What's Kindle Unlimited Paying its Authors? Unfortunately, We Have No Idea

You'll recall that in a previous blog post I talked about putting The Spellbound Spirit into Kindle Unlimited, and deciding if it was worth offering exclusivity to fickle Amazon versus the potential payout for authors.

Before I get into my experience thus far, let's remind ourselves of a few things:

Kindle Unlimited (or KU) is a program through which self-published authors grant Amazon three months' worth of exclusivity (meaning they cannot sell their work through any other retailers) in exchange for making money per borrow. Traditionally-published authors are not held to this same standard and can continue to publish on Barnes & Noble or any other retailer they desire.Amazon has been decidedly non-transparent about their numbers, meaning that every month, the amount of money you receive for borrows changes. As an author, you are not privy to the amount you will earn per borrow until the 15th of the following month.Payouts are based on the number of KU subscribers vs. the amount placed into the "Global Fund" every month. These two numbers fluctuate drastically on a month-to-month basis.

Keeping those three things in mind, let's get to the entrails of the experiment I've been running.

KU's first month was July. It was announced halfway through the month and the Global Fund was set at $2m (so effectively, $2m for 15 days). Borrows were only meant to be paid out if the reader finished at least 10% of the book, so if someone borrowed your book and didn't read it, you got nothing.

Unfortunately, KDP didn't fully have its shit together, so every borrow regardless of reader progress was paid out. On August 15th, the information on the payout was released: $1.81 per borrow.

In short, authors got paid a lot more than they were expecting (because of the inflated borrow number), but the actual amount per unit was right around what we were promised, and that was a great way to start the program.

Even skeptics such as myself were intrigued by this. Obviously I out-earned what I would have made on any other retailer (especially since The Spellbound Spirit never gained much traction on any other retailer's site, anyway). Unfortunately this didn't give me much "progress" to report, as everything fell in line with what was originally said and we hadn't had another month to compare it to yet.

“Why is there no way for me to know NOW what I’ll get paid for the month? Why is Amazon allowed to set the price fifteen days after the month has already ended? In what other business would this be considered okay?”

When I saw the Global Fund listed for $2m for August, however, I was a bit alarmed. $2m for 31 days whereas July had $2m for 15 days? That seemed like the price would surely go down. Add to it that partway through the month every author's borrows number was massively reduced (due to KDP working out the kinks in its reporting system), I was concerned about the totals.

Yet I was assured by some that we'd see no real decrease. $1.75, maybe. Probably more. After all, it was only KU's second month. Why would Amazon want any bad press?

Still, an issue niggled at the back of my mind: "Why is there no way for me to know NOW what I'll get paid for the month? Why is Amazon allowed to set the price fifteen days after the month has already ended? In what other business would this be considered okay?"

Today is September 15th. The numbers for August have just been released. The result?

$1.54 per borrow.

For those of you keeping score at home, that is a whopping $0.27 per unit drop in price between July and August... and we weren't even told until September.

This is why I criticize Amazon's lack of transparency. This is why I tell people to be apprehensive and skeptical. Because it may not seem like much, but if this is setting some kind of precedence, authors can expect a much lower payout next month.

And with a contract which requires three months of exclusivity, there's not much we can do about it.

“If your employer told you that you’d work all month and then they’d decide your rate of pay after the fact, would that be all right with you?”

Now, I'm not reporting the sky is falling (yet). But think of it this way: would you be likely to, say, go to your grocery store today and tell them, "Hm, well those $400-worth of groceries I bought and ate last month... they now feel like $200-worth to me," and then expect the grocer to be all right with that? Would you go to your pharmacist and pick up your prescription, then fifteen days later tell them that you'll pay them 75% of what the cost was supposed to be? If your employer told you that you'd work all month and then they'd decide your rate of pay after the fact, would that be all right with you?

This is effectively the deal that Amazon is forcing self-published authors to accept, and it is not okay.

For the moment, however, most authors are satisfied with the arrangement. They're still making more than they would have from other retailers. They're still netting over $1.50/borrow. In short, it still makes fiscal sense for them to remain enrolled in the program.

But in my opinion, as it stands right now, those authors are not thinking clearly about the long-term.

KU is a program Amazon has put a lot of work into. It's a subscription-based program that they have every intention of using to supplant a large part of the buying process. In other words, they are looking to rely on subscription-based customers rather than those who buy books individually. That means that it's expected to grow, which means in turn that a few months down the line, those authors may find that their number of borrows vastly exceed their number of sales.

After all, who wants to pay $2.99 per novel—or more—when they could pay $10/month to read as much as they'd like?

What happens when those authors, instead of earning 70% royalties on a sale, are now mainly earning money based off of their borrows—and when the amount of subscribers have increased to that point, that means everyone gets a smaller share of the pie.

They might be making $0.50/borrow. $0.30/borrow. Less.

And you might say, "Well, you've no way of knowing that's a certainty."

You're right. I don't. Because Amazon refuses to set a fixed price.

This, besides being bound by exclusivity, is my largest problem with the KU payout model. It allows Amazon—which is a corporate entity, don't kid yourselves there—to decide the rate of pay for self-published authors based on how much money they (the corporation) feels like contributing. Without a fixed price, that number could be $1m. That number could be $2m or $5m. It could be $500,000 with over a million subscribers. This model is one that functions off of uncertain, ever-changing variables and submits authors to a guessing game in which they never quite know what their work will earn them until it's too late.

It is not an acceptable way of doing business. Not if it stays as-is, anyway.

In October, my option to renew my KU status for The Spellbound Spirit will become available. Depending on how Amazon reworks its payment structure—or doesn't—I may pull out. I don't like being jerked around, and I don't like knowing how much money I'm receiving this month based on a decision made after I've already committed to the program. It's unethical at best and preying upon self-published authors at worst.

But for now, is it still a lucrative option for authors? Yes. It is.

Just remember to check the temperature of the water they've got you sitting in every once in a while. If you don't, they certainly aren't going to do it for you.

EDIT: Amazon just released this report on the matter:

“Announcement: KDP Select Global Fund Updates

Hello,

We have continued to see significant early trial response from customers to Kindle Unlimited (KU). Similar to what we’ve done in the past around holiday spikes in borrowing activity, we are adding a bonus of $2.7 million in August on top of the regular base fund amount of $2 million.”

My only commentary is this: if you're already growing at double the rate of your first month, and you have to shove nearly $3m into the fund just to keep borrows over $1.50 per, it does not bode well for future expansion. At least, not for authors, anyway.