Does Amazon treat indies like second class citizens?
I’ve seen a few comments to this effect since Kindle Unlimited launched. The argument comes from the fact that self-published authors are paid from a shared pool for ebooks borrowed through KU, while traditionally published titles receive the same payout they would get for a regular sale. Since KU launched, self-published titles have earned in the neighborhood of $1.30 – $1.60 for each KU borrow (if the title is read to the 10% mark).
Another complaint about KU is that it ignores price for indies, so a 99 cent ebook and a $9.99 ebook both pay the author $1.30-ish for a borrow (again, if read to the 10% mark). A $9.99 ebook borrowed from a trad publisher, meanwhile, will pay 70%, which comes to $6.99.
It’s worth pointing out here that the trad-pubbed author of that ebook will only receive around $1.48 for that same borrow of a $9.99 ebook. And the trad-pubbed author of a $4.99 ebook borrowed through KU (which is a better comparison to indie pricing) will receive a mere 74 cents! So a comparison of earnings between authors on either side is actually much better for the self-published author.
But wait, you say, we aren’t just authors. We are publishers! We pay for cover art and editing. We upload a finished product, ready to go. These aren’t royalties we’re earning; they are a cut of proceeds. So comparing our income as authors to other authors isn’t fair. We should compare our income as self-publishers to other publishers.
Okay, then, let’s compare. In this case, trad publishers are getting the better end of the stick for ebooks priced above $2.99. For ebooks priced below $2.99, self-published “publishers” begin to do better. (Very few trad pubbed books are priced this low, so it’s moot.) But we have to also compare everything, not just pay. We have to compare what Amazon is getting out of the bargain. Because the way I see it, indies aren’t just treated like second class citizens by Amazon — self-published authors treat Amazon’s customers like second class citizens.
What in the world do I mean? Well, I don’t see Harper Collins snagging Wikipedia articles and uploading them to Amazon for a quick buck. I don’t see the rampant piracy of other authors’ works, a quick repackaging, and again a quick and illegal buck. I don’t see publishers exchanging thoughts on how to make a quick buck packaging blog posts as KU ebooks, or how to chop up novels into thirty 10-page stories that pay out after the first page turn.
Are the offerings from indies and trad publishers the same? They certainly can be. The best-written indie books are as good if not better than the best-written trad published books. And the indie titles are usually priced more reasonably, which provides Amazon’s customers with a better shopping and reading experience. The best indie titles are well-edited, have great cover art and well-written blurbs. They provide an equal or better experience at often half the price. These are the authors who are justifiable in complaining about being treated as second class citizens. They hand Amazon great works at a steady clip, and they see themselves as being on par with a Hachette title, but the pay isn’t the same.
But we have to take the bad with the good. The same freedom to publish that has changed the lives of thousands of authors also brings a wild west where others take advantage and try to game every system in every way possible. A handful of rotten apples spoils the entire bunch. The only way to prevent this is heavy curation, which I certainly don’t want. I want freedom, but with freedom comes the need to curb abuses. The logical step (and many have argued for this, some with compassion, some out of spite) is a tiered system. Classes of treatment for publishers based on the class of treatment given to customers.
Before you balk, consider that we already have this. Amazon has varying levels of accessibility, from the practically wide-open KDP to the submission-curated Kindle Singles to the acquisitions editors at their imprints, to the work submitted by other publishers. At each level, the rewards (pay, promotion, editorial) vary. We don’t just have first and second class citizens. We have all sorts of classes.
The same is true with traditional publishers. Not all authors are treated the same. Massive advances effectively raise the royalty rate paid to top authors, who aren’t expected to earn out their million-plus-dollar deals. Some authors get book tours, others don’t. Some get top editorial, others don’t. Some get placement in the front of the catalog, others don’t. Some get store co-op and favorable placement in retail, others don’t.
The same is true of indies, who also fall into various categories. There are KDP authors, and then there are KDP Select authors. The latter get many promotional tools that the former doesn’t. KDP Select authors also receive higher pay in some territories than the regular KDP author.
There’s more. When Amazon started allowing self-published authors to set up pre-orders, they were concerned about the customer experience. What if the book isn’t ready in time? So they created a system that punishes those who miss their deadlines. You can have the right to set up a pre-order taken away from you for a year if you don’t get your work up in time. This makes perfect sense if you consider that Amazon’s philosophy for generating income is to concentrate manically on the customer experience. While Amazon loves authors, they love their customers more than anyone else. Again, more classes to fall into. It’s just the way the world works.
So you have a class of authors who make their deadlines and a class of authors on probation for not meeting their deadlines. You have a class of authors who get regular feedback from readers about typos and a class of authors who rarely get this feedback (or who act on it promptly when they do). You have authors whose ebooks are read in a few days and authors whose ebooks are read in a few weeks, a reflection, perhaps, on the quality of the customer experience but not on the quality of the work. And the customer experience, again, might be what Amazon is after. A quicker read means more purchases per year. I’m fairly certain that Amazon watches this metric. I would.
There are other tiers. You have authors whose ebooks average a certain number of sales, borrows, reviews, social media shares, etc. and authors who perform lower than this. Should we be treated the same?
I think we should have the same opportunities. The start line should be wide enough for everyone to slap an ASIN number on their chest and get ready for the bang of the gun. Everyone who wants to publish their original content should be allowed to, but I don’t think we have the right to expect the same outcomes. Even if your books are better than your neighbor’s, it doesn’t mean you’ll sell more. There’s an element of chance involved. It all comes down to public taste, the size of your platform, the timing, the genre, persistence, genre, keywords, hard work, and a hundred other little factors.
That’s where the classes start sorting themselves, and so the question is how Amazon should treat authors based on these outcomes. Should authors who sell a lot of books get better treatment than authors just starting out? Should an author with 30 published titles be treated the same as an author with 3 published titles? What about an author who releases a highly sought after ebook every month, as some of my kickass colleagues are capable of doing?
I think authors should be treated fairly, which means not evenly but commensurate with what they offer in return. And so authors who treat readers like second class citizens shouldn’t expect to be treated like first class publishers. That’s not an invitation to punish people (I’m sure many will read it that way). To me, it’s simply inspiration to work harder to treat readers with respect and to help other indies do the same.
Of course, it will be impossible to prevent abuses by the untoward and impossible to agree on metrics of quality (an exercise that I abhor). But now we can ask again whether Amazon should pay indies — as a whole — the same way they pay trad publishers. Should an indie author get the full tilt for a borrow in KU? Let’s ignore the fact that the system would likely collapse in a heap of unprofitability. Let’s also ignore the more reasonable idea that trad publishers shouldn’t get the same amount for a borrow as they do for a sale either. Ignoring all of that, do I think indies as a whole should get paid the same as trad publishers as a whole?
I do not.
As a whole, I don’t think we indies treat Amazon as well as trad publishers do (Hachette, notwithstanding). Not that it’s cut and dry. I mean, we don’t charge ridiculously high prices for our ebooks, which Amazon appreciates. But then, trad publishers don’t employ perma-free on the scale we do, and free ebooks tax Amazon’s infrastructure without earning them a penny (they lose money, in fact, as they have to pay AT&T to deliver these works, provide customer service for these works, storage, etc.). In all the arguments I’ve seen of Amazon treating indies as second class citizens, I’ve never once seen indie authors own up to the cost we foist on Amazon with perma-free. Not once.
That’s an intellectually bankrupt stance to take if it’s by simple omission. If people think that omission is justified, then it’s a morally bankrupt position. It’s a case of wanting as much from another as possible without thinking of what that party provides us or what costs we incur with our actions (again, as an entire group).
We have to consider indies as a whole, and so we unfortunately have to consider the number of hijinks, scams, rip-offs, pirated works, wiki articles, typo-ridden rough drafts, etc. that this group uploads to Amazon, all of which requires infrastructure to handle (fighting piracy and plagiarism isn’t cheap, nor is improving the customer experience through a focus on quality).
And here’s where life is unfair: There’s no way for indies to prevent other indies from spoiling the system for the rest of us. There’s no way we can help bring up quality overall so that we all get treated more fairly (though many try, whether by offering writing advice, sharing editing and beta-reading services, or providing tips on cover art, formatting, burbs, etc.).
What we need is something we already kinda have, and that’s reciprocity. The authors who respect Amazon’s customers by providing high quality reads with professional covers at a great price should be treated better than those who upload short error-riddled rough drafts at high prices. And the latter should be treated better than those who break Amazon’s TOS, like having KDP Select books available elsewhere. And this group should be treated better than those who break the law by uploading stolen material (or by profiting from open-source or crowd-sourced material).
Tiers. They already exist, but they are nebulous and unclear. When Amazon wanted to beta-test their pre-order system, they went to authors who had a history of producing quality content on a consistent basis. These authors were given special privileges in exchange for treating Amazon’s customers like first class citizens, all to test the merits of a system before wider release. The KU All Star bonuses are similar in that the authors who produce the highest-demand works are rewarded for doing so.
Not only will you and I disagree about whether or not this is fair, I don’t think most people agree about which of these decisions are fair and which aren’t. It isn’t that simple. It never is. If you’ve ever had a job, you’ve seen yourself and fellow employees treated variously in varying ways, and not all of it made sense. The question is whether or not Amazon has authors’ best intentions in mind when they make these decisions, and I am certain that they do. I think they consider their customer first (a fact many authors and publishers seem to ignore when trying to understand Amazon’s decisions), and then they look at their service providers (that’s us) and try to balance profitability with reasonability. I don’t envy them that challenge. I think they get far more right than wrong.
As an author, of course, I am biased. I think Amazon should tweak their KU payout system to make it more fair among us indies. 99 cent short stories and novels should pay the same 35 cents that they do on KDP. The payout should also come at higher than the 10% read range (maybe more like 50%). Works priced from $2.99 – $6.99 should pay $2.00 per borrow. And these rates should be known ahead of time. It shouldn’t fluctuate from month to month.
Another option would be to pay 40% on borrows and 70% on sales right across the board. But if we get more from Amazon, we need to ask what they are getting in return. I don’t see this mentioned much, but Amazon’s customers — our readers — are the ones who really matter. Are we treating them like first class citizens? You might be, but is our class of publisher as a whole?
If not, what can we do better? How can we negotiate with Amazon for better pay? I believe in fair exchanges; I believe we should take others’ perspectives to see what they need from us, not just what we need from them. As much as I hate the idea of tiers, they already exist. I would hate to see a “stamp of approval” system of any sort. The new release from a first-time author who put time and care into their product should be indistinguishable online from the latest novel from a Big 5 bestselling author. There shouldn’t be gatekeepers or curators within KDP.
So the fairest thing I can think of is escalators. Amazon’s self-publishing audio book program, ACX, used to employ earnings escalators. The payout rate might start at 40%, but it can go up to 90% with enough sales. This puts the job of rewarding customer experience where it belongs, and that’s with the customer. Keep them happy and coming back for more, and the payout goes up.
The question is whether or not Amazon is at its profitability limit right now with paying 70% of the sale price in exchange for hosting and supporting our titles. I think this is a fair split. It could be higher, but it could also be lower. Brick and mortar retailers keep 40% – 50% of the retail price in exchange for transacting the sale. Despite what some seem to think, e-commerce isn’t cheap. A 30% take in exchange for file hosting, delivery, recommendations, automated email blasts, marketing tools, the best customer review system, etc., seems fair to me. But I also think there’s a little meat on that bone. Especially to reward those who treat Amazon’s customers like first class citizens.
I’d love to see that 70% payout creep up to 85% with enough titles sold. Maybe 1,000 sales moves the peg up to 71%. 5,000 sales gets you 72%. Perhaps reaching 85% requires selling ten million ebooks (something no single self-published author has yet done on Amazon). I don’t dream of ever reaching that sort of level, but I would applaud those who do for being rewarded for it.
Maybe there are other ways to acknowledge authors who treat readers with the utmost respect. This would not only be reward authors but inspire us. It would be fair. What isn’t fair is what I see happening among my cohort: Authors expecting equal treatment without asking whether they are providing an equal service. Authors complaining about KU payouts when we cost Amazon a lot of money through perma-free (a practice we corner them into via their price-matching promise to their customers). We expect to be paid just like traditional publishers, but do we — as a whole — treat customers as well? Do our low prices offset any other deficiencies? Is there any way to expect fair treatment without dividing us up into tiers based on the quality and quantity of our output?
I don’t think these are simple questions, nor do I think the answers are obvious or simple. There are those who seem to think the answers are dead-easy, and that’s to give, give, give. I argue they aren’t thinking the whole thing through, or they aren’t trying to view the situation from all angles while taking everyone’s needs and motivations into account. I’ve certainly been guilty of this.
There’s been a bit of commentary on this blog post, which is already too long, so I thought I’d make it longer. The post wasn’t about KU being bad. I’ve blogged already that I think KU is great for many authors, that subscriptions are a disruptive force, and those who are disrupted are going to complain while the disruptors do well for themselves. I applaud that. KU has been good for me. I’m just looking at ways I would tweak the structure if I were Amazon. Not to benefit myself, but to provide the highest quality experience for their customers. (Any game of suggesting tweaks for a retailer must be taken from their perspective, otherwise it’s just wishful thinking.)
The post was also not an attempt to equate abuses of KDP with indies. Or to suggest that indies who do things the right way deserve anything less than stellar treatment from retailers. It was an attempt at a pragmatic view of the entire landscape, which I think helps explain business decisions that may seem wonky when viewed from within our immediate bubble, but might make sense when seen from a greater height or another perspective.
I’m not a fan of most of what is suggested in that blog post. My ideal publishing world would look much different from the current world. But how is that useful? If we are going to demand things from retailers like Amazon, we have to take their motives and needs into account. Motives such as: The customer comes first. Motives such as: We don’t want to give away products, but we also don’t want competitors to take market share by undercutting our prices.
I’ve seen it suggested that Amazon is all for perma-free, why else do they allow it? They allow it for the reasons stated in the previous paragraph, as a response to the actions of other retailers. If Amazon was truly for a free price-point, they would make this an option in the KDP dashboard. If they thought free should be easy to attain, they wouldn’t have limited us to 5 “Free Days” as part of our KDP Select membership. Think about that: The reward for exclusivity in 2011 was a mere 5 days of “free” out of every 90. That tells you what you need to know about how Amazon views free ebooks. Again, the fact that they price-match has to do with the fear of losing market share to competitors. We seize this as an opportunity.
When Hachette refused to negotiate with Amazon, Amazon responded by taking away pre-orders and predictive warehouse stocking. These were free features that Hachette and other publishers use to their great advantage without pausing to appreciate. Amazon pre-orders reshaped the publishing landscape. They are used to drive hype among sales staff, set print runs, and make all kinds of marketing decisions. I know, because I saw this in my publications with two of the largest publishers. They constantly updated me on how things were looking by referencing Amazon pre-orders. This was the sort of info that other companies might pay a lot of money to marketing firms or polling firms to deduce for them.
Predictive warehouse stock allowed same-day and two-day delivery of books to customers all over the country. When publishers ship books, it takes two weeks to get them (I know from working in a bookstore where I placed these orders all the time). If you go to a bookstore and place a “special order,” you’ll probably see that book in a couple weeks. That was the reality before Amazon spent billions of dollars on distribution centers and honed their predictive algorithms. Big publishers just take these things for granted. It made their negotiations with Amazon seem ludicrous to many observers. Why should Hachette expect these things, plus better margins, without offering anything in return? My blog post was simply raising the possibility that some of us fall prey to the same tendency to not see all that we are being offered — only what else we want. We fall prey to seeing how others treat us without delving into how our actions (as a group) affect others.
As I said in the original post, it is cosmically unfair for all KDP users to be lumped together. That’s the conundrum. I don’t see an easy answer to any of this, just more problems. But for me, thinking about it this way at least makes the issues observable so I can contemplate them better. I wish I could offer solutions or even hints of ideas for solutions. All I can offer is my own confusion and thoughts. For what that’s worth. :)