Thoughts on the Revisions to Amazon’s Kindle Unlimited Subscription Service

Amazon has recently changed its Kindle Unlimited program, in terms of its payouts for writers.  From July 2014 to July 2015, the program paid a writer a percentage of a total financial pool, based on the number of borrows a particular book received.  The new program makes that payment contingent on the number of pages read by borrowers of a particular book, divided by the total number of pages read by all borrowers.

Some sample calculations will make this easier to understand.  In the table below, “Book A” is a particular book by a writer:

July 2014 to June 2015 Payment System      

Book A Borrows in Month X       100

Total Books Borrowed in Month X        7,000,000

Pct. of All Borrows that were Book A   0.00143%

           

Total Dollars in Writer Payment Pool   $10,000,000

           

Total Dollars allotted to Book A $142.86

Dollars per Borrow for Book A   $1.43

July 2014 to June 2015 Payment System      

Book A Borrows in Month X       100

Number of Pages in Book A        200

Total Book A Pages Borrowed in Month X      20,000

Total Books Borrowed in Month X        7,000,000

Average Pages in Books Borrowed in Month X         200

Total Pages Borrowed in Month X        1,400,000,000

Pct. of All Pages Borrows that were Book A   0.00143%

Total Dollars in Writer Payment Pool   $10,000,000

           

Total Dollars allotted to Book A $143.86

Dollars per Borrow for Book A   $1.43

As you can see, nothing changes if “Book A” is the same length as the average book in the Kindle Unlimited pool.  (For the sake of argument, we will say that average length is 200 pages, or 100,000 words at 500 words per page, a fairly standard length for a novel).

But, if Book A varies from that length, things change considerably, as shown below:

Format                      Words                       Pages             Pay per Book

Short Story               10,000                      20                               0.14

Novelette                  20,000                      40                               0.29

Novella                     30,000                      60                               0.43

Novel                       100,000                    200                             1.43

Epic Novel               250,000                    500                             3.57

 

Now, the short story is penalized, while the epic novel is rewarded (note that these calculations assume that books are read to the end, though Amazon’s payout schedule takes into account only pages actually read).  For the record, I doubt that Amazon will actually let short stories fall below some threshold value, say 30 cents (equivalent to 30% of a 99 cent book).

Clearly, Amazon is incentivizing writers to shift out of shorter works and into longer works.  Many writers have been using Kindle Unlimited as a showplace for short works, since the payoff is the same as for novels, under the old payment schedule.  It paid to put up short works, even to break up novels into shorter, multiple documents (serialize).  Under the old system, you got $1.43 per borrow, regardless of length (using the sample calculation).  Now, it will take 10 borrows of a short story to reward the author to the same extent as one borrow of a novel.

 

Why is Amazon doing this?  I suspect that the short story frenzy had run its course, and it wasn’t attracting new readers to Kindle Unlimited.  Probably the more voracious, experimental reader, perhaps those with public transit commutes were drawn to shorter formats.  But, to expand the audience of readers, Amazon wanted to get more novels into Kindle Unlimited, since the novel is still the preferred form of most readers.

I wrote about the original Kindle Unlimited program in a blog last summer.  Here are a few things I said then (you can look them up):

http://dodecahedronbooks.blogspot.ca/2014/07/thoughts-on-new-amazon-unlimited.html 

1.     “One interesting wrinkle of the program is that any book downloaded and “read” would be worth the same amount of money to the author/publisher, regardless of length.  So, a 25 page (10,000 word) $0.99 short story ebook would pay the writer as much as a 500 page (200,000 word) $3.99 epic length novel…it would probably be more profitable for the writer/publisher to have short books downloaded by subscribers, but have longer books purchased by non-subscribers.”

That’s basically what happened – writers put short works in KU, and even cut up longer works for KU (i.e. serialized).  However, many kept their novel length works out of KU, so that they could be on multiple platforms (Kobo, Apple, etc.).

2.     “One wonders how long Amazon will maintain the 5 days out of each 90 days that a writer/publisher can offer books for free, if enrolled in KDP Select…It seems to me that it would be to Amazon’s advantage to drop “free” in the near future, as that would encourage cost-sensitive voracious readers to sign up for Kindle Unlimited…Note that if Amazon does abandon “free”, it will probably be done incrementally, in stages over a year or two.

We are still waiting to see how this will play out.  So far, there is no indication that Amazon intends to drop free promotions.

3.     “Another interesting aspect of Amazon Unlimited is that, as of the date of the writing of this blog (July 21, 2014), none of the “big five” publishers have signed on to the program (Penguin/Random House, Harper-Collins, Hachette, MacMillan, and Simon and Schuster).  That primarily leaves books produced by the mid-size publishers to independent/self-published writers.”

As far as I know, that’s still true.

4.     “Amazon, as always, will be watching their data carefully, refining their algorithms and adjusting their business strategies in the manner that they feel best advantages them.”

Clearly, they have done just that.

5.     “As for our little venture, Dodecahedron Books will enrol some of our shorter fiction in Amazon Unlimited, hoping it gets some downloads and drives some business to the longer books, like the Kati of Terra series and the Witches’ Stones series.  Other than that, it is a matter of observe, write, publish and try to enjoy the ride…”

We did enrol quite a few short stories in KU and they had some decent success, both on their own and in helping to introduce some readers to our longer fiction.  Indeed, we eventually enrolled that longer fiction in KU, as well.  Our novel to short story ratio of borrows was 54:46, so assuming that things stay the same (though they never do), we will actually do better under the new payment regime.

In conclusion, I would just reiterate what I said last year about our relationship with Amazon:

 

Observe, write, publish and enjoy the ride.

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And here’s an XKCD comic showing how short form writing can be exquisite, even if Amazon is encouraging us to write longer works (you have to pay careful attention to this one):