How Much Do You Want To Get Paid Tomorrow?

Things had been going pretty smoothly for self-publishers.

We were more or less done with the arguments about whether this was a viable path and whether you could attract an agent/publisher (if you wanted to) by self-publishing first.

We had generally agreed that e-books were here to stay and that print books and bookstores (sadly) were on the way out.

Then Amazon came along with a curveball, splitting the community: KDP Select.

KDP Select is an opt-in program where self-publishers can be part of Amazon’s e-book lending library.  There has been a lot of discussion about KDP Select and the Lending Library – some hysterical, some measured – but I think it needs to be considered in the framework of subscription models in general.

I won’t spend much time on the pros and cons, they have been debated pretty exhaustively on The Passive Voice and this Kindle Boards thread, and I think most writers already know where they stand on this. I want to ask everyone to take a look at the bigger picture of subscription models and how we will collectively define future compensation for our work.

There had been murmurings about Amazon’s move for some time. With the launch of the Kindle Fire – and the obvious corollary that the device was designed to generate future profit on content – speculation turned to whether Amazon would attempt some kind of Netflix-for-Books. Indeed, rumors abounded that they had approached publishers on this and had been universally rebuffed.

For a reader, the deal is seductive: read as much as you like for a fixed fee. In practice, it’s only attractive if the books you want to read are part of the package. For the company selling the package, the clearest way to show value is by having content you can’t get anywhere else.

It was inevitable in one sense. Exclusivity was always going to rear its head. We’ve seen it in plenty of other content industries (software, games, music); it was only a matter of time before it inserted itself in the e-book game. It’s not that new – Amazon just got people talking about it.

Writers are used to being on the sidelines, watching these power plays. This time is different (partly because the publishers decided to sit this one out). We’re being asked to make a decision. And make no mistake, whether we participate, and how we participate, has huge ramifications for the whole publishing business: how readers pay for books, how writers get paid for those stories they read, and how publishers and retailers get to play in this new game.

Amazon arouses strong feelings (in either direction). But whatever your feelings are, you need to realize that subscription models of some sort are going to play a big part in the immediate future.

There are plenty of start-ups out there right now working on similar subscription models. It usually works like this. Readers can read whatever they like – for free – but have to suffer ads (which subsidize the books they are reading). The ads aren’t too bad – they aren’t intrusive, they aren’t pop-ups, they are like the digital equivalent of the glossy one-pagers you see in magazines (or like those in the ad-supported Kindles).

The companies pay for the ads, and the ads pay the authors, and the readers read for free (and put up with the ads). It sounds okay in theory, but there are plenty of skeptics who wonder if the ads will be effective enough and lucrative enough to pay authors and publishers the kind of money to include their content (and to replace the cash they earn from selling that content in the usual way).

The subscription part comes from a fee, paid by the reader. In many models (like Spotify, if you are familiar with that), if you pay a monthly fee you can make the ads disappear, and get access to exclusive content. In some models, they don’t really bother with ads at all, and just charge a monthly fee. But all models are generally some mixture of ads and subscriptions.

Either way, whether you like it or not, subscription models are going to form a big part of the reading mix in the future – probably in the immediate future. This isn’t something like enhanced e-books where the jury is out. This is happening now.

And whether you think subscription models are the right way to sell your work or not, that decision is out of your hands. Readers are in charge here. If that’s how they want to read your stories (and it’s how a large portion of people now like to consume music, television, and movies), then that’s how you will have to sell them.

My point is, whether you think subscription models are right or wrong, you need to start thinking about how you will value (and sell) your work under such models.

This discussion has largely been going on in the background, but Amazon has changed all that with their Lending Library – where Amazon Prime subscribers could rent one book from the library for free each month. First, it was launched with a hand-picked selection of approximately 5,000 bestselling books. To assuage publishers concerns, Amazon pledged to pay full price each time one of their titles were rented.

There have been a lot of strongly worded articles about this, but the fact is, it’s all shadow boxing. Nobody expects either (a) future rentals to be limited to one per month or (b) Amazon to continue to pay full price for each book rented. Neither is sustainable. The real argument is about what price Amazon (or any other retailer) will pay per rental, and how the whole system will operate.

Because publishers were unwilling to participate in the Lending Library, Amazon turned to self-publishers – an army of content owners grappling with discoverability. To entice self-publishers into the Lending Library, Amazon created a program called KDP Select which had all sorts of purported benefits to get self-publishers to opt in. The price of entry was a 90-day exclusivity period.

Initially, there was a rush to sign-up – 30,000 self-published titles were entered in the first 24 hours. However, many more stayed on the sidelines – some dead against it, others unsure. Some who opted in originally, have already opted out. Others, however, are already seeing good results.

It’s impossible to make an objective statement about the merits of KDP Select when so much is unknown, when writers will view it very differently depending on their readership and business model, and when, like most things, the proof will be in the pudding.

I will attempt to present the pros and cons dispassionately, then explain why I’m not participating, and finally I will argue that there is a bigger picture here which all writers (and publishers) need to consider whether they are participating or not.

There are lots of self-publishers who have already made a different decision to mine, and I hope they can participate in the comments. That way, anyone who is on the fence will get to hear all sides before making their own decision.

If you haven’t decided yet, and you are feeling under pressure, don’t sweat it. If you were worried that you should get in early and take advantage of being first, it’s already too late – there are already 41,500 e-books in the Lending Library (over 35,000 through KDP Select), and the number is rising every hour. In short, that window is gone.

These are the primary benefits of participating:

1. Amazon will pay a fee for each book rented. The amount paid will come from a fixed pot of $500,000 in the first month, and will be distributed pro rata depending on how many times your book was downloaded in that month. The pot may increase in subsequent months, but there are no guarantees.

2. Amazon will allow you to put your book for free for a maximum of five days in each 90-day opt-in period. This may not sound like a benefit to anyone who hasn’t tried it, but there are numerous examples of authors using “free” to boost paid sales. Whether you think it’s a benefit or not, most self-publishers consider it a handy, targeted way to use a strategy that previously required uncertain, back-door hoop-jumping.

3. Rentals positively affect your sales ranking in the same manner that a normal sale does. This has been confirmed by Amazon.

4. Exposure in the Lending Library could win you readers that would not have discovered your work otherwise.

These are the main costs:

1. Exclusivity. To participate in KDP Select, you must remove your book from all other retailers and keep it removed for a 90-day period (the minimum opt-in time). You are also prohibited from selling from your own site. Penalties for failure to comply are pretty severe. If you choose to opt out, Amazon still has exclusivity for those 90 days.

2. I’m not sure if this is a real issue for many, but there is language in the Terms of Service of KDP Select which is causing concern. The opposing argument is that such language is necessary to prevent authors circumventing exclusivity by publishing a slightly different version of the same book outside of Amazon. I’m not a lawyer, so you will need to decide for yourself if this is an issue (or have one advise you if you are concerned).

To many self-publishers, KDP Select was a no-brainer. They were making 95% (or more) of their sales through Amazon, so the main perceived cost of participating was largely moot. However, as 30,000 titles were enrolled in the first 24 hours, it became clear that the limited pot of $500,000 wasn’t going to go very far.

Most of the self-publishers arguing in favor of the scheme didn’t focus on the payouts (they admitted the math didn’t look attractive). To them, the key benefit in participating was the potential extra exposure both from the library itself, and being able to do targeted free promotions.

They felt that Amazon would promote the program to current and prospective Prime subscribers, and that they had a chance of gaining new readers before publishers changed their minds and flooded the Lending Library with backlist. And, to be fair, some self-publishers posted some initial results that were positive.

However, I was never tempted to enroll. Aside from the payment terms, which were too vague and too small, my main issue was with exclusivity. The details don’t matter so much – they will be different for everyone – but my non-Amazon sales are too large a proportion to give up for benefits I’m skeptical about.

On top of that, I really don’t want to abandon my readers in the surcharge countries, nor those who aren’t allowed to buy from Amazon at all. It also runs completely contrary to my whole approach of building multiple income streams and diversifying away from being dependent on one company or market. I’ve detailed the reasons why participating is not a good idea (for me) in this post.

But I’m more concerned about how exclusivity could limit my creative promotions. These are the three best things I have done in the last six months to help sales or put money in my pocket:

  1. LibraryThing Giveaways
  2. Making the PDF of Let’s Get Digital a free download on my blog.
  3. Crowdfunding the release of A Storm Hits Valparaiso.

Collectively, those three moves have been directly responsible for more than 50% of my revenue this year, and probably a lot more indirectly. The first two are certainly impermissible under the terms of KDP Select, and the third is up in the air, depending on your interpretation.

There is one final – much more important – aspect to this that I think all writers need to consider. As I said earlier, subscription models are going to play a big part in the future of reading. We need to figure out how we are going to be compensated by publishers, retailers, or companies that are running these programs. If we don’t you can be sure that they will be paying us as little as possible.

I think that agreeing to Amazon’s model of a fixed pot is a dangerous precedent, and I would much prefer if a per-download fee was negotiated – that could then be revised upwards or downwards by mutual agreement in the future.

Right now, authors get to set the price of their work. We put a dollar value on it whether we self-publish and sell through Amazon, or whether we license it to publishers and accept payment in return.

By accepting the compensation system Amazon is proposing, we are agreeing to fight for a limited pot of cash – no matter how many authors are scrambling for it. Amazon say they will raise it if the scheme is popular, but it’s all at their discretion. We have no say. They have all the power under this new model.

But right now, we have the power. We can turn down that crummy advance. We can refuse to sell our book for 99c. We can tell that publisher in Uzbekistan that if he wants our audio rights, he needs to come back with a serious offer. The point is, we can see the cash on the table, and walk away if it isn’t attractive enough.

Under Amazon’s scheme, we never know what we will be paid until well after the fact. We’re not even being made a crummy offer. There’s no minimum guaranteed payment per rental. We know what the size of the pot is (for one month of the three month exclusivity they demand), but have no idea how many rentals it will cover. We’re being told afterwards what we did (or didn’t) get paid. That’s not acceptable.

There are valid reasons for experimenting with KDP Select, and there are valid reasons for rejecting it. However, I would urge all self-publishers to look beyond what they perceive to be in their immediate self-interest and consider the bigger picture.

Subscription models are going to play a big part in the future. We don’t know how big yet, but we can be sure that a large chunk of our readers will be using them. That means, of course, that a large chunk of our income will (or should) come from them.

Do you want to have a say in what you get paid? Do you want to have control over the value that is placed on your work? Or do you want to hand away that power to someone else? It’s your decision.

Amazon has already shown that they are willing to listen on this issue. When creating KDP Select, they reached out to many top-selling self-publishers and sought their feedback – and many of their changes were incorporated.

I think we could (and should) get a better deal for our work. We can demand a rethink on exclusivity. And we can fight for a better compensation system. The first step, I would humbly suggest, is to withhold participation in KDP Select until those terms improve.