Diversification vs. Kindle Unlimited: An Experiment

In my last blog post, I talked a little about the Amazon vs. Hachette dispute and why diversification is so important to authors, particularly self-published ones.

Which may seem hypocritical now considering I just enrolled The Spellbound Spirit in KDP Select, and by extension, the newly-launched Kindle Unlimited program.

For those new to the self-publishing game, KDP Select is Amazon's exclusive program which seals authors into a 90-day deal wherein they cannot sell their books through any other distributor. Once that agreement is made new tools are made available to the author, including Kindle Countdown Deals, Free Days, and enrollment in the new Kindle Unlimited program.

Since I'm a pretty vocal proponent of catalog diversification, it would seem incongruous with my belief system to enroll in a program that forces authors to choose exclusivity. But hear me out.

Kindle Unlimited is basically set up as the Netflix of books. For a monthly fee of $9.99, readers can read as many books as they want (10 can be downloaded at a time), provided that those books are enrolled in the Kindle Unlimited program.

As of today, the number of authors already enrolled is staggering. The number of readers even more so.

I mean, why not? It's a great deal for readers. That much is clear. But what about authors? What are they getting out of this?

Well, as Amazon puts it:

“Once a customer reads more than 10% of your book, or a Kindle Owners’ Lending Library customer downloads your book, you’ll receive a share of the KDP Select Global Fund.”

So far, that share is being quoted as roughly $2.00 per "borrowed" book based off of Amazon's explanation of the Global Fund.

“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.”

Some authors are all but salivating at this opportunity, and in theory, they've got every right to be. Offering books to readers in a way that makes them more accessible is something we all want to achieve, and getting paid a decent amount to do that is even better.

But what happens in the long run? What about when Kindle Unlimited has more subscribers? Won't the royalty rate afforded to authors decrease?

In short, yes. It absolutely will. And there's no way around that. It's pretty basic math. Amazon isn't going to operate at a loss for very long, and that's where my experiment with offering my novel for the next three months to Kindle Unlimited subscribers comes in.

As usual, there's a lot of controversy surrounding Amazon's decision. If successful (and again, why wouldn't it be?), it will change the face of online book distribution forever. Competitors like Barnes & Noble will have to adopt a similar program or risk getting phased out just like Borders and Walden Books. The program is here to stay whether we like it or not.

That being said, consumers will benefit so greatly from it that it's likely Amazon will end up with the edge they've always wanted. And once that happens, authors can anticipate seeing lower royalties just like what happened with Audible earlier this year. And since authors have all their eggs in a single basket, it's likely that they'll have little choice but to continue accepting Amazon's ever-decreasing royalty rates.

Heck, by the time signing our books into exclusivity really becomes an issue, we may have nowhere else to turn in order to make a profit at all.

But as always, there are detractors. Many authors who are so enamored with the company that they refer to it as "Mother Amazon" shout "conspiracy theorists!" any time criticism is lobbed at the corporate giant. They're excited about the possibilities, all of which they see through rose-colored glasses and the mindset of an idealist operating on the assumption that Amazon will "take care of them" since they currently offer the highest royalty rate around outside of Smashwords. They don't foresee the hammer coming down and I believe it will take documented proof of Amazon's tactics in order for them to see the light.

Which is why I've got The Spellbound Spirit married to the Kindle Unlimited program for 90 days. I expect Amazon won't renege on their $2.00 figure this month, but in August and September, I'm betting the payout decreases substantially. And I'm willing to document that here as proof that programs like this are eventually going to back self-published authors into a corner.

But why am I singling out the self-publishing experience here, you may ask. Why aren't I addressing all of the traditionally published authors—such as J.K. Rowling—whose books are also enrolled in the new Kindle Unlimited program?

Well, in short, that's because Amazon doesn't force traditionally-published authors to enroll in KDP Select or offer their books exclusively through Amazon in order to benefit from Kindle Unlimited. They can continue to sell through any distributor they like while also gaining all the perks of Amazon's new subscription-based program.

Remember when I said that Amazon definitely has a bias toward self-published authors just like any other publisher, but they choose where to apply that bias first? I wasn't just blowing smoke. They are treating self-published authors worse than traditionally-published ones and forcing us to adhere to standards they would never inflict upon those tied to the Big Five, et al. They do it out in the open, right in front of the public eye, because they know there's no bigger marketplace for self-published authors to flock to right now. And what do you think will happen once they've secured even more of it?

"Mother Amazon" is not your friend. They're a company. They're a distributor. They are not going to "take care of you" unless it benefits them.

And at the end of this experiment, I believe I'll have proof of that.

Do I think Amazon is a monster? No, absolutely not. Do I think they're a bad company overall? No, though they do have bad policies. Do I think it would be bad if they monopolized the self-publishing marketplace, and the retail marketplace overall?

Yes. Absolutely. And until they prove otherwise, I'll continue to champion diversification amongst self-published authors' catalogs.

If Kindle Unlimited weren't tied to the KDP Select program, we probably wouldn't be having this conversation. But as it stands, I don't see how this could possibly be a good thing for authors in the long-term. I guess we'll find out in about three months!

The Spellbound Spirit is still available for purchase on Amazon.com, despite its enrollment in the Kindle Unlimited program. If you'd like to take advantage of its limited-time enrollment, you can find it here. Happy reading!