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

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.