Monday, December 22, 2014

Is Kindle Unlimited Devaluing Books? The Dark Side of Exclusivity

In my previous post, I examined how authors can succeed despite the challenging sales environment for ebooks.  Today, I examine how Amazon’s Kindle Unlimited could jeopardize the independence of indie authors.

Budget-minded power-readers at Amazon now have 700,000 fewer reasons to purchase indie ebooks thanks to Kindle Unlimited.  Oh, and authors earn less too.

Back in July, Amazon launched Kindle Unlimited, an ebook subscription service where for $9.99 a month, customers gain access to a catalog of over 700,000 ebooks.  Nearly all of these titles are supplied by indie authors who participate in KDP Select, Amazon’s ebook self-publishing option that requires exclusivity.

I first wrote about Kindle Unlimited here in July.  Although I'm a fan of ebook subscription services (see my two-part series analyzing the subscription business model), I concluded Kindle Unlimited was a bad deal for authors because it required exclusivity and gave Amazon free rein to control author compensation.

Five months in, let's take a fresh look at how Kindle Unlimited's unique business model is affecting authors.

For the month of November, Amazon paid $1.39 for each qualifying read.  This is half of what an indie author earns when a $3.99 ebook is purchased at Amazon, or when the same book is read at KU's ebook subscription competitors, Oyster and Scribd.

Oyster and Scribd don't require exclusivity.  Oyster and Scribd pay authors off of the retail list price set by the author (Smashwords authors earn 60% list at Oyster and Scribd like any other retailer).  Amazon, by contrast, requires exclusivity (you can't sell your book anywhere else).  They pay out of a shared pool.  The size of this shared pool is determined by Amazon the month after the book is read.  It’s like Amazon sells your book today but says, “I’ll decide what I feel like paying you in a few weeks."

Many indies have announced they're abandoning KDP Select after suffering massive sales drops since July.

Authors are in a difficult spot at Amazon.  A few KU authors have publicly reported increased sales and readership, but that appears to be the exception rather than the norm.  For most KU participants, it's unclear if the promised benefits outweigh the harm of excluding the millions of readers at other retailers.  No other retailer makes authors play Russian Roulette with their books and careers like this.

KU authors have no control over their per-copy earnings because KU pays the same for a 99 cent book as a $9.99 book.  Amazon determines the value of each read, and determines how this value is shared among participating authors.

Historically, the big fear of ebook subscription services was that they’d devalue books, much in the same way some musicians (including Taylor Swift in the news recently) are concerned Spotify devalues music.  There are two elements to the devaluation concern.  The first is that subscription services might make books feel free to consumers and make them less likely to pay fair prices for other books, and the second concern is that authors will earn less for each customer interaction at the subscription service.

Oyster and Scribd proved that authors and publishers can achieve the same or higher earnings with ebook subscriptions as they earn at retail, and without exclusivity.  The Oyster and Scribd business models are author-friendly, and were the fastest growing channels in 2014 for Smashwords authors.

Kindle Unlimited, on the other hand, strips control from the author.

When Amazon’s contract dispute with Hachette broke out earlier this year, many indies assumed the dispute had nothing to do with them.  In my blog post last May, Amazon Dispute with Hachette Foreshadows What’s Next for Indie Authors, I cautioned how the dispute with Hachette would set the stage for Amazon to put the squeeze on indie authors next.

I think most indie ebook authors would agree that low customer prices are a generally a great thing.  It's one of the reasons indie ebooks sell so well.  Indies are pricing their professional-quality books at a fraction of the price of the books from the large publishers.

Amazon’s business model is dependent upon low prices to attract customers.  It must extract price concessions from suppliers to feed budget-minded consumers.  Publishers are suppliers.  Indie authors are suppliers.  When Amazon says it has a responsibility to its customers to negotiate good deals from suppliers, I don't question that.  But how far is too far? 

Is an ebook that sells for $3.99 and earns you $2.79 too expensive for Amazon?  Last month, Amazon decided your book was worth $1.39.

Have we come to a point where ebook retailers should display a Fair Trade Certification label so consumers know if the retailer is treating their suppliers fairly?  We've got Fair Trade coffee, why not Fair Trade ebooks?

The dark side of exclusivity

Amazon's indie author squeeze started innocuously enough with their launch of KDP Select in December 2011.  With KDP Select, Amazon created a caste system in their store that gave advantages to exclusive authors (more discoverability, more merchandising tools, higher royalty rates) and harmed non-exclusive authors (less discoverability, fewer merchandising tools, lower royalty rates).

I’ve been speaking out against KDP Select exclusivity since the program first launched in December 2011.  In my first post, I cautioned that KDP Select could trap indie authors like tenant farmers tilling Amazon soil. This is happening now.

Amazon’s defenders will counter that KDP Select participation is optional and temporary, and this is true.  Authors are free to leave KDP Select after three months.  Yet this freedom is illusory.  By choosing to plant their seed exclusively at Amazon, an author must rip their seed out of other retailers' soil. They become more dependent on Amazon.

With KU, Amazon is salting the earth for authors and competing retailers.  KU devalues books, starves its competitors of the books readers want to read, exposes indies to greater risk and uncertainty, and prevents future ebook retailing options from taking root.

As Amazon’s exclusive catalog grows, and as indie authors account for an ever-greater percentage of the ebook market, ebook consumers will have fewer reasons to purchase ebooks.

Even authors who have successfully diversified their distribution outside of Amazon are affected by KU.  Why should budget-minded power-readers who loves indie ebooks purchase ebooks from iBooks or Barnes & Noble when they can access nearly a million books in KU for one low price?

Indies gave KDP Select its critical mass, which means Indies created this monster. Now indies have the power to undo this before it's too late.

Coming up in the next two weeks, I'll do my annual predictions post for 2015 and will also do my annual Smashwords year-in-review post.  To guarantee you don't miss any future posts, subscribe to receive posts via email at the subscription link at right. It's a private list and you can opt out at any time.


Vern said...

Seems right-on Mark. Unfortunately.

I pulled my books out of all other retailers (Smashwords too) and went all in at Amazon. It's been downhill since.

I'm playing with the idea of just offering my main books only on my site. Amazon will get my short stories and other books that are worth a dollar. I'll price my books at $4.99 to $9.99 at my site and whatever happens, happens. I hate being a pawn in someone's chess match. I hate that I think I need Amazon.

Great article Mark, I thought you were an Amazon cheerleader. Glad to see you haven't lost your objectivity. Cheers man...

Mark Coker said...

Hi Vern, glad you found it useful.

A better option is to distribute all your books to all retailers, otherwise you're missing out on all the lowest hanging fruit. Keep your books in the regular KDP (opt out of the KDP Select system) and then get your books back up on Smashwords so we can get them out to the largest non-Amazons.

Funny that you thought I was an Amazon cheerleader. I've been called an Amazon hater (I'm not), but never a cheerleader. :) I think every author should be everywhere.

Good luck!

Jamie Salisbury said...

Spot on Mark! Though I refuse to give Amazon exclusivity, my sales have all but dried up from four figures/mo to barely two. . .it's very depressing for indie authors who if nothing else depend on royalties to pay for such things as editing, cover artists and formatting.
Now what?

Inkling said...

I agree with Mark. Release your books through every retailer that doesn't have a terrible trouble-to-upload v. potential-income factor. That's where Smashwords can help. It can handle smaller outlets that are too much trouble to feed directly.

Also, if you have books you placed in the iBookstore that are sold in Europe, time is running out. To see the same income per sale, you need to raise your prices about 25%. Apple should have sent you an email about that.

EU taxes are changing. Amazon and Apple have been paying Luxembourg VAT taxes, which for ebooks is only 3%. Starting on January 1, the EU is requiring that online ebook retailers pay the VAT in the purchaser's country. That's typically 20-25%. That comes off BEFORE you split what remains with the retailer. For a $10 book, you'll typically be splitting about $7.50 rather than nearly $10.

Amazon, to their credit, is raising prices for all existing Kindle ebooks automatically, You need do nothing.

Apple requires you to go online and raise the prices yourself. For the lower price range of ebooks, I found that raising the price one category (i.e. from 2.99 Euros to 3.99) was about right. For higher priced books, you may have to raise it more than one category. Don't feel guilty. This isn't your fault. The tax collectors get that increase not you.

Keep in mind that you may not want to raise prices for sales in Luxembourg, where the VAT on ebooks is just 3% or in France, where there's a special VAT on ebooks of 5%.

Also, keep in mind that this only applies to EU-member countries. Non-members Norway (25%) and Switzerland (8%) have already been applying the VAT to their sales. In my case, I raised the Norwegian price to include that VAT and didn't raise the price for the Swiss. I'll pay a VAT under 10%. I won't pay one at 25%.

Also, keep in mind that, in the future, you will have to take the VAT into account when you price ebooks for EU countries. You cannot simply convert the dollar price into a Euro price.

Hopefully, both Amazon and Apple will add calculators to their websites that will tell your what your earnings per sale will after the VAT and currency conversions for whatever price you set.

Mark might want to clarify what's happening with Smashwords ebooks being sold through the iBookstore.

L.L Hunter said...

You've hit the nail on the head, Mark.
Since the introduction of Kindle Unlimited, my sales have dropped dramatically. I refuse to be exclusive and now make just as much, maybe even more money on iBooks, Smashwords and Barnes and Noble separately as i do on Amazon. I also refuse to be told what to do. Amazon are so not FOR the author. They are a big company that don't care about the needs of little people who make the business run, much like a government. I would pull my books down off Amazon, but i hate to say i need them.

Anna Erishkigal said...

At last somebody besides -me- has the opinion that we, the Indie authors, have been Amazon's unpaid marketing department from the get-go.

Think about it. We put our books up there, but we have to PAY to market them ourselves. Amazon was smart enough to make us 'discoverable' in a zillion little subcategories, so like monkeys tapping on the food lever, we could run an advertisement, see an instant result, and keep plowing a percentage of our royalties every month back into driving customers to Amazon's website.

Amazon makes very little money on books sales, especially book sales. They make money when the prospective readers we pay, with our own dime, to send there see an 'you might also be interested in' ad on YOUR book page and go surfing off to buy widgets and flea collars for their cat and a birthday gift for great-aunt Edna.

Amazon was doubly smart with their Amazon Affiliate program which gives people who funnel traffic there a share of any of those 'also made' sales (which they then squeezed to make sure you sent people there to BUY, not just snarf freebies). Overnight an entire cottage industry cropped up of marketers reaching out to readers and sending them daily 'get this book free, get this one for $.99 cents' emails to drive customers to Amazon. And again, here comes Indie Author Monkey, tapping on the food lever, pushing harder and harder to get their little pellet of food even though you have to push faster and faster to get enough to eat.

Thankfully in my 'day job' I've seen corporate raiders come in and squeeze a supplier until it bleeds. Exclusivity is bad unless you get something out of it, which we weren't getting ENOUGH of it to justify the marriage for quite some time now.

Where Amazon goofed up this time is they DRASTICALLY cut our sales, all at once. So the question is, will Indie authors wake up and start sending readers to the other platforms? Or will they keep hitting on the food lever, hoping if they can push fast enough maybe this time they'll get a meal?

I just wish the other retailers would get their act together and REWARD us for pushing customers there?

Ooo-oo-Eee-Ee-Eeeeeeee. Anybody got a banana?

Stephen L. Nowland said...

An excellent evaluation of the situation. I'm glad I stayed away from Amazon's offer.

Eugenio Salvato said...

Hi Mark,

I have recently unsubscribed from KDP Select, and made my books available on Smashwords for the very reasons you state.

Thanks for the post.

Paul S Grieve said...

I've never considered KDP Select for all the reasons you've talked about. By not being exclusive to anyone, I have total control over the rights to my books.

I'm just starting out in this game, but so far I like the way Smashwords has treated me compared with Amazon. Keep up the good work, Mark!

Jessica Coulter Smith said...

I completely agree with you. I have a select few titles with KU (those that weren't selling more than 10 copies a month), but for the most part I have my titles distributed to as many places as possible. My sales went from around 2000 a month to 400 a month since KU launched.

Derek Haines said...

I agree totally, Mark. Except that the damage being done by KU affects all Indie authors, whether they are in KDP, KU or not. So being in or out of Amazon's clutches makes no difference, because what Amazon wants to do, it does, and this affects the whole market.

With 700,000 ebooks (which I calculate is around 20% of Kindle's catalogue) available to grab for cheap on KU, this must negatively affect ebook sales across all retailers.

There's no doubt that Indie ebook sales have dropped since the middle of 2014, which has been reported from many sources. Is it due in total to KU? I don't know. But one thing is for sure in my mind, Indie ebook authors are going to be in for a very rough time in 2015.

Kathleen Morris said...

Well, I actually don't agree at all. Sorry. I started publishing in 2012. Gave Smashwords a try for a year. Was very disappointed in sales. Pulled all my books and went exclusive to Amazon. My reason were clearly business, because I highly respect Smashwords and think you guys are awesome. What I didn't like was spreading myself so thin. When people asked where to buy my books, I became overwhelmed with all the different ebooks stores. Ugh! I didn't need that. All I wanted to do was write. So, everything was moved to Amazon. One central place. It's worked great for me. I have 16 books out now. Just released a new full length novel on the weekend. I have never had a problem with sales. Every month I get paid direct deposit and I'm pleased. KU and select have been wonderful for me as well. And still there are people buying my books for $5.99. Who would think they still would? But they do. And I never have to worry about marketing. Amazon does it for me with its algorithms. That frees me up to write. I know this isn't the case for everyone, but for me it is the wisest business decision I have made so far in my writing career. Sorry to be a nay-sayer. I still love you guys!

Jason Matthews said...

Amazon Cheerleader? Heheh, I'll bet even Mark chuckled a little.
Say Mark, doesn't it seem odd that the first (non-Amazon) retailers to come up with a subscription service are Oyster and Scribd? What are the chances some other big players start a subscription service soon, and wouldn't that likely lower overall prices even more?

adan said...

Mark, as usual, a lot of good valid points. But like Kathleen above, I'm finding I've gained much valuable time having most of my books in Kindle Unlimited, and leaving a few wide through ya'll.

And obviously, if exclusivity on KU were to go away, I'd immediately place all my titles back in Scribd etc.

I think my only point that doesn't rest as much on either personal opinion or personal choice, is related to :

"Why should budget-minded power-readers who loves indie ebooks purchase ebooks from iBooks or Barnes & Noble when they can access nearly a million books in KU for one low price?"

I think that hides the fact that both Scribd and Oyster were expanding so dramatically, Amazon (I believe) had little choice but to release KU. Probably early, in my opinion.

That Scribd and Oyster were (and are?) your fastest growing sales outlets, only reinforces my point :

That your stmt above should have read (emphasis mine) :

"Why should budget-minded power-readers who loves indie ebooks purchase ebooks from iBooks or Barnes & Noble when they can access nearly a million books in KU, Scribd, and Oyster, for one low price?"

Regardless of whether authors do or don't get fair proceeds for the use of their books in either or any of these services, readers more and more are choosing "not" to purchase and to read via subscription services.

The variable royalty payouts to authors doesn't change that, or diminish the trend at either Scribd, Oyster, or KU, at least as far as I can tell - which I agree, isn't very far. :-)

Mark H. Walker said...


Not to be blunt, but I sold three copies of my novel on Smashwords, I've sold many hundreds times that on Kindle. I'm a Mark Coker fan, but clearly, Amazon is simply selling so many more books, that even taking the time to place titles on Smashwords is no longer worth it. Sorry.


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Alisa said...

I am a reader who supports Indie authors. But, I read on a Nook--it was the best eInk system when it came out and I often am reading in the sun, car, etc. I have over 1600 books on it. I am not going to switch to Kindle, or read on my phone with their free app--doesn't work in the sun. I have reached the point in a couple of series books where I can't get them all due them being exclusive to Amazon. It's unlikely that I will go back to that series when it's exclusivity time period has expired. I am onto something else that is available to me at B&N.

Ian Daniel said...

"No other retailer makes authors play Russian Roulette with their books and careers like this."

This is the way I see it, be it cynical or real. My dad was contacted via a fake BT online survey and subsequently scammed out of £320K over a 2.5 year period by a boiler room network selling fake gold shares, so I'm on the cynical side.

But when the www was born, apparently anything goes. 95% of emails I get are someone wanting money from me. The majority of links I click, someone wants my hard earned money.

So, Amazon created a Marketplace and if you want to earn money with them, you play by their rules. I've just accepted it, that the www equals zero stability, zero guarantees and expect massive change - often. And more importantly trust nobody's word be it Bezos or a business partner.

My concern for ebooks is filtering through the masses of absolute garbage, written solely for a quick buck. How many times have you bought an ebook on Amazon and at the end thought, yet another wasted hour?

If you can't beat 'em, join 'em, may be an appropriate approach.

K.M. Frontain said...
This comment has been removed by the author.
Greg Strandberg said...

Lots of good points. I like the point that they decide what you're paid a month after the sale. Sounds extremely sketchy.

Going months and months without any sales on your books sounds extremely sketchy too, and that's what happened to 12 of my books on your site, Mark, and that's why I unpublished them.

I'd rather have $1.39 on a book this month than go 4, 5 or 6 months with nothing.

Does that make me a bad person, does that mean I devalue myself? Maybe.

I put my books on your site or others, Mark, and they go nowhere. And am I supposed to spend $50 on marketing for all of my 50 books each month? C'mon.

Most books don't sell. I think KU sucks right now, but they make my books move. You don't.

What are you going to do about that?

merciamcm said...

"Is a $3.99 ebook too expensive? Last month, Amazon decided your book was worth $1.39."

Minor mathematical quibble. Amazon decided it was worth $1.99. You forgot to factor in the 30% retailing fee for a sale.

I am not currently in KU, but plan to put short stories in there as I love subscription services and Scribd does not love short stories.

D.A.Roberts said...

For those of you who say Smashwords sold very little to none for you, but Amazon sold much more and that is why you unpublished... the damage to you is long term, and not immediate. Yes, actual damage, and if you give me a moment, I'll explain how that is possible.

Amazon KDP Select and KU do create dependency by paying you out of a fund for something I call a 'non-sales marketing budget' that is a shared expense for the company. A 'lend book' is not the same as a sold book. That expires and is gone from the reader's hands. But in Select, you get a piece of that money pie, a fund that is 'given' by Amazon to the authors. That was the hook. Nowhere else can you sell your brand, which is the sinker. That is what this is about.

However, Amazon is turning you into their brand, and your individuality as an author is at risk. What will you do when Amazon no longer wishes to supply the current 3 Million share pool of cash?

Now with KU, they can transfer you from a program with little control to a program with no control. Yes, for now the money is good. It feels right. You're getting paid. That trail of cash is dependent on Amazon keeping their program in place. Dependent, which means when that program is transferred out, cancelled for another marketing ploy or another scheme, your own brand, your readership, who has been paying a subscription, is going to see and remember you how, since you haven't been visible in any other market?

I have never, ever been exclusive to Amazon Select or KU. I am merely on Amazon KDP, and I'm everywhere else as well. B&N, Amazon, everywhere Smashwords goes, I am there as well. When I started listing on Smashwords in 2009, my sales sucked. I had Zero downloads. In 2010, they still sucked... but I had maybe a dozen downloads. But I did what writers do best. I wrote, I focused on creating more books, and I marketed when I could, just like most other indies.

Defenders of Valinthia became popular. Not my first novel nor my third, but my forth. It's one of my most popular titles. Go look it up on Amazon. It's currently a freebie via Kindle and a paperback too, but it's popular just about everywhere!

What does this matter to you? Here is where you need to pay careful attention. Here is where your brand matters. The moment one of my books became popular, my other books gleaned new interest as well. My 2011 and 2012 stats skyrocketed... on Amazon, and shockingly, on Barnes and Noble, and even more so on Apple. In 2012, I have had 15,471 downloads for Apple alone.

Now if I had been exclusive to Amazon only, I would have had only 1215 downloads for all of 2012. That's it.

You might not see the importance of having products on multiple shelves in multiple stores, but when Customer 1 tells their family and friends about my books, and they go to Apple or Barnes & Noble or whatever store they favor, they will find me.

They won't be finding you. When you have your breakout moment at Amazon, you may 'think' that glorious 4 digit download is your golden path, but I can tell you here and now, you're getting shafted.

I myself prefer to use my Nook, and my wife uses her iPad. If we hear about your novel from a friend, which is available only on Amazon Kindle, you just lost two sales, because neither of us is forking out any extra just to buy a Kindle.

Think about that. I won't be suffering the same fate. What am I doing? Currently writing, and hoping that my next novel will be just as popular. At least I have a small band of fans out there who will at least peek at it. Fans I gleaned not from one market, but several.

Will you be as lucky with Amazon, when the spotlight is on you? If you're not on other shelves, you most certainly will never see those sales, that's for sure.

Good luck and all. You're going to need it.

Derek Haines said...

I really have to add one point to this discussion. Everyday I receive promotional ebook emails from Amazon, and on occasions, even for my own books.

But even though I am registered with the the following retailers, what do I get from Smashwords, Apple, B&N, Kobo, Scribd and Oyster by way of ebook promotion? Absolutely nothing! Zip, zero, nil. Well, in fact I do get Kobo promotions very occasionally, but they are in German. Ok, they try, but not very cleverly it seems, so it doesn't count.

I'm really afraid to say Mark, that whatever Amazon are, they are the only ebook retailer that regularly promote their authors and ebooks. So no matter what the price per copy, they will win in Indie authors' eyes.

Has anyone ever received a promotional ebook email form Apple iBooks or B&N? I for one haven't.

I don't think the argument is about exclusivity at all. I think it's about what retailers can do to sell ebooks and support their authors. On that score, Amazon wins hands down, and the rest, which are mostly in the Smashwords distribution stable, fail very badly unfortunately.

joleenenaylor said...

First a great post Mark I've noticed the "free" trend for some time now and read several reviews on books on Amazon saying "Wait until it's free" - meaning the customers assume that EVERY book will/should be free to everyone at some point, whether through the KU service or with the Kindle select.

@Anna Erishkigal - just wanted to say what a spot on comment. That is EXACTLY it!

As for authors and sales - WE have something to do with that. When you list your book links, which one do you list first? When you share your link on Twitter or FB pages, which link do you use? When you buy advertising, is it on Nook Book Promo Blogs OR Kindle promo blogs? No wonder Amazon sells so many of your books. Personally I sell the same or more through Barnes & Noble (distributed through Smashwords) than I do on Amazon - and with less advertising. I set the first book in my series free then gave the "amazon is the most important retailer" a try with some advertising and paid to have ONLY the amazon link advertised. Yes, I gave away a more books on Amazon, but even though I gave away fewer on B&N I SOLD more on B&N afterwards than I did on Amazon.Meaning the Amazon readers are grabbing the book but not bothering to go on and chances are not even reading it.

I saw someone mention the "promo" mails from amazon - I get those and I'll say this - they often have MY books in them. Why? Because they show me books I have *already been looking at*. Not much of a promotion.

Terri Branson said...

I think Mark's article on Kindle Unlimited is right on target. There is another aspect not being covered in the media. Kindle Select pays author a variable usage share, which depends on the monthly pool. That means authors get paid a REFERRAL FEE, not a royalty. And that means, in essence, that authors are putting their books in PUBLIC DOMAIN, allowing them to be distributed for free in exchange for a referral fee. If for no other reason, authors should never accept that kind of deal because I do believe (and some legal experts agree) that such deals endanger an author's claim to copyright. Obviously, I would never fall prey to such tactics and I warn as many authors (contract published and self-published) as possible to safeguard their rights as well as earn the most returns.

Kathleen Morris said...

D.A.Roberts - I have many fans who read my books on their ipad, iphone, android tablet. All you have to do is put the kindle app on any device these days. You don't need a kindle to read amazon books anymore. Nobody really cares about what device they read on. Not the people I talk to anyway. And I also have all my books available on print through create space, and they get distributed to Apple, Barnes & Noble, Kobo - all across the globe. I sell many print copies because Amazon pushes my paper copies for me with their kindle match program. So...not sure why a person wouldn't want to make a good business decision like that. What it makes me, is an author. But not just an author...a PAID author :)

K.M. Frontain said...

I deleted my earlier post to correct it and repost here. Earlier I omitted the word Select when referring to KDP Select. Below is the corrected para.

I understand this may not be a possibility for some authors, but if you have enough ebooks that you can "sacrifice" a few to KDP Select, and especially if you are a series writer, you could choose a series or a few stand-alone books to sacrifice to KDP Select. The back matter of those sacrificed books would point readers to your other series not on KDP Select. This is what I plan to do after the holidays. I'll sacrifice a lesser series to KDP and see if back matter redirects readers fond enough of my work to my other series. This might be the best adaptive strategy for now. Don't give KDP Select everything, just a few things.

D.A.Roberts said...

@ Derek Haines - For those ebook promotional emails you're receiving from Amazon... I got a tip for you. One, those ebooks are from Amazon's patented algorithm that calculates via your browsing habits what you might buy. Visit your own book page, you'll see a string of authors 'like' the book you're viewing, even if it's your own book. The longer you stay on that page, the more likely they will direct email you about the book you're looking at, with a list of the books in the 'similar to this author' pane that you probably didn't pay much attention too. So you fully understand, you're all hyped up for marketing in an email that only you got. That was no mass mailer to everyone about you. Other customers get their email with something totally different, based on their browsing time on certain product pages. Go ahead an test it, land a page on a product you'll never read or use, minimize it for a half hour, and in a week or so, you'll get that email as well. Nobody else will see that specific product promotion but you.

@ Kathleen Morris - I also use the Kindle match program for my paperback novels sold on Amazon. But because I'm not exclusively selling on Amazon, they don't promote nothing for me. Anywhere. Also, not everyone is tech savvy about throwing on the Kindle App regardless of what they use to read. It's an extra step that a chunk of serious readers don't care to make. Buying on Amazon does nothing for customer loyalty rewards or discounts on those other retailers. Some people are loyal to their favored store, just as you feel your loyalty is aimed at Amazon. My books, both paperback and ebook, sell on Amazon. But they sell at other markets too. So I get PAID for my work as well. :) Why people think it's a good idea to put everything they publish in one basket and ignore all the customers in other stores is beyond me.

Look at it this way. I'm an equal opportunity kind of writer. You can buy my books on Amazon, just like anyone else. But I'm also in other stores as well, and my sales there also happen. It may have taken a few years, but hey, at least if Amazon shuts their doors for whatever reason to selling books, I'm not going to be struggling to re-invent my brand.

Before people scoff and think that it will never happen, that Amazon will always do ebooks because they are too big to fail... remember Sony.

Sony and Amazon sell all kinds of products, losing ebooks won't destroy their business. In fact, Sony killed their ebooks to improve their bottom line, because they were losing money elsewhere.

Have you heard about Amazon's spending habits recently?

Biggest Quarterly Loss in 14 years. Yeah, keep depending on their handouts and free so-called marketing. It won't last forever.

Meg Watson said...

I'm doing wonderfully on KU, and I'm looking forward to the Indie Author Earnings report to see how others did as well.

True, I had to think about how best to leverage the service, but it was great to take books off permafree and use Select free days instead.

Though there have been some writers who profited greatly from the changes 2 years ago who didn't see the same tsunami of approval this time, I'm sure there will be a new crop of success stories to speak up soon.

Mark Coker said...

Thanks for the great comments and discussion everyone.

@jamie, I think the "now what?" message is for all authors to understand that authors are the most powerful force in publishing, and every author's short term decisions have long term implications. I'm an optimist at heart. If all indies keep an eye on the long term, and embrace a goal of ensuring a vibrant ecosystem composed of multiple ebook retailing opportunities, then the future is very bright.

@inkling, off topic but worthwhile... if authors only use Smashwords to reach retailers they can't reach on their own, this is fine but I'd argue they're probably hurting themselves in the long run. A good distributor like Smashwords helps authors and publishers spend more time writing and producing and less time on nonessential tasks like managing multiple platforms. It's about time management. This is self-serving for me to say, but an author's unique contribution to the world is their writing. Anything that takes away from their writing will harm their production, or harm their ability to carve out free time for other important things in life like rest, relaxation and family. The vast majority of Smashwords authors choose to distribute with Smashwords even though they have the option to upload direct to many retailers. Re: VAT, thanks for sharing that information for fellow authors. VAT is going have seriously negative implications for authors and publishers in 2015. We'll have a solution or two to help authors manage, so stay tuned for more in the weeks ahead. Thanks.

@Anna, great points. KU serves as a good wakeup call that it's dangerous for an author to have all their eggs in one basket. It's about risk management. The high risk option of going all in with KDP-S can pay off spectacularly well for some authors, but disastrously for others.

@Derek, agreed. KU affects all authors, especially those with readers that shop at multiple stores. It's difficult to understand the impact. I can only see our numbers. Our numbers would indicate that authors who maintained full distribution with Smashwords were somewhat insulated from KU. Overall anemic sales at all retailers were offset somewhat by new channels we added over the last 12-15 months like FlipKart, Oyster, Scribd and OverDrive. Our sales in July were solid, the month KU launched, August was a little weak but October/November our authors experienced a modest sales uptick which to me is encouraging given the overall lackluster environment.

@Kathleen, it's great to hear of your success. Hopefully you'll give us another chance in the future. We've made a lot of exciting improvements since 2012 with new tools, capabilities and channels.

@jason, I think it's likely that another big retailer or two comes out with a subscription option as well. Whether it devalues books or not will depend on the terms. We are unlikely to support the pool model unless our authors are guaranteed a minimum floor that they're earning now thanks to our Agency deals. We've already said no to multiple subscription services that wanted our books on the pool model. As I mentioned in the post, I think there are two primary components of devaluation - customer perception and author earnings. Oyster and Scribd, since they offer retailer-like terms, have business models that force them to make a profit by helping authors/publishers profit at retailer-like margins. This means that if customers ever start consuming too many books, Oyster and Scribd would either need to limit consumption or raise service fees, both scenarios of which will preserve the perception of value in the aggregate minds of consumers. With services like KU that pay out of a pool, it doesn't matter to them if they only attract heavy readers because they have the freedom to pay authors less. The dynamics between the two models are fascinating when you think about it. :)

Mark Coker said...

@Mark H. Walker, I'm sorry to hear of that experience. I took a quick look at your account and see that your book was with us for less than four months, and you only had Premium Catalog distribution to our retailers for about four weeks of that period. Maybe you'll give us another chance in the future? Our distribution network is where the sales will come from. Over the last three years, many of authors have started earning more through the Smashwords network than through Amazon (which is a pleasant surprise considering Amazon controls an estimated 65% of the market). Some of them have contributed their comments here. Every author's results will vary. Send me an email if I can help get you back. first initial second initial @ ...

@Alisa, thanks so much for stopping by. It's always great to hear perspectives from readers. I think you're a perfect example of the missed opportunity authors face if they go exclusive because exclusivity creates friction that prevents readers from supporting the authors they want to support.

@Greg, if KU works for you then that's great. That doesn't make you a bad person. :)

@Mercia, to clarify, I have updated the sentence, "Is a $3.99 ebook too expensive?" to read, "Is an ebook that sells for $3.99 and earns you $2.79 too expensive for Amazon?" Thanks.

@Derek, I get promo emails all the time from Kobo and Apple. Some SW authors have been featured in the iBooks emails as well as emails they send to the broader iTunes list (it's like winning the lottery for them). B&N has emails too. I think all retailers could do more here.

PD Singer said...

@Mark "I took a quick look at your account and see that your book was with us for less than four months, and you only had Premium Catalog distribution to our retailers for about four weeks of that period."

This is part of the problem. My one Smashwords title (I had to try it for myself) took over a month to propagate through the smaller channels, and I wasn't going to spend what might be weeks or months waiting for the book to go live when I could know it would be hours, a day or two at most, to go live through the big vendors direct. This lag time completely negates the usefulness of "one stop uploading" because while you're waiting for the books to go live, you _might as well_ be exclusive to Amazon. A book launch becomes very soft indeed if one saves an hour to wait for weeks.

I do have one series under a different pen name that I tried putting into Select, because it wasn't moving well at the other retailers. Being in KU provided borrows, and the unit sales jumped, but the payout was about equivalent due to the shrinking KU payment. I missed the gold rush and won't be renewing unless January looks awfully good.

Katmarie said...

I can only speak as a reader, but I have found so many books to read through KU that I doubt I will ever go back to buying ebooks on a regular basis. Why? Because authors and publishers have spent years pounding it into readers' heads that we don't own the ebooks we "buy" - we only license them. We do not have permission to give them away. loan them to multiple friends, or sell them like physical books we own. It says so, ad nauseam, in the front of ever ebook I read.

OK, I get it. So then why on earth would I buy one? Much better to rent or checkout from the library. I may try out Oyster or Scribd some day, but my actual purchases will be limited to ebooks I may want to re-read and that will be very rare. Authors who are losing sales to subscription services should not be surprised - as a group YOU devalued ebooks in many readers' eyes, and we got the message.

fiona64 said...

Hi, Mark. Thank you for this; I have shared the article with my author group.

As with many of my fellow Smashers, I sell 5:1 in ePub vs. .mobi (Kindle) ... and the ratio will doubtless change when I do my year-end metrics due to KU causing a crash in sales at Amazon.

It's easy to say "just get the app," but that fails to take into account that some people do not have smartphones or tablets, and that some people are reading on computers old enough that the Kindle app doesn't work. It also fails to take into account that some folks have chosen other readers for their own reasons ... and that Kobo is far more popular abroad than is Kindle.

I see it this way: I am not willing to tell 80 percent of my audience that I no longer care to sell for them, so why would I go with KDP-S? And for those of you who think it's the way to go ... IMO, you've just told potential readers who do *not* have Kindles, for whatever reason, that they are not important enough to be part of your readership. Is that really the message you want to send?

Alfonso Borello said...

You are feeding zombies; if you stop feeding them, they will stop sucking your blood.

Services like Amazon unlimited, Oyster and Scribd are bad, very. They attract cheap people. If I can have all-you-can-eat buffet with shrimp and oysters (popular authors top 100), I won't have the time nor the desire to even consider your books as a self-published author, sorry; and, if I'm bored, once in a blue moon, I'll read a few pages of your 'masterpiece' and give you 25c . First you prove yourself, then I'll give you chance, then go and collect the money from your aggregator.

Before becoming a pilot, I was in the restaurant business; coupons attract cheap people, and they visit ONLY places where they can get food for nothing. Cheap restaurants were hurting the good ones because of their catch, but only for a while, because they couldn't sustain the high operating costs in the long run; they will later disappear and the market would be healthy again.

Scribd and Oyster are good for research paper authors; not for books. They devaluate books, highly. It makes business sense for a start-up in hope to filling a need; unfortunately, you need to sell a heckuva lot of books to see any decent number. Amazon had, of course, to respond; just respond, for now. The service will soon vanish, as soon as publishers will pull the plug for the bad numbers.

You must shut off the oxygen bottle to these services; you'll get nothing out of it. These companies, like many start-up have to show growth, hoping to be bought by the giants with deep pockets; this is their only objective; remember

You, as an author, have self-respect; it's better to sell way less books at full price, the price of your talent and self-esteem; you'll be better off in the long run. Your books will sell again, and who is checking behind the scene, will notice. If you experience low sales, go on googleplay, and acx.

Forgive me, I'm writing these notes on a tablet, on a plane on autopilot, yes; there isn't must style in these notes, probably tons of spelling errors as well; what is important is the message.

Smashwords is a great company, and I respect Mark very much indeed; he's sensitive and respectful; of course he must do what's better for the company, but...

shut off these services like Oyster and Scribd at once, and without delay; they're bad for your health.


Alfonso Borello

P.S. Dear Mark, I really don't know you personally, but you should get into audiobooks before it's too late; this platform is really rocking. Happy Holidays!

Ruth Ann Nordin said...

I'm glad I started self-publishing ebooks when people told me there was no money in it. Back then (2009), the mantra was, "Self-published books will only sell 200 copies in a lifetime, if you're lucky."

This put me in the mindset to write for the sheer joy of writing. Self-publishing was about maintaining full control of the story. There wasn't any thought to sales in it.

Looking back, I'm glad I had this mindset going in because when sales drop, I immediately go back to my initial motivator. I don't know how I'd be able to cope in this roller coaster environment if I got into self-publishing now. It's a different atmosphere.

From what I've seen, being exclusive hasn't paid off for a lot of authors who've tried it, especially not longterm.

It takes time to build a solid platform and fanbase. A couple weeks or months isn't long enough to stay at retailers. Sometimes it takes years. It's not always constant either. There are ups and downs, and it often cycles. Also, you can't predict which book will sell well and which won't. All you can do is write and publish the next one, and make it your best work yet. Then you repeat the process all over again.

It seems people get impatient and want results immediately. Results don't always happen right away. KU might be a great deal today that might turn sour in the years to come. Or maybe those of us who didn't get into KU will be wishing we had if all the other retailers fold up. We just don't know where things will go.

But I feel safer putting my books in multiple channels. I don't have to give up having books in Amazon to be in other places. I can have my books in as many places as I want. When my sales drop at Amazon, it's nice to have the other retailers there as a buffer. That buffer didn't happen overnight. I started with ebooks in 2009 but didn't see my first $100 until the very end of 2010. That was only $100. That was two years of writing, publishing, blogging, and social networking. These days, I'd be considered a failure since it took me so long to gain any traction.

This stuff takes time. Try not to get discouraged.

Connie Rossini said...

I agree with @Alfonso Borello--I'd love to Smashwords get into audiobooks.

Otherwise, my full-length nonfiction book is KDP Select at least until Countdown Deals stops giving me such a huge sales boost. I have had a short freebie out for 18 months and even at free it does not get even a small fraction of the downloads from Smashwords and its partners as from Amazon. I don't like being exclusive on Amazon, but it's hard for me to see an alternative right now. (My paperback is available elsewhere.) KU has made little difference in my royalties one way or another.

I agree with others who have said Smashwords and its partners need to do more to attract customers. I don't know what. I think this oughtta be the #1 thing Smashwords looks at in 2015. You concentrate on authors and I appreciate that, but if you don't concentrate more on customers, your authors cannot make a living and won't stay with you.