Amazon’s Kindle Unlimited – Good for Readers, What About Authors?

By now you’ve probably heard of Kindle Unlimited, Amazon’s new subscription service that’s being dubbed “Netflix for books.” Subscribers pay a monthly fee of $9.99 to gain unlimited access to an electronic library of 600,000 ebooks. There’s a 30-day free trial, so I decided to check it out.

The first thing I noticed is there are some bonafide blockbusters available: Harry Potter, The Hunger Games, The Life of Pi. These well-known titles are splashed across the front page of the website, but once you dig a little deeper, you’ll find that the bulk of the library appears to consist of independently published novels. That’s not a bad thing, mind you, but subscribers expecting to find all the latest hits from their favorite big name authors will be disappointed.

I often hear the same complaint about Netflix. Some new customers will go in expecting to find specific movies, as if they were visiting a video store (remember those?). They’re soon disappointed when they discover The Dark Knight, for example, is unavailable for streaming, and quickly cancel their service. Those same sorts of subscribers would likely be disappointed with Kindle Unlimited. 600,000 books is a lot of books, but it’s nowhere near all the books.

But despite all its nay-sayers, Netflix has thrived. Why is this? I believe it’s a combination of Netflix’s low monthly fee combined with subscribers’ willingness to just see what’s on.

Allow me to explain: I find it’s best to use Netflix as if you’re surfing channels on TV: Let’s just see what’s on. They have a ton of content that appeals to me, and as long as I don’t go in with preconceived notions of what I want to watch, I can always find something. Truth be told, it’s more content than I have time to watch, especially if you consider all the television series they’ve added. And if I still want to watch something specific, there are DVDs, Blu-rays, and other pay-per-view services to provide exactly that.

As a reader, I think Kindle Unlimited should be approached the same way. It’s unlikely to have the latest hit book you’ve been dying to read (you know, the one you wanted to read before the movie came out), but there is still a ton of content to catch your interest.

After initiating my 30-day trial, I immediately loaded up my tablet with a slew of novels I never got around to reading (starting with Wonder Boys), as well as some highly-rated indie series I’ve been meaning to check out. Will I be able to read enough books per month to make it worth my $10 per month? Probably.

I think Kindle Unlimited will be a great service for readers, and I’m sure over time the selection will grow. But the question remains: Is Kindle Unlimited good for authors? Let’s examine this point-by-point:

  • If subscribers can read an unlimited amount of books for $10/month, who will continue to buy ebooks?

Relax. I think the limited selection will ensure that ebook sales will be just fine. Readers looking for specific ebooks will continue to buy them just as they did before, perhaps using Kindle Unlimited as a supplement to their reading habits. After all, a lot of the same fears were directed towards Netflix when it first came out, and it hasn’t exactly killed the rest of the video market. There’s Redbox, Vudu, Amazon, Best Buy, and don’t forget movie theaters… It seems people can’t get enough movies!

So, no, Kindle Unlimited won’t destroy the book business any more than Netflix destroyed the movie business. Besides, much like their movie publisher counterparts, traditional book publishers are likely to withhold much of their content from Kindle Unlimited, or make it available only for a limited time, to “protect” their existing sales.

  • Will Kindle Unlimited result in authors earning less money?

This is a tough one. Obviously if existing books sales are unaffected, then authors who don’t participate in the program should also be unaffected. The fear, of course, is that Kindle Unlimited will take away sales from these authors, that subscribers will eschew purchasing individual books and just enjoy what’s available for their $10 per month. I suspect this won’t be the case, but time will tell. If anything, I would expect this program to increase overall readership, and not just take a precious slice of an ever-shrinking pie.

  • But what about authors who participate in the program, or are considering participating? Will Kindle Unlimited boost their income?

I’d say it depends. That’s not much of an answer, I admit, but hear me out. Kindle Unlimited will pay authors a share of the KDP Select fund every month. This is the same fund that pays authors when readers borrow a book through the Kindle Owner’s Lending Library (KOLL). Amazon has just added $800,00o to this monthly fund for July, bringing the total to $2 million to divvy up between authors.

What does this amount to in individual royalties? It’s hard to say. There’s a fixed pool to split, but no one knows how many books will be sold under this new program, including Amazon. I’ve seen estimates from as low as 13¢ per sale to as high as $2. If the Kindle Unlimited program becomes wildly successful and the $2 million fund should prove insufficient to pay authors a meaningful royalty, I believe Amazon will increase the fund. That’s just good business, for both the authors and Amazon. After all, if the royalty is too low, authors will pull their books from the program, and Amazon will lose subscribers.  In a few months we should have more data, but for now, let’s use the KOLL program as a target rate, which earns the author approximately $2 every time a book is borrowed.

But wait! There’s an additional caveat: Unlike the KOLL program, Kindle Unlimited requires the reader to read at least 10% of the book before the author will be paid.

  • What? A reader has to read my book before I get paid?

Well, yes. At least 10% of it, anyway. If you think about it, it makes sense. Unlimited subscribers have the ability to download an unlimited (imagine that!) number of books per month. I’m sure some of these subscribers will immediately download hundreds of books, if not more, though they’re unlikely to ever get around to reading them all. Obviously, Amazon wouldn’t be able to afford to pay for all these unread downloads (well, not pay very much anyway), so this restriction seems reasonable. Amazon is only paying for the books that readers actually read (or at least start to read), and the books will become unavailable if the subscription lapses. My takeaway from this policy? Make sure the first 10% of your book is damn good!

  • Okay, so now we’ve established how Kindle Unlimited authors will be paid, and roughly how much they will be paid, does it make sense to participate?

First of all, if you’re not self-published, you probably won’t have a say in the matter; your publisher will decide if your books are made available to the program (not likely).

For the rest of us, it’s the classic price versus volume argument: Is the risk of a potentially lower royalty outweighed by a potentially greater number of sales? If you’re an independent author selling your ebooks at $10 a pop and you’re doing great business, then the program probably doesn’t make good sense (or cents). After all, you’d be trading a $7 royalty for a $2 royalty, requiring you to sell 3.5X as many books to make up the difference. That’s a pretty tall order. But if you’re already selling your books for $2.99, for instance, you’re making about $2 per sale anyway, so the greater exposure the Kindle Unlimited program provides could well be worth it.

But like the KOLL program, there’s a catch. In order to participate in Kindle Unlimited, you need to enroll your ebook in Kindle Select, which means it will be digitally exclusive to Amazon. (Obviously Amazon has made exceptions to secure the non-exclusive rights for books such as the The Lord of the Rings series, but for the rest of us mortals, it’s Kindle Select or nothing.) Furthermore, as far as I can tell, there’s no way for an author who is enrolled in the Kindle Select program to opt-out of the Unlimited portion of it. As of this writing, if your book is enrolled in Select, it is enrolled in the Kindle Unlimited program.

  • Is this exclusivity worth it?

Tough call. Amazon is the biggest ebook marketplace, but it’s not the only ebook marketplace. Will the exposure of the Unlimited program outweigh the loss of sales and exposure through other outlets such as iBooks or Nook? Unfortunately, it’s impossible to say, but some big names such as Hugh Howey are jumping in on the topic, optimistic that Amazon’s service will be a boon for self-published authors.

Furthermore, it’s not always about the individual sale. Sometimes the exposure can be much more valuable, leading to a larger fan base that will increase sales further down the road, or resulting in sales of other books. If Kindle Unlimited becomes a huge hit, the question may become whether you can afford not to be in it.

  • The Bottom Line

Change is always scary, but that’s the nature of progress. Along the way it seems as if someone is always predicting an apocalypse of one sort or another, whether it be in the financial markets or book publishing. Rather than listening to such pundits, I would encourage self-published authors to embrace new technologies and new avenues to sell their books with optimism. We have an advantage in that we can adapt quickly to change, unlike traditional publishers, who try to keep the old systems that have benefited them for so long firmly in place. I doubt any of the big publishers will ever embrace Kindle Unlimited, preferring to keep their traditional sales models as well as their accompanying high prices.

To this I say good! The less books in the Kindle Unlimited program, the more visible my own titles will be. And the higher traditional publishing insists on pricing their ebooks, the more attractive my low prices will be. (Seriously, I think it’s in every independent author’s best interest for traditional publishers to resist change for as long as possible; the ability we have to price our books well below theirs is a huge advantage.)

To this end, I have enrolled my first book The Woodlander in the Kindle Select program, and thus it is now available in the Kindle Unlimited program as well. Whether this is a smart move, time will tell, but for now I’m cautiously optimistic.

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About thewoodlander

Kirk Watson is the author of The Grey Tales series of novels featuring squirrel-of-action John Grey. He resides in Austin, Texas.
This entry was posted in Writing and tagged . Bookmark the permalink.

2 Responses to Amazon’s Kindle Unlimited – Good for Readers, What About Authors?

  1. Great analysis. I was wondering how this was going to affect authors. For lesser known authors, I think releasing one or two books to amazon unlimited is a great way of getting exposure.

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