All posts by Brad Pauquette, CEO

What Kindle Unlimited Means for the Little Guy

Today Amazon introduced a new service which will allow subscribers to download an unlimited number of Kindle books for only $9.99 per month.  That’s great news for readers, one e-book from a big publisher can easily run $8 or $9.  If you read multiple books per month, you’ll get a great deal and you’ll also be free to experiment with materials that you otherwise might not have been willing to pay for individually.

But what does it mean for the small publisher? It’s a mixed bag, but it’s mostly bad.  The plan is an extension of Kindle Select and the Kindle Lending Library, which have been around for years.

The good news is that under the plan, all books are created equal.  Amazon sets a fund for each month (the total amount is determined at their discretion), and then they divide that amount of cash equally among all books that have been downloaded.  All books are equal, a download is a download whether the book was originally listed at 99 cents or $9.99.  This month, the fund is $2 million.  So if 1 million books are downloaded under the plan, they’ll pay out $2 per download to the publisher of the book.

This is good for small publishers, because it equalizes our payments with the bigger publishers.  Typically, small presses must list e-books for less, because we don’t have the clout and reputation to justify a $9 e-book (and that price is robbery), even though the materials are often just as good.  Now, a book is a book, and we all get the same pay.

That’s not exactly fair in its own right (a well researched medical text cost far more to produce than a romance novel, after all, and ought to earn more), but at least the imbalance swings in favor of smaller businesses, which is good for the industry.

That’s where the good stops.

In general, publishers will make a lot less per book downloaded.  The payment will also be unpredictable.  Despite the fact that Amazon has blown wide the gates for unlimited downloads (the previous Kindle Lending Library only allowed one title to be downloaded per month by Amazon Prime subscribers), they’ve added a meager 66% to the budget for all titles downloaded this month.  Of course, we won’t know what we’re making until the month ends and Amazon self-reports to us how many of our books have been sold, and what our cut of this pie is.

Keep in mind that there’s no reasonable way for a small publisher to audit Amazon’s downloads.  We simply take their word that the number of our books downloaded is correct, and that the total number of all books downloaded market-wide is correct.  These books are downloaded to Amazon’s own devices and the data never really leaves their cloud, they even process their own payments.  It’s unlikely that Amazon would falsify this information, but as no third party is ever involved in the transaction, it would be incredibly easy to shift the numbers however they see fit.

And the total pool of available cash is set by Amazon.  It’s not a percentage of subscriptions or tied to total book revenues in any way, Amazon’s not a cooperative after all.  Amazon determines the size of the pot, they determine how it will be divided up, and you have to eat it out of their bowl.

The criteria for being included in the list of eligible books for download is the worst part of the deal for small publishers.  To be included in the Kindle Select program and offered for free to subscribers, publishers must agree to list the e-book of a given title with Amazon exclusively.  No Nook book, no iPad version, no Kobo store.

In reality, more than 90% of our e-book sales are for the Amazon Kindle already.  If we had to choose one retailer to do business with, it would have to be Amazon if we want to survive.  Amazon is now forcing us to make that decision.

If you’re paying $9.99 for this subscription, why would you ever read a book that wasn’t listed on Kindle Unlimited?  With so many titles at your disposal for no additional charge, what can a small press who hasn’t sold their soul to Amazon do to get you to pay $4 extra to take a risk on their book?

Our target readers, our bread and butter, are going to sign up for Kindle Unlimited.  If you read a lot, it’s a really smart way to get more books at a lower cost, you’re going to do it.  The people to whom this program appeals are avid readers, my core customers.

So now a publishing company like mine is faced with a choice.  Do we list our book exclusively with Amazon and be made available to this important customer base, or do we play the odds and try our best to increase our sales on these other markets, where the number of readers and devices are plummeting?

The financial decision is obvious, give our e-books to Amazon exclusively.  But is that right?

It’s important to note that the Kindle Select program appears to have waived the exclusivity requirement for some larger publishers.

I would like to say that I won’t give in to Amazon’s strong arm tactics.  I don’t care if I never sell another book again.

But the truth is that I love producing books.  And in order to keep producing books, I have to keep selling them.  And if you want to sell books, you need Amazon.  Like really, you NEED them.

We’ll see how this plays out over the next months, but it looks like many small publishers will be forced into listing their e-books exclusively on Amazon.  If you read e-books on a Nook, an iPad or a Sony device, that means that most small press books (the books that are pushing the boundaries of the art form and putting out truly amazing content) will no longer be available to you.

At the end of the day, Kindle Unlimited will make it much more difficult for small publishers to continue to produce materials.  It will restrict the amount of content available to readers, and the ways in which they can consume it.  All books will be selected and approved by the establishment before they’re available to you.

Kindle Unlimited will ultimately favor the largest producers, and even the scraps falling from the table will be stolen from the small publisher.  But you’ll get a great deal on e-books.

It’s been said, beware of Greeks bearing gifts.

I say, Beware of Amazon. Period.