Kindle Unlimited: The Key Questions Amazon Marketing Publishing

amazon_kindle_unlimitedAmazon launched Kindle Unlimited on Friday, giving self-publishers a big decision to make.

The long-rumored subscription service will allow users to download unlimited books for $9.99 a month, and reader reaction has been, from what I can see, overwhelmingly positive – especially because they will be able to test the service with a month’s free trial. Writers have been a little more cautious, for all sorts of reasons I’ll try and tease out below.

The main stumbling block for self-publishers is that participation in Kindle Unlimited is restricted to titles enrolled in KDP Select – Amazon’s program which offers various additional marketing tools in exchange for exclusivity. Author compensation will be similar to borrows under the Kindle Owners’ Lending Library – a percentage of money from a fixed pool. The only real twist is that payment will be triggered when 10% of downloaded books have been read.

At the moment, it’s far too early to know what effect this will have on the market as a whole, and it seems like authors have more questions than answers right now, so I’d like to address some of those.

How much will we be paid for borrows?

There’s actually no way of knowing right now. Authors had the same questions when KDP Select launched in December 2011, and I remember estimates ranging from $0.30 to $2. In the time since, borrow payouts have averaged $2.19. It seemed like Amazon was always keen to keep the rate around $2, adding and subtracting money from the fixed pool each month to keep things at that level.

It could be the case that KDP Select and the Kindle Owners’ Lending Library was (at least in part) a giant experiment paving the way for Kindle Unlimited, and it could also be the case that Amazon will maintain borrow rates at around $2, but we can’t be sure until it happens. It’s possible that Amazon could let borrow rates slip and hope that increased volume makes up for it. We’ll have to wait and see.

Will this cannibalize paid sales?

This is the big question. It seems safe to assume that paid sales will be cannibalized to some extent, but Kindle Unlimited could also grow the pie. We don’t know how popular it will be with readers, but I’d be very surprised if it was a flop.

So which kind of readers will it attract? Will it be all the bargain-hunting readers that swamp sites like BookBub and make limited-time 99c sales so effective? Will it gobble up the freehunters that make permafree such a winning strategy? Will it wean the power readers off box-sets? Will it increase the amount of reading (and, by extension, payments to authors) by those on tighter budgets? Will it be used by readers in addition to their normal purchasing habits, or will it replace them? Will it make short fiction and serials more attractive to readers? All interesting questions that will be answered over time.

Is this the future of reading?

Authors are understandably nervous about all reading moving to a subscription-model (whether Amazon or Scribd or Oyster). Self-publishers lose a key tool (price) and it looks like this will generally muddy the little drips of data we do get. Writers in general cast fearful eyes at the music world and Spotify, and its paltry rates. But I think books are very different. Music has a much higher replay value, so I can’t see our compensation ever degrading to that level. And I also don’t think that subscription services as a whole will grab as much of the market as they will in music – my gut says there’s a hard limit of how much of the pie they will grab. Maybe 25%… tops.

How popular will Kindle Unlimited be?

Oyster and Scribd have a headstart, but Amazon has proven it can eat up that ground in no time. While the competition has more big books from big names, thanks to its deals with major publishers, Amazon has two key advantages (aside from the obvious). To my knowledge, Kindle Unlimited is the only subscription service that will work on the tens of millions of e-ink Kindles that are in circulation – the others are app based. And it’s also the only major subscription service combining e-books and audiobooks. The audio market is growing faster than the e-book market at the moment, and Amazon clearly feels that it’s only getting started. It is pushing the audiobook angle in all the marketing and PR, so it views that as a big selling point to readers.

Don’t Oyster and Scribd have better terms for writers?

For most self-publishers, the only way into Oyster and Scribd is via a distribution service like Smashwords, where you will get 60% of your list price every time that 10% of your book is read. Unless you are writing lots of very short/cheap books, the terms there can be much more lucrative (assuming Kindle Unlimited borrow rates do indeed come out at around $2 – which is still an open question).

However there’s a flipside to that. There’s no way in hell that the terms that Oyster and Scribd are offering are sustainable. Obviously, both companies are happy to eat the losses today in exchange for market share tomorrow, but those compensation terms will have to deteriorate at some point. The only question is how much. I have issues with Amazon’s compensation model – I hate the fixed pool on principle, and I don’t like not knowing what I’ll be paid in exchange for my work – but it’s definitely more sustainable.

Doesn’t this devalue books?

No more than libraries devalue books, or remainder bins, cheap paperback classics, supermarket specials, or my Dad giving me his old copy of The Angel’s Game by Carlos Ruiz Zafón – excellent by the way – which is to say: Not At All.

How will this affect deal sites like BookBub?

That’s an interesting question. An all-you-can-read proposition for $9.99 is obviously attractive to bargain hunters, but there’s another wrinkle here. I’m guessing (but don’t know for sure) that Amazon won’t treat Kindle Unlimited downloads as a paid sale for affiliate purposes, so this doesn’t look like something that could be an income generator for deal sites – aside from the short-term action in encouraging sign-ups.

On the other hand, deal sites have been walking a fine line since the restrictions came out on how many free downloads they were allowed push per month, and this could be a way around that. Maybe. At the very least, self-publishers will be looking for some way to get attention among the 600,000+ titles in Kindle Unlimited, and I’m sure the market will respond with something.

How will this affect the algorithms?

It’s pretty early to be definitive, but it looks like each borrow will be treated as a sale for ranking purposes. This was always the case with KDP Select and the Kindle Owners’ Lending Library, but Prime subscribers were restricted to one borrow a month so the overall effect was always going to be limited.

With Kindle Unlimited however, readers can borrow up to ten books at a time, with no due dates, and have unlimited borrows per month (as long as they keep returning books). At the moment, it looks like that “sale” is credited to your rank right away (and not when the reader hits 10%), but I’d imagine that could change – given the obvious possibilities for gaming the system. The Kindle Unlimited “store” seems to be a function of the Popularity List, with all that entails.

Will this be lucrative for self-publishers?

The other big question. Will Kindle Unlimited be a springboard to success? Or will it be more like a goodie bag at the Oscars – an additional reward for those already doing very well? Will the prizes go to the savvy first movers? Or is adopting a cautious approach more prudent?

This is really tricky to answer. KDP Select free runs were undoubtedly a springboard to success – at least initially. A book that was selling poorly and had no visibility whatsoever could catapult up the charts and continue selling well for an extended period that sometimes lasted for weeks after the promotion. Countdown was a little different, and tended to reward books already doing well (for the most part).

I could see it going both ways. Those who dive in now could benefit from all those readers testing out their trial month. All those borrow-boosted books could zoom up the charts. I’m seeing some of the launch-featured books jumping from around #2,000 to #200, and general volume seems to be way up – i.e. it looks like it’s taking a lot more sales to hit the usual ranks.

Naturally, if this phenomenon continues it will squeeze out many non-Kindle Unlimited books from high-visibility spots in the Kindle Store. That would seem to make enrolling the smart move, but it’s not that simple. For starters, the first month could be a poor guide to how things will pan out – maybe most readers won’t renew their subscription when their free trial expires. And there are other considerations too.

I mentioned above that the Kindle Unlimited “store” looks like it’s a function of the Popularity List. This was one of the reasons why Countdown tended to predominantly reward books already selling well. So Kindle Unlimited could result in an overall win for those participating, but that “overall win” could contain a vicious power curve which disproportionately rewards those already selling consistently. It really is too early to know.

What happens if you don’t participate?

The obvious cost of not playing is that you will have no borrows – which have a monetary benefit and a ranking one. There’s also the opportunity cost of the lack of visibility from not appearing in the Kindle Unlimited pages and charts. My gut says that things will get harder overall on Amazon for those who don’t participate, but time will tell to what extent that’s true.

The flipside, of course, is that there will be less competition on the other retailers. To varying extents, Barnes & Noble, Apple, Kobo, and Google have been reaching out to indies and including more of their titles in store promotions, as well as generally making improvements to their stores in terms of discoverability. They all still have a long way to go to catch up with Amazon, but I’d imagine they will respond to Kindle Unlimited.

Don’t forget that the launch of KDP Select was what first prodded Apple into throwing some treats our way, like pre-orders and participation in store promotions. Self-publishers are much more important to the retailers now than two years ago, and this will force them to raise their game again. Indeed, it could be argued that the launch of KDP Select improved things for self-publishers overall both on Amazon and outside Amazon. But then I’m an (argumentative) optimist…

I’m confused! How do I decide?

I don’t blame you, I’m confused myself. I haven’t decided yet whether to participate or not, for all the reasons outlined above. I probably will experiment with my latest release and take it from there. I’m keenly aware that I was too cautious when KDP Select launched, and only began experimenting with it after the algorithms changed and free runs were less powerful. On the other hand, I’ve never really gained anything by participating in KDP Select so I’m not tempted to go all in at the start.

It really is a decision you have to make for yourself, because there are so many variables. How much do you sell outside Amazon? What price do you normally sell at? How much will borrow rates actually be? Are you willing to forego hard-won momentum on the other retailers for what is, essentially, a risk? Does going exclusive with one or more titles effect any marketing plans already in motion?

If you are already in Select, it’s a pretty easy decision – your books were enrolled in the program automatically. (By the way, if you have a problem with that, Amazon is allowing authors to remove their titles.)

And it’s less difficult decision to experiment with a title that either isn’t selling well at the moment in general, or hasn’t got any traction yet outside of Amazon.

However, I hate exclusivity. I don’t like it on principle, and I don’t like telling readers that they can’t buy my book for any reason. So I haven’t decided yet. I’ll probably throw something in there and see how it goes, but it won’t be with gleeful abandon.

But I’m also interested to hear your thoughts. And if you have seen any good posts on the program or strategies etc., please share them below – I’ve been out of the loop this weekend while working on edits of Digital 2 – which is going to need a new chapter!

*weeps*

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time spent outside. He writes novels under another name, has helped thousands of authors build a readership with his books, blogs, workshops, and courses, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.