Amazon increased the KDP Select global fund pool for December from the base $3 million to $7.25 million which compares to $6.5 million in November and $5.5 million in October.
The payout per borrow in December was $1.43, up from November’s $1.40 and October’s low of $1.33. Dividing the payout per borrow by the total pool gives a headline number of over 5 million paid borrows in December 2014, up from 4.6 million in November and 4.1 million in October!
Amazon also announced that total royalties paid to KDP Select authors for the five months since Kindle Unlimited was introduced were “more than double” that of the same five months of the previous year.
Unfortunately, we don’t know the overall growth of the Kindle ebook market. Did the market double in size between the five months of 2013 and 2014? If so, we’d expect authors to be earning double without the introduction of Kindle Unlimited. If the market trebled in size, but author’s earnings only doubled, KU would’ve had a sizeable negative effect. We have to know the change in market size to make sense of whether KU had a positive or negative effect.
While it is undoubtedly good news that KDP Select royalties are more than double what they were for the same period in 2013, I’m not sure to what degree the introduction of KU can be credited with the increase. When Amazon says, “we wanted to share some initial results from the first few months of Kindle Unlimited“, they are deliberately trying to associate the introduction of KU with the increase in year-on-year sales, when many other factors may be involved.
Another claim is that, “During the 5 full months since KU launch (August to December 2014), royalties to KDPS authors from a la carte sales have grown faster than a la carte sales on KDP overall or Kindle overall.” One simple way to achieve that would be to give KU titles prominence in the Kindle marketplace. As KU books are available for purchase or borrow, you would expect sales to increase compared to non-KDPS titles if the visibility of KDPS titles were boosted. Does Amazon boost the prominence of KDPS titles? I have no idea.
Regarding the claim, “Total earnings on titles priced $2.99 or greater are growing faster than the overall average. The same is true for titles 150+ pages in length.” I don’t know how to explain this. It seems to flatly contradict the introduction of a flat-rate monthly fee for unlimited titles. A paid borrow nets the author $1.43, whereas a $2.99 sale paying 70% nets the author $2.09 (assuming negligible delivery costs). The only way a $2.99+ title can be making more since the introduction of KU is if the amount of borrows more than compensates for any fall in sales.
Perhaps the number of borrows is compensating for any fall in sales. However, such information contradicts many claims from authors that sales have fallen and the difference has not been made up through KU borrows. In one famous example, HM Ward withdrew her 60 books from KDP Select as a result of her income falling by 75% in the two months after the introduction of KU, as described on the KU Boards forum. Note that the reported revenue fall included “All Star” bonuses for both months for being one of the highest sellers on Kindle!
Are there niche-specific effects of Kindle Unlimited? Perhaps some niches are more likely to have sales cannibalised into borrows and other niches aren’t. Perhaps the niche KM Ward is in suffered more than other niches. Perhaps the introduction of the All Stars program was specifically meant to counter the effect. We don’t know this information.
The final claim is that, “Renewal Rates – Authors have chosen to renew their titles in KDP Select at rates in excess of 95% in each month of 2014.” I would simply use apathy to explain this. You have to actively opt out of KDP Select. As most titles and most authors will be selling very few books they have little incentive to leave. The introduction of the All Stars program shows that Amazon is concerned about the top sellers leaving and is incentivising them to stay in KDP Select.
Overall the news from Amazon seems good, but we really don’t have the full picture. Amazon have said,
“We’ve gotten lots of great feedback in the past weeks and months, including a bunch of ideas on how to further improve the structure of the program and make it work better for authors and readers alike. Like everything we do, we’re looking hard at all your feedback and we expect to keep tweaking and improving the program in the future. “
… which implies that they know everything in the garden isn’t rosy and are looking to make improvements.
What do you think? Was the introduction of KU a good thing or a bad thing for authors? Is Amazon simply using KU as a “loss leader” to get people to buy and use Kindles? After all, there’s an advert every time you turn on your Kindle, and people on Kindle buy and consume content other than ebooks which all helps Amazon’s growth. Are Amazon just reacting to Scribd’s subscription model? Leave a comment below with your thoughts…