Amazon’s New Pay-Per-Page Compensation Model

Today I thought I’d address some misinformation I’ve seen on the Internet about how Amazon is changing the way it compensates authors. You may have read that Amazon will now pay authors based on how many of a Kindle book’s pages a reader actually reads. That’s true, but only for books that are read as part of the Kindle Unlimited program.

Kindle Unlimited is Amazon’s ebook subscription program (the other two big ones are Oyster and Scribd; all my books are available on both). Because I’m an indie author, I’ll speak about how it works for us. If I want one of my books to be in the Kindle Unlimited program, I have to make the book available exclusively at Amazon and put it into what’s called the Kindle Select program. All books in Kindle Select are automatically added to Kindle Unlimited. The exclusivity requirement is a deal breaker for me, which is why my books aren’t available through Kindle Unlimited.

Authors aren’t compensated for books read through Kindle Unlimited (called a “borrow”) in the same way that we are for a plain old sale. Every month, Amazon puts a certain amount of money into the Kindle Unlimited pot. At the end of the month, it divides the money up based on the total number of borrows across all books, and the number of borrows a specific book has received.

For a completely contrived example, if the pot for the month is $1,000, 000, and $1,000, 000 books are borrowed, authors will receive $1.00 per borrow. If 2,000,000 books are borrowed, then authors would receive $0.50 per borrow. Lately, the payout per borrow has averaged around $1.30 (down from $2.00 or so when the program was first introduced). Up until now (and until July 1), if a reader downloads a book through Kindle Unlimited and reads at least 10% of it, it counts as a borrow.

This compensation model resulted in two things:

Most authors wouldn’t put long books into the program, because they wouldn’t be paid enough for a borrow. For example, Rymellan 1 is priced at $6.99. If someone buys it, I get 70% of 6.99 (minus download fees – authors pay for the “free” whispernet), which works out to about $4.83. If I were to put Rymellan 1 into Kindle Select (and hence, Kindle Unlimited), I’d be paid about $1.30 per borrow. No thanks.
It encouraged people who want to make a quick buck to put very short books into the program. Think about it. If a reader only has to read 10% of the book for it to count as a borrow, then the shorter the book, the fewer number of pages they have to read. For really short books, just reading one page would do it, meaning that a borrow would be counted as soon as the reader opened the book. The authors of these short books get the same amount of money for a borrow of a 10-page book as I would for a borrow of Rymellan 1. Hardly fair.

So, Kindle Unlimited is full of short ebooks that offer little value. Don’t get me wrong. There are many authors (including myself) that write short stories. I’m not talking about them. I’m talking about short non-fiction books that people hire freelancers to write.

With the new “pay per page” compensation model, Amazon is trying to address both problems. It’s trying to thwart the “get rich quick” crowd, and it’s hoping to encourage authors to put longer works into the program. There will still be a pot for the month, but instead of divvying up the money based on the total number of borrows, the pot will be divided based on the total number of pages read across all books.

For me, as long as the program requires exclusivity, I won’t be putting longer books into it. Also, we’ll have to see what the “pay per page” model actually translates to for novels. If it turns out that authors get a penny a page, for example, that would be better than the current $1.30, but would still fall short of what one would receive for a sale of a higher-priced book.

Note that Oyster and Scribd pay the full sale royalty when someone borrows and reads an entire book. In other words, a borrow and a sale are compensated in the same way.

Also note that all the retailers are tracking what you read. They obviously know what you’ve bought, but they also know how far you’ve read in a book, and if you’ve skipped around inside it. The only way you can avoid this is to never connect your device to the retailer, which isn’t convenient.

In conclusion, yes, Amazon will move to a “pay per page” model on July 1, but only for books borrowed through the Kindle Unlimited program.

I’ll end with different type of cat video. You may have already seen this. If not, keep your eye on the upper right and prepare to hold your breath.

Later.

Amazon’s New Pay-Per-Page Compensation Model is a post from: Sarah Ettritch