Self-Publishing Sunday: New Amazon Payout Method will Work if Amazon Wants it to Work

My beach art - a heart and some LOVE

My beach art – a heart and some LOVE

I’m back from vacation. I was in the Outer Banks of North Carolina for a week, and, luckily, wasn’t bitten by a shark. They’ve had six bites in the last two weeks, so glad we were involved in none of the incidents. Now that I’m back, I thought I’d throw in my two cents on the changes Amazon announced to its Kindle Direct Publishing (KDP) Select program.

The background (skip, if you understand how KDP Select works)
Authors who publish on Amazon use its basic KDP program. Authors who wish to be included in the Kindle Online Lending Library or the Kindle Unlimited program must commit to KDP Select. When authors commit to KDP Select (it’s a 90-day enrollment period), KU and KOLL members can borrow their books at no charge, and Amazon pays authors a royalty.

In the past, Amazon had a set royalty that it decided each month. Royalty rates for a borrow ranged from 1.30 to 1.80, depending on the month. All books were treated equally. A 10 page book received the same royalty as a 400 page book. Clearly, that’s unfair.

The backlash
So, in an effort to increase fairness, Amazon announced on June 15 that authors in the KDP Select, starting July 1, would be paid based on the number of pages the borrowers read. While on its face, this seemed fairer, it also caused a lot of backlash. The main problem is it’s paying authors based on how much of a book the user finishes. We don’t pay restaurants based on how much of our meal we eat. We don’t pay rent based on how many hours we sleep in the apartment (hey, I was out of town for a week; I’m only going to pay 3/4 of rent). It irked many writers because it’s a slippery slope many don’t want to go down.

My prediction: If Amazon wants it work, it will
The good news is KDP Select is an optional program, so anyone who doesn’t like it can get out. And while I think this new payment method will work out in Amazon’s favor (with the company having to pay some authors less), I don’t think the changes will be as doom and gloom and full of woe as the naysayers claim. Why? Simple. Because Amazon wants its subscription service to work. It wants to get good books to join the program, and get the scam books (the 10 pages of drek that were taking advantage) out of the program. It can’t get good books in the program by paying authors a pittance. Even though some authors are going to get paid less, I suspect the program is meant to get authors whose books are read to be paid well.  Amazon wants authors in the program whose books get read.

Another reason it’s likely to work: Amazon isn’t stupid. They’ve crunched the numbers. They didn’t just come up with this program on Friday afternoon and launch it on Monday morning. I imagine, from the day they realized they were paying scammers the same amount they were paying good books, they’ve been looking for a way to put a stop to this and draw in longer works. Even though Amazon refuses to tell authors their predictions, they have predictions. They have seen the read-through rate on borrowed books and have a payout rate in mind that will get a fair number of KDP Select enrolled authors of longer works similar royalties to what they were getting before the change took place.  I suspect they know what the sweet spot is for the payout and will add more money to the payout pot to get it there.

The new program is clearly designed to get rid of junk shorts. It’s not clear how much the new pay per page system will hurt legitimate short stories. If the payout rate is a penny per page, then 30 to 40 page shorts will earn for a borrow about the same as they earned for the sale of a 99 cent book. If the payout is less than a penny per page, then the program probably will drive shorts out of it. Though, some writers of shorts will stay in the program if they have strong borrow rates that improve their overall visibility on Amazon.

If the loss of short works becomes a problem for Amazon, I’m sure the company will come up with a solution.

For those who aren’t sure what to do, I’d recommend giving it a shot for at least the first month, to see how it goes. My self-publishing book is in Select, and I decided to let the term renew just to see how the new process works. I’m also curious about my read-through rate. Generally, Amazon doesn’t share this data, but I’d love to know what percentage of the book people read. Though, I’ve got to admit, nonfiction may not be the best one to experiment with because readers may read nonlinear, or cherry pick the bits of info they need. I don’t know if the data I get from the new model will give a real good sense of what parts of my book people are reading. Because they can skip around, I’ll just know they read 20 pages, but not what order. For a novelist, I think it’s safe to assume, if a person read 20 pages, it’s the first 20 pages and that they did not read 10 at the beginning and 10 at the end and then quit. So, I think the page info will be more useful for novelist.

I plan to release my next novels in September, so by then, I think I should have a good idea of how the new system works, and I’ll be able to decide if I want in or out of the pay-per-page read system. In general, I’m not fond of the idea of being paid that way. However, I don’t know that the way it will be rolled out by Amazon will be disadvantageous to the author. I really think Amazon wants its subscription service to work, and if authors in the program aren’t paid a fair wage, the good authors will leave and the subscription service won’t work. So, I think the payouts will at least be commiserate with what authors were getting before the change was made. Some people have speculated that payouts will actually be much higher for authors with a high read-through rate.

I’m not saying the program won’t have a few bumps as it finds its way. It will. But, ultimately, I think, as long as Amazon wants its Kindle Unlimited subscription service to work, it will figure out a way to make the payout system work for authors.  KU doesn’t work without content. Amazon knows that and authors know that, and I don’t think Amazon would propose a system that they know would drive out good authors. I’m not saying to have faith blindly or trust blindly that it will work out. But, I do think it’s worth sticking around the first couple of months to see what happens.

If you are in Select and don’t like the changes, or just aren’t sure you want to be one of the first people to test out a new system, you can opt out of Select prior to the end of your enrollment period. I wrote a piece for Indies Unlimited with instructions.

One last note. There is one group of authors who come out real losers in this pay-per-page plan:  children’s book authors. They have books that are legitimately short, but deserve to be paid more per page than a typical novel would be paid per page. illustrations are expensive, and the children’s books just don’t fit into that per-page model. Last I’d heard, Amazon hadn’t addressed this issue. If I hear that they are addressing children’s books, I’ll post a link here on the blog.

 

About RJ Crayton

RJ Crayton is a former journalist who now writes fiction. She's reported for the Kansas City Star and Wichita Eagle, as well as the smaller publications Education Technology News and Campus Crime. She has two published novels, Life First and Second Life and blogs for Indies Unlimited and the Institute for Ethics and Emerging Technologies. For exclusive content and first looks at her new work, sign up for the newsletter at http://rjcrayton.com/subscribe.
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7 Responses to Self-Publishing Sunday: New Amazon Payout Method will Work if Amazon Wants it to Work

  1. I’m staying in too, RJ. I’m basically for the program. I do think that, like children’s books, pictorial (photography) books may need to be re-evaluated. I have several of the latter, but will still leave them in for now.

    Also, though not directly related, but sure to have an impact, is the fact that Scribd just booted a rumored 80-90% of its romance and erotica books received via Smashwords, D2D, and others, off its subscription service.

    Maybe they anticipate an exodus anyway of romance books back into (or into) Select. Maybe the traditional publishers and Scribd have worked out enough of an exclusive (of Amazon) deal Scribd no longer needs or wants the indie romance books. I don’t know.

    There’s a lot of details that will eventually clarify who, what, and why – and that’ll explain more clearly explain whether there’s any indie-trad pub strategies going on, or it’s simply removing a genre with too many readers for their business model to handle.

    Either way, again, I’m staying in KU, and gonna see how it goes, including what info it gives in re my titles read.

    I should add I have two titles in Kindle Worlds, and they have a set royalty based on price (that Amazon sets), and those have continued to gain traction. I don’t expect a royalty change there, but I’m very happy with the exposure I’m getting via both Joe Konrath’s and Ann Voss Peterson’s Kindle Worlds.

    Gonna share your post, RJ. Lot of good info you brought up. Thanks! 🙂

    • RJ Crayton says:

      Good points, Felipe. The ScribD thing was a surprise I heard about last night. I think whatever drove ScribD to make this move also drove Amazon to change up the Kindle Unlimited payment method. I think romance readers are getting a really good deal out of the subscription services and the companies are trying to figure out a way to make it work out for them.

      I must admit I was a little disappointed to see the new chart today. I thought we’d have more information about how many pages readers read of each individual book, but it looks like it just shows overall pages read. I mean, 600 pages read of a 100 page book could mean 6 people read the whole thing, or 20 people read half of it, or the bulk of 50 people read just a few pages, with most bailing. The pages read number doesn’t really offer the author that much info.

  2. Dale says:

    I’ve read so much about this both for and against and I think it’s an interesting decision by Amazon. I’m so curious that I’m seriously thinking about going back into select, lol.

    • RJ Crayton says:

      Well, it’s an interesting prospect. I’m not in Select for my Life First series and never have been. I’m not going to pull any books from wide distribution to go into Select. But, I had planned to try my new series in Select, and I may still do it. I’m not publishing until September, so I’ll get a chance to at least hear what others think of it before making a decision. I don’t know that the new program should be anyone’s cue to rush in or rush out of the program. If you’re in, might as well stay. If you’re not, you can watch from the sidelines and see what happens. I’m most interested in what will happpen Wednesday. Can’t wait to see the dashboard with the “pages read” feature.

  3. Charles Ray says:

    R.J.: Like you, I ‘ve decided to stay in KDP Select. So far, my monthly income hasn’t gone down – in fact, for a couple of books, it’s actually gone up, and of course, after a blitz on CoPromote (a site that cross promotes FB, Twitter, etc.) I had a real spike this month in one of my books. I don’t believe in knee jerk reactions, so I’m going to give it some time – maybe six months, before I even think about making any changes – if I do that is. If the current rate of sales keeps steady, I see no reason to change.

    • RJ Crayton says:

      Oh, yeah, I think staying the course is a good idea for people who have regular size books. Seeing how it works is a good idea. It sounds like Amazon wants the really short works to get paid much less, so I could see them leaving. But it all depends on the page count and what that final number is. People aren’t going to know that number until August 15, probably. So, folks have to stick around at least until then to see how it works. I only have my self-publishing book in Select so there’s no downside in sticking with it. I’ll have to check out coPromote. Sounds interesting.

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