBooks in KDP (Kindle Direct Publishing) Select prior to the launch of KU could have their books downloaded for free by Kindle owners who were allotted one free eBook per month through the Kindle Owners Lending Library. In the days prior to KU, the Global Fund totaled around $1 million, and was divided proportionally amongst the authors who had their books downloaded.

In July 2014 with the introduction of KU, the Global Fund increased to $2.4 M, and over the next year as more readers signed up for KU and more authors enrolled in KDP Select, that Global Fund increased to $11.5 M by July 2015, and today sits just shy of $15 M.

Kindle-Unlimited-KDP-Payout-Graph

A whopping $131.6 M was paid out to authors through the KDP Select Global Fund in 2015. If the pot stays at its current size ($14.9 million per month) for the rest of 2016, Amazon will pay out $228.6 M to authors this year. It is possible that the Global Fund will continue to grow in the remaining months of 2016, which would make the total Global Fund payout for 2016 north of $228.6 M. 

For the first year of KU, the payouts were simple: Each author was paid every time someone downloaded and read at least 10% of their book.

When KU was a year old, in June 2015, Amazon announced that they would begin paying participating authors by pages read, instead of by number of books downloaded. At the same time they introduced KENPC (Kindle Edition Normalized Page Count), which accounted for type size and line spacing to prevent anyone from cheating the system and artificially making their books longer. Amazon calculated the payout per page by beginning with their monthly KDP Select Global Fund and dividing it by the total number of (KENP) pages read. That first month it was decreed that each page was worth $0.005779.

As more readers and more authors entered into the KU system, the Global Fund size did not compensate for the increasing number of pages read every month, so the payout per page read dropped steadily in 2015.

Kindle-Unlimited-KDP-KENP-Payout-Graph

In January of 2016, Amazon announced yet another change in how they were going to pay authors with the introduction of KENPC v2.0 (Kindle Edition Normalized Page Count). This was supposed to standardize for additional spacing and text features. Some authors saw their page counts, and thus their total potential payout per book, drop, while others saw them rise. Amazon claimed that the average change across all KDP titles would be under 5%, but individual authors saw up to 10% changes in page length.

An additional change implemented in V2.0 was the capping of payouts at page 3,000 for longer titles. This affected mostly dictionaries and large reference books, but did have some implications for larger boxed sets as well. Since these changes, the payout per page has increased back up toward $0.005 per page.

Calculating Payout by Book

Under KU, using April 2016’s payout numbers, these are the maximum payouts per book based on total pages read:

KENP Pages Read Payout Per Page* Max Payout
150 $0.00496 $0.75
300 $0.00496 $1.50
450 $0.00496 $2.25
700 $0.00496 $3.50
1,000 $0.00496 $5.00
3,000 $0.00496 $15.00
6,000 $0.00496 $15.00

*based on payout numbers from April 2016

Looking at these numbers, it is easy to see why many authors were upset by the change to pay per page. Before KU, if you wrote a 150 page eBook, and priced it at $2.99 you would make $2.09 (after Amazon’s 30% royalty) off of a sale of that book and you would realize that revenue as soon as a reader downloaded the book. Under KU, that same book nets you $0.75, and that is only once a reader completes the entire book, which may happen within 24 hours or 6 months of the reader borrowing the book. Additionally, as an author you do not know what the payout per page will be until the following month, so it’s hard to determine what the max. value of your book in KU is in any given month. 

Authors do have a choice of whether or not their book is included in KU. An author can simply opt out of KU altogether by not enrolling their book in KDP Select. This decision proves agonizing for many authors, and there are authors who make good arguments for both sides.

Hugh Howey, a successful indie author, offers some perspective in his blog post Why KU Short Fiction Still Makes Sense. He argues that the KENP system is leveling the playing field among indie authors. The amount of work that goes into writing 60,000 words is the same, regardless of whether or not you publish those 60,000 words as one novel or six, 10,000 word short stories. Under the KENP system, both scenarios are compensated equally, instead of being skewed in favor of short stories, which were often priced the same as full length novels before. Howey is supportive of Amazon, and sung their praises in a recent interview with Digital Book World:

“Kindle Unlimited is just one example of the enormous sums of money an author misses out on by going with a major publisher. We’re talking $150,000,000 a year going directly to authors, and if you sign with a major publisher, you are taking yourself out of that pool.” – Hugh Howey

However, some authors argue that inclusion in KDP Select (and by extension, KU) authors are losing out on other revenue streams and becoming increasingly more reliant on Amazon.

Controversies

Kindle Unlimited has sparked its fair share of complaints and controversies.

From a promotion and payment perspective, the biggest downside to KU from the beginning has been that authors no longer get paid for books that readers borrow and never read them. We all have that stack of books that we keep telling ourselves we want to read, but never seem to get to. In the early days of indie eBook authorship, if your cover and blurb were good enough to prompt a sale, then you got paid. Now the game has changed and is rewarding increasingly higher quality, engaging content. As competition increases, covers and blurbs become more important to make ebooks stand out from the crowd, with the crux of success coming from the the content of a book and the quality of its storytelling.

The most notable and most recent controversy concerned the placement of the table of contents in books enrolled in KU. Some authors were placing a link at the beginning of their eBooks which directed the reader to a table of contents that lived at the back of the book. Since the number of pages read by a reader (which is what the payout is based off of) is measured by noting the furthest page in a book that a reader views, some believed that authors were cheating the system by preemptively pushing readers to the end of their books. It turns out that this was not as impactful as many believed.

How Do Authors Drive KU Borrows?

The same marketing tactics that work for selling books also work for driving KU borrows: 

  1. Promote your title to readers (through your email list, Facebook or Google ads, features on deal sites)
  2. Drive enough sales or download volume to rise in the bestseller charts
  3. Activity on the title spurs Amazon’s algorithm to recommend your book to other readers with similar tastes
  4. Halo sales continue after your promotion has run; KU borrows turn into KENP read
  5. Run another promotion 90 days later once momentum declines

KU has two fundamental perks for indie authors who are actively marketing their titles :

  1. It is thought that Amazon gives preferential treatment to KU titles, although there is no definitive proof. A glance through the Kindle Top Charts shows a large portion of the best performing books as eligible through KU. Perhaps this is simply because a KU borrow counts the same as a normal sale or download, so it is easier for these titles to climb the charts. The affect of this is discussed in the most recent Author Earnings report.
  2. The major publishing houses don’t publish their books through the KU program, so the competition within the KU program (which includes the books listed in the Kindle Countdown Deal charts, and elsewhere) are other indies or small presses. The major traditional publishers are not currently competing.

The primary difference when marketing a title enrolled in KU is how quickly you can measure the results of your efforts. For a title not enrolled in KU measurements is simple: authors watch their sales graph spike, and then watched halo sales come through in the following days. Authors tally up the total earnings from the promotion and compare it to the time and money spent actively marketing the title. 

The standard formula
RETURN = Total Sales – Amazon Royalty – Marketing Cost

For a title that is enrolled in KU, there is an additional component to measure: KENP read.The challenge here is twofold: 

  1. Readers who borrow a title during the promotion may not read that book until 6 months later. So there is an extensive time lag between the promotion and the results of the promotion
  2. Authors don’t know what the payout per page will be until the following month. So it is difficult to ascribe a value to pages read that do come through in the days following the promotion.
The KU formula
RETURN = (Total Sales – Amazon Royalty) + (KENP pages read * KENP payout rate) – Marketing Cost

Many authors make a best guess by using the prior month’s payout per page to get to an approximate value of the KENP read in the weeks following a promotion. Sophisticated authors will look back at promotions over a 3 or 6 month window to aggregate the full effect, and corresponding full cost of their promotional activity, to account for the lag.

What’s Next for Amazon KDP Select and Kindle Unlimited?

Kindle Unlimited has changed the way that many people read books. By giving independent authors an arena in which they can sell their books without the competition of mainstream publishers, KU has empowered them to find audiences in new ways. But all the while, Amazon reminds authors that they hold the keys to the coffers, and can always change the rules. It’s impossible to predict what new perks and programs Amazon will release in the coming years, but being at the top of the eBook and book markets appears to be a top priority. 

Authors still have control over many things: whether to enroll in KDP Select at all, the packaging of each book and the quality of the content inside. Successful authors focus on these elements and experiment with programs like KDP Select to determine the best path to success for each of their titles. 

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