Home : Kindle Unlimited: Will it Affect You?

kindle-unlimitedThe New York Times claims self-published authors are unhappy about Amazon’s Kindle Unlimited program, which uses an “all you can eat” model similar to the one used by Netflix and Spotify. For $9.99 a month, Kindle Unlimited offers access to 700,000 self-published and traditionally published books. Publishers who participate in the program earn less money in exchange for access to Amazon’s subscriber community.

But the problem is not Amazon. More often than not, the problem is unrealistic expectations. Kindle Unlimited is a non-issue for most self-publishers.

Kindle Unlimited: Publishers are Opting In.

Nobody forces anyone to buy from Amazon (or sell through them). The world could boycott Amazon and shut it down, but they won’t because Amazon makes it cheap and convenient for consumers to find and access everything from eBooks to LED trailer lights. If you feel like your publishing business is a second-class citizen on Amazon, you’re right. The customer is the one riding up front in a big leather seat. Amazon has built an empire by offering value to customers—and they know if you opt out, a small army of people with stuff to sell will be happy to fill the tiny void left by your departure. This doesn’t make Amazon mean or unfair; it makes them smart businessmen. As capitalists, they’re following the money—and they’re exploiting the power vested in them by the marketplace to change the publishing ecosystem to favor their business. Love it? Hate it? Those aren’t relevant questions.

Selling Books? Really?

For most small publishers, books are a horrendous retail product. How much money do you make from a book sale? Probably somewhere between $2 and $10. Self-publishers who fail to sell books in volume rarely earn enough revenue to recoup their publishing costs. And forget about getting paid for those writing and research hours. Sure, there’s always a bell going off somewhere in the casino that keeps the rest of the room popping quarters and pulling handles—some publishers get lucky or clever—but the majority of self-publishers sell fewer than 100 books.

Given that big publishers keep the prices of eBooks artificially high (they’d sell millions of $2 eBooks, but I suspect their $20 printed complements wouldn’t look very appealing to consumers), small publishers have exploited the low production and distribution costs to flood the market with $1–$3 eBooks. But with the seller skimming 30%–70% off of low prices, the retail profit margin remains thin, even with production costs near zero. Most self-publishers cross their fingers, hope readers will discover them, and send their messages in bottles out into the seas of publishing.

If you opt in to Kindle Unlimited and toss your books in that pool, how much will this really affect your bottom line? If you’re one of the minority who sells books in volume, you will see a difference. But if your average book sale returns less than a cup of coffee (as is usually the case) and you sell 100 books per year, profit opportunities lie outside the bookselling environment.

Of the authors I work with, the ones who profit from book sales are the ones who sell books at workshops and keynote speeches. One sold 1000 books at a single event, signing books and accepting cash at the back of the room, but most of us don’t have access to stadium-sized audiences. We publish because we want to share our stories and ideas, even if that costs more money than it makes. The rest of my clients don’t worry about book profits. They trade on the credibility that comes with literally being the one who “wrote the book on the subject.” For them, a book is a relationship builder.

Relationship Marketing

In general terms, a sales transaction is the result of a relationship between a buyer and a seller. That relationship may be as simple and indirect as a consumer reading a label on a package, deciding to trust the people behind the product, and buying it. Or it might involve months of negotiation between a sales/support team and an acquisitions department. In either case, the exchange of money is predicated upon a consumer making the decision to trust the seller—to enter into a relationship.

Smart sellers consider the costs in time and money required to initiate a relationship with a buyer. How much time, effort, and money will you invest to earn $5–$10? If (hypothetically) it takes 15 minutes to talk to a prospective reader one-on-one, and that results in a sale half the time, your hourly return is $7.50. Spend an hour reading to an audience of 25 people and assume 10 of them will buy a book when you’re done. Your return is $75. But how many of these audiences can you assemble? It’s clearly more efficient to build relationships with many prospective readers at once, but until your audience exceeds 100 people, the returns aren’t very gratifying. And how many hours and dollars will it take you to prep for your hour behind the lectern? What if you spend $350 on books to sell at your reading event and then it rains that day and nobody shows up? If you expect 100 participants, you’ll want to bring at least 50 books. Larger businesses require more up-front capital so you can invest in inventory. Risk increases with audience size.

As an author, if I initiate a relationship with a reader that results in a book sale, I earn $5. As a book designer, if I initiate a relationship with a reader that results in $3000 worth of design, typesetting, and coaching work, my efficiency increases 6oo times. Personally, I would find it gratifying if you  read my books, but professionally, I want you to see my books and want yours to look and function like mine. I want you to see my eBooks and purchase the software I developed that empowers you to make your own. As an author, I’m an artist who wants to share my work, but as a publisher, I want to derive income from books. Selling them—at least for me—seems the least effective way to accomplish that goal.

Writing, Publishing, and Kindle Unlimited

As a writer, I think of myself as a literary artist. I love sharing my stories, and I love helping others share theirs. The art of writing well, of transmuting thoughts and ideas into ink squiggles on paper fascinates me. As a book designer, I understand how font choice and page layout and other aesthetic factors empower readers to decode those ink squiggles into something greater than the data on the page. As with most artists, I want to share my work. Paying the bills with it wouldn’t be such a terrible thing, but art is not driven by practical considerations. Art is about personal expression. Art seeks an audience.

As a publisher, I think about “shallow” things like relationship costs, marketing efficiency, profit per unit, and how I can make money. Bookselling fell off my radar a long time ago. My books (and this blog) attempt to demonstrate relationship-worthiness—knowledge, experience, capability, taste, and perspective—offerings that provide value to clients and profit to my publishing business.

Whether Kindle Unlimited is a godsend or a rip-off can only be assessed in the context of where your publishing interests lie on the spectrum between art and business. We all want to share our work with millions of readers, and hope to earn a few coins in the process. But without a solid strategy and a realistic budget with which to implement it, many indie writers will find it valuable to use Kindle Unlimited to put their work in front of a larger audience—even it if it costs them a big slice of a tiny pie.

If you’re wearing your publishing business hat, you’re most likely selling books in volume by appealing to niche audiences, speaking to groups, or using your writing credentials to attract bigger opportunities. If you’re selling books well on your own at prices you’ve set yourself, you’re probably best off holding your course. If your model involves casting as wide a net as possible using your book as opportunity bait, Kindle Unlimited might be an excellent value.

Kindle Unlimited is an opportunity for some writers and a deal killer for others. Publishing is a tough business either way. You’ll find excellent discussions of the program’s practical pros and cons, but the real danger lies in allowing such discussions to obscure the bigger picture.

The greatest pitfall for indie publishers is not Amazon or their latest eBook distribution strategy. The stumbling block is wishful thinking that promotes conflating the interests of art (writing) with those of business (publishing). Is your book an art book (fiction, for example) designed to entertain and inspire, or a practical product (like a book on programming or investing)? Is your audience easy to identify and reach (people who collect acoustic guitars all hang out on a few websites) or more nebulous and general (people who enjoy novels; where do they hang out?)? Do you have a strategy and a budget, or do you have “a good book and lots of passion?” With a clear business plan, the impact of Kindle Unlimited on your book business will be easy to assess. Without one, think about bigger things first.


Comments

Kindle Unlimited: Will it Affect You? — 24 Comments

  1. Great Post Dave! Like most Kindle Unlimited Articles you’re sitting on the fence! lol I’m a passionate author making my mark in the non-fiction writing world with 60 books up – All but 15 are in Kindle unlimited – been with Amazon for 2 years now – been banned – blocked – had books taken down- left KDP and went back and will leave again. You name it and I’ve experienced it and figured a lot of it out.

    Bottom Line – Unless you are willing to write A LOT of quality books, understand they technical crap that goes with Keyword/SEO, have the resources to pick TOP niches with the right level of competition, and of course know how to format the books, have good covers and an external marketing strategy – you’re not going to make a dime on your books. And definitely not anytime soon!

    Sad to say you are in competition with the big wig publishing companies that get special privileges with Amazon and they pay teams to take care of ALL the book publishing stuff. I’ve done it all on my own and it’s crazy nuts hell! lol Lots for me still to learn but I’m cracking the code and am finally making money.

    MY ADVICE – If you passionate about writing – make sure you’ve got at least a thousand dollars to put into covers, research tools, editors, etc. to start. And plan to spend at least 1.5 years EVERY DAY, 6-8 hours, LEARNING anything and everything about publishing books on Amazon.

    The customer support system with Amazon is useless when you get past the baby phase. There are just THREE Kindle Execute Reps that you can only get through with a lot of patience, time, and persistence. It’s taken me 2 years and I have contact with all three and finally got a direct number to one of them! YEAH – you really do need them in your corner when shit hits the fan..cuz it will! lol

    Sorry I’m yammering – great post and maybe I’ll see you on top of my gynormous book enterprise mountain some day?? Keep smiling:)

    Cathy:)

    http://www.amazon.com/Cathy-Wilson/e/B00CMQYQIC/ref=sr_tc_2_0?qid=1423626909&sr=1-2-ent

    http://www.flawlesscreativewriting.com/blog/

  2. Dave, I have already commented on Linked In on this article, but I do so again because I see that the readership is different between there and here, and wanting to participate in this conversation, too, I am posting here also.

    The above article is exceptionally well written and it was a pleasure to follow your thinking. I sense that we are kindred spirits as evidenced in our efforts to balance business and art as are many of the respondents

    I used to sell well from my site and the resulting revenue was certainly not an income but a comforting component of it. With the advent of Amazon, I saw my site sales shrivel up. I suspect that people came to my site and then went to Amazon to get the books at a discount. Then, I tried to offer the books with an electronic premium—an ebook or an MP3—that would effectively lower the cost to the buyer and keep them buying from me. With this setup, the buyer had a book as well as another title for the price of the book alone. But, the buying culture had changed, and I have not resurrected my sales figures. Where to find the sales I had depended on?

    While I have earned significant income at times from book sales—once selling $29,000 at a weekend event at which I was a break-out speaker [apparently my presentation was well received 😉 ] and having sold in the $500 to $1,000 range many times—like you, I think of book sales as an opportunity to reach out for ancillary services. I have found that library presentations lead well to editing and book production work. A four-library tour one year lead to $22,000 in work and several feature articles. Not bad. (Hint: speak in well-heeled communities.)

    I don’t know what to think of Kindle Unlimited. I have one book in Kindle Select and I am about to send another one. A third is in preparation. If only this: Kindle publication has stimulated me to write much. There has as yet been no significant income—not even a pay back—from the sales. People who do well seem to be predominantly the genre writers

  3. Since there seem to be no other cynics in the crowd, here is my contrarian perspective: I have yet to see an indie author whose downstream service providers (cover designers, line editors, proof readers, printers, publicists, etc.) make less than the author. All of them would prefer the author give away his/her work – as long as THEY still get paid. Sure, it’s free enterprise and capitalism, and no one forced the author to write a book. But I find it a bit disingenuous when everyone who makes money on the back of the author encourages the author to reduce the meager return they get on their product, while they continue to collect a full price for their services.

    • I agree—and I always tell prospective clients they’re unlikely to sell enough books to cover my fees. That’s a tough sales pitch, and it explains why we have so many charlatans in our industry, but whether we like it or not, it’s a tough world out there. I don’t like that the retailer (typically) earns half the cover price of a book just for listing it in its database and managing transactions, but authors are free to use non-standard distribution schemes (which I encourage). I don’t think you’re a contrarian; I think we agree. If retailing books is your profitmaker, KU will cost you $$$ and that’s unfortunate. But if your $2 per book doesn’t make much difference anyway, exchanging a small pie for a smaller one won’t make a difference. Maybe you can afford 4 cups of coffee a month instead of 5. Who would care? For authors who want to get their work in front of more readers, KU can be a blessing. Whether it brings consulting or contract work or just satisfaction, publishing can be rewarding even if you sell very few books. I’ve sold fewer than 200 books total and I’ve published 5—but I make a profit in the publishing business. If Amazon can get my work in front of more readers, the impact on my trivial book royalties will be inconsequential.

  4. This is quite the valuable article for anyone considering breaking into this field. I have only recently found your blog (probably through Joel Canfield) and am impressed by all the well-written articles!

  5. As clear, cogent and concise look at the conflicting aspects of creativity (art) and commerce as I have yet seen. As a writer, visual artist and hypnotherapist I have dealt with these issues for decades. Most of the bile and ire directed at Amazon really boils down to “I don’t like their business model and the way it affects me.” Me neither, but so what! Having expectations of them as a commercial organization is a waste of energy, under the heading of “If I have no power to control or create change in an issue, it is pointless to upset myself about it.” Then let go. Ditto with Microsoft, another internet giant, the target of similar feelings for many people. Best wishes, Brian.

  6. For those of us who write series of novels or articles, this program works very well. If/when a reader likes your style or direction, then he/she can find more of the same from you and help spread the word. I want these readers to share and move as little busy salespeople for me and my brand. Think?

  7. The NYT is finding authors who aren’t typical of Kindle Unlimited. Most don’t sell 6,000 high-priced books a month. The monthly royalty is about the same as 35% royalty for books priced at $3.99 and a deal if it’s priced lower. It’s not the end of the world for the vast majority of Kindle Unlimited authors, really.

  8. This is a very relevant article. Thanks, Dave. As an indie author/publisher, Kindle Unlimited it just one of the instruments in my publishing tool kit for 2015. We will see how this plays out.

  9. Niche marketing is the way to go for a small publisher like my Yardman Press. As a writer however I still dream of hitting the mass audience so Kindle will remain a choice for my own e-books while I make what money I can from selling print versions at book fairs and other events I use the Square dongle and depend on folks with credit cards making impulse purchases of a book with an attractive cover.

  10. I guess I will find out soon enough..but I found I had more reads than when I first put the book out in print with the publisher using horrible black and white pencil sketches than no more appealed to children than radishes. The Ebook on Kindle has done by far better in 2 months than a year with that publisher. I redid all the illustrations in color,kid friendly and the cover is awesome.

  11. Thank you so much! I have enjoyed my experience with KDP & have not had time to research this new movement! Your article enlightened me so that I can make a more informed decision. By the way, where did you get your stats? Particularly, the one about most authors not selling more than 100 books. I’d like a comparison of the average indie authors sales to see how I am measuring up. Keep up the good work!

    • Book stats come from numerous places, but the farther away you get from traditional publishing, the more difficult it is to gather an accurate census. The Book Industry Study Group is one worthwhile source. The “100 books” stat is commonly tossed around. But you can do the math using articles like this one in The Guardian. Also see Bowker’s analysis of the (2013) self-publishing market here. Assume there are roughly 600,000 self-published books in print with ISBN numbers, and assume many more go directly to Amazon’s Kindle platform without an ISBN (Amazon doesn’t require one). Now the trick is to figure out the distribution. A few indie authors sell 250,000 copies and a few sell one or two. Assume that 20% sell 80% of the books (or apply some other conventional rule of thumb), and 80 million books sold (or whatever quantity you think is right based on the sources you find). Now figure that non-fiction will sell better (it’s easy to justify the cost of a $40 book that teaches you a valuable skill like writing javascript, while a $20 novel is a recreational purchase), and skew the distribution again. If you find reliable statistics, let me know, but when you think about how much relationship-building it takes to sell 100 books, and consider how many books are amateurishly edited and weakly designed (which slants the battle uphill even more), the numbers make sense.

      But you’ve got me thinking. Perhaps exploring the “how may books sold?” question in depth will make a good future blog post.

  12. Your points are well taken and, for the most part, on the obvious side. Of course Amazon is a business predicated on selling products at a low cost and high convenience. And they treat books as yet another commodity.
    Which is the point — book people, reader and writers (and independent sellers) are, to varying degrees, passionate about the written word. We are untied in seeing a Picasso as more than gesso and pigments smeared on a piece of sail cloth, and books as more than a collection of sheets of printed-on paper bound together with glue.
    Amazon is acting in its own self-interest, which is not the interest of authors, anymore than they operate in the interests of light bulb manufacturers. That does not mean that authors do not have interests and, in fact, it almost guarantees that there will be conflicts between the authors’ interests and Amazons (see the Hachette war).
    For authors who are willing to give their work away and for whom self-publishing is a slightly more respectable alternative to the vanity press, Kindle Unlimited may seem like a good idea. For anyone serious about being read, it almost certainly debases what they are doing.

    • I’d like to think these points are obvious, but wishful thinking is the opiate of indie publishers. It feels like magic when we upload a file and see our book pop up for sale on Amazon. Wow! Just like the big publishers! And look; they gave me my own author page! And many publishers are also Amazon customers, used to good prices and free shipping. The fog rolls in and it’s easy to forget that they’re not here for us.

      But I disagree with your last statement. I don’t make my money from book sales; I make it from editing and book design, and from selling software that empowers you to make your own eBooks with WordPress. You can read my last book in its entirety at TheBlueMonkBook.com, and if not for the fact that my link would violate Amazon’s exclusivity policy, I’d pop it up on Kindle Unlimited today. As a writer, I’m “serious about being read,” and KU would expose my book to more readers. As a publisher who derives income from sources other than book sales, I’d rather have more people find my book and then find me through it. I don’t think that debases anything.

      Publishing is a business and as such, publishers need to act in their own interests. Depending on the business model, Kindle Unlimited will be a help or a hindrance. Creative writers should not conflate artistic goals with business goals. Without a marketing plan or budget, if you’re only selling a handful of books, it may be worth it to take a hit in the already trivial income stream to get found by more readers. I like to make money as much as anyone, but when some reader I’ve never met writes a review of one of my books or sends me an email, I get more satisfaction out of that than I ever could from the meager $5 I get after the bookseller and the printer have taken their cut.

      Debasing? It’s as uplifting as anything I can think of. My business goals are over here and my business goals are over there. Both get achieved.

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