Friday, June 19, 2015

Amazon Borrows by the Page

What's Going On

On June 15th, Amazon announced a change to how the KDP Select Global Fund will work. 

In true internet fashion, this has created panic in some corners and wild speculation in others.

Starting on July 1st, authors with books enrolled in Kindle Unlimited (KU) or Kindle On-Line Lending Library (KOLL) will no longer receive a flat fee for each book read past 10%. In July the amount paid to the author will be based on the number of pages read. You can see the original announcement at or here

Here is the example from the post
For simplicity, assume the fund is $10M and that 100,000,000 total pages were read in the month:

The author of a 100 page book which was borrowed and read completely 100 times would earn $1,000 ($10 million multiplied by 10,000 pages for this author divided by 100,000,000 total pages).

The author of a 200 page book which was borrowed and read completely 100 times would earn $2,000 ($10 million multiplied by 20,000 pages for this author divided by 100,000,000 total pages).

The author of a 200 page book which was borrowed 100 times but only read half way through on average would earn $1,000 ($10 million multiplied by 10,000 pages for this author divided by 100,000,000 total pages).

It sounds great. $1,000 in additional royalties, but as many people have pointed out those numbers are not exactly realistic.

Time for Some Wild Speculation

Let’s look at the numbers a little differently.

Currently the KU/KOLL program has been running around $1.35 per borrow. Some months have been better and some worse, but for a ball park figure I’m going to stick with $1.35 per borrow.

At the end of each month Amazon has adjusted the fund amount to keep the royalty per borrow around that level. They start with some fixed amount (like $3M) and then add in some bonus amount at the end of the month to reach their target payout number.

From that, I think it’s safe to say that Amazon has decided what they think a fair royalty for a borrow is, and they make the math work out each month.

I’m going to assume that Amazon wants to keep that target number going forward, but now they want to calculate it a by page instead of by book.

Let’s say that the Amazon has decided that a “standard” book size is 200 pages. By standard I mean that if the book has 200 pages and all 200 pages are read, then the author would earn the standard royalty rate of $1.35 per book. If your books are smaller, you’ll make less and if your book is larger you’ll make more.

That works out to $0.00675 per page. Yep, that’s a little more than half a penny per page read.

That’s probably a much more realistic example than the $0.10 a page that Amazon uses in their example. That $2.000 per month in their example suddenly dropped to $135.00 per month, which is what the author would have made in the old model for 100 borrows.

What does this really mean?

All the math above is just a guess. Only the folks at Amazon know what the actual calculations are and it will be a few months before we’ll have enough information to do any real analysis of the numbers.

It is safe to assume that if your books are smaller, you’ll make less money in royalties from borrows. If your book are larger, you’ll make more. The problem is knowing what smaller or larger is relative too.

But, that isn’t the real take away from this. This is an excellent example of one of the risks of independent publishing as opposed to going with a traditional contract. Once you sign a traditional contract with a publisher you know what the rules are. When you self-publish through, the only thing that you can count on is that the rules will change, and your option is to accept the new terms or to move on.

As an independent writer the choice is up to you. When Amazon first started the Kindle On-Line Lending Library (KOLL) some authors split their larger length novels into a collection of smaller books released as a series. Others decide to focus on short stories that they could release quickly. A few pulled their books off of Amazon in protest. More just road it out.

What should you do?

First, and always, write what you want to write. If you don’t enjoy it why bother?

Second, avoid the hype, but be realistic. If 100% of your monthly income is coming for short story borrows on Amazon, you are going to encounter some rough months ahead.

Third, explore other options. Amazon is not the only method of distribution out there. The more you know about what your choices are, the better you’ll feel about the choice you do make.

Finally, don’t worry about beating the system. The system will change. You can’t control that part of the process. Focus on what you can control - writing a great story. If you are just starting a novel today, the odds are that by the time you are ready for publishing the rules will have changed again.

What do you think?

Amazon thinks this will be better for the readers. That it will put author's goals in line with reader's expectations.

Will it make a difference? Are writers just writing for the system or are they already writing for their audience?