Amazon announced they’re going to change their KDP Select programme so that it pays authors for every page of their novels that was read. For those who don’t know KDP Select, it’s a Netflix-style book programme from Amazon, where a reader pays a monthly subscription for the Kindle Unlimited service and gets to read whatever they want from the list of books on KDP Select.
So what does this mean and how does it work?
I’m not a published writer, so I have only an outsider’s view of the publishing industry, but I do have a background in software and mathematics, so I believe I can at least clarify some of the math for you.
How does KDP Select work?
Amazon KDP stands for Amazon Kindle Direct Publishing, and KDP Select is one part of that. KDP is one of the more popular ways to self-publish. It allows you to upload your book and have it on sale on Amazon with a few clicks. KDP has really taken off, and the sales numbers of self-published books are approaching and sometimes surpassing traditionally published books. That doesn’t mean self-publishing is the way to go for all writers all the time as some will tell you. I for one am neither an editor nor a salesman, so I’d like to find a traditional publisher to do that for me.
As stated, KDP select is a part of KDP. With KDP Select, author’s books are made available to readers through the Kindle Unlimited programme. This is a bit like KDP, but the rules are slightly different. KDP Unlimited is like Netflix, with subscribers. There’s a global pot of money (the global fund) each month, that is divided among all the authors that are part of the KDP Select programme, based on the number of times that each of their books is read. Amazon counts it as a read if more than 10% of a book was read. For those of you paying attention, yes, Amazon is violating your privacy by recording every page read on the Kindle (and not just for KDP unlimited readers).
KDP Select in a diagram:
Now then, an example. Say that there is 100 dollars in the fund for the month of June, and there are two authors: author Alice with 1 book that was read 2 times in June, and Bob with 1 book that was read 8 times. The total number of reads in June was 10, meaning that each page read is worth 1/10th of 100 dollars, or 10 dollars. Alice had 2 reads, meaning she gets paid 20 dollars, and Bob had 8 reads, meaning he gets 80 dollars. In a table:
KDP select per page
The problem with this old model, is that Amazon counts a book as read if the user read more than 10% of it and doesn’t look at page count. This means that if Alice publishes a 100 page fantasy novel on KDP Select, a reader has to read 10 pages before Alice gets paid. If Bob publishes a 20 page short story, he gets paid after 2 pages. Worse, Alice gets paid the same amount for one read of her 100 page book as Bob for his 20 page story.
As you might guess, this is a tad unfair, and has led to people serializing their story and submitting ever shorter works. Amazon decided to change it by introducing a new model: pay-per-page-read. Let’s expand the example: assume the 100 page fantasy novel from Alice is read completely once, and until page 60 the second time, leading to 160 pages total. Bob’s 20 page short story was read 8 times, but only until page 5, leading to 40 pages:
With a total of 200 pages read, the payout-per-page is $0.50. This leads to a reversal in payout in the example. Alice now gets 80 dollars, and Bob only 20.
As you can see, this can mean a major shift in where the KDP select money goes. I think it’s more fair, since we can assume that Alice had to do a lot more work to write her 100 page novel than Bob for his 20 page one. Also, in this example, Bob didn’t get anybody to read past page 5, while Alice had one complete read and one to page 60. That might not be the best measure of quality, but it says something.
So, I think this way is more fair.
One counter-argument against this model, is that the current-day wishy-washy readers put down books without finishing them, making this an unfair model. That argument, unfortunately, is based on bad math. This is best shown with the example. Let’s assume readers are so wishy-wishy that Alice’s reads and Bob’s reads are both halved. Nobody finishes their books and most don’t even reach the middle. This will lead to the following table:
‘What?’ you say. ‘The payouts have not been updated.’
That’s right, they weren’t. When the total pages read are all halved, the total pages read is halved, so the payout-per-page doubles to $1 per page, and the resulting payouts stay the same. This means that if readers all put down books earlier, the payouts are not affected.
The only valid argument is that readers will put down longer books earlier, leading to less money earned for big fantasy tomes. Yes, that might be true, but that’s just business: if you’re book is less captivating than the competition, you will lose readers.
Now, I’m not saying Amazon KDP Select is great, as you can read below, but I do think the new payout model is more fair than the old one.
KDP Select in general
The above numbers give insights into how the payouts are calculated. What they don’t explain is how the total payout amount comes about. If you look at the diagram, Amazon collects subscription fees for Kindle Unlimited on one side, and then comes to a global fund on the other side. How this global fund comes about is completely unclear, and hidden behind Amazon’s wall of NDAs.
Amazon only reports how high the global fund is each month, and how much each read of 10% or more is worth. From those numbers it’s possible to calculate the rough amount of reads that month, but nothing else. If we look at the number for March 2015, you get the following:
Amazon cheerily claims the global fund is almost 10 million. That’s a lot of money, and it’s been steadily rising (in june it actually passed 10 million). Unfortunately, the number of reads has been rising as well, only faster. The net result is that the payout per read has been steadily decreasing. Last year, the payout per read was about $1.86, now it’s gone down to $1.33. It’s quickly losing viability. Worse, once your book is on KDP Select, you are not allowed to take it down for 90 days, and you’re not allowed to sell it any other way.
We’ll see what happens when the new model kicks in. This may be more favourable to good authors. What still remains a mystery is how much Amazon is actually making off off Kindle Unlimited. They charge $10 a month per subscription to readers, but we have no idea how many there are. Is that bad? Well, if there are 1 million subscribers, Amazon is making 10 million a month, and putting almost all the money in the global fund. However, if they have 5 million subscribers, they’re raking in 50 million a month, and only giving 20% to the authors. We just don’t know. And we don’t know what will happen next month, or the month after.
Most likely, Amazon is not raking in the big bucks for this service. It’s not their style. They just want to control all the distribution and take a percentage. Still, the way KDP Select is set up, authors have no control over their earnings. The same is happening with TV (Netflix), and with music (read about the Taylor Swift-Apple dispute). Is this a bad thing? I honestly don’t know, but my gut instinct says that throwing all creative works behind distributor-controlled subscriptions is not going to favour the creators.
In the end, we’ll just have to wait and see, but we do live in interesting times.