Thoughts on Kindle Unlimited and Scribd

Some of you may know that Amazon changed the terms of its subscription service, Kindle Unlimited (KU) such that payments due to authors with books in KU are calculated in a different manner than previously. If you’re a reader and you subscribe, you can read all you want for $9.99 a month. With the single limitation, so far, that you can have up to 10 books on your “shelf” at once. To get book number 11, you have to read or release one of those books.

With the Kindle Unlimited subscription you can access hundreds of thousands of Kindle books and thousands of audiobooks with Whispersync for Voice. You can keep up to ten books at a time and there are no due dates. Read your Kindle Unlimited books on any Amazon device, or free Kindle reading app. (Terms)

Scribd reinvented itself from a pirate site reader-centric sharing site (Irony ALERT!) into a subscription service. For $8.99 a month. They paid all authors/publishers the same as a sale.

If you’re a reader, that’s a pretty sweet deal, assuming the books you want to read are in the program.

If you’re an author, deciding whether to have a book in KU is a business decision, and not everyone’s business needs and goals are the same. Everyone’s reasons for being in or out are different. Last year when KU debuted, I blogged about it here. Here’s what I said then about how that would be profitable:

If you are paying authors/publishers a percentage of price, then for your business to be viable, that payout amount per month HAS to be less than 9.99 * (number of users subscribed).

This means a profitable user will read a number of books N per month where the payment due to vendors is less than 9.99. The more books they read, the less the wholesale price has to be (obviously), and, at 9.99 per month, the wholesale price has to be less than 4.99 for 2 books per month, 3.99 for 3 books, etc.

Not long after that post, it turned out the payment terms for traditionally published books in KU were different than for self-published books. Traditionally published books receive the same payment as if the book had been bought — that is 70% of the purchase price. Further, certain self-published authors were given those or similar terms in order to convince them to put their books in the program.

Self-published authors can only participate in KU if they put their books in Kindle Select — that is, have those books exclusively at Amazon. Scribd does not require exclusivity. For some authors, Kindle Select makes sense. But for others, it doesn’t. Doing well at other vendors or wanting to avoid the risk of having a business depend on a single vendor are good reasons not to be in Select and therefore, not in KU.

Traditionally published books need not be exclusive. Because, as Amazon recognized, that would be a non-starter.

Arithmetic

What the Romance community knew, and what I suspect Amazon knew (because DATA!) and what Scribd apparently did not know (Because why would anyone pay attention to what goes on with those books women read?) is that Romance readers are the Great White Sharks of the reading world. They are the 80 in the 80/20 rule. They are the power in a power law.

Solving for X

Remember my ruminations over profit, book prices and that monthly subscription rate? Amazon had the data that would have told them everything they needed to know about those Power Readers (before KU debuted). Amazon solved the math problem with deep pockets but also by offering self-publishers a substantially worse deal. The KU reimbursement rates started decently, then took a swift dive until the reimbursement fell to around $1.34. Why? Well, either you sustain losses because of the Power Readers or you find a way to compensate for that. Falling KU reimbursement rates were exactly that, that is, KU’s “flexible” reimbursement rates to self-published authors was their hedge.

As KU continued, Amazon kept talking about how much money they were putting into the monthly fixed KU pool to be distributed to the self-pubbed authors, but reimbursement rates from that pool continued to fall. Because the hedge was needed. (So I speculate.) Scribd had no such hedge in its business model. (To my knowledge, anyway.)

How did Scribd solve for X? They didn’t. It’s hard to understand why Scribd thought $8.99 for all readers was viable even in the medium term. If they knew about Power Readers then they either didn’t know enough or they thought the same thing most of the traditional world thinks about products for women. How could they possibly matter when they were up against REAL books and REAL readers?

$8.99 is a brilliant strategy for competing for potential KU subscribers. It’s not a brilliant strategy for paying authors/publishers in an environment that includes Power Readers. The rational solution after the short to medium term is to introduce tiered subscription rates. It’s blazingly obvious that in an environment that includes Power Readers you must also have a bazillion 1-2 book a month readers or you have to charge Power Readers more. Or you have to pay authors/publishers less. Scribd did a great job going after traditional publishers, and they probably had a better selection of books than Amazon. And, by the way, the word is lots of Power Readers (those sharks!!) had subscriptions to both services. Because the pool of books was different.

But if they charged those readers more, then KU looks more attractive… It’s a tough situation.

Solving for Y by Killing X

Scribd’s solution was to remove 80-90% of Romances from their service.

Sure. Of course. Now they will be paying out less to authors and publishers because the books people women actually want to read are gone. Now that they’ve basically told the Power Readers they are unwelcome with all their womanly reading of THOSE books—who the hell knew they read that much???—what they have left are the 1-2 book a month readers.

This makes a certain sense. Because maybe what will happen is the Power Readers keep their subscriptions to both Scribd and KU, but now only borrow 1-2 books from Scribd and things are sustainable for a bit longer for them. Yes, an FU to romance readers, but Scribd maybe wasn’t in a position to feed the sharks.

If I were a Romance publisher ::cough::Harlequin/Avon::cough:: who just put substantial backlist into Scribd only to have their reader base told to fuck off, I think I’d be pretty pissed off.

The more established self-publishers, the ones who cannot afford Amazon exclusivity financially or at the cost of reader-relations will likely move to Oyster in order to have some presence in a subscription system. I wonder if Oyster knows what’s coming their way?

Cue the theme from Jaws….. LOOK OUT OYSTER!!!

Segue

Early on, long before KU, I put one book into Select into order to have data on the program. I asked my newsletter subscribers to tell me what they thought about my decision. Their answer? The non-Amazon readers were angry. Rightly so. That was enough for me. My experiment was done after the first angry letter. (After 90 days, you can elect not to re-enroll in Select.) If it had been possible, I would have ended it immediately, but I had to wait out the 90 days. I sent a copy of that book to every single reader who let me know how they felt.

Amazon’s Adjustment

The initial structure of KU with its fixed reimbursement pool meant that a longer book that make $2-4.00 for a sale, made $1.34 in KU. Shorter books, on the other hand, that would be sold in the $0.99-1.99 range and thus net the author a dollar or less, made $1.34 in KU. In other words, a book priced at $0.99 made $1.34 in KU. Anyone with half a brain can see that this meant shorter books were way more profitable and that longer books were way less profitable.

The adjustment Amazon made was to address that disparity. Instead of paying the same amount per borrow regardless of length, authors are now paid based on pages read. “Pages” read, actually. Basically, Amazon had to normalize what a page means for a digital book when displays are reflowable and resizable across different sized devices. A “Kindle Page” is the same for all devices regardless of settings. (Presumably, of course.)

To me, that’s fair enough. Authors who write shorter books make up the difference by writing more books. I should think that’s obvious, though apparently not. Category authors tend to write more books than single title authors. Three 30K word books will make you the same as one 90 page book, assuming the books are read all the way through.

I have to shake my head at the suggestions from some that readers should make sure to page through shorter books, because otherwise those authors are screwed.

No they’re not. They’re only screwed if readers never actually finish the books, and if readers aren’t finishing their books, well, maybe those authors should worry about why that is. There absolutely is a market for shorter books and short stories. Just like there’s a market for longer ones. I have short stories, novellas, and novels on sale. They achieve different goals for me. I’m quite sure that readers have different goals and preferences for reading works of varying lengths.

Final Thoughts

I don’t have any books in KU. I did have books in Scribd, but I assume the only thing left is Scandal, which is currently free and so would not have been removed. I’ll probably go pull Scandal because I’m vindictive that way.

But now I’m kind of wishing I did have something in KU because at last at LONG LAST Amazon is giving authors data about how much of their books get read, but the only way to get it is to be in KU. I had this idea that authors could put a book in KU, let it sit for 90 days and watch the data about pages read. You’d rewrite if no one gets past Chapter 10. ::snort:: Mostly I’m kidding.

[Update: MelJean Brook pointed out that Amazon is NOT providing meaningful page read metrics so my plan would not work. There is no way to tell from the data provided if 2000 Kindle pages read is 2000 people reading one page or one person blowing through 2000 pages of an author’s work.]

I Lied. This is the Final Thought

I was talking to a friend the other night about why Amazon didn’t fix their issue sooner since they surely had the data about the problem of shorter works no later than 6 months in. Assuming that’s true, that gives them 6 months to develop, test, and QA and then prepare the PR for the Kindle Normalized Pages scheme. This is aggressive but doable. You’d have to test a lot of scenarios and then make absolutely sure all the calculations are correct and reach consistency.

Maybe the schema changes weren’t as big a deal as they would be in a traditional SQL Server or Oracle environment, but NoSQL solutions have different challenges, and one of them is hidden errors because of eventual consistency or problems with “schemaless” documents. (It’s only schemaless if you never hired a data architect, and if you didn’t sooner or later you’re fucked. *)

I’m thinking of Wattpad and its problem with user comments attributed to the wrong account. That’s a total NoSQL error that a good OLTP-trained data architect could have said, hold on a sec here… What happens if…. And then all the developers stick their fingers in their ears and sing LahLahLahLahLah because the architect just added 3 months to the delivery date. And nine months later your data is untrustable. There are scores of developers out there who got burned by thinking schemaless means never having to think about data consistency across transactions.

Eventually, your financial data has to be in a transactionally consistent state and stay that way and it can never ever revert to a previously inconsistent state. Or you can’t pay people correctly. So, you know, 6 months seems like a decent guess for how long it would take to roll it out and be certain it works for paying people reliably. The concept isn’t hard. The execution is.

Interesting.

* OMG. I actually made a database joke in a writing blog! More than one, actually. This is very strange.

Note: Regarding NoSQL, it’s a very very fast way of scaling data. Although UC Berkeley had one of the early such databases, Amazon more or less put the concept into widespread use, followed by the original developers at You Tube who had to massively scale MySQL. Those guys needed to ramp up fast and on a scale that traditional transactional database could not then achieve. When I say “documents” in the sense of a NoSQL database, I don’t mean a Word document. I mean a collection of information of related items where Item 1 may not have the same information as Item 2 in the same set of related information. In that sense, there is no “schema” (that is a definition of what information is contained in related data. In a transactional database, all objects of a defined type have the same structure, even where elements of the structure are NULL.)

The NSA, by the way, collects your information in Hadoop, a NoSQL database backed up with some Postgres SQL functionality for the sorts of transactions that MUST be consistent.

This is a laughably high level explanation. It’s way more complicated. I’m a SQL Server DBA and Data Architect, but I’ve done some Mongo DB where we needed to address some shortcomings with our SQL Server applications without spending a fortune. For anyone who cares, Microsoft’s SQL Server 2014 changed the query optimization engine in significant ways — and I suspect it’s a direct response to NoSQL. For example my current employer had ugly queries that were taking 2 minutes (on completely under resourced SQL 2008 servers and for data that SHOULD have been in a datawarehouse but wasn’t, so I’m sorry, but the situation is long and convoluted and no one here cares, just know that 2 minutes for a query result is beyond embarrassing) that went down to 45 seconds when run on a SQL 2014 install.

Basically, the point is that the situation is considerably more complicated than, hey, let’s do it THIS way instead. Amazon is not just a company that sells stuff. They INVENTED the technology they needed to massively scale because no one else was doing that, and then they open sourced it. So when we talk about Amazon having advantages, the advantages are even bigger than most realize. Amazon IS data. I don’t think they do anything without knowing what the data says, and they have more data than anyone.

It’s why we’re seeing such an upheaval in publishing. It’s why Romance matters more and it’s why companies and analysts who dismiss Romance are in big trouble. Amazon knew about Power Readers. The usual gendered biases very likely got exploded by the facts. Traditional publishers need to lose the bias. Companies who want to compete in this space need to fire anyone who talks about REAL books and REAL readers.

The Romance Sharks will eat their lunch.

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11 Responses to “Thoughts on Kindle Unlimited and Scribd”

  1. Meljean says:

    “But now I’m kind of wishing I did have something in KU because at last at LONG LAST Amazon is giving authors data about how much of their books get read, but the only way to get it is to be in KU. I had this idea that authors could put a book in KU, let it sit for 90 days and watch the data about pages read. You’d rewrite if no one gets past Chapter 10. ::snort:: Mostly I’m kidding.”

    I don’t think you actually get this info. (Even kidding, it would be really interesting to see where readers stop.) However, although I can see the total number of pages read (I have a few things in KU at the moment), I can’t see how many people are borrowing the books. So as far as I can tell, there’s no way to even get an average number of pages read. Because, say I have a book that shows 2000 pages read, and the book is 100 pages long. It’s possible that 20 people finished that book. It’s also possible that 40 people only read halfway through. So as a measuring tool, it’s all but worthless.

  2. Well that’s disappointing. Rats! Thanks for the explanation. My “Kindle Pages Read” chart is flat-lined at 0, of course.

    Hey, maybe 2000 people read 1 page! Everything went downhill fast after the copyright statement. Hah.

  3. Wasn’t Scribd or Oyster giving this info? I’m pretty you could get it at one point – I remember seeing it last summer, because Into the Shadows had come out. But whereas the superior Carolyn would seek to learn from that, Carolyn Crane merely felt insulted and like what the fuck?

    Anyway, It was really eye-opening. Though I personally finish about 10% of all books I start. And I think a lot of people are reading like that in this environment. Because everyone is buying a zillion more books, right?

    I also wonder if Amazon left that deal in place feeling like they could hurt other retailers more than they actually did with it. Did they imagine a lot more indies would go over?

    • Amazon’s willingness to sustain a loss for a long time is an advantage. It means they can sit tight at $9.99 for everyone, profitable or not, for longer than anyone else.

      I’m not sure about Amazon and it’s Select program in that respect. I have heard from others that when they say they make as more or more from other vendors as from Amazon they were met with disbelief. So, it’s possible that Amazon is a bit smug — and wrong — about its position with authors who are diversified. It’s not data they have except by anecdote.

      Objectively, Select appears to be based on a belief that they can convince authors to be exclusive — except they know they were unable to do so for many of the top authors. It’s why they had to cut separate and different deals with them. And even that wasn’t sufficient to keep them in KU.

      I’ve heard Russ Grandinetti sound disingenuous about Select. He’s said, hey, it’s only 90 days and it’s voluntary. True statements, but if you re-enroll, it’s not just 90 days. I’ve also heard him talk about how happy authors are in Select and appear to conflate Select authors with all authors. Select is an echo chamber for them. Select authors are happy, he’s said– but what about the authors who aren’t in Select?

      I absolutely believe Amazon thinks they can hurt other retailers with KU — it’s obvious they have in re Scribd.

      I don’t know how large/influential the non-Select authors are to Amazon. Are there enough of them, and do they sell enough books at Amazon to be worth more than Select authors? I’m just not sure.

      I do know that pre-orders COULD have been tied to Select and weren’t. Now there’s the Print giveaway thing that also could have been tied to Select and wasn’t.

  4. KatieF says:

    FYI, when I search your name on Scribd, it says there are 10 titles. But, when I click the link to browse the titles, only 7 show up–three of which (The King’s Dragon, Not Proper Enough and Not Wicked Enough) are listed a unavailable. The 4 that are available are Scandal, My Dangerous Pleasure, My Darkest Passion and Drop Dead.

    As a reader, I find the changes at Scribd annoying and confusing but, I have so many options for ebooks that, ultimately, it’s not a big deal. I can’t imagine how frustrating it must be for the authors trying to understand the implications of the changes at Scribd and KU, especially since the stakes are so much higher for you.

    • That’s interesting! The King’s Dragon is actually a MacMillan offering. At this point MacMillan has non-exclusive rights to the story. Not Proper Enough and Not Wicked Enough are Berkley Books titles (Penguin Random) where Berkley has only North American rights. I have the rights everywhere else. So, perhaps Scribd can’t handle titles where a publisher does not have World Rights.

      Scandal, My Dangerous Pleasure, My Darkest Passion, and Dead Drop are either titles that reverted to me, or are original titles I self published. Scandal is free, so that would not be pulled. I have several other titles that I put in Scribd that do not appear on your list. Huh. Interesting information!

      And yes! I imagine the changes at Scribd are annoying and confusing. I don’t know why you’d show a reader a book they can’t actually have. That’s frustrating for the reader. Way to drive them away!

  5. HJ says:

    I haven’t subscribed to KU because I was concerned that self-publishing authors had to commit to Kindle Select. I did subscribe to Scribd, having used it on a free trial and checked that authors were being properly compensated. I was delighted at how much romance there was on there, and couldn’t believe the price. For me it was especially useful for re-reading books which I bought in print years ago which are packed away at the moment.

    I am concerned to learn that Scribd has “remove[d] 80-90% of Romances from their service”. When did they do that?

    It would explain why some things which I put in my library are now showing as “not available”. It looks as though I’ll be cancelling that subscription — I don’t think it’s fair to remove such an enormous proportion of books from one subject area, and it definitely isn’t fair to do so without telling the subscribers.

    • HJ: The announcement from Scribd about the removal of most Romances from their offering was came this past Thursday, I believe.

      I’m disappointed they didn’t communicate better with subscribers. That’s really rotten. But the cynic in me says their Romance Reader subscribers were killing them, so they didn’t care about the customer relations portion of the decision. I hope that’s wrong.

  6. I just read a lot of words and my head is spinning. I’m curious if anyone knows how this affects the Amazon ranking? I just looked at my sales report and I have a bunch of borrows, less sales than I’ve had all week, and my ranking seems to have slipped a few notches. Can someone dumb it down for me? Thanks!

    • Hey, Tamela! Thanks for coming by. My understanding (so far) is that KU borrows will continue to contribute to sales rank. But it’s not clear yet if a book with a high read rate will be given a different/additional weight. So, the answer is that we don’t know yet. However, this is June/July 2015. There was a sales “swoon” at the same time in 2014 AND a swoon in 2013. I say this because at all three times the self-pub loops were full of authors complaining of a dip in sales. Even that isn’t hard proof, but for three years running we have this phenomena and KU did not exist for the first instance. Anyway, we need to consider the possibility that KU is not the cause of the sales swoon and have a strategy for that while also having a strategy for an environment where KU IS the cause. If those two strategies are different, with different consequences, then we have to place a bet one way or the other, or develop something hybrid — because what if BOTH are true?

      This is also the second summer where my sales have increased from previous months, so again, my own sales data does not follow the “June Swoon” theory. (I’m a SF Giant’s fan. What can I say?)

      Assess. Evaluate. Consider scenarios. Place a fact-based bet with the strategies you implement.