exclusivity – One Thousand And One Parsecs

2019-08-15 Newsletter Author’s Note

This author’s note originally appeared in the August 15th edition of my author newsletter. To sign up for my newsletter, click here.

It was not an easy decision to enroll all of my Star Wanderers books into Kindle Unlimited. For years, this was my flagship series, not only on Amazon but on all platforms. Enrolling it in KU means that the ebooks are only available on Amazon now, and the first book is no longer free to non-KU subscribers.

In the indie author community, KU has always been a controversial program. It all boils down to one word: exclusivity. In order to enroll your books in KU, you cannot publish them anywhere else but Amazon. The upshot is that Amazon’s algorithms give your books a huge signal boost—about 2.5x, by my back-of-the-envelope calculations. Getting writers to do anything is a bit like herding cats, but with the right incentive structure you can do it. Amazon wants to be the dominant retailer for ebooks, and KU is their tool for doing it.

I don’t blame readers for subscribing to KU. It seems like a great program: $9.99 per month gives you an awesome selection of books to choose from. And certainly, Amazon can do what it wants on its own platform. If that means reducing the visiblity of books that aren’t exclusive to your platform, so be it. But as a matter of principle, I believe that exclusivity is bad for readers and writers, which is why I’ve stayed out of the program.

Until now. What changed? A few things. Earlier this year, I finally wrote out a complete business plan that describes everything I do (72 pages, 22.2k words). That made me rethink a lot of things, especially my marketing strategy. If Amazon gives books in KU such a huge signal boost, could I use that to bring more readers to my books that aren’t in KU? If none of my books are enrolled in KU, isn’t that just another way of making my books exclusive?

When Kindle Unlimited launched in 2014, I had finally reached a point where I could live off of my book royalties. A lot of that was because of Star Wanderers: with a permafree first-in-series, it got a lot of visiblity. But then, the Amazon algorithms changed to favor KU over permafree. I chose to stay out of KU, and lost more than 60% of my writing income over the next 18 months as a result.

I learned several things from that experience. First, I learned that I couldn’t rely on Amazon to do my marketing for me. I had to come up with a plan. Second, I learned that it was a bad idea to be dependent on just one platform. It was time to diversify.

Paradoxically, this meant doubling down on my decision to keep my books out of KU. But it paid off. In 2014, more than 90% of my writing income came from Amazon. Now, it’s more like 40%-60%, depending on the month. If I had panicked and put all my books in KU, I wouldn’t have those other income streams right now, and many of those readers never would have found me.

Over the years, I also became less dependent on Star Wanderers as well. I began to move toward writing trilogies of longer books instead of longer series of shorter books. And as I wrote and published more books, interest in my Star Wanderers books seemed to wane.

So now I’m in a place where enrolling Star Wanderers into KU actually makes sense. I have a plan and a marketing strategy, I’m not dependent on Amazon anymore, and the books themselves seem well-suited to the experiment. We’ll see how it turns out.

If you’re not an Amazon customer, don’t worry: I’m not going to enroll all of my books in KU, and still plan to release all of my new books wide. For now, it’s just Star Wanderers. And if you are a KU subscriber, I hope you enjoy! These books have a very special place in my heart, and I’m happy to share them with you.

Why Kindle Unlimited is a broken system

I recently became embroiled in an unexpectedly hostile discussion on Mad Genius Club over the brokenness of Kindle Unlimited. In retrospect, though, there was nothing surprising about it.

The OP had asserted that Amazon is “still the only real game in town,” which I attempted to refute. It ended with the fine folks at Mad Genius Club putting words in my mouth, threatening to ban me for my “tone,” and calling me a “pompous blowhard” and a “prancing, self-aggrandizing, self-congratulating spunkmuffin.” Which would have been amusing except that… okay, it was pretty amusing. But it was also a bit infuriating to watch so many people deliberately take offense simply because I disagreed with them.

(The irony was especially thick as they viciously attacked me, then turned around and emphatically denied that KU pits authors against authors, all while demanding me to prove to them that it does—often in the same breath.

And for the record, I do not think that there’s anything “dickish” about asking the other side to back up their argument with sources. This is especially true for things that “everybody just knows,” and doubly so when forming a negative argument, such as “no one bothers with outside Amazon.”)

In all fairness, however, there were a few arguments I made that I could have done a better job supporting. And since this is my blog, where no one holds the ban-hammer but me, it seems appropriate to make them here.

First, though, I want to make it clear to any KU readers that I’m not trying make you feel guilty for subscribing to KU. If you are a KU subscriber and you enjoy the program, great! I have nothing at all against that. Whether or not the system is broken, we’ll still find ways to get paid. Have fun, and as always, thanks for reading.

Also, I want to point out that even though I believe KU is broken, I would still love to enroll my books. The problem, as I’ve pointed out before, is that Amazon demands exclusivity for the privilege. Not only am I wary of putting all of my eggs in a basket (especially a broken one), I also think that that’s a bad deal for my readers on iBooks, Kobo, Nook, etc, or who live outside of the territories where Amazon operates. Their numbers are not insignificant.

So why is Kindle Unlimited a broken system? In a word, incentives.

In a healthy system, writers write the books that readers want to read, readers support the writers by voting with their dollar, and the middlemen (publishers, distributors, booksellers, etc) provide value to both readers and writers commensurate with the cut that they take.

A healthy system is not closed. If readers collectively decide to read twice as many books, writers collectively earn twice as much. If another writer’s books do twice as well, it does not take away from the money I earn from my books.

Contrast that with the closed system that is KDP Select. We have only a ballpark estimate for the size of the KU subscriber base. Amazon keeps that (and most other KU-related data) close to the chest. We have no idea if the pay is commensurate with the subscriber base.

Instead, writers are paid out of a fixed pot, the KDP Select Global Fund. If readers collectively read twice as many KU books, it doesn’t increase the size of the pot. The pot only increases if Amazon decides to increase it, which again may or may not be commensurate with the increase in books read, or subscribers enrolled. We have no way of knowing.

Worse, because pay is based on a share of the pot, if someone else’s books receive twice as many borrows, everyone else’s earnings go down—even if their readership remains unchanged.

This is why so many writers are up in arms about the latest KU scandal, covered in depth by Phoenix Sullivan and Ann Christy. To summarize, the current iteration of Kindle Unlimited (KU 2.0) pays authors based on number of pages read, and scammers are gaming the system with text synthesizers and click farms. It’s not impossible to make $500,000 a month with this scam, all of which is taken out of the share of legitimate writers.

Is Amazon working to fix the problem? Until last week, it wasn’t clear that they were—and it’s still an open question if they can. It’s a perpetual game of whack-a-mole where the moles keep getting smarter, increasing the odds that legitimate writers will get whacked.

When you look at the way the incentives are structured, however, there’s nothing surprising about this unmitigated mess. Amazon has divorced the readers from the writers in such a way that pricing signals no longer work. Worse, the fixed pot pits authors against authors in a zero-sum race to the bottom. You do not earn more by simply getting more readers—you earn it by getting more reads than other authors. In the meantime, Amazon keeps lowering the KENPC payment rate, and authors keep bending over.

Is there still value in an ebook subscription service? Readers certainly seem to think so. If there’s value for readers, it shouldn’t be too difficult to also find value for writers.

But when you look back on the history of KU, you realize that it’s not really about providing value for readers or writers, but undercutting Amazon’s competition. KU launched right around the same time as two other subscription ebook services: Oyster and Scribd. These subscription services did provide value to writers, as they paid full price for every completed read.

Amazon responded by launching KU 1.0, which paid writers significantly less. However, since Amazon had most of the ebook market share (at least in the US), and since non-KU books receive much less visibility on the Kindle Store than KU-enrolled books, authors were aggressively pressured to sign up. Amazon’s exclusivity requirements kept its competitors from receiving content, and as a result, they have since either folded (Oyster) or failed to gain much traction (Scribd).

It ultimately comes down to the contrast between makers and takers. KDP Select is a closed system, where the size of the pie is fixed and the best you can expect is to get a larger slice than the person next to you. This turns everyone into a taker: someone who feels threatened by other people’s success and jealously guards their own.

Is it any wonder then that KU authors, when presented with someone critical of the KDP Select program, resort to rhetorical tactics like gaslighting, lampost-moving, name-calling, and conflating disagreement for personal attacks? Sadly, no. These are all classic hallmarks of a taker, which the system has forced them to become. In this way, Kinde Unlimited pits authors against authors.

It’s a broken system, but of course, different people experience the brokenness in different ways. When I was living in Georgia, I met several older people who believed that things were better under Communism. Without a doubt, the Soviet system was broken, but these people did better under it than they did after it fell. In the same way, there are a lot of authors doing very well under KU 2.0 who would love to keep things exactly the way it is.

Several of them employ text synthesizers and click-farms.

And when KU 3.0 comes out, as it inevitably will, it will sort out a new batch of winners and losers just like KU 2.0 did before. Because of Amazon’s exclusivity requirements, many writers will lose just about everything, having developed no other income streams.

But not the scammers. They’ll just find a new way to game the system, based on the way KU 3.0 misplaces the incentives. Amazon will continue to aggressively insert itself between readers and writers, breaking the incentives structure in new and interesting ways.

And the cycle will begin again.

Why my books are not in Kindle Unlimited

Last year, Amazon came out with a book subscription service called Kindle Unlimited. As a reader and an Amazon customer, I’ve noticed that they’ve been pushing this service quite aggressively. As a writer, I’ve been following it quite closely, especially with some recent changes with how they compensate their authors.

However, if you check my Amazon catalog, you will find that none of my books are available on Kindle Unlimited. And if I had to tell you why, I could sum it up in just one word:

Exclusivity.

In order to enroll your books in Kindle Unlimited, Amazon demands that the content of your book cannot be available anywhere else. Not on competing retailers. Not on your website. Not on a site like Wattpad or posted on social media. It’s KU and KU only, take it or leave it. And you can’t get around that by doing separate editions, since it’s the content that must be exlusive, not the book.

Recently, Hugh Howey argued that KU’s exclusivity doesn’t really hurt writers or readers, because all of Amazon’s competitors in the ebook market suck so hard that it’s no big loss to lose them anyways. I disagree, though. Different readers have different needs, and as great as Amazon is, it isn’t the best choice for everyone.

I believe that readers should be empowered to make their own choices, not only in what they read, but in how they read it. Some readers would rather sideload their ebooks, and don’t want to deal with Amazon’s proprietary .mobi format. Others would rather keep their books native to their device and not deal with Amazon’s apps. Others live in parts of the world where Amazon tacks on an arbitrary $2 USD surcharge to every kindle store purchase, and that obviously doesn’t work for them.

Put simply, I believe that exclusivity is a bad deal for readers—and that because of that, it’s also a bad deal for writers. The less control that readers have over what they read, the less they are going to read. The more control that middlemen have over the market (and for all the wonderful things that it does, Amazon is still a middleman between readers and writers), the less pressure there is for them to innovate and improve.

On many of the indie writers forums and communities that I frequent, it appears that other writers are more interested in short-term monetary gains than in doing what best serves their readers. And that’s unfortunate, because Kindle Unlimited is structured in such a way that it pits writers against each other in a zero-sub game. Instead of paying a fixed rate for each page (or KENPC) read, Amazon sets a “pot” and pays each author a share of it, in proportion to how many borrows/pages they got. Thus, if one author gets more reads than another (or games the system to make Amazon’s algorithms think that he had more reads), that means less money for the other author.

A lot of writers argue that it’s not really a zero-sub game because Amazon usually adds to the pot after the month is over, thus manipulating the borrow rate to hit some undisclosed target. Even if that’s true, though, it makes things even worse. If Amazon has a target borrow rate in mind, why not tell authors up front? It basically amounts to not telling authors how much they’re going to be paid until after their books have been sold. In any other supplier relationship, this blatant lack of transparency would be insane.

From what I can see, it’s all about control. Exclusivity gives them a great deal of control, not only over the marketplace but over authors as well. The lack of transparency and ever-changing borrow rates make it difficult for authors to gather the data they need to decide whether to stay in KU or to publish their books widely. And authors who decide not to opt into KU are punished by having their books rank lower, thus achieving less visibility in the Amazon ecosystem. In the year since KU came out, my Amazon income has fallen by at least 60%.

Even with all of that, though, I would be happy to enroll all of my books in Kindle Unlimited if Amazon dropped the exclusivity requirement. There are a lot of readers who prefer Amazon’s KU subscription service, and I would love to make my books available for them.

But exclusivity is a bad deal.

Why I won’t be signing up for KDP Select

In the last couple of weeks, there’s been a lot of discussion about Amazon’s new Lending Library program. Just a few days ago, Amazon opened it up to indie writers with the KDP Select program. By signing up, writers gain access to Amazon Prime members (US only), where readers can borrow the book for free and Amazon still reimburses the writer.

The catch? Two, actually: writers agree to make their books exclusive to Amazon for 90 days, and payment for all KDP Select authors comes out of a monthly “fixed pot” of $500,000, where every writer gets a cut according to what percentage of the Lending Library downloads were for their books.

Reactions from the indie community have been mixed. Within only a few hours, several thousand enthusiastic writers had signed up (the current number of participants is ~50k), but many others remain cautious and aloof.

The full range of reactions can be seen in the Kindle Boards thread. Guido Henkel does a good job pointing out how the numbers don’t add up, while David Gaughran offers a compelling analysis that likewise dampers enthusiasm for the program. On the Smashwords blog, Mark Coker pleads with writers to keep their options open, while at Writer Beware, A.C. Crispin points out some disturbing language in the terms & conditions that essentially amounts to a non-compete clause.

I’m sure that many others will weigh in on KDP Select in the coming days, and I look forward to reading their analysis, but I’ve already decided that I won’t be signing up with the program. Even if no one else signs up, with 50k writer splitting a $50,000 pot, the average monthly paymentis only going to be $10. Unless you’re one of the lucky bestsellers, you’ll probably make even less than that.

But the real reason I’m not signing up is because I don’t feel that it serves my readers. If I put any of my titles through KDP Select, I’d be giving Amazon a 90 day exclusive, which means that my readers would be forced to either buy through Amazon or wait three months to buy my books. I don’t feel that that’s fair to my readers, especially in territories where Amazon levies a $2 surcharge.

At this point in my career, my goal is to build up a dedicated fan base that looks forward to each new release. To do that, I want to make my books available in as many places as possible. Even if I’m not selling all that well right now at Barnes & Noble or the smaller retailers, it’s not worth it to cut those readers off and tell them to go to Amazon or wait.

However, the KDP Select program does foreshadow the next big phase of the ebook revolution, and that is the move to subscription services. I expect that in the mid- to near-future, we’re going to see a lot of ebook lending models arise, kind of like Netflix for books. The big question in my mind is how the writers are going to be compensated.

Like David, I have a lot of concerns with KDP Select’s “fixed pot” model. Besides the lack of any guaranteed or minimum rate of compensation and the general opaqueness of the system, it fundamentally pits writers against each other in a zero-sum game, where one writer’s gain is another one’s loss. To me, this represents a giant step backward.

When a reader finds something they like, they’re more likely to try out another book just like it. This is how readers have historically found new writers, and it fosters a sense of community, where writers work together to reach out to new readers and expand the scope of the genre. The “fixed pot” model disincentives all this and replaces it with a Machiavellian system that, at its worst, works against the natural advantages of the medium and undermines the genre community.

For all these reasons, I won’t be signing up for Amazon’s KDP Select. The exclusivity hurts writers and readers, the numbers just don’t add up, and the “fixed pot” model represents a fundamental shift in bookselling that I cannot support.