Scammers and Fixed Pots

Lots of news in the last couple of weeks about Amazon Kindle Unlimited scammers, who are creating 3,000-page books filled with mostly garbage because that’s what lets them take advantage of the way Amazon pays authors participating in the KU scheme: Amazon tracks the last page synced and pays out by how far into the book someone’s gone (as opposed to read).

This is bad news for actual authors with actual books, because a) actual books are generally much smaller than three thousand pages, and b) Amazon doesn’t pay a set rate per page — it defines a KU “pot” of money for each month and then pays out to authors by the number of pages they register readers as having gotten through, as a proportion of total pages read on the service that month. So if (purely as an example) Amazon defines the payout pot for KU as $1 million for a month, then all the authors participating have to split that $1 million — and the scam artist with the fake 3,000-page book is going to get a larger chunk of that $1 million than the actual author with a 300-page book.

Bear in mind that no matter what compensatory scheme Amazon does for its KU system, someone is going to find a way to maximize it. Before the current “pages read” scheme, Amazon paid out when a certain percentage of a book was gone through, which drove authors to create very short books that would hit their payout percentage with just a couple of page flips. It was this gaming, presumably, that caused Amazon to change how it did its payout. If and when Amazon changes its payout scheme (again), people will find out how to game the system under the new rules. It’s what happens.

(Nor is adjusting one’s work to take advantage of the market a problem; publishers have always done this. Is the money is cheap paperbacks? They will make cheap paperbacks. Is the money in hardcovers? They’ll make hardcovers. What, novellas are the next big thing? They’ll all make novellas! Likewise, if Amazon is saying to self-pubbed authors (and, by extension, scammers) “[X] is the way we decide to pay you,” then it’s rational to do [X].)

The problem with the Kindle Unlimited scammers isn’t really the compensatory triggers of KU or the fact that everyone, legit author or otherwise, is looking for the way to squeeze as much money as possible from it. The problem is: who bears the immediate economic brunt of the scammers taking advantage of whatever scheme Amazon decides upon? Well, it’s not Amazon, that’s for sure, since its financial exposure is only what it wants to pay out on a monthly basis; scammers in the system or no, Amazon only pays what Amazon wants to pay. The readers also get off lightly; their economic exposure is only they flat fee they pay to access KU.

So that leaves the actual authors, whose share of a fixed amount of money is being diluted by bad actors who see how the system can be gamed and are cheerfully gaming it as fast as they can. It is the authors’ problem because Amazon doesn’t pay out like it has to pay out for printed books, where each unit sold has a contractually-defined royalty that is independent of any other book or author and how well they are selling. Again, Amazon pays from a pot it defines and controls and which is limited; in effect pitting authors against each other, and all of them against the scammers. In this case the scammers are winning because it takes almost no time to create a scam book, assign fake accounts to “read” it, and profit; meanwhile writing real books actual people would invest their time in is still the same time-intensive effort it always was.

Is this fair? Well, life’s not fair, and in business (which this is) you get what you contractually agree to. Kindle Unlimited authors presumably know that they are only going to get what Amazon is willing to give them for their participation; they also presumably know that their marketplace is “fair,” with regard to scammers, to the extent that Amazon wants to make it so; they also presumably know that their ability to force Amazon to do anything to deal with scammers is exceptionally limited because the KU agreement privileges Amazon over individual KU participants to an extraordinary degree. KU participants, by participating, have agreed to let Amazon shift the financial risk over to them.

(Well, some of them. It’s my understanding that there is a tranche of authors — generally hugely best-selling, generally not self-published — whose participation in KU is through other deals where their compensation is not tied into an Amazon-defined pot. Good for them! And another reminder of the issue of “fair” in publishing — nothing’s fair, everything is what you agree to in contracts.)

That being said, if Amazon doesn’t eventually deal with the scammers, then it will become their problem: Authors, quite reasonably, won’t want to participate if scammers are taking money that should be going to them, and readers won’t see the value of the KU subscription if authors stay off the service. Humans are bad-experience avoidant, and it doesn’t take many bad experiences to keep people away. It’s in Amazon’s best interest to fix this. Eventually. I’m pretty sure it will.

But only to a point. Amazon is very very very unlikely to ever make Kindle Unlimited a scheme that doesn’t rely on a fixed payout, defined by Amazon itself. And that is why, at the end of it, KU (and, to be clear, other subscription services with a service-defined payout pot) will always disadvantage authors in terms of how much they can make, and why these authors will always suffer first and foremost from scammers — because there’s only so much money for authors in the scheme, and that’s the money scammers are taking. There will always be scammers and people who will game the system; so as long as the KU scheme pays out from a fixed pot, authors participating in it will always be the most vulnerable to their actions.

Amazon should deal with its KU scammers. It should also compensate KU authors for their work independent of how other authors are doing, or what they are doing, or what scammers are doing. The first of these is rather more likely than the others. If you’re an author participating in Kindle Unlimited, know what you’re getting into, and the fact that it’s you whose money is on the line when the scammers game the system.

56 thoughts on “Scammers and Fixed Pots

  1. Whenever I post one of these articles, I get the “Ohhh Scalzi hates Amazon and self-publishing!” crowd saying I hate Amazon and self-publishing, so as a reminder:

    1. Amazon is one of my publishers (via Audible) and I have been super happy with how they’ve worked with me. Amazon has also (through its imprints) published friends of mine and done well by them;

    2. Pointing out the fact that Amazon advantages itself in its business dealings with authors makes it no different than any other publisher or business entity. i.e., it’s not arbitrarily more evil than other publishers (or conversely other publishers less evil than Amazon), and making it about “evil” is a silly and reductive way of going about things;

    3. Anyone who knows how I got my start in publishing will understand why I giggle at the suggestion I have anything against self-publishing.

    That said, no, I probably wouldn’t participate in a KU-like scheme unless I was in that tranche of authors who got paid outside of the pot.

  2. It seems to me that KU should offer the readers an option to flag fraudulent books… or just incorporate reader reviews into the payment equation…

  3. I’m curious why you wouldn’t participate in KU unless you got paid outside the pot? (I’m assuming you mean that if you were self-publishing). Amazon is by far the largest market for self-publishing, most of the self-published authors I’ve seen talking about it say Amazon is between 80-90 percent of their sales – and KU, at least for me, provides between one-third and half of my income (many authors on the Amazon forums report like numbers).

    As to the rest, as a self-published, enrolled in KU, author, I agree with every word. Amazon has been great to and for me. They have countered the gamesters in the past, I have no doubt they’ll counter the current gamesmanship, and do everything they can to thwart those wily bastards in the future.

  4. Interesting. It’s the same payment model as a video training site that I work with. They don’t have this problem (that I’ve seen) because they have people editing and vetting each video. It wouldn’t be possible, without collusion, to get a ‘fake’ video in.

    I’m guessing Amazon can’t/won’t put in a process were books submitted to KU get checked to make sure they’re not thousands of pages of garbage. Too much cost overhead probably.

  5. “It should also compensate KU authors for their work independent of how other authors are doing, or what they are doing, or what scammers are doing.”

    But that doesn’t really make sense from a financial perspective, does it?

    The readers are paying X amount of dollars/month; the payout-pool for authors/copyright-holders is thus financially limited to X minus Amazon’s cut; getting close to X or even over X is not viable.

    Of course the current m.o. of Amazon setting a fixed payout-pool instead of a dynamically fluctuating pool dependent on subscribers is “unfair”.

  6. G.R. Cooper:

    Because philosophically I don’t like the idea of my success disadvantaging others and also because (as noted) the set-up punishes authors for scammers taking advantage of the system.

    Alphager:

    “But that doesn’t really make sense from a financial perspective, does it?”

    From the author’s perspective, it certainly does. Less so from Amazon’s, which is why it’s very unlikely to happen. That said, you do seem to be working from the idea that Amazon’s pool of money available for author payment is limited to the number of subscribers it has for KU; rumor is, that’s not Amazon’s only source of income.

    Also, of course, if it were, the question then becomes why authors should be obliged to participate in a scheme that caps their income simply because that’s the business model that the venue itself can make a profit from. Seems to me that if a business can’t make money other than by setting a hard limit on what the people whose work draws people to it can make, maybe it doesn’t deserve to exist.

  7. The problem with Kindle Unlimited goes back to the fact that, when the Kindle was originally designed, nobody had any earthly idea that one day people would be paying a monthly fee to subscribe to a service that compensated authors based on their book being read rather than bought. As such, the system was built according to principles of standard retail sales, and attempting to retrofit some other method of compensation onto it has necessarily been a quick-and-dirty kludge so far. And the thing about quick-and-dirty kludges is that they usually leave loopholes you can drive a truck through.

    If Amazon wants to keep using the current pay-per-page-read scheme, it should see about implementing a firmware fix to set up Kindles to track each individual page that’s read, rather than using the last-read marker intended for use in syncing reading positions across devices to do something it was never meant for.

    Until then, all the fraud-fighting it wants to do is just going to amount to plugging holes in a dike with its thumb—a temporary fix that doesn’t solve the underlying problem until the structure is actually repaired.

  8. Amazon gives you the option of flagging content as inappropriate. I would like to see “fraudulent product created to mislead the consumer” as a flagging option. For example, there was a product attempting to capitalize on the success of the book “My Brilliant Friend” that had essential made a small alteration to the book’s cover art and stated that it was a deeper analysis of the book. The reviewers were giving it one star reviews so I flagged it for being a misleading product.

    It looks bad on Amazon when they do not manage their marketplace better.

  9. From an author’s point of view, the problem is that Amazon has fixed the pot and that anything scammers can take from it is money taken from them.

    But from a reader’s point of view the problem is different: the money I am paying in my subscription is not going to the authors whose work I have valued enough to bother reading it.

    That may be a a more important way of looking at it, because it may point the way to a better solution which is less dependent on constant games of whack a mole. Scammers scam because they can make money, and they can only make money from appropriating some of the subscriptions of ordinary, non-scamming, readers. That works because all the subscriptions from all the readers first go into a single pot, which is then divided by the number of qualifying books read (which may or may not be genuine books read by any genuine person). But it doesn’t have to be like that: if my subscription is first divided between the authors I have read, then the total payments are much better aligned with the total preferences of the readers – and the game for the scammers is much more difficult.

    That seems to me a really good idea – though not one I can take any credit for. I first saw the argument made in this post by Sharky Laguana, applying it to Spotify rather than KU, but as far as I can see the underlying issues are the same.

  10. Robotech_Master:

    “when the Kindle was originally designed, nobody had any earthly idea that one day people would be paying a monthly fee to subscribe to a service that compensated authors based on their book being read rather than bought.”

    Given that the Kindle debuted in 2007, by which time streaming music services had existed for a number of years, I find this argument somewhat unconvincing. I suspect Amazon had at least an inkling that a subscriber service was possible and/or desirable at some point in the future.

  11. “the number of pages they register readers as having been gotten through”? really? And you call yourself a writer. ;)

  12. I’ve looked at selling my writing through Kindle, several times.

    I don;t think my writing is so good, and Amazon promotes the mean return, not the mode or median. Your income, sir, would be exceptional, whatever the method of publishing, You are one of the happy few contributing to that tempting Amazon average.

    And then they want to pay me in the USA, and pay American taxes. That’s fine for you, you’re already in the system. There are tax treaties, and Amazon seems to have changed the details a little, but for the likely return to me, staying legal is a lot of effort. I am not sure I can earn enough to pay for the postage stamps I shall need.

    And, here in Europe, Amazon is being looked at over some rather dodgy tax management.

    Meanwhile, at least some of these scammers may be breaking US law, over the same tax identity rules as I face, and over tactics that sound awfully like wire fraud.

    Amazon, way back, was a pretty smart bookseller. They had a good idea of what I liked to read. All that seems to have gone. They’re not a bookstore any more. I can’t think of any names that really fit, but maybe Woolworths. I do remember getting books at Woolworths when I was a kid. Now Amazon, like most of the huge retail companies, seems to make their money by dodging taxes.

    You have an agent. You have a publisher with a legal department. You and Amazon can both make large amounts of money by dealing with each other.

    From here, at the other end of the long tail, they look like crooks.

    It is not a game I care to participate in.

  13. I went back and set my titles to fall out of Kindle Select and Kindle Unlimited as soon as all this sketchy nonsense started. Publishing was never likely to be more than a hobby for me anyway, and I didn’t like the payment models … would prefer that if someone is getting one of my books, they are doing so intentionally. If I want to sell more, I should market more, because there’s no point making a sale that you don’t get paid for unless you are DELIBERATELY giving the title away for free.

  14. I am self-published through KU.

    There are two components to this mess that haven’t really made it into the general kerfuffle:

    1) the situation has dramatically improved from the perspective of the authors drawing from the pot and degraded from the perspective of the reader. Why? Prior to February, there was a) no cap on pages and b) no enforcement of the rules against linking to the back of the book. So what we had was 20,000 to 50,000 or even more page books with a link at the front. Luring even a few readers into this made a lot of money.
    With the 3,000 page cap and Amazon now using an algorithm to pick up the links to the back, the impact on the pot has been visibly reduced. (The payment per page read in January was .41 cents. In February and March it was .48 cents)
    The cost has been that the scammers have moved on to putting out dozens of 3,000 page books where before they’d do one utterly immense one. This has overwhelmed the new release lists in several genres.
    Amazon appears to be moving on these, but with their usual ‘clumsy giant with a flamethrower’ grace.

    2) These scammers don’t need to snare legitimate readers anymore. As David Gaughran and Phoenix Sullivan cover in their excellent summary of the issue here:https://davidgaughran.wordpress.com/2016/04/15/ku-scammers-attack-amazons-free-ebook-charts/ the hardcore scammers have moved on to utilizing clickfarms and co-operatives and have effectively created a closed ecosystem.
    That doesn’t mean the books don’t show up in searches and genre lists – they are burying legitimate books in multiple genres – but that they don’t NEED to fool legitimate readers anymore.

    I find the fixed pot payment scheme problematic from my side, but I can see how it controls risks for Amazon and seems to be one of the few ways to run a subscription service without going bankrupt.

    But as Scalzi says, I read the contract. I knew what I was getting into. It may not be very fair, but it’s what I agreed to!

  15. It doesn’t have to be a fixed pot. It could be a percent of subscription revenue.

    If it’s in Amazon’s interest to discourage scammers, they could do it. Not eliminate, of course, but discourage. Including paying real people to read books and kick out the utter junk.

  16. Scammers are like sewage: wherever there’s a crack in the wall, they’ll find their way through it. Now that the issue is coming to light, Amazon will look to fix it.

    In Kindle Unlimited (KU) version 1, the way Amazon tabulated a read—10% of the book’s total length—greatly favored authors of short stories. A lot of novel writers bailed out of KU because they were making no income and writers of short stories were raking it in with readers doing nothing more than a quick sampling of the first page. The KU Library became filled with short stories as writers themselves switched format to make money. Readers complained that full-length novels were disappearing from KU. Amazon had to do something to fix that. A year after KU v.1 began, Amazon rolled out KU v.2.

    KU v..2 went with the page-count model. This solved the problem for novel writers, and they began to carefully rejoin the Kindle Unlimited program. Naturally, short-story writers took a hit as the model removed the loophole that was generating a lot of income for them. Readers became happier as novels began to reappear in the KU Library.

    However, many authors didn’t like the lack of transparency from Amazon. Many complained that Amazon was being very vague about how the page-counts and page-reads were being tabulated. A lot of writers were hoping they would get reports on how many pages of their books were read by each reader. A good way to tell if there is a problem in your book is if everyone reads it up to Page ## and then stops.

    Thanks to the article linked above, we now have a pretty good idea how Amazon was tabulating pages read. Likely, Amazon will get a fix in place fairly quickly as readers begin to complain about being scammed.

    For the record, I do NOT take part in KU. The rate of pay-per-read is below what I would make on a sale of the book. Also, there is absolutely no incentive for the reader to actually BUY the book once read on KU. I just cannot afford to go that route. Also, to participate in KU requires the author to be exclusive to Amazon. I don’t like the idea of putting all my eggs into one basket.

    I would prefer to see KU change their consumption model to a reader may read as many books as they want, but they may only read any given book just once. If they want to buy it again, they must pay for it. (I would even be favorable to a KU reader getting a 20% discount off the list price in that event.) Then I would consider going into the KU program.

  17. It is really simple to solve. Say I am KU subscriber I pay x amount to subscribe each month. Amazon takes a portion to run the service,this leaves y to go to the authors I read. Say I just read one book the all of y goes to the author of that book. If I read multiple books just portion the money out based on number of pages read. Do this for each subscriber. So the system can’t be scammed as if you have a bit to pretend to read books then the bot can only give out it’s y in a fraudulent way, it can’t effect which authors my y goes to….

  18. As a reader, I wasn’t very thrilled with all of the 300 page novels suddenly being broken up into 10 or 12 or 15 “parts” to game the KU system.

    But what really bugs me, even more than the “readers guides” that are designed to look like the book but is just a quickie summary, are the fake books published under the names of REAL, WELL KNOWN AUTHORS.

    The most prominent one right now is the fake “Stephen King,” who has a bunch of short stories (often priced like novels) that are selling to the real Stephen King’s fans, who in term write 1 star reviews about how terrible they are and asking why King is selling an awful short story for $8, etc.

    Even though Amazon has been notified numerous times, even by King’s office, they still list the fake Stephen King’s “books” on the real Stephen King’s author page from time to time — and the fake books ALWAYS show up in the “because you purchased X, you might like Y” emails for Stephen King readers.

    There are other examples, but that’s the one that I get asked about almost every single day by confused/angry readers. All I can tell people is that Amazon doesn’t care because they get a nice cut from each sale, so why would they do anything about it?

  19. “Because philosophically I don’t like the idea of my success disadvantaging others and also because (as noted) the set-up punishes authors for scammers taking advantage of the system.”

    Fair enough. But as one of those KU authors, I *want* big name authors to join, especially those with which I share a genre.

    Big names would attract subscribers into the system. After those subscribers read through your one book per year, that would leave them with probably 360+ days left in the year in which to find and read my books. I honestly believe that big name authors more than make up for what they take out of the pot. Maybe I’m naive.

    And as you pointed out, the system isn’t perfect by any means – but my share of the pot (payout per page read) hasn’t really changed appreciably since they started the new system. I’m sure there are people taking advantage of the flaws, and maybe it has made a difference in my bottom line, but I haven’t seen anything to indicate that it’s anything other than a minor issue. I worry more about the subscribers seeing nothing books and giving up on KU than I do about someone tricking readers into diluting my payout.

    Again, as you point out, the old system was broken *far* worse – paying by the checkout instead of page read led to a lot of 8 page “books” that got their “authors” as much per read as a 1000 page novel. As broken as the current system may be, it’s better than the old and I know that it’s in Amazon’s best interest to fix it – if not for authors, then for the subscribers.

    I’m glad you’re helping to raise a stink about the issue, though – from the bottom of my heart. I don’t just want KU to improve, I *need* it to.

  20. I think Jeff Vogel did a nice job writing about the “Indie Bubble” of video games in his The Bottom Feeder blog, and made the point there that the pot of money in any given month is fixed. That is, consumers only have so many dollars to spend in any month on games, regardless of how many games are available or how good they are. I think this has proven true in that market, and is probably true in books as well. That is, regardless of Amazon policies, the pot is fixed. Only so many dollars are going to books by any publisher in a month. Amazon may be stingy or generous – it would be nice to have more transparency – but I don’t see the fixed-pot situation as artificial. Any thoughts on that?

  21. The first problem is amazon’s flat rate approach. Every user pays a monthly fee. Amazon should be allocating some percent of all subscription fees to authors. ten bucks a month for KU? For every subscriber, say 5 bucks a month goes to authors. Then how to allocate the money? I’d say take each user’s total time reading, and divvy up their five bucks to all the authors they read based on how much *time* they spent reading a work. If you spend your entire time on KU reading one book, then all of your five dollars should go to that author. Spend 10 hours in a month reading 4 books at 2.5 hours apiece? Each author should get $5/4 for that month. If someone spends 10 hours on KU and wastes a few minutes reading some scammer work before deciding its garbage, then the scammer should get a few minutes divided by 10 hours spent that month.

    That would be the fair approach to authors, while protecting Amazon from being forced to pay out more than they bring in. Amazon would be protected and guaranteed to make a profit, and authors would be rewarded based on how many people actually read their book. And scammers would have to write books that people spent hours reading for them to make any money, which would at least weed out the garbage-book generators.

    The thing is, Amazon doesn’t want people to know how much money they make on KU, so they’d never agree to something like this. They want an opaque system so they can pick and choose exactly how much goes into the pot, and neither users nor authors have any idea how much money Amazon is making compared to how much money authors are making. And readers have no idea how much of their money is making it back to the authors.

    Probably the only way to force a change would be something like an anti-trust suit which at least forces Amazon to be transparent about its KU money so authors and readers can make an informed decision about whether the deal offered by Amazon is fair to them. Right now, readers and authors are making blind decisions, because Amazon operates as a black box. And that’s entirely to Amazon’s benefit, but also making it impossible for readers or authors to make any sort of informed decision about whether or not the deal they are agreeing to is actually fair to them or not.

    Without that information, the idea of “fairness” is arbitrary. Which Amazon likes, because they can arbitrarily say their contract is “fair” and people can only shrug and go “I suppose”, being forced to take Amazon’s word for it.

    If people want fairness, they need transparency.

  22. One day people will wake up en masse to the enormous damage Amazon has done to books and readers of books. I can’t even use Amazon to find books by any author I don’t already know anymore without fear of being buried under piles of ROMANCE: BBW ROMANCE: Rekindled (Second Chance Billionaire Bad Boy Romance) (Billionaire Alpha Male BBW Contemporary Romance) and Really Really Big Space Battleship Shoots Things and The End of the World Cause Liberals. I look forward to that.

    Note: Only the first of those is an actual title. I paraphrased the other two.

  23. I’m with Robotech_Master on this. Amazon could implement a scheme that records every single page read, and thus they could pay based on pure pages read. As an engineer, this “we’ll assume the last page read means all pages up to there were read” screams “we don’t feel like making the effort to do it the right way, let’s just hack together something that seems to work”.

    Subscription models for books may have been spinning around in Bezo’s head in 2007, but that does not at all mean that anyone bothered to tell the engineers. Most likely they got a memo that it had to be supported in a couple weeks and “make it work”.

  24. @Ben Holm there’s a fixed amount of sunlight but that doesn’t mean the person controlling the window shade can’t artificially set the amount of light a plant gets. The theoretical maximum is less relevant when someone can arbitrarily set a lower, actual maximum.

  25. I just want to make a point that’s easily overlooked, in all this talk about Kindle Unlimited and Kindle Select:

    You can self-publish ebooks on Amazon without going through KU or KDP Select.

    Kindle Direct Publishing bypasses the whole mess. You put your ebook up for sale, you get paid for each book sold.

    You don’t have to be exclusive to Amazon, either. And you get a far better royalty rate than with traditional publishing.

    It’s easy to overlook this option because (of course) Amazon would prefer you go with either KU or KDP Select, so when talking about self-publishing they feature information about those two programs. And the fact that Kindle Direct Publishing is often referred to as KDP makes it easy to confuse with KDP Select (NOT the same thing!).

    When I got the rights for my out-of-print novels back from my publisher, I re-released them myself throught KDP (NON-Select). I’ve done really well with them — and I’m also free to also sell the ebooks through IBooks, Kobo, Smashwords, etc.

    My self-published royalities through Amazon have already surpassed my total royalies from my original publisher.

    So, if you didn’t already know — remember that KU and KDP Select are not the only options for ebooks on Amazon. And don’t confuse KDP with KDP Select!

    https://kdp.amazon.com/

  26. The trouble with the Invisible Hand of the Marketplace is
    that you don’t know where it’s been.

  27. “I have a hard time understanding how Kindle Unlimited is better than my local library’s ebook lending program.”

    Hey Charlie!

    For writers or readers?

    As a reader, I think the main difference for me would be that at least my local library program had a pretty limited selection (a few thousand books) compared to KU and that they could only check out X copies at a time (usually 1 or 2 for most books). For the popular books, my spot in the queue usually meant waiting months to read a hot new release. With KU, I could just dive right in whenever I wanted.

    For writers? I have no idea ;-) Maybe that KU seems to effect your books ranking, and being at the top of the sales lists gets you in front of more potential customers (I noticed that when I got into the top 100 in Science Fiction books, my sales increased dramatically, and when I got into the top 100 authors, they went through the roof).

  28. Amazon does not need or want to have a subscription service for books, nor does it care a crap about indie authors. It does not use a pool of money for that service because it would be hard for one of the biggest companies in the world to fund a book subscription service otherwise.

    Amazon started with books as its lead product for two reasons: 1) print books had a return refund consignment system that meant less cash risk, especially since Amazon priced them as a wholesaler, not a retailer; and 2) book customers are on average well-heeled, educated desirable consumers who would buy other Amazon products and whose demographic and buying data are big money-makers to sell to marketing companies and industry. That’s also why they bought Goodreads. They make way, way more off of selling data from book customers than they ever have actually selling them books, electronic or otherwise.

    All the indie publishing, just like all the publisher publishing, is a big data gathering pool. The exclusive service (Kindle Select, for which they charge more fees but claim they are doing more marketing,) which requires you to be part of the subscription service (Kindle Unlimited,) helps Amazon maintain its monopoly on indie electronic publishing and provides oodles of data mining — from the customers themselves who subscribe to exactly what they read, and how far they read in. That’s a number that is worth money to Amazon to sell, more than the subscription service itself probably.

    Logically, Amazon should have no pool and pay authors a set fee for each download based on size of the file with a much smaller cap — 1,000 pages, with how far a subscriber read of it or if they read it at all unimportant. That’s a much simpler accounting model. (This would not stop scammers obviously.) But how far the subscriber “read” into a file is important if you’re selling that data (as well as the data on the indie authors who opt to join the service.) For Amazon, policing scammers or stopping authors hustling for more of a pot by cracking novels into serial installments is pretty much unimportant, just as how many indie authors actually sell decently on KDP is unimportant. It doesn’t matter how useful the data may actually be, whether a book is fake or real. It just matters that the data on it on marketing and purchase trends will sell. Kindle Unlimited is a data sink.

    Amazon offers indie authors wide access to a pool of desirable customers, fairly cheap marketing services and helps with production for its platform for fees. It does not provide full marketing or distribution of the marketplace, but it can certainly be sufficient. It provides a reliable retail selling platform easy to link to on the Web. Additional services can be purchased for additional business costs. So authors wanting to go indie can do actual number calculations about the costs of Amazon’s services and access as a business expense relative to the number of copies they’d have to sell through Amazon to make sufficient profit minus their other business expenses. (And again, even though Amazon calls the net income it passes to the author royalties, it is not royalty income, it is not the same set of business circumstances.)

    When it comes to Kindle Select, authors have to make similar pragmatic business calculations. Are the increased marketing fees that eat into profits, the exclusivity to Amazon as the only seller as opposed to multiple sellers, and the substantially reduced income from being in Kindle Unlimited subscription service per unit sold (downloaded) — i.e. an increase in your expenses and a downcrease in income amounts from the different streams (because KU increases your expenses deducted from your earnings as a subscription sale) — sufficiently offset by an increase in income due to the extra marketing services and exposure on KU? For some projects, it might be worth trying the increased expenses.

    But with Amazon’s KU pool system, the answer is for most publications, no, it’s a really bad business calculation. Amazon has set up a sales venue in which there’s a pot of money they make up however they feel like, that if it gets used up, you might not get paid for your work even if subscribers are downloading it, and the amount that you might get paid will yo-yo depending on how many scammers and hustlers are gaming the service that month. Which means it’s not increasing your income enough to offset the increased costs of being in Kindle Select and Kindle Unlimited (exclusive to Amazon,) as opposed to just selling on their platform as Kindle DP (non-exclusive to Amazon.) And in the meantime, they mine data off of you as the seller and the subscribers as customers and sell it and that’s Amazon’s profit for very little cash outlay.

    Kindle Select was a bad idea for authors as soon as they yoked it to Kindle Unlimited, which was a bad idea for everybody. Scammers are the least of its problems in terms of indie authors’ business expenses. To put it clearly, the advantage for indie electronic publishing is that it’s relatively cheap on production and distribution costs and some basic, international marketing stuff, allowing for potentially big or decent profits. When those costs increase, along with the necessary costs, time and labor for authors in selling and promotion, it has a direct effect on profits. And you’ve got to calculate whether you can handle those increased costs and what you’re getting for those increased costs in terms of increased profit to make up for them. And KU does that really, really badly — unless you aren’t trying to sell stories but just take advantage of Amazon’s total indifference, like the scammers. You’d be a lot better off on KDP, except maybe for some kinds of short fiction — although maybe not now, given the changes that made things worse.

  29. Geezlouise Kat, I missed reading you. I speak here only as a consumer.

    KU and other services sound like public billboards for hot fast cheap writings – probably on the edge of quality control, so caveat emptor to all and sundry; but with writer-pitfalls too (well-reasoned, John), while still including some for us readers. As I think Kat implies, Amazon appears one heckofa quantifying economist intent on data manipulation and market tailoring, for eventual precious pennies in new and sundry ways. And I also feel readers represent an expandable market for predators, so again, well said. Now I’m everything Kindle but as a reader I’ve also had burnt fingers over the years. Decades ago I remember LPUs (Least Publishable Units) being the bane of scholarship, which now appear here in a different form; and I’ll just say, hehe. I’ve recommended Kindles at times and lost a friend or two because of it, but I’ve had gains too. Things haven’t settled. The next few years should be interesting. I wonder if Amazon’s quantifying-to-solve-problems efforts, will come to resemble Microsoft’s software efforts in creating Word. Erm, maybe it’ll eventually hit some workable medium.

    I remember good old days of professionally edited books where one purchased, say, a Doubleday on exegesis and knew beforehand it would meet highest editorial quality levels. You can buy a Kindle book right now and still find margins cutting off words! But Cheap and Fast.

    Kat, your analysis appears tight, but what about name recognition? That is one hope that resides in every writer’s soul and which our Kindle morass of choices may still promote. When a reader absorbs a writer’s work, then readers become willing to buy into that name for life. It’s an effect Amazon may actually be helping. That hasn’t been lost in all this, has it? (Scammers get forgotten.) As Scalzi hinted, a chance for a say somewhat in front of a big audience is sometimes all that’s needed, no matter how floozy one’s first vehicle is, and economics and legals be hanged. Erm, not that that’s a good argument in defense of this mess.

  30. With subscriptions, there’s the video subscription model, where services pay producers a certain amount regardless, and the music subscription model, where services pay producers per use. Amazon is trying to push books into the music subscription model, which is, I think a mistake. The video model presumes that most people watch a given movie/tv episode once. The music model presumes that most people will listen to the same song over and over.

    I personally think that books are much more like movies in this regard. People rarely read the same book more than once or twice. Song listens is likely an extremely good metric of how well people like the song, but book reads is likely only a mediocre metric of how well people like the book. It has more to do with how good the marketing is and how well people liked other books by the author.

    Content producers like the video model much more than the music model. The great advantage is that they get paid regardless. This also leads to higher quality content, IMHO. It drives the service to care more about getting stuff people like.

    The trouble is that the book industry is poorly set up to work like this. The way it would have to work is for publishers to make deals with Amazon to say “you can publish all of our content as subscriptions for $X” and then turn around and make deals with authors like “We’ll pay $Y for the subscription rights”. Then you could imagine Amazon commissioning high-profile writers to write some new book for a large, flat fee. But none of this is really consistent with the current business model in books, where everything is heavily geared on per-copy payment.

    It’s a pity, because such a model could be extremely good for the mid-list writer in that it would generate a more dependable income.

  31. Essentially, this is a problem with any automated system which hands out money – someone will sit there, look at the rules, and figure out how to get a lot of money for very little effort indeed. People do it with welfare systems, they do it with jobs, they do it with ATMs – and most of the resultant costs of doing business with these automated systems for handing out money are therefore raised by the costs of dealing with the scammers. In a welfare system, the cost is turned into bureaucratic hurdles you have to jump in order to qualify for payment (and a willingness to deal with those hurdles and the bureaucracy which spawns them essentially becomes a criterion for receiving welfare payments). In the case of employment, what happens is that managers are employed to ensure the workers are working, and then other managers are employed to ensure the managers are doing their jobs correctly, and further levels of management to check on them, right the way up to CEO level (which is where the most talented scammers at the whole “money for nothing” game wind up slotting themselves into the system). With ATMs, we have to go through measures to verify our identity in order to use them; the banks have to take steps to place them in secure locations where they aren’t going to be pulled out of the wall, and (in Australia at least) place bollards to ensure some enterprising yahoo doesn’t just ram the wretched thing to dislodge it.

    But it’s always an escalating cycle – the people handing out the money put rule X in the way of the money, the scammers figure out ways of getting past rule X, which leads to the introduction of rule Y, so the scammers get past that. Time for rule Z, which they’re also going to figure out…

    I suspect KU is going to have these sorts of problems no matter HOW Amazon phrase the rules about payment unless they do something like introducing a stage where every book published through KU is checked for “bookness” (i.e. does this thing have the 500,000 words it says it does, arranged into meaningful sentences, making a coherent narrative) before being put up on the list. Unfortunately, the state of the art at the moment in computer/language interactions means the only processors capable of being able to do those calculations are human brains… and those cost more money to run than server farms over the long term. And of course, even there, it would depend on the thoroughness of the checking process – because there will be scammers signing up for the “get paid for reading books to check for bookness” job just like any other.

  32. Steven B: People rarely read the same book more than once or twice.

    Really? Am I so weird, then? About half of my reading is re-reading–and we’re not talking the occasional book here; when a new book in a series comes out, I’ll usually re-read most or all the earlier books, and there are books on my shelves (and on my Kindle) that I’ve read five or six times, easily. In fact, if I only read a book once, I tend to get rid of it (or return it to the library, more likely). It’s the books that I feel I’m going to re-read that I bother to buy in the first place, in any format (e- or paper).

    As I said, possibly I’m a weird outlier, but it’s one of the reasons I’ve never been attracted to book subscription services like KU. If I enjoy the book, likely I’ll want to re-read it, and that means owning it. And if I’m not sure I’m going to enjoy it, then I get it from the library first. Of course, I do have access to a pretty good library system, and an extensive InterLibrary Loan system, so that helps with that model . . .

    Since KU pays up to the last page read, do they then pay the author more for re-readings of works? They should, it seems to me.

  33. “Since KU pays up to the last page read, do they then pay the author more for re-readings of works?”

    No, we only get paid for the first read. Otherwise, I guess, a gameable system becomes a true breeding ground for fraud.

  34. from a reader’s perspective I like ku because i find i am reading more, buying books by authors i never would have found without coming across them in ku, and saving money based on the amount i read. it really bothers me to think that i’m not supporting authors in the way i could be by using the service, though. supporting authors i enjoy reading is important to me because i’m incredibly selfish and want to be able to read more of their work. but if the ku platform is not adequately paying those authors (whether by contractual design or through a flaw in the system allowing it to be gamed) then aren’t i part of the problem as a subscriber?

  35. @Mary Frances @Stephen B – I think I’m somewhat between you. I’ve reread my favorites many times, but there’s an awful lot of quick reads on, say, current events, or just quick, pulpy sci-fi, which I don’t ever feel the need to revisit. I like KU for stuff to just burn through and largely forget about, and actual purchases for books I want to savor.

  36. Turtlesong:

    I think it’s a little harsh to call you part of the problem when you’re taking advantage of a service freely offered, that people freely participate in. That said, I’ll give you the same advice that I’d give anyone else who likes something they find in a streaming/subscription service: If you really like it, buy a copy. That (usually) sends a lot more money to the creator.

  37. Any system paying out of a fixed pot is insane. I don’t like the authors effectively fighting for a piece of the pie, and I especially don’t like Amazon being the one to decide how much pie there is. The marketplace should be deciding the size of the pie, not an executive at one company.

  38. @Turtlesong: I’m speaking here as an author who has some books in KU and relies heavily on KU for income — please don’t feel as if you are doing anything wrong! I am a relatively unknown, self-published author, and I make a lot more money overall through KU borrows than I do through sales, because I have very little name recognition and so people who have never heard of me are more likely to try my books if it doesn’t cost them anything extra. No, it’s not a perfect system and there are aspects of the KU model that I’m not on board with — but then, authors don’t get paid at all for used book sales, and yet I love used bookstores and find a lot of new authors that way. I say read on, enjoy, and don’t feel at all guilty for using an available service, that DOES compensate authors, to support your book habit.

  39. If there is a system that rewards people there will always be people who game it. This is a universal truth. The more automated the system the more open it is to being gamed. The perfect example of this is SEO and specifically Google’s rankings. There has been a constant game of one upmanship between between Google and those that are trying to game the system.

    No matter what Amazon does to fix KU people will find ways to exploit it but that doesn’t preclude them from having a responsibility to try to keep it as clean as possible.

    The biggest issue I see with KU isn’t the scammers (though they are a hindrance) it is with Amazon and the lack of transparency in their system. Opaque systems like this tend to benefit those running the system at the cost of those they are “helping” (think hedge funds).

    Well that was longer than I meant it to be. Just my ¢2.

  40. What’s crazy is that even with the scamming happening, being Amazon exclusive is still more profitable for many authors than not. I have resisted being in KU/Select with my books out of principal, but I’ve done the math and estimate this decision has cost me at least $50,000 over the last 18 months. Despite doing everything I could to grow audience outside Amazon, 2015 still saw 91% of my income coming from Amazon. 2016 is looking about the same so far. My personal feelings being in the way of my business sense has cost me tens of thousands, something I’m going to try to get over this year at least in part. This is the reality of things.

    I try to subscribe to the notion that when an industry changes, you can play defense and try to hang onto what you have through the old ways, or your can play offense and try to figure out how to make the changes work for you. I don’t think Kindle Unlimited is going anywhere. I imagine Amazon will change some things (they are super cracking down on ToC links, for example, catching a lot of legit authors in the meantime) but even with the way things look now, they are still the best game in town.

    So I do hope that Amazon stops the worst of the scamming (I know they won’t stop it all, scammers are too nimble for that), but I imagine the price per page won’t change much. They seem to like keeping it around half a cent a page. The question that every author has to answer for themselves is if the upsides (visibility, over all earnings, greater readership, potential promotion help from Amazon etc) outweigh the downsides (losing some % of the pool to scammers, being exclusive, more people borrowing than buying etc). For some authors, it doesn’t add up. For others, it adds up to a lot.

  41. Mary Frances, you are not alone. I read one or two new books a month (more if I discover a writer I love with a backlist—I inhaled the first dozen Vorkosiverse books in a month).

    Like you, it’s often a reread to refresh my mind for a series when the next book is coming out soon. And sometimes it’s just a comfort read. Or a series I want to discuss with folks at a workshop or con, so I need to read it again.

    It’s at least a 50/50 split. Heck, I might reread more than I read new.

    Ebooks have made it worse, because my retention isn’t as good as with paper. I have to reread if I like something, or else I’ll forget it.

  42. Richard Norton:

    Waves!

    I remember good old days of professionally edited books where one purchased, say, a Doubleday on exegesis and knew beforehand it would meet highest editorial quality levels. You can buy a Kindle book right now and still find margins cutting off words! But Cheap and Fast.

    You’re talking about typesetting more than editing, and proof-reading, which isn’t brilliant on print books either. But the problem with e-books is that each format has to have different proof-reading, not once but several times, because things shift simply when files get transferred as well as converted into formats. Hence, margins cutting off words even when the work was heavily proof-read for text and formatting. It’s one of those intense labor expense costs of e-books that people pretend don’t exist and indie authors often discount as a cost because they do the work themselves for a handful of their own books. Publishers do better with it these days than the indies, but it will still be a problem for probably another decade with e-books. There’s not a lot of money in e-books, so nobody in the tech world is rushing to fix it.

    Kat, your analysis appears tight, but what about name recognition?

    It’s not name recognition; it’s accidental browsing, which is not a bad thing as it is a principle mechanism for fiction and somewhat for non-fiction. As Scalzi noted, Amazon cuts separate deals with big name authors from publishers for KU monies that are not part of the pot, non-exclusive listings and way better payment terms than what they give indies. That’s to draw in customers to subscribe to KU, whose data is then mined by Amazon. Once the customers are subscribed to stream buy the big names (handy for big readers,) then some of them browse, same as in a bookstore or the regular Kindle store. So if you’re next to the big names in the service and they happen upon you, they might try you. And then if they like you, they spread word of mouth. That’s awareness, not recognition. Once you get a big enough fan base spreading word of mouth, you get name recognition. Once you have name recognition, direct advertising can actually do you more cost effective good.

    But the problem is, same as in the regular Kindle store — it’s a huge pool of authors, so the odds of the browsers finding your stuff particularly by accident go down proportionately — but not completely. The idea of Kindle Select and Kindle Unlimited is that Amazon makes you exclusively theirs and takes more of your sales money as marketing fees in return for more marketing services — algorithms that pop your name up if you get enough downloads, display placement, etc. — SAME AS IN A BOOKSTORE. So they are selling it to indies as more marketing to connect browsers to your works. Some of these services are ones that Amazon used to give indie authors in the regular Kindle selling program for free or nearly for free, but now they’re charging more for them.

    So that’s the calculation indie authors have to make — are they getting better marketing through this that is bumping up their sales enough to offset the increased marketing costs of going with Kindle Select (and Unlimited streaming,) over the cheaper costs of selling it non-exclusively in KDP. And the answer most of the time is going to be no, but for some projects and some circumstances, it might not hurt to try. So it’s a business decision. There don’t seem to be a lot of pluses for indie authors from it, and quite a lot of indie authors dropped out of KU apparently, but others have made some money with it, because Amazon again stopped giving them some of those marketing services in KDP, so it is harder to connect to accidental browsers in KDP now than it used to be. That’s a deliberate strategy of Amazon’s and it works because they own 90% of the indie e-book market — a monopoly.

    The book industry already had a subscription service and still has forms of it today — they’re called BOOK CLUBS. You joined/subscribed to a book club by agreeing to buy two books from the club within each year of membership (not a real hardship for heavy readers with some cash to spend.) You got special book club editions, including handy omnibuses of series and special illustrated editions, and you got them at heavily discounted book club prices. Every month, the book club would offer you a large selection of books to consider through a mailed illustrated catalog flyer, from leading authors and up and comers, (even easier to do today online,) and if you didn’t want one that month, you told them no thanks, except for at least two you’d have to buy at some point. I got the first Anita Blake novels through a book club deal, before she was huge.

    The book club model was a very profitable arm of publishing bulk direct sales — and helping newer authors — till the wholesale market fell and shipping costs rose, but a ghost of it still exists. It’s a very easy model to adapt for a subscription-like service for books that would naturally offer a lot more books on access than the traditional book clubs (which made licensing deals with publishers as a sub-right.) And Amazon used some of that to build its streaming service but it isn’t interested in pursuing that road. It’s trying to make giant books be like two minute songs and it isn’t even using the music streaming services payment plan. It has a plan in which Amazon can sell your book to subscription members and pay you possibly nothing with its little pot of gold scheme.

    So again, the relationship between indie authors and Amazon is changing, as was fully expected as the electronic format market matures. And again, I think indie authors really need to form collective organizations that would give them more bargaining leverage with Amazon. But the reality is that Amazon effectively killed most of the competition for indie electronic books and short fiction because indie authors had no leverage versus the publishers’ leverage. The indie electronic market, at least for English language sales, is what Amazon says it is, the way Amazon wants it to be. If they decide to dump KDP altogether and only offer KU, they can do that.

    So scammers aside, authors need to calculate what will work for them best with what’s on offer now. I’m not real convinced that the costs and payment scam Amazon offers for KS/KU is better than KDP. But different indie authors have different circumstances.

  43. We have a fairly good idea of how fast the average reader processes a sentence, and we are very good at assigning difficulty scales to blocs of text. Amazon knows how long a reader is taking to blast through a book.

    At some point somebody will write an algorithm that says ‘ding!’ when 3000 pages are reached in 45 minutes.

  44. if there is more money in scamming than in writing for amazon. Make another amazon account as a self published author under an alias and create scammer books. If you can’t beat them, join them. The more authors blow this up, the more likely Amazon will be to crack down on this. I gotta see if I can generate scam books with code…

  45. “if there is more money in scamming than in writing for amazon. Make another amazon account as a self published author under an alias and create scammer books. If you can’t beat them, join them. The more authors blow this up, the more likely Amazon will be to crack down on this. I gotta see if I can generate scam books with code…”

    This raises an interesting point – not your tongue-in-cheek suggestion, but the fact that each author’s account with Amazon is tied to their tax ID. You can create noms-de-plume, but each has to be associated with an actual, single individual.

    Seems like it would be easy for Amazon to prevent scammers from being able to participate in the system at all – if you’re found to have put up bogus books for sale, your tax ID is black flagged.

  46. “This raises an interesting point – not your tongue-in-cheek suggestion, but the fact that each author’s account with Amazon is tied to their tax ID. You can create noms-de-plume, but each has to be associated with an actual, single individual.”

    https://www.irs.gov/Individuals/International-Taxpayers/Taxpayer-Identification-Numbers-TIN

    Options:
    1. Make another LLC. Its $125 in Virginia and its tax deductible. Another Tax ID
    2. Use the Tax ID of a significant other or family member.

    See simple.

  47. It takes about 10 “readers” of a 3,000 page scam book to make back that $125 (in the LLC example). Plenty of people who can report the book for what it is.

    Since Amazon doesn’t pay for 60 days, that’s plenty of time to ban the account and prevent them from getting any money at all.

    Total income for the scammer, – $125

    See simple.

  48. G. R. Cooper: it’s just that in a lot of those cases those “readers” aren’t genuine readers but clickfarms. The scammers are getting savvier – they’re not advertising to human beings who want to read books; they’re just paying clickfarms to get them page views – and almost nobody is accidentally clicking on these scam books, so almost nobody is reporting them.

    You could almost call it a victimless crime, except that they’re lowering the amount of money for payouts that go to real authors.

  49. Why is there even a single pot? The easiest solution is that you take an individual’s subscription, take off your profit, and the rest is divided among the authors of the books read by that subscriber. Not much gaming possible there, except for clickbait, and that could be easily fixed by letting users flag the book as garbage. A flagged book generates no payout from that subscriber.

  50. Bezos will never be my favorite human being. He’s not interested in a solution and he’s not interested in equity. He’s interested in profit. As John describes KU, it’s simply a means for suppressing wages.

    I own a Kindle because it’s too freaking convenient, but I always try to purchase other formats from vendors I prefer. Conversion is a snap with Calibre…

  51. Disclaimer: I am a self-pub author with books in KU.

    My main problem with the fixed pot, even going back to the earlier one-book-per-month lending library is that Amazon has access to all the data, so they should be the ones to assume the risk of unpredictability. Not only is that more fair to the authors (and yes, I know Amazon is a business and life is not fair), but I cannot help but feel that if the Amazon held the risk directly by paying out a fixed per-page price rather than shares in a fixed pot, they would have been much quicker to address the scammers. If that 0.41 to 0.48 cents per page improvement can be attributed to getting rid of the scammers, that would have represented a 15% share of the $12.7million pot. In other words, if the scammers had taken from Amazon’s pocket instead of the authors, that would have been an extra $1.8million. Even if that’s off by a factor of 2-5x, that’s still a significant chunk of change.

    But in the meantime, it’s still good enough for me to stay in KU. Someday it might not be.

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