Subscription Model Squabbles

So, authors, you’ll all remember when, in the middle of the Amazon-Hachette spit-fight, I noted that Amazon isn’t your friend, it’s a business entity with its own goals, which may only tangentially align with yours (and the same goes for Hachette)?

Surprise!

Authors are upset with Amazon. Again.

For much of the last year, mainstream novelists were furious that Amazon was discouraging the sale of some titles in its confrontation with the publisher Hachette over e­books.

Now self­-published writers, who owe much of their audience to the retailer’s publishing platform, are unhappy.

One problem is too much competition. But a new complaint is about Kindle Unlimited, a new Amazon subscription service that offers access to 700,000 books — both self­published and traditionally published — for $9.99 a month.

It may bring in readers, but the writers say they earn less. And in interviews and online forums, they have voiced their complaints.

Part of the issue, as I understand it, is that the payment Amazon doles out to many self-published folks who participate in Kindle Unlimited comes not from the percentage of a sale price, but from a slice of a pot of money Amazon decides to offer, called the KDP Select Global Fund. Here’s how it works, from the Amazon FAQ on the matter:

We base the calculation of your share of the KDP Select Global Fund by how often Kindle Unlimited customers choose and read more than 10% of your book, and Kindle Owners’ Lending Library customers download your book. We compare these numbers to how often all participating KDP Select titles were chosen. For example, if the monthly global fund amount is $1,000,000, all participating KDP titles were read 300,000 times, and customers read your book 1,500 times, you will earn 0.5% (1,500/300,000 = 0.5%), or $5,000 for that month.

However, as Amazon gets to select the size of the pot, and the share of the pot is contingent on performance relative to other titles, how much that cut is can fluctuate substantially, as is noted in the article. The article also notes that as the cut is the same for any read (i.e., a short story and a Rothfuss-sized epic novel are the same in the eye of the Kindle Unlimited clicker), authors are chopping up larger books into several files, or writing books as serials (looks like The Human Division was on target for that model).

Given the nature of the payment game here, this is a rational response, but it’s a short term solution at best, as it explodes the number of titles in Kindle Unlimited (and commensurately the number of titles read). As more authors catch on that particular trick, the less useful it will be for everyone. And while Amazon says it will tweak the size of the pot “to make participation in KDP Select a compelling option for authors and publishers,” inasmuch as self-published authors are already griping about how much revenue they’ve lost, the question becomes whether it will ever become a genuinely compelling option.

(Note well that these terms are as I understand it currently only for the majority of self-published authors. Publishers, who have more leverage on Amazon’s business, and certain (very few) high-profile self-published authors, are able to make deals that resemble traditional payment/royalty deals. They are not in the same payment pot as the hundreds of thousands of self-published authors, and they are not enjoined by exclusivity, as the majority of self-published authors are. Which if my understanding is correct is certainly an interesting point of data for those self-published authors.)

Does this make Amazon’s subscription scheme, or Amazon itself, evil? Nope. It does reinforce the point that Amazon has its own plans, which are not really about helping authors, per se. Its plans center on being the one single place everyone buys anything, ever. A $9.99 all-you-can-eat reading subscription plan with titles exclusive to Amazon is a fine way to lock consumers in the Amazon ecosystem. That’s Amazon’s job: to get and keep consumers’ business. It’s also the job of Oyster and Smashwords and other places that are also trying to make a go of the all-you-can-eat book subscription thing. What’s also their job: Getting the product that will enable them to reach their goals, and getting the product as cheaply as possible.

That said, the thing to actively dislike about the Kindle Unlimited “payment from a pot” plan is the fact that it and any other plan like it absolutely and unambiguously make writing and publishing a zero-sum game. In traditional publishing, your success as an author does not limit my success — the potential pool of money is so large as to be effectively unlimited, and one’s payment is independent of any other purchase a consumer might make, or what any other reader might read.

In the Kindle Unlimited scheme, the pool of money available to authors is strictly limited by a corporation whose purposes, short- and long-term, are not necessarily aligned with the authors’, and every time someone with a Kindle Unlimited account reads another author’s work, every other authors’ share of the pot  becomes that much smaller. In the traditional publishing model, it’s in my interest to encourage readers to read other authors, because people who read more buy more books — the proverbial tide lifts all boats. In the Kindle Unlimited model, the more authors you and everyone else reads, the less I can potentially earn. And ultimately, there’s a cap on how much I can earn — a cap imposed by Amazon, or whoever else is in charge of the “pot.” As an author, I won’t be able to ever earn more than Amazon wants me to (especially if Amazon requires my title to be exclusive).

So: Evil? No. Good for authors? Let’s just say I’m not entirely convinced. And neither, it seems, are these self-published authors. Good for them. I genuinely wish them the best of luck getting Amazon (and others) to pay them what the market will bear, and not just what Amazon wants to pay.

81 thoughts on “Subscription Model Squabbles

  1. To anyone thinking this piece is an encomium to the halcyon days of traditional publishing: Dude, come on. Don’t be the guy who has to think about everything in such incorrectly binary terms. You’ll be boring the shit out of me if you do.

    Also, to get ahead of the question, yes, I’m aware that the CEO of Macmillan has said the company (which includes Tor, my publisher) will start exploring subscription services. I have expressed to Tor and Macmillan my concerns, which include the issues raised here. I suspect there will be a very strong push to put all authors in to the capped pot of income, including most if not all traditionally published authors.

  2. Would/will placing all authors in the same pot encourage variations on your original model for “Agent to the Stars”? I do not know what it would take today for a successful author such as yourself to “self-publish” and ask for readers to send you money directly. As I started – variations…

  3. It seems this scheme is limited to KDP Select authors, who allow Amazon to be their only sales point. I tried it for a while, then went back to selling my backlist ebooks through Kobo, Smashwords, and my own webstore. Amazon is still my main vector, but as long as we self-pubbing authors have other options, we can’t be completely steamrollered.

    If I were a true believer in the free market, I’d expect someone to come along and do what Amazon does in a way that’s more attractive to us content suppliers. But, come on, I didn’t just fall of the back of the turnip truck.

    Ah, well, brave new world. I’ve got stories in the next F&SF and Lightspeed mags, and I’ve bought ads to steer readers to my webstore. I’ll be interested to see if I get my money back.

  4. Robin in NM:

    It’s easier for someone now to do what I did in 1999, if only because people no longer have to physically mail money to the recipient. I’m not sure how the subscription service would have an impact on that one way or the other, with the exception that a subscription service that required exclusivity would obviously keep someone from collecting money any other way.

  5. The split pool is a terrible system. The other subscription services offer full royalty if someone reads your work. Sadly, the current the meager Amazon KU $1.39 payout is actually obtained by Amazon adding extra money to the pot, so I can’t even imagine how much VC money the other services are losing. None of these appear to be sustainable.

    Having said all that, the problems millionaire indie superstars are having with KU don’t necessarily match what midlist authors are experiencing. My income has rather significantly increased.

  6. Do you think the digital nature of the books means readers are less likely to permanently buy favorites? Because I noticed Kindle Unlimited is in fact limited to 10 books checked out at a time, so I’m not sure how different it will end up being from the library for me even if I decided it was worth the money– sample lots, buy favorites.

  7. Kat Fletcher:

    I have no doubt that in the short term (and in the long term) there are going to be people who see an upswing in income. One of the questions for me is how that will be sustained and whether those folks would be better off with a different distribution model.

    Also, of course, it will be interesting to see how the dictates of getting money out of this model change how writing is produced. We’re obviously already seeing some of that with out people are structuring their work. This is, mind you, not at all exclusive to subscription services — novels are generally the length they are now because that’s the size of a book that looks good on chain bookstore shelf.

    Chrysoula:

    I would suspect it will have some effect, if music and movies are any indication. People buy rather fewer CDs and DVDs than they used to.

  8. I don’t think KU is the real issue. The real issue is a glut of content. And that’s not going away. Even authors who aren’t part of KU are, or will be, affected. While indie authors are feeling it quicker, I have no doubt this pain will spread to trad authors also. Simply too many books for a finite number of readers.

  9. It’s tough to get published nowadays if you’ve never published before. Most publishers don’t take direct submissions from new authors, they only want submissions from agents. And many (most?) established agents won’t take direct submissions from new authors either. And finding an agent – meh. They all act like they hate authors. So naturally self-publishing seems like a great way to get a book out there.

    But then there’s the sales issue itself, because once the thrill of seeing your book published is over, an author wants to see some validation. Sales tell the story. And that’s where self-publishing breaks down, because most authors not only don’t have the funds or the skills to promote on any useful scale, those authors also would rather write than market books.

    “I’m a writer, not a marketer”. That’s a luxury only established authors can enjoy. And it’s not even fully true for them.

    So Amazon, smart business people that they are, takes advantage of how this works. Can’t blame a business for wanting to make the maximum money, but from the writer’s point of view, it’s so damn depressing.

  10. “so I’m not sure how different it will end up being from the library for me even if I decided it was worth the money– sample lots, buy favorites.”

    Well, one of the big differences I see (unless I’m missing something) is the fact that Amazon is offering unlimited copies of every title.

    Which, as a librarian whose library uses Overdrive, and as a librarian who is in charge of spending the youth materials budget (and therefore deciding if we get multiple copies of Mockingjay, or one copy and then a few other titles, etc.) THAT is the part that has me going O.o and “NOPE that’s never going to be a good deal for authors.”

  11. I don’t think KU is the real issue. The real issue is a glut of content. And that’s not going away. Even authors who aren’t part of KU are, or will be, affected. While indie authors are feeling it quicker, I have no doubt this pain will spread to trad authors also. Simply too many books for a finite number of readers.

    This. Well, at least partially this. I think KU as a program is pretty bad, but I think the glut of mediocre and worse than mediocre content is almost too much to overcome. I’m at the point where I’m just going to run searches on authors I already know and like, read Locus and leave it at that.

    Plus, there are some /strange/ people out there and the Kindle has let them loose to scribble their fantasies down furiously and shove them out into public. Between the libertarian survivalists and the people that want to have sex with werewolves…good lord!

  12. That fixed pool system is terrible, although I can see why it would be attractive to companies (definitely be afraid that all the publishers are going to try this sooner or later, at least in connection to subscription services). Instead of having to share earnings with the authors as they come, they can plan out a specific amount spent on it for each year as long as there are enough authors bringing in enough sales for it to be worthwhile.

    @jennygadget

    “NOPE that’s never going to be a good deal for authors.”

    There probably is some sweet spot somewhere where you could figure out a per-rental royalty payment to authors/publishers that would be lower than the full book price but also good for the authors (especially if their e-books get rented a lot), although I’m not sure if libraries could afford it.

    Failing that, I’d settle just for librarians like yourself being able to purchase e-books of any publisher for rental, even if you have to re-buy them every so often.

  13. It’s definitely not great for authors. I was just honestly curious if the digital nature would change the ‘I want to own things’ element of hybrid readers. But I know lots of people aren’t hybrid readers– they either exclusively use libraries or they exclusively buy.

    But I’d always been under the impression that the primary way libraries (and used bookstores) were good for writers was via exposing Readers Who Buy to their work, not direct sales.

    I wonder if it matters whether a subscriber checks out primarily indie or trad books. I signed up for the trial alongside a new Fire for my homeschooled seven year old so I could find lots of nonfiction for him without having to waste tons of money or deal with tantrums in the library…

    (I also noticed the digital price on some long-published classics went up to $9.99 when they became available for KU, which I admit tipped me into the trial. But that 10 book limit… Not what they were promising at all, honestly.)

  14. I wouldn’t call it zero-sum just yet. While true, the pot is eventually going to top-out once the subscription counts plateau, it will be continually rising until then leaving plenty of room for growth. The author v. author antics to get a slice of the limited pie will be a downer, but nothing precludes people who want to own a title from buying it in addition to reading it in the Amazon system. Like any new tool the authors will find the ideal way to use this particular vector to getting works to the public. Maybe as you say, serials and short works will dominate this pool. Maybe authors will publish different editions for subscription and non subscription consumption.

    It’s essentially like a paid subscription to a library who has unlimited copies of titles, and one that pays the authors more than once for the reads of their work. If libraries were given this option without the limits and DRM that are forced on them we may have had this option for a while now. I’d gladly pay a monthly fee to my local library for unlimited Overdrive.

  15. So it’s Author Thunderdome.

    And sure, right now it’s just KDP… you know they’re gonna expand it to all books they sell in a year or two. Oh, the bleating we will hear from Patterson, Turow, et. al then.

  16. I have KU. I signed up because there were a handful of self pub books I wanted to check out but wasn’t sure it was worth buying (I’ve been burned on some terrible self pub books.)

    Since then, I’ve found some good books and a lot more terrible ones. One of the requirements is that the reader must read at least 10% of the book. I’ve noticed a huge uptick in short 25-30 page “books.” Just by opening the book to the first page beyond the table of contents, you have read 10%!

    I like subscription models in theory, which reminds me of the library, but the way they pay authors and the encouragement to write bad books just for a quick pay day are major problems.

  17. Chrysoula, library sales have traditionally been a huge deal for some authors, especially YA and children’s authors. At one time, the only place children’s authors got hardcover sales was from libraries; it likely didn’t make much difference to the best sellers, in any field, but for the midlist authors? Believe me, it always did–and I suspect still does. Think of it this way: my local library, a decent suburban system, has a main library and two branches. A new picture book comes out–the children’s librarian purchases one copy of the hardcover, possibly taking a chance on a new author; if that author proves popular with patrons (and libraries do try to keep track), his/her next book is going to sell three copies to just that one library system . . . and so on. Move the numbers to a national level, to urban libraries with thirty or forty branches (Chicago, admittedly one of the largest systems out there, has about 80 branches), and that can be a LOT of sales.

    I’ll be interested to see how subscription services impact library use over time, too.

  18. No one has mentioned the January gym effect, or the Netflix effect if you will, where the customers buy the membership, use it for a month or so, and then pay for it monthly for a while until they realize they aren’t using it and they cancel. This is why gyms push hard to make people sign up for an entire year’s membership, knowing they won’t show up after about February 13th. Amazon’s KU seems to be month-to-month, like Netflix. I posit that only people who constantly buy new books are going to stick with the program and use it extensively; the rest will use it for a month or two and stop, or continue to pay for it and not borrow any books, or many books. We haven’t seen enough months of KU yet to know how the readers will behave, but the result could mean that the pot Amazon shares might swell from unused memberships, or go the other way, and decrease from fewer borrows–even if Amazon is pocketing more money from the unused memberships.

  19. I held back on the subscription models because I wanted to see how people felt about them after a year or so, (I don’t mind being the last to join a fashionable affair). I’m also seeing a lot of people talking about dropping the services because they realize they can get them from the library now, and the library is getting better about ebooks. Juggling the library list and reading through some free offers for books lists and I can barely keep up with everything I have to read, and I don’t see it changing anytime soon. If I find a good writer I can peruse their stuff and buy it at an indie bookstore or on kindle or even used, I’m not picky in the end.

  20. “halcyon days of traditional publishing” — as when my father, clutching his Army Air Corps wings in one fist and a Harvard B.A., Cum Laude, in English Literature, boldly went where no editor had gone before. Oh, and HIS version of how Hugo Gernsback was forced into bankruptcy by creditors via a loophole in New York Law. And, aaaaah, “the halcyon days of the mid-1980s, when profits were soaring…

  21. One thing that was pointed out in a similar discussion on another site is that “borrows” via Kindle Unlimited currently directly add to the sales rank for the book within the Kindle Store. That means that people in KU are somewhat more likely to be on the Top 100 lists and therefore get recommended more frequently by the Amazon algorithms. This is a not inconsiderable advantage for those in the program.

  22. Unless you have a ton of titles on Kindle Unlimited, it’s not a very good deal for authors. There are certainly some scenarios where you can make more money via Kindle Select than you can by opting out of the program, but their probability is extremely low, and writers with more titles have a decisive advantage.

    Here’s an example of how the program might work.

    Let’s assume you are selling a title for $4.99 on Kindle. Assume it gets a 70% royalty and has a delivery fee of $0.15. Your profit per title is: 70%*($4.99-$0.15) = $3.14, which incidentally is pretty close to pi.

    Scalzi, you like pie. I like pie too.

    Let’s say that in one scenario, you sell 100 copies in December without Kindle Unlimited.

    For you to make the same profit as an author on Kindle Unlimited in the month of December (with a total pot of $3,000,000), readers would have to download and read 10% of 1,463 copies of the same book for you to break even if the average title on Kindle Unlimited is downloaded 20 times in a given month.

    Now, I am assuming that the average number of downloads per title is 20. To be fair, this number could be more or less — Amazon’s example conveniently implies it is ~.43 downloads per title — but it seems to me that Amazon constructs its example to make the program look like a boon for authors, and the company makes some pretty unrealistic assumptions. For instance, 95% of books sell fewer than 1,000 copies over any time period, yet Amazon uses 1,500 as the number the hypothetical Kindle Select participant makes in one month in its example to show how the same author can make $5,000 in one month.

    As both the average number of downloads per title and the number of titles increases (right now, the number of titles is >700k), the number of readers you would need to break even increases.

    Therefore, if you have one title, the optimal game theoretic strategy is to defect and not participate in the program.

    Of course, the only way you can make money in this scheme is to break up your work into individual pieces. As you suggested, the Kindle Unlimited system is structured as a zero sum game. The more titles you have and the more reads you get, the bigger the share of the $3 million you get that will be allocated among the >700,000 titles that are currently on Kindle Unlimited, and even then, you need to garner a much higher number of downloads and engagements (>10% of your material gets read) per title than the average. Outside of Kindle Unlimited, you get paid whether a reader reads your work or not.

    This is a pretty smart marketing scheme by Amazon, great for customers, but a terrible deal for authors. The only question is whether Amazon will steer its 70%+ market share market power away from titles that refuse to opt-in to the program.

    For Amazon to make the program compelling for authors, it needs to: 1) release more data so that authors can make a more objective assessment as to whether the program makes economic sense for them (right now, it doesn’t), and 2) what kind of a signal boost does an author get by participating in the program (e.g., are an author’s books exposed to 10x, 100x, or 1,000x of an audience under the program than they otherwise would be, and what percentage of that additional signal reads the >10% of the download required to make money from the program).

    Right now, Amazon is betting on the stereotype that most writers can’t do math, or game theory for that matter.

    Fortunately, some of us can do both.

  23. I always look at page counts before I buy anything on Kindle. There are very few things I will buy at short lengths unless A) I’m familiar with the author and really like their work, and/or B) it’s clearly marketed as a short story. Pretty much the only serial I’ve gone for was The Human Division and I waited until that one was complete and purchased it as one e-book. I already have too many files on the Kindle. I don’t need, or want things that should be one file taking up 10 or 20 of them.

  24. Bob Mayer said: “I don’t think KU is the real issue. The real issue is a glut of content. And that’s not going away. Even authors who aren’t part of KU are, or will be, affected. While indie authors are feeling it quicker, I have no doubt this pain will spread to trad authors also. Simply too many books for a finite number of readers.”

    This is not my experience as a reader. There are a limited number of authors who write my favorite genre. When I find a new one I’m beside myself with joy – even though it’s also the genre I write in. I can name less than ten authors who write what I want to read and do it well. I’m happy for the competition.

    I think there are a lot of readers who would welcome more books from their favorite authors. I think the average number of books an author writes a year is about one maybe two (I could be wrong, I know there are those who can produce six or more. I bet they don’t have four kids). That’s a lot of empty days to fill for an avid reader. The problem is finding books. In that way the glut is an issue because you have to kiss a lot of frogs. The genre I’m reading is poorly defined to begin with so I have to really search to find new authors. But I’m not worried about it being overrun. Too many books? That’s like saying too much ice cream. Or too much chocolate.

    As for Amazon – well heck. I do better financially when I enroll my books in Kindle Select. They far out perform all the other platforms put together. With four kids in varying stages of orthodontics I have to go with the money. I don’t like shutting out any of my readers (and have been known to send nook readers books without payment because, damn, if someone wants to read my books badly enough to contact me then, yeah, I’m going to send it to them. It’s part of my marketing strategy. (Ignore the laughter, it’s my imaginary marketing team reacting to my use of the word strategy.) Do I wish there was a better way? Yes. But this is the system I’ve got to work with and I’m doing much better financially than I was with a small press.

  25. Amazon is still my main vector, but as long as we self-pubbing authors have other options, we can’t be completely steamrollered.
    This has always been my concern with people who refuse to publish on other platforms. You take away options from yourself and your readers. Amazon (or any other company) is only competitive (in winning over authors and customers) until the competition is gone, and then they can set all the rules.

  26. A fussy point of game theory: the Kindle Unlimited plan is only as close to zero sum as Amazon wants it to be. They could elect to grow the pot at the same rate as downloads (or more slowly) or for that matter shrink it over time.

    Nor, because of the relative return problem, is traditional publishing necessarily an expanding sum across the board; overwhelming success in one genre may shift capital toward it and choke off a genre that was doing fine at the old rate of return, even if the ROI doesn’t change. (Even if the price and cost are the same for strawberries, if there’s a bonanza in beets, so much so that produce aisles have to add more space for beets, then the strawberry farmers may find that they have to get into beets or get out, under pressure from banks and having nowhere to sell anymore.). Or in the words of Jesse Jackson, a rising tide lifts many boats, but if the boat is stuck to the bottom or you don’t have a boat, you drown.

    And to quote a lot of people, ya got no friends in this world.

  27. I remember when KU 1st came out I suggested people write shorts stories to be the exclusive “gateways” to their series because I thought having a presence in KU was important but being exclusive can be dangerous to your long-term career. I didn’t, and still don’t, like the share of a pot rather than % of book list price. The “read 10%” is a much low barrier compared to the other subscription services.

    I still don’t think we’ve got a clue on the long-term effects of KU. KDP free worked really well for about a year (?).

    It’s really important that book subscription services not go the way music & movies went in paying creators. Scribd and Oyster have reasonable models although one wonders if, as mentioned above, the “gym membership” model is working out – do more people pay monthly & not use it than heavy/moderate users? Amazon has not done great by indie creators by choosing “pot” over % – do they change as more people subscribe?

    I don’t worry about a glut of books. There has been a glut my whole life and I’ve found many of them frustrating/hurtful/triggering for a number of reasons. The grammar/punctuation/editing might have been overall better but my needs as a reader (female, hearing problems, abused, raped, multicultural world, nerd, tomboy, so tired of male gaze) were ignored. We still have a ways to go on those issues.

    Discoverability has been, and always will be, an issue for authors.

  28. It’s like bears. Photogenic as all hell, good for the ecology, cute when they’re young, yadda yadda. But they’re carnivores. They eat meat. Guess what? You’re made out of meat. Nothing evil about them eating meat; humans eat meat, too. But one wants to be cautious of bears, lest one become their dinner.

    Similarly, as the old saw goes, you don’t have to run faster than the bear, you just have to run faster than your buddy.

    Also: Bears are lovely in their place, but when they get to snuffling around in your rubbish bin, you’ve got to tranq ’em, tag ’em, and chuck ’em back in the woods.

    If they show up at your rubbish bin again, good-bye bear. Otherwise, they might decide to show up in your living room.

    Okay, it’s a strained analogy, but you have to admit, it’s cute.

  29. I don’t think this is very good for readers either. Its going to result in a lot of short stories to be spammed out, and a lot of serialized novels by self-pubbed authors will probably be started but never completed. Poor quality for serious writers, poor quality for readers, and ultimately going to be poor quality for Amazon shareholders in the longer term. Depressingly, probably moderately successful for Amazon in the short term though.

  30. I actually used the introduction of KOLL as an excuse to pull my (at that time, only) book out of Kindle Select and make it available on other platforms– I didn’t see any way I could reasonably expect to make more money with my stuff on KOLL than without, and they offered a free opt-out-early of Kindle Select if you wanted it. Since then I’ve written a second book that’s also available all over the place and I’m actually thinking about putting it *back into* Kindle Select to see if it moves more copies, because that one hasn’t done as well outside of Amazon. Amazon is still definitely my major source of writing income but that’s sort of like saying my back yard is my major source of diamonds at the moment; I’m still working on the “breakout” phase of getting famous. :-)

  31. Well. we’ve all heard of “caveat emptor”. This mess certainly qualifies as “caveat venditor”. Although Amazon’s power limits a writer’s options.

    This is clearly another case where self-published writers should form a guild and sell their books only through the guild. The probability of that is somewhere close to that of me winning the lottery. :)

  32. I don’t really see how a subscription service can be good for both authors and consumers, regardless of payment model. As a consumer, my only interest in a subscription service is if it lets me pay less to access the same content or if it has exclusive content I want to access. It seems like no matter how it’s structured, either consumers overpay relative to buying, or authors get underpaid relative to buying.

  33. The prevailing data/anecdotes I’ve seen regarding this is that, for most authors, KU has resulted in a significant drop in income. (“75%” is a figure I’ve seen bandied about more than once.)

    Having proceeds from KU deposited into a “pot”, then having that pot distributed back to the content producers according to a variable (!) formula controlled by Amazon executives & bean-counters sounds like a bad deal. A horrible deal. A ghastly, gruesome deal. Any contact or agreement where one side, and only that side, can change the terms of the contract at whim, is a contract to stay far, far away from.

    That sort of arrangement reminds me of the old Soviet socialist collectivist farms. Workers turned over the fruits (literally) of their labors to commissars, and the commissars then decided how that food would be redistributed back to the public, including to the people who had produced it. How many Soviet citizens, including farm workers, died of starvation under Stalin?

    That’s right, folks. Taking part in Kindle Unlimited, as author or reader, is… Communism!!! [waves flag, fondles gun, looks under bed] Anyone think that argument might have legs? Anyone think I’m just nuts?

  34. Any contact or agreement where one side, and only that side, can change the terms of the contract at whim, is a contract to stay far, far away from.

    This bears repeating.

    Amazon will change its formula so that it maximizes Amazon’s profit, regardless of the effect on writers’ profits.

  35. Another problem with KU is that many readers who receive free or cheap books leave shitty reviews.

    In October, I did a Bookbub free promo and enrolled in KU. Before that, out of 150 reviews nearly all were 5 star with just a handful of 4’s and a couple of 3’s. I had NO 2 star or 1 star reviews. That’s after 2+ years.

    In the 3 months since those free (and in the case of KU “free-ish”) offers, I’ve gotten several more 3-star reviews five 2-star, out of 25 additional reviews.

    It’s not just the numbers, but the quality of the reviews. They’re often really terse, like “Not worth it,” with no extra details. And, sometimes mean-spirited. I get the impression the immature or impatient “reviewer” read a few paragraphs, didn’t immediately relate, and just chucked the book aside and vented his or her spleen.

    I think there’s a form of cognitive dissonance at work – people who don’t pay decent money for a book devalue it.

  36. “I think there’s a form of cognitive dissonance at work – people who don’t pay decent money for a book devalue it.”

    Hillary, this is exactly right, and is a great reason not to price books at the $0.99 price point independent of Kindle Select.

  37. So your contracts allow the publisher to sell your books any way they want? I would think an author who sells well could demand that they be kept out of subscription services.

  38. Yeah, what Mike said.

    I’m not a fan of subscription services, and am using the library more and more (San Diego rocks, but has a blind spot for Seanan Mcguire, and very limited e-books).

    I’ve borrowed precisely one book from whatever the Kindle Prime borrow one book per month thing is called now, because it is basically impossible to find content on there.

    KU isn’t for me. I can’t see how it is of benefit to authors – I suspect the people who get it will be avid readers and you’re likely to lose conventional sales.

    I do have Prime, there is plenty of content on that.

    Amazon is close to becoming a juggernaut, I suspect there is some anti-trust breakup in its’ future as it sells so much. It’s so easy to buy from and 2 day delivery in prime means that I’ll check the prices with other stores, and if it’s the same, wait 2 days.

  39. There are authors willing and wanting to write than the number that can live from the readers money. This creates a buyers market. The book market traditionally was a sellers market (publishers implemented this by filtering what and how much would appear as book). The popularity of Amazon with consumer is a result of this change which Amazon (together with modern technology) helped facilitate.

  40. John, I think there’s a typo in your post:
    “every time someone with a Kindle Unlimited account reads another author’s work, every other authors’ share of the work becomes that much smaller”
    I think the second “work” should be “pot”.

  41. I recall you saying you’d switched to one of the subscription-based services for music some time ago, John. Got any feelings about being a user of that for music and thinking it’s not a good deal for you? Obviously music is different in many ways, and not just the existence of statutory law about play payments. But I remember thinking about that the last time you opined about subscription writing access.

  42. in theory you can pay people to subscribe to Prime and “read” books all day long until the 10% mark for the authors who contract with you to get paid more. sort of like the download nonsense marketing in the iTunes store

  43. Don Whiteside:

    I use the streaming services for discovery and have a rule that any music I listen to more than three times I buy, because if I intentionally listen to it three times, I’ll want to listen to it more than that, and the artist should get paid. Ironically, what usually ends up happening is that I buy the music and then never download it, because it’s still easier to pull it up on the streaming service.

  44. I don’t buy books from Amazon. There’s not much I like about their business model. I did, however, just buy “Redshirts” from B&N on my Nook, and it’s really good.

  45. Very interesting comments from the writing side, things i had no idea about (scientist here, anything i write i have to PAY to get published in academic journals, so no frame of reference for me).

    I read a lot. I buy books. I used to buy hard backs and paper backs, but now have a kindle and almost always buy ebooks because of the extreme convenience of having my whole library on one device that is easy to hold and easier to transport. (I had to buy book 13 of the Wheel of Time series at an airport and lug the bastard around for a 10 day vacation because Tor/Harriet MacDougal didn’t want to release the ebook for several months. I was NOT a happy camper that week).

    I own a lot of my favorite books in paper, ebook AND audio format, so i like to think i am supporting my favorite authors well, (although now it is only ebook and audio format).

    All that being said, i have no desire to join the Kindle Unlimited subscription service. I have bought some self published books and while some were very good, most were just awful. I look at the KU as me having to wade through TONS of terrible stuff to have to find the gems, and paying a per month fee would make me feel that I would HAVE to read as much as possible both to get my money’s worth and to benefit the author (especially after this post about the payment process). That sounds too much work for something I should enjoy.

    Even when i was a poor grad student, i always bought my books because i like to re read them, I like them to be MINE. I don’t go to the library, i buy books. I bet there are a lot more dedicated readers like me out there who prefer a pay as you go model as opposed to an all you can eat model. At least I hope so.

  46. Books, similar to music, are something that I much prefer to own rather than subscribe to a service for. Thus I remain uninterested in KU. Subscription services are interesting to sample new content, but Kindle’s free sample of the first couple chapters combined with reviews generally makes buying a book from an unknown author a pretty safe bet, so paying for a subscription service is of doubly questionable value to me here.

    Amazon is my primary source of books because of two factors: a. the convenience of being able to obtain the vast majority of books I’d like to read from one vendor, and b. the kindle is simply a superior reading device to various phones, tablets, and whatnot. Luckily one can load other content on the kindle, so if an author wants to sell me their work in a compatible format through some other venue, that’s cool too.

    Given all the ways there are out there for people to purchase content, the biggest hurdle for authors and publishers seems to be DRM which locks me (and them) into single ecosystems — at least in that I’ve invested in many hundreds of books from Amazon, and I like kindle, I have no desire to deal with somebody else’s crappy DRM (in addition to Amazon’s) that prevents me from reading books on the device I want to read them on.

    I do wonder, in the world of social networks, twitter, goodreads, etc, etc, how essential is Amazon to sell ebooks. I’m guessing that lower friction and being part of a big collection is of value, especially for gaining new readers, but is it essential? For authors I already enjoy, I’ll happily buy later books from whereever, provided I can reasonably read them on hardware I already own…

    (okay, that wandered a bit, apologies for the rambling)

  47. I’m not sure that the fact that someone diagnosed positively with Amazon Derangement Syndrome agrees with something that you’ve said means you’re both right. It doesn’t mean you’re wrong, either. It just means that two people said things on the internet that happen to align.

    I think you’re a little early off the bat saying that even the Kindle Unlimited system of paying authors from a pot absolutely and unambiguously make writing and publishing a zero-sum game though, since the size of the pot changes month-to-month.

    Finally, the option of whether to appear in Kindle Unlimited is available to every author in KDP, and they are free to change their minds over time as well. Obviously it won’t be the best strategy for every author, maybe it’s not a good strategy for any author (though many seem to report seeing an improvement in their non-borrow sales while in KU, so probably not). So why bother reporting on whether one corporation or another is your friend? As you correctly report – none of them are.

    Amazon however seems to offer a better deal overall than many other corporations (yes, it’s not a publisher in the KDP sense; no, that isn’t particularly interesting today), so why does it matter if they’re a friend?

  48. @brucearthurs, how’s about calling it feudalism? Everyone has to give their portion to the lord/oligarch, who then stores it up and “gives” it back to the peasants on holidays, minus his cut for, y’know, jewelry and Crusades and stuff. More peasants that usual? Bad crop year? Farm workers gonna go hungry, but Ye Olde King still gets his cut, cuz those castles aren’t cheap (Help, help, I’m being repressed!)

  49. To Hillary Rettig:

    Your comment: “Another problem with KU is that many readers who receive free or cheap books leave shitty reviews.”

    I agree. This quotation applies:

    “People that pay for things never complain. It’s the guy you give something to that
    you can’t please.”
    — Will Rogers

    As for me, I like avoiding what is in vogue. Avoiding what the crowd is doing has served me well. For example, in 2009 when my “How to Retire Happy, Wild, and Free” was selling around 11,000 copies a year, I established a goal of having the book sell 2,000 copies a month or 24,000 copies a year. I decided to concentrate on print sales and not ebook sales even though ebooks were the rage. In fact, I didn’t introduce it as an ebook until around two years ago. When I did, I refused to place this book on Kindle Select or price it below $9.97 as an ebook.

    I like what markeing guru Seth Godin stated about the strategy of low-ball pricing. He called this short blog post “Clawing Yourself to the Bottom”:

    “Trading in your standards in order to gain short-term attention or profit isn’t as easy as it looks. Once-great media brands that now traffic in cheesecake and quick clicks didn’t get there by mistake. Respected brands that rushed to deliver low price at all costs had to figure out which corners to cut, and fooled themselves into thinking they could get away with it forever. As the bottom gets more and more crowded, it’s harder than ever to be more short-sighted than everyone else. If you’re going to need to work that hard at it, might as well put the effort into racing to the top instead.”

    By sticking to my standards and utilizing creative marketing techniques (that 99 percent of authors don’t use), I was able to get the sales of “How to Retire Happy, Wild, and Free” to reach 24,500 copies in 2013. Somewhat of a surprise to me, the total sales of print, ebook, and audio editions of this book have reached 45,000 copies this year (over an 80 percent increase over last year). (Ebook sales will be only around 13 percent of the total.) Keep in mind that I self-published this book over 10 years ago.

    Incidentally, I am now avoiding all subscription services as well. Seth Godin further covered why providing a product [or book] at a cheaper price is not a great idea in another blog post.

    “Will they switch for cheaper? In fact, most people switch for better. Without a doubt, there’s a slot in every market for the cheap enough, good enough alternative. But rapid growth and long-term loyalty come from being better instead. When your product or your service doesn’t measure up, the answer probably isn’t to lower your price or offer a refund to the disappointed customer. Instead, the alternative is to invest in making it better. So much better that people can’t help but talk about it — and so much better that they would truly miss it if it were gone.”

    In short, the key is to create a book that is better than 99 percent of its competition. Then you don’t have to do with your book what the majority of writers are doing with theirs.

    Ernie J. Zelinski
    The Prosperity Guy
    “Helping Adventurous Souls Live Prosperous and Free”
    Author of the Bestseller “How to Retire Happy, Wild, and Free”
    (Over 225,000 copies sold and published in 9 languages)
    and the International Bestseller “The Joy of Not Working”
    (Over 275,000 copies sold and published in 17 languages)

  50. John, even before this scheme the game was essentially zero sum with respect to reading time. Even if read 24 hours per day, the time spent reading other authors means that i m NOT buying/reading your books so you loose advising me to read other other authors.

  51. Damn this article got slashdotted. For those who don’t know slashdot.org is a very high traffic techy news site. Its mainly user submitted contact. Websites have been known to crash due to the increase in traffic caused by a link. To a techy this is bigger than a hugo.

    I think its very ironic that the first post people will see on the blog is John destroying his mouse pad.

    Major props. You are officially cool.

    http://news.slashdot.org/story/14/12/29/2335237/how-amazons-ebook-subscriptions-are-changing-the-writing-industry

  52. Guess:

    Heh. I’ve been slashdotted before.

    Vadim Lebedev:

    It’s certainly true that any single reader has only so much time in the day for reading. There is, however, a vast pool of readers.

  53. Well, the Libertartian Derp crowd over there certainly doesn’t have much sympathy for your position. You A) don’t know what business you’re in, and B) buggy whips, man, buggy whips.

  54. Rochrist:

    Oh, I know. I only got as far as “If Amazon acts economically rationally,” before I started laughing and fighting my urge to pat adorable techies on the head. Heaven help us from people who understand neither my business nor Amazon’s.

  55. @rochrist: What does this have to do with ‘liberterian derp crowd’? They want cheap stuff. I’m sure lots of socialists shop at kmart and sign up for the this Amazon book borrowing thing too.

    @john: uh… what does that line have to do with a techy? I don’t know any techies who use the terms ‘economically rationale’, thats typically used by liberals academics. :P

  56. I’m sure lots of socialists shop at kmart and sign up for the this Amazon book borrowing thing too.

    Possibly, but they don’t make up slashdots core audience.

  57. I don’t know any techies who use the terms ‘economically rationale’, thats typically used by liberals academics

    As a liberal academic: no, it’s not.

  58. Guess:

    “what does that line have to do with a techy?”

    You’d have to ask the techie who used it. I’m curious too!

    Rochrist:

    “So you missed the part where you hate gamers and geeks. :)”

    The secret is out: I’ve been hate-writing science fiction and video games ALL THIS TIME.

  59. My only quibble with the post is that Smashwords is not actually “trying to make a go of the all-you-can-eat book subscription thing,” per-se. It “ships” to Oyster and Scribd (both! And I have gotten small payments from both, yay!), which are doing that, but it doesn’t have that option on its own storefront — just regular sales. The amount that I get paid from Oyster and Scribd isn’t based on a “pot,” but is a percentage of the sale-price of the book in question, as I recall.

    So no exclusivity requirements there, nor am I mandated to opt-in for the subscription markets as well as iTunes, Kobo, etc., and the amount I get is negotiated to be a percentage of sale-price (based on how far they get, there are 2 amounts I can get, if I recall correctly and I don’t feel like double-checking); if they read 90% or more, I believe I get pretty much “normal” royalties. If that changes to a point where I’m actually seeing issues, I could always uncheck those distribution options, at any time.

    …I have reasons for not going Amazon-exclusive. >_>

  60. I tend to agree with John Barnes and Vadim that you are making a fair amount of assumptions, particularly on Amazon’s part to get to the Zero-Sum argument. They may be correct, but it would be a bit of killing the goose which lays the golden eggs. On a (related) side note, have you seen the direction publishers are going with authors per Kristine Kathryn Rusch – http://kriswrites.com/2014/12/17/business-musings-what-traditional-publishing-learned-in-2014/#sthash.XSb9NUMn.7qOD8uKa.dpbs I found it fascinating to see what the major Publishing Houses are angling to do to authors. Thanks for all your writings and thoughts.

  61. 1) Amazon ALWAYS thinks Zero Sum Game. Look at every line of business they are in. They never go for creating of new income streams. They just try to destroy existing ones.

    A9 Search
    Kindle Fire Phone
    etc.

    They are ‘competitive and destructive’ by nature, and not creative.

    What big new profit stream have they created?

    2) Indie Authors were happy when Amazon was taking a share of the tens of billions of dollars a year books business and handing them hundreds of thousands of dollars while destroying that revenue/reducing it substantially.

    Now, they’re seeing step 2 – their income getting cut.

    The end goal is simple –
    Books will be the loss leader that gets people to buy fridges and TVs at Amazon.

    3) I think it’s very telling that people are still not getting the real point of all of this.

    It’s to marginalize authors and turn them into slaves who work for free for ATTENTION.
    While all the VALUE created is used as an incentive – So readers feel

    We get free books. Thank you Amazon. Now I’ll buy my groceries from you to thank you for the free books and other free content created by nameless statusless creators who get nothing except the promise of winning the lottery of 1% success.

  62. There seems to be an underlying assumption on many of these blogs that Amazon and publishers exist to service authors. They don’t. They serve readers, hence the new subscription models and other facets of publishing that authors don’t like. The unpleasant fact remains that authors are an expense to publishers and retailers whereas readers are an income source. So who would you please if you were in their shoes? And it’s a buyer’s market for publishers with many thousands of writers out there (many of them quite good) deluding themselves they can make a living writing. That’s never been the case for 95% of authors. The New Yorker had a great article about 15 years ago that examined the world of advances and the market for literary fiction. They posited the total market for literary fiction at about 7,000-10,000 copies and noted that almost all of those sales were to libraries. Yet that’s not enough for any author to live on even with a publisher’s advance of, say, $15,000, which is less than you can make annually at McDonald’s. Even if that author self-published those 10,000 books at Amazon for $4.99, his take would be in the low thirties, but to make a go financially assumes a consistent sale every year of that number. Aspiring authors remind me of kids in the ghetto playing basketball and operating under the assumption they’ll make millions playing pro-ball. A minuscule percentage of them might. The rest won’t.

  63. I’m not in the publishing business and John may call me a ‘cute techy’ for floating this… but has anyone thought of this?

    Has anyone considered selling books on 3rd party sites like Good Old Games? They are selling videos now and might be interested in adding SF books. 1 purchase and the purchaser can get all online media formats. The incentive for an author to do this is you can likely negotiate a higher percentage than you could with Amazon/Apple. The bandwidth to host and download books is alot lower than what is required to download games and movies for GOG. For the customer, its a way to get all formats so your not tied to 1 product. Some of these ‘ereaders’ are going to go out of business.

    I think you can still get this to work with Kindle Right? I have an ipad and I downloaded Worldcon stuff to my PC and sync’d it over. You could likely negotiate a better deal with someone like good old games. You can do that on top of selling directly on Amazon/Barnes and Noble.

    Anyone know if the writers groups like the SFWA have considered changing membership rules to let in some of self published authors? Some of them are making a tremendous amount of money. I went to kboards.com (linked from the NY Times article) and I saw a roman author named HM Ward post there. She said that she normally gets $5.60 per book sale from Amazon(which is why she doesn’t like the subscription services) and I believe I read that she sold 6 million books. She could retire… I know there are few authors like this, but wondering if any of the associations have talked about expanding?

  64. Guess: As I understand it, you can upload unlocked ebooks to a Kindle or Nook reader, but if you want to use Digital Rights Management to protect the content, then you have to get the blessing of Amazon or B&N, respectively.

    But the Nook, at least, uses DRM and reader software licensed from Adobe. I don’t think there’s any technical barrier that stops a major publisher from licensing the same software, making ebook-reader apps for Android and iOS, and then offering customers some incentive to download and read ebooks through their own app. (There’s probably a human barrier, in the sense that a corporate culture that is well-fitted for producing and marketing books is likely to suck at producing software, at least for the first few years that they try it.)

  65. I’ve been watching KULL for s while now, and am finally ready with a _knowledgeable_ opinion. 1) Normal advertising cost money to introduce you to potential readers. 2) KULL *pays* you for introducing you to potential readers, no problem? It depends on who you are, and what you write. James Patterson/J.D.Robb/Larry Correia/etc. are not going to gain much from KULL exposure. Thousands, if not millions, know of them and are aware of what they write. They benefit from having _one_ book available, for those not familiar with them. For the rest of us, having at least one book definitely benefits us, the same as occasional “get this book for free” does. If you write in multiple genre, having one in each, would definitely help.
    The point is that it is like being in a library, or “book of the Month” club. You don’t make much, if any, but you get _exposure_. As time goes on, Amazon may change the rules to reflect length, and payment, but that’s up to them. I believe they will, to stop the 20-30 page books, being put in. Like any system, people will try to “game” it to make more money. No realistic person expects any “system”, to be perfect the first time. Experience tells you what and where to change, to make it better.

  66. @Walter Daniels

    The trouble with this is that, as time goes on, exposure (at Amazon any rate) becomes worth less and less, because the very concept has become illusory. When you are one of ~3,000,000+ (and growing exponentially) self-published books in the Amazon catalog, it’s almost impossible to gain any visibility at all. You end up lost in a sort of literary soup of ….beige! :)

  67. Re. comparisons to music and music sales following

    While very similar, the music industry has something that the publishing industry does not: Streaming listening. Publishers don’t have to deal with Pandora, iTunes Radio, or Slacker or even broadcast radio. All of which are free (or have a free level). It is not unreasonable to say that the decrease in music sales is more related to the rise of Pandora than the launch of Rhapsody or Spotify.

    Note: Rhapsody as a subscription model has been around a lot longer than the decrease in music sales. Not so much the case with Pandora.

    Re. Harry

    It’s zero sum in that every month has a fixed amount of money available constrained by subscriptions but an unlimited amount of consumption due to the nature of the model. In short, the more people read the lower the payout for authors. Note that this doesn’t mean that “your gain is my loss.” It’s more like “your gain means that we both lose a little.”

    Re. Lilybily

    In the business world that’s, perhaps ironically, called spoilage (or breakage). Unused subscriptions will definitely be accounted for as Amazon trends usage over time and adjusts the payout. It will undoubtedly grow but should stabilize. We really won’t know the true range of KU payout for months as these things are trended.

    Anyway, I posted a (probably overly) lengthy review of the economics and background of the Kindle Unlimited Subscription model, along with some specific assessments of author impact.

    http://jakekerr.com/2014/12/30/making-sense-of-kindle-unlimited/

  68. I wouldnt have a problem calling this evil. Mind, there is evil==genocide, and there is evil==robbing banks and there is evil==gambling bank money on risky investments then lobbying for a bailout. But this is purely selfish at the expense of others, with all terms set by amazon after the fact. Its like a variable interest rate mortgage, where the bank pushes how great the rate is now and downplays how high it go in the next 30 years. But at least with the mortgage, the rate is usually a f7nction of some external rate, like prime+.25. Here, amazon is saying you get a percentage of some monthly pot, and amazon sets the size of the pot. It is asking you to contractualy accept a posible bait and switch at any time in the future. By getting authors to accept that amazon can arbitrarily set the size of the pot, how can authors then argue that the pot is too small down the road when it is cut in half?

    The entire point of fixing the royalty up front is to give authors the option of shopping around and to have publishers commit in advance to some percentage. Making it entirely arbitrary based on the whims of the publisher is evil.

    There are business transactions that are win-win and fall into the category of morally “good”. This is attempting to turn the entire industry on its head so that amazon is the only guaranteed winmer, and if anyone else wins, it is entirely at amazons discretion.

    Its a variable rate mortgage where the lending bank has complete control over an entirely arbitrarily set loan rate. Thats not just “business”, thats evil.

  69. I like a compromise of subscription model. All the books you can read, but you have to pay individually for the last 25% to 50%.

    One of the things I hate about ebooks is sample size.

    In a bookstore, or library, I do the following
    Look at the cover
    read the back blurb
    read the first page
    flip to the middle of the book and read a few pages (about 50%)
    flip to the end of the book and read a few pages (about 90%)

    If I like the book at any point, I stop and get it. I usually have to take a music CD home from the library to try, but use the same method.

    My experience with most ebook automatic samples is 85% copyright information and 15% content. Some of my favorite authors get around this by releasing a free sample of a novel that contains more content.

    Until Amazon got involved with Baen Books, Baen tended towards a 50% free sample size, now they are smaller. With Baen’s original 50% free sample size, I bought many many books, Yes, even the short story collections, and was only burned once (the novel seemed to changed genres two chapters later). With the smaller free sample size, I have passed on more books than before (this may be also a result of favorite authors taking semi-retirement/ writing longer books).

    I would gladly pay a monthly fee, for non-exclusive books, if I could read 50- 90% before deciding to buy it.

    I also wonder if ebook authors will start adding donation button/ web URLs to recoup some of the loss.

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