Friday, July 18, 2014

Is Kindle Unlimited Bad for Authors?

Amazon today unveiled Kindle Unlimited, following in the footsteps of Smashwords partners Scribd and Oyster.

When I first heard of Kindle Unlimited, I was pleased.  After learning more, however, I think indies should steer clear of it.

As long-time readers of this blog know, I was initially skeptical of the prospects for a "Netflix of ebooks," but I began to see the light as I examined the emerging business models of the subscription services.

Now, several months into our relationships with Scribd and Oyster, I'm pleased to report these two ebook subscription services are the fastest growing retail channels at Smashwords at a time when industry-wide ebook sales are looking anemic.

These services will bring more readers to ebooks and possibly even more readers to conventional ebook retailers (especially if more retailers offer subscription services too).

I think Scribd and Oyster hit the nail on the head by creating services that balance the intersecting interests of readers, authors, the subscription service itself and the publishing industry in which we all operate. 

The same cannot be said for Kindle Unlimited.  Indies would do well to avoid Kindle Unlimited for one simple reason:  it requires KDP Select exclusivity.

I've been speaking out against KDP Select ever since they launched it in 2011 when I wrote my post, Amazon Shows its Predatory Stripes with KDP Select.  Amazon partisans have accused me of being an Amazon hater for my criticism of KDP Select, but that's simply not true. I admire Amazon.  Jeff Bezos and team are freaking brilliant. They deserve massive kudos for catalyzing the rise of ebooks, and for changing the lives of indie authors.

But for all of Amazon's good deeds, it does not mean we indies should kiss their feet unconditionally. Their business methods are not beyond reproach.  We should encourage a healthy debate about Amazon's practices and how they can do better for authors and readers.  I can admire Amazon yet still oppose exclusivity.  We should also recognize when Amazon's business interests don't align with author interests.

KDP Select is a good example where the business interests of Amazon and authors diverge.

Exclusivity is great for Amazon, but it's not necessarily great for authors and readers.  Exclusivity starves competing retailers of books readers want to read, which motivates readers to move their reading to the Kindle platform. This is why Amazon has made exclusivity central to their ebook strategy. They're playing a long term game of attrition.

Most indie authors recognize the value in fostering a diverse ecosystem of multiple competing retailing options.  Yet every book enrolled in KDP Select is a vote to put Amazon's competitors out of business. You know this to be true if you believe, as I believe, that indies are the future of publishing.

Authors must weigh the benefits of KDP Select's many enticing features against the alternative benefits of broad and diversified distribution.  How do you measure what you'll lose from either decision when missed opportunities are immeasurable?  And is it the indie author's responsibility to support Amazon's competitors?  Should an indie author feel guilty for giving KDP Select a try?  I don't envy authors who must make these decisions.  Amazon forces these difficult decisions upon authors.

It can take years to build readership at a retailer.  Authors who cycle their books in and out of KDP Select will have a more difficult time building readership at Amazon's competitors. Millions of readers prefer shopping at retailers other than Amazon. These other retailers operate in multiple countries (iBooks, for example, operates in 51 countries).  These country-specific stores represent unique micro-markets of captive audiences not reachable via Amazon.

Any time an author goes exclusive, they risk alienating fans who prefer shopping at other retailers, and they miss the opportunity for serendipitous discovery by new readers at other stores.  They risk missing those times where lightning strikes and their books break out at different retailers at different times, often for reasons that can't be identified.

Authors who go exclusive at Amazon become more dependent (the opposite of independent) upon Amazon.  Just as any financial adviser will advise you to avoid placing your retirement nest egg in a single basket, indies should think twice before locking their books into these three-month, automatically-renewing KDP Select contracts.

With KDP Select, Amazon rewards authors who go exclusive and disadvantages authors who do not.  That's right, they're punishing regular KDP authors who don't go exclusive by denying them access to special sales and discovery tools like free promotional pricing, Kindle Unlimited and Kindle Owners Lending Library.  These are great tools so it's a shame Amazon doesn't make them available to all authors without restriction.

Amazon is creating a caste system within the Amazon store. Also worthy of note, as revealed by Publishers Lunch, it appears as if Amazon is paying traditionally published authors more for their participation in Kindle Unlimited than they're paying indie authors.

No other retailer creates such artificial restrictions for indie authors.  Smashwords-distributed authors, by contrast, enjoy unlimited free pricing, greater pricing control, ebook preorders, broader global distribution and all without the handcuffs of exclusivity.

It's unfortunate Amazon is restricting access to Kindle Unlimited.  It's unfortunate they're denying their customers access to the books of all indie authors who would otherwise participate if not for the exclusivity requirement.  It's unfortunate that Amazon forces indies to make such a choice.

For indie authors who feel trapped in KDP Select, today's announcement offers you a silver lining:  you now have an out.  Because Amazon automatically opted all KDP Select authors into Kindle Unlimited, they're giving KDP Select authors the ability to immediately withdraw from KDP Select without waiting for their current three-month term to expire.  The instructions, which are listed at , advise authors to contact their support team to leave KDP Select.

If you've got indie author friends who are in KDP Select, now might be a good time for them to cast their vote against exclusivity.  KDP Select would not exist were it not for the ongoing support of indie authors.

Sunday, July 6, 2014

2014 Smashwords Survey Reveals New Opportunities for Indie Authors

Welcome to the 2014 Smashwords Survey, our third annual survey that reveals new opportunities for indie ebook authors to sell more books.

As in prior surveys (view the 2013 Smashwords Survey here and 2012 Smashwords Survey here), we examined aggregated retail and library sales data of Smashwords books and then crunched the numbers based on various quantifiable characteristics of the book.

For this year's survey, we examined over $25 million in customer purchases  aggregated across Smashwords retailers including Apple iBooks, Barnes & Noble, the store, Sony (now closed), Diesel (closed), Oyster, Scribd, Kobo, public libraries and others.

This year, we break new ground with more data, including survey questions that explore preorders and series, two categories of inquiry that weren't possible in prior years.  These latter two categories were enabled by Smashwords' introduction of ebook preorder distribution in July, 2013 and our new Smashwords Series Manager feature which allows us to capture, analyze and share the performance of series books.

The goal of the survey is to identify Viral Catalysts.  I first introduced the concept of Viral Catalyst in 2012 with the publication of my free ebook best practices book, The Secrets to Ebook Publishing Success.  A Viral Catalyst is anything that makes a book more discoverable and more enjoyable to readers.

The underlying premise of my Viral Catalyst concept is that Viral Catalysts help drive reader word of mouth because they increase reader satisfaction.  Although every author would love to learn the single secret fast track magic bullet to bestsellerdom, there is no such single secret.  Ebook bestsellers become bestsellers based on multiple Viral Catalyst factors starting with book quality but also influenced by cover design, breath of distribution, pricing, marketing, luck and myriad other factors.  In the Smashwords Survey, we seek to identify potential Viral Catalysts that are quantifiable and therefore measurable. 

The initial survey results were first revealed at the RT Booklovers convention in New Orleans on May 14, 2014.  The updated Slideshare edition of this presentation includes more data, charts and analysis than was presented in New Orleans.

Key findings in this year's survey:
The ebook sales power curve is extremely steep - This isn't a surprise, but for the first time we share some numbers along the curve (see the slides in the Series section).  A few titles sell fabulously well and most sell poorly.  An incremental increase is sales rank is usually matched by an exponential increase is sales.  Despite the steep sales curve, a lot of Smashwords authors are earning good income from their books.  Your opportunity as a Smashwords author or publisher is to do those things that give you an incremental advantage so you can climb in sales rank.
Readers prefer longer ebooks - We observed this in the prior surveys.  Longer books sell better, and when you view the data through the prism of the power curve, it becomes clear why longer books give authors such a huge sales advantage.

Pricing - The highest earning indie authors are utilizing lower average prices than the authors who earn less, but this doesn't mean that ultra-low prices such as $.99 are the path to riches.  $2.99 and $3.99 are the sweet spots for most of the bestsellers.

FREE still works great, but it's losing some mojo - Free remains one of the most powerful book marketing tools because it makes it easier for readers to take a risk on an author brand that is unknown or untrusted.  Free ebooks, according to our data derived from iBooks downloads, generated 39 times more downloads on average during our survey period than books at any price.  Yet the effectiveness of free is down dramatically compared to our 2013 (91X) and 2012 (100X) survey results.  While there is still much untapped greenfield opportunity for indies to leverage free, I expect the effectiveness of free will continue to decline as more authors learn to take advantage of it.  If you've never utilized free, now's the time to do so before your window of maximum opportunity closes further.

Preorders yield sales advantage - When we launched preorders in 2013, we knew anecdotally from our early alpha tests that preorders gave authors a sales advantage.  The 2014 Survey is the first time we're able to share aggregated results, and the results are strongly suggestive that ebooks borne as preorders sell more copies and earn the author more money than books that don't utilized preorders.  I think preorders today are where free was five years ago.  The first authors to effectively utilize preorders will gain the most advantage, just as the first authors to enter new distribution channels gain the most advantage.  Five years from now once all indies recognize that preorders are a no-brainer essential best practice, the effectiveness of preorders will decline.  Also revealed in the data is the fact that most Smashwords authors (and therefore, most indies) ARE NOT utilizing preorders yet despite our aggressive promotion of this exciting new tool.  The authors who heeded our advice, however, are reaping the rewards.

Series yield sales advantage - For the first time, we examine the performance of series books.  This new analysis is enabled by the fact that in September we launched Smashwords Series Manager which allows us to capture enhanced metadata on series.  The results are interesting!  Series books outsell standalone books.  We also look at the characteristics of series.  I'll want to do more with series in our 2015 survey.
Best-performing series have longer books - Not a surprise, but the implications are significant.  If you imagine the power curve overlaid on the series data we share, you see why authors who write full-length books in their series have an advantage over authors who break books into smaller chunks.  Also interesting, we found series books under 50,000 words are especially disadvantaged.  This is not to say that you can't become a bestseller writing shorter novellas.  Multiple Smashwords authors have had success here.  But what the data does tell me is that successful novella writers might achieve even greater success if they write full-length.  The data appears to suggest that series books under 50,000 words might create friction that makes readers incrementally less willing to buy.
FREE series starters pack a punch - This is a big deal.  I suspected this for a long time based on numerous authors' results going back to Brian S. Pratt who was one of the first Smashwords authors to prove the effectiveness of free series starters, but the aggregated numbers now confirm it.  We found strong evidence that series that have free series starters earn more money for authors than series that do not have free series starters.  For the many Smashwords authors who are reluctant to experiment with free for fear it'll devalue your books, now you've got the kick in the butt you need to give it a try.  All Smashwords retailers support free without restriction.
New (added July 7)  Non-fiction earns more at higher prices -  For the first time we added new data for non-fiction pricing.  We looked at the most common price points for indie non-fiction, the price points that earn the most downloads, and the price points that earn the non-fiction author the most money.  The results are fascinating.  It's not a surprise that non-fiction readers respond differently to price.  The surprise is how differently.  Non-fiction buyers are less price-sensitive.  After crunching the numbers it appears as if most non-fiction authors are under-pricing their works, and they should experiment with higher prices.

How to Interpret the Findings

For many of the slides, I added analysis to help you interpret the findings.  This analysis is my own interpretation.  You may view the findings differently, or see things I don't see.  Or you may strongly disagree with my interpretation.  That's okay.

Be cautious.  Most of the survey results are based on averages.  Your book is not average.  It's unique.  Therefore, your results will vary.  The findings aggregate the results of many dissimilar books, which means the findings are prone to misinterpretation and error.  The findings are also potentially skewed by factors such as genre (romance dominates, which means our data will more closely describe potential outcomes for romance or genre fiction than it will for non-fiction how-to manuals), or by the fact book sales at retailers are heavily skewed to fiction.

As I caution on Slide 25, cause and effect is not always provable.  The forces that determine a book's sales performance are often multi-dimensional, synergistic, opaque, delayed or simply not apparent.  Correlation does not always mean causation.  For example, although we show that the highest-earning books were priced at $3.99, the price alone is not the reason those books were bestsellers, and you should not necessarily jump to change all your prices to $3.99.  Although the bestselling books tend to be over 100,000 words, readers don't purchase by length alone, so don't write longer if the story doesn't demand it.

Consider our findings as possible inputs that influence the outcome.  Do not make publishing decisions solely based on the findings in this survey.  Instead, use these findings as an additional datapoint - as potential clues - that will help you make more informed decisions.  Also note the findings will raise additional questions.  As I was digging through the data for preorders, for example, I found myself wanting to dive deeper to explore such questions as, do sales decay over time, how do new releases impact the sales of existing series books, and how is the sales behavior across different genres different?  Although this survey shares more data than ever before, I found that the more questions I asked, the more I wanted to ask.  There simply wasn't time to build all the queries I wanted, or time to crunch and analyze all the numbers.

I look forward to sharing more in 2015 if not earlier.

If you found the survey results useful, won't you please share with your writer friends?

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