Subscription Models for Literature

Some more thinking-out-loud about subscription service models and the book industry. I’ve blogged about this numerous times in the past, but years go by and your thought process changes and more data rolls in.

This was my blog post when Kindle Unlimited was unveiled. A few things I said at the time:

  • I doubted a model like Scribd’s or Oyster’s could survive. (I compared it to paying too much for manual labor, which would close down a factory and leave everyone out of a job, a comparison pretty apt with the recent removal of erotica from Scribd’s lineup.)
  • I felt like Amazon was forced into subscription services, but was going about it in a smarter way. (Noting that the full-tilt plan Scribd and Oyster were using was unsustainable, and that a borrow should never pay the same as a sale.)
  • That it was too soon to say anything conclusive, so I would have to wait and see. (Which I still agree with, but I feel a little less ignorant today than I did a year ago.)

 

So what do I think about subscription ebook models now? I think they are different from retail models, for one. And I might be alone in this, because the media is covering Amazon’s estimated $0.00579 per-page payment plan to retail royalties, as if this is the new metric for a living wage for an author. Everyone is asking where the literary version of Taylor Swift is, the musician who has been railing against the pay from streaming audio services. Few media outlets have made it clear that this new payment plan is for borrows, rather than the sale of ebooks. It turns out that most of this is moot, anyway.

Amazon’s page count is an in-house metric that vastly overstates the length of ebooks. A 300-page print edition of an ebook can tally nearly double that according to KENPC, or the new standard page count for Kindle Unlimited. Which means media outlets are talking about a price-per-page that paints one image in readers’ heads, and it isn’t an accurate image. These aren’t physical book pages. The real compensation (which we won’t know for at least 5 or 6 more weeks) would probably come to just over a penny per page.

Only a penny per page?!? Outrage, right?!

Hell, I don’t know. What am I paying an author when I buy a book from a bookstore? If someone told me I was paying Taylor Swift $0.00000145 for every note of music she wrote, I’d want someone to tell me what in the world that meant. Is that a lot? Not much? Should I ask for some money back? Or should I mail her whatever I can scrounge out of my sofa?

Here’s the math I would have to do on a napkin to make sense of Amazon’s payment structure: The typical novel is about 300 pages. Half a cent per page is $1.50. Wow. That sounds like not very much at all. I paid $14.95 for that paperback! But you know why that doesn’t sound like much? Because we haven’t had a Taylor Swift in publishing. Ever. And publishers (despite me blogging that this would be a great idea) have never printed the author’s cut right on the cover of the print book. So readers don’t know.

The typical Big 5 author makes roughly 9% for a paperback sale, with 15% of that going to an agent (the range is really 8% – 10%, but that number has gone down lately due to something called “high discount,” which we won’t go into here, but know that I’m giving the Big 5 many benefits of the doubt). A $14.95 paperback (which used to be a $6.99 mass market paperback!) is paying the author $1.50 per retail sale. But 15% of that goes to the agent, so they are left with $1.28. Or less than an indie author gets for the borrow of an ebook. And remember that we’re comparing this to the sale of a paperback, a physical object that had to be shipped around in a truck and that the reader can pass along or sell to a used bookstore.

So publishing has a problem, and it always has, and the rich folk getting massive advances to boost those royalty percentages have never uttered a peep. In fact, they’ve only gotten upset when Amazon and others came along and made it possible to buy less expensive and just-as-good books from indies, ruining their little hegemony.

Is Amazon paying too little for borrows? I can’t see it. My fear is that they’ll pay so much that all of this will collapse, and we’ll lose another outlet to readers, who are consumers, who are getting used to consuming their entertainment in brand new ways. Ways that publishers don’t seem to understand and that authors don’t seem very comfortable with. Nobody wants to own anything anymore. And if you’re the exception, then you’re the exception.

We are moving more and more to Spotify, satellite radio, and Netflix. Even video game companies are toying with the rental system. There’s talk of this video game console generation or the next one being the last, before we are just streaming the games. Ebooks were just the start of the disruption, like MP3s were the start of the music industry disruption, but the disruption continues. People want access to everything for cheap and if they can’t find it, they’ll go looking elsewhere.

(If you haven’t steeled yourself for advertising breaks in the middle of ebooks, then start doing so. It’s only a matter of time.)

If you think it’s unfair that the marketplace change on you, I’m sorry. The producers and retailers have to deal with this as well. It all comes back to the consumer, of which we are all a small part. Have your expectations changed, as a shopper? Your habits? Your budgets? Multiply out any of these small changes by a billion. That’s what’s happening.

(One more quick note on Amazon’s KENPC page count algorithm thingy: I would say this has been Amazon’s biggest screwup in this affair thus far. People are concentrating on the per-page price rather than the computed size of their works, and a more accurate version of the latter would’ve led to a higher value of the former. That is, Amazon would’ve been better to have the calculations come out to a penny per page, and the KENPC more closely match print editions, than the way they went around it. I think they thought people would balk at the KENPC, and wanted to make that generous, but indies think more in terms of dollars, and that’s the number they ended up diluting, and which has become the headline for media outlets.)

 

What About Subscription Models?

Will subscription models put a squeeze on author earnings? My guess a year ago was that they would. I still think they will. But I think comparisons to the music industry are premature and unfounded. It’s hard to compare a 3-minute time investment to a 10-hour investment. Music streams pay so little because they can mount up so fast. Page reads can’t mount up as quickly from a small number of users. And yet both types of streaming programs (music and literature) are going for roughly $10 / month. There’s no way books are going to be consumed in the quantities that music currently is, so these comparisons are off by orders of magnitude.

The second reason I don’t despair is the room indies have to play with. Our pay went up 6X before any squeeze began. Musicians had already seen their pay go down before the squeeze began. So while there’s a lot of hand-wringing as some authors predict a reduction in earnings, when you look at the amount they’re making per borrow, and it’s more than a Random House author makes on the sale of a trade paperback, you realize how insulated we are from the destitution that many are predicting. Will earnings go down? Most likely. But not as far as people are thinking, and from a much higher starting plateau.

But let’s talk more about reduced earnings for entertainers. How can we expect anything else? Look at how many hours people are spending on Facebook and Twitter, entertaining each other for free! How can we compete with that? Or compete with improving TV content, much of which has moved to reality TV, cutting out more creators in order to pad profit margins? The reality is that we can’t. Not unless we grow the share of people being entertained at some cost to them. That means luring them away from social media, which tickles a reward mechanism even deeper than the one for story. The dice are loaded against us. It’s time to have an honest discussion about this. It’s time to up our games or discuss ways to monetize what we do for a living. Either that, or it’s time for us to accept that most entertainers will never be paid professionals, and that we will have to do this on the side and for the love of it.

(This is something else I’ve blogged about extensively and have done myself for years. First, alongside my day job. And now, something I am continuing to do in retirement. I write because I love to write. And this gives me an enormous advantage over those who write because it’s the only way they can hope to make a living.)

 

KU 1.0 Compared to KU 2.0

Here’s some math from the brilliant author Susan Kaye Quinn. It compares the old payment system to the new system.

Under KU 1.0:

98k novel = 414 pages* = $1.34 per borrow = 0.0033 pennies/pg
15k novella = 51 pages* = $1.34 per borrow = 2.6 pennies/pg
*the number on the product description pg

Under KU 2.0 (Assuming 100% page read):

98k novel = 553 pages** = 0.6 pennies-per-pg*** = $3.32 per 100% read
15k novella = 85 pages** = 0.6 pennies-per-pg*** = $0.51 per 100% read
**KENPC page count
***estimate from June

Under KU 1.0, most indies were making more for a borrow of a short story than for a sale (the exceptions are those able to charge $2.99 or higher for the sale of a 15k story). I haven’t seen a good argument to defend this part of the old system, or the fact that KU 1.0 was paying a third of a penny per KENPC page (which would be more like .0017 per print page).

Under KU 2.0, we can see what Amazon is trying to do with their per-page calculation. They’re trying to reward KDP Select authors for a borrow by paying the same amount as a sale. Holy crap. Really? Actually, the prices on my works are lower than average, and these borrow rates would pay me more than I currently make for a sale. But as someone else pointed out, these borrow payout rates are very close to what Amazon’s pricing tool recommends for works of this length.

That is, Amazon is funding their KU payout pool to simulate a paid sale for every borrow.

This is what it appeared they were doing under KU 1.0. The first borrow rates were coming in close to $2.00. That number slid over time, even as Amazon piled on more money. Why? Because authors realized they could maximize their income by splitting up novels and by concentrating on short stories. Kris Rusch and others (myself among them) have referred to this as “gaming the system.” That creates outrage among those who game the system. Guess, what? I game Amazon’s system every day. I do it with permafree, which exploits Amazon’s price-matching policy to get more free days than they want to hand out (only 5 per 90 day KDP Select period). And I’ve been serializing novels since before it was a thing. I’ve also been putting short stories into KU and profiting from it.

I guess the difference is that I’ve expected from the beginning that KU was broken and would be fixed. Someone dug up an interview I did ten months ago, when KU was only two months old, and I predicted Amazon would move to a per-page remuneration system. The old model was broken. The people who profited from that should be glad Amazon waited so long to fix it. Those who love to write short stories still should. May I suggest a bit of back matter? Or some constructive ways for us to help authors without screwing consumers?

 

Ideas For Subscription eBook Back Matter

How about an appeal to the readers? My idea for printing the author’s cut on the back of paperback books was to highlight to readers how little authors make. I think readers would reward authors if we knew how to ask and if they knew how much (or little) we make. How about:

Hey, if you enjoyed this short story, it might interest you that I spent two weeks working on this, on top of raising my three little ruffians, who tug on my chair while I’m writing and ask me to cut the crust off their sandwiches. And it probably took you thirty minutes to read it. If you got this far, you must’ve enjoyed it. So guess what? I just made fifteen cents! Want to help me out so I can keep writing? There are a ton of ways. You could write an honest review of this work. Or tell your friends about it. Or buy a copy to keep forever! Or go to my website and use the donate button. Anything helps. I love writing, and I love helping support my family, and I want to keep doing both. Thanks so much for reading. See you soon.

Add your Twitter handle, your email address, your website, your Paypal account, your P.O. box, whatever.

There are solutions for children’s book authors as well. What about going to Amazon and asking for a separate payment system for illustrated ebooks? Or rewarding multiple read-throughs? Or time spent gazing at each page? What about a separate system (storefront, payment structure) for illustrated ebooks? I’d be all over those ideas. Amazon has shown themselves amenable to change. Rather than freak out about this, use that knowledge to your advantage. Petition. Rally. Come up with a plan.

 

In Summary

  • KU 2.0 pays per page a higher rate for an ebook borrow than major publishers pay per page for a print sale.
  • KU 2.0 seems to be an attempt by Amazon to pay the same per borrow that they pay per sale, if ebooks are priced according to their recommendations.
  • KU 2.0 more fairly rewards time invested by authors and time spent by readers than KU 1.0.
  • I have yet to see an argument by anyone showing how KU 1.0 was more fair to authors than KU 2.0.
  • If you think change is scary, you ain’t seen nothing yet.

 

COMMENTS (113)

I agree that Amazon could have defused some of this by tweaking the KENPC, but really it all comes out in the wash, as the same calculations apply to all books. Maybe some of this will settle when the actual results start coming out in August, and authors find out they like the new system.

One slight correction: in the fourth paragraph, I think you meant to say that Amazon vastly overstates the length of books.

Nice catch. Fixed.

And yeah, it all comes out in the wash. But it would’ve changed the tenor of the howling. Slightly.

What I’d love to hear from Amazon is how many authors will be affected by this, and by how much. They could apply the KU2.0 math to previous months and say X% of authors wouldn’t see their income move by X% amount, which I think would be a very big number followed by a very small number.

All of these numbers and calculations make my gut ache. I’ve never seen any reason to help Amazon be a monopoly, which is all Select tries to do. I don’t care if it benefits me or not to be in Select. KU can go fish. I make about half my royalties from venues Smashwords serves, perhaps more from iBooks and B&N than others. That anyone would forego “going wide” seems like shooting one’s self in the foot. I’d rather fill out a 1040 than dive into some of these calculations.,

@David H Fears
“That anyone would forego “going wide” seems like shooting one’s self in the foot.”

And yet your experience may not be everyone’s. Some have gone wide and suffered losses–gained few sales in other markets and forewent borrows meantime.

I absolutely loved this post. Thank you, Hugh. I’m not nervous with the new system, because the only thing I worry about is if my book is entertaining, worthwhile, and well-written. I work my butt off to be a better writer, and some day it will pay off in terms of money and popularity. And, I look at it another way — if I can’t seem to keep a reader throughout the entirety of one of my books, then I can look at it as a way, or as another reason to change my approach, refine my work, or fix any editing mistakes my editor, proofreaders, and I may have missed.

Same here, man. I figure if I write long enough, I’ll eventually get good at it.

Someone asked me the other day if I thought I would make it as a writer if I was debuting today. I think all authors should ask themselves this question: What chances would they have if they dubuted 10 years from now? 20 years from now?

Is writing as a profession getting easier or harder? More egalitarian or less fair? Will more people be paying to read in the future or will it be fewer people?

My guess is that we should all be thankful for when we are writing, as long as we started post-2009 or were able to win back rights to pre-2009 works.

Yes, being grateful for the opportunity to write and self publish is where I’m at. Also, the more we learn this art, the better we become. Selling books isn’t the only reason one should write, though it is an amazing perk, and a helpful one at that. We write, or at least I do, in pursuit of self improvement, self discovery, and in hopes that my work may help another person in some way. It is simple, really. And, to make a living from it? Priceless.

…that my editor, proofreaders, and I may have missed.

Good post, a lot of good points. It will probably make sense for writers of shorts to set their prices realistically and go “wide” instead of staying in KU. They really need to do something for those who write children’s books though.

Now’s a good time to start the KU 3.0 Petition.

Another thing Amazon should’ve done: They should’ve always referred to KU as “KU 1.0” in messages to authors. That gives infinite heads-up that changes are coming. Rather than a 2-week notice, you’ve got a day-1 notice.

Authors now have a day-1 notice that KU’s terms can change. But the blow could’ve been softened.

You know, I just realized that a lot of traditionally published authors have come down on Amazon for this per-page payment without doing the math to see what they are getting paid.

I hope they don’t. They seem happy.

I think the one problem with your calculation and conclusion that Amazon is bringing borrows in line with sales is the liberal assumption of a 100% read through. Then data I’ve seen from ebook retailers is that a typical book gets somewhere in the neighbourhood of 60%. Ina typical sale, whether the reader finishes the book or not is immaterial, always. So for most authors, the average will still drop.

Just pointing something out that irks me when people write these types of analysis. It shouldn’t be based on the 100% read through since that is the exception rather than the rule.

We are also assuming a 10% read-through for borrows to trigger that pay-out. I know I don’t get to most of the ebooks I borrow. Not sure how to do a better job with the dearth of data we have.

David Gatewood

We’ll begin to coalesce around an estimate for “% read per borrow”(*) after a month or two, thanks to the awesomeness of indie authors with respect to sharing data. It won’t be perfect, but some before/after KU 2.0 comparisons, spread across enough authors, should get to something reasonable.

(*) Technically, the metric we’ll be able to estimate is “% read per (borrow that is >=10% read)” — since the “before” data never included borrows that were <10% read.

Except that Amazon, in its infinite wisdom, is choosing not to give us borrow numbers anymore. So that means we will never be able to calculate a % per book that people are reading. If I have a 300 page book and have 3000 page reads, is that 10 borrows reading it all the way through or 300 borrows only reading the first 10 pages…

As for backmatter, authors can also say they’re a part of the tipmyauthor.com network, and if a reader feels so inclined, they can visit that website and leave a comment or small tip for the author, as a way to say thank you.

There are lots of things we can do to take charge of our careers. Being proactive is important.

I wrote a blog post yesterday ( https://motherearthseries.wordpress.com/2015/07/03/books-parallel-music-once-again/ ) comparing books to the music industry and even started a thread on the Kboards saying that you are our Taylor Swift. It unfortunately fanned the flames and was locked and eventually taken down after a couple of pages of replies.

You’re right that we can’t directly equate books to songs, but I think the comparison is closer than you imagine. If you think of a play from a stream site like Spotify as a page read, then a chapter in a novel, or a short story, becomes a number of plays of a song you find and like. At that point, you might see if that artist has more songs, just like you will continue reading the novel or seek out more short stories from an author whose work you’re enjoying. Coincidentally, (or maybe not) Spotify’s payout for a song play is $0.006-$0.008.

I’m no Taylor Swift.

And the quickest way to get a thread locked at KBoards these days seems to be mention me, have me start a thread, or have me butt into a thread. I’m getting the hint. Maybe in my old age, I’ve become cranky, or senile, or insensitive, or dumb. Probably a little bit of all of these. I think the forums will be a-okay without me. I’ll miss that place a lot more than it’ll miss me, that’s for sure. Been my #1 procrastination destination for well on 5 years. :)

She’s prettier (you’re a good looking guy, but come on ;-) ) but I made the connection because you’ve done as much or more to champion fair compensation for writers than anyone else out there.

I stayed away from the boards for a long time. I’ve been active the past few days trying to do my small part to quell the misinformation that seems to abound there at times. Don’t know if it’s helped or hurt at this point.

You being back there is the reason I’ve stayed away, so I’m saying it’s helped.

;)

I can see needing a kboards break after the past couple of days, Hugh. But you’re wrong if you think the majority of participants over there won’t miss your input. Here’s one person seriously hoping that a howling minority won’t continue to run off generous and successful folks like you (who certainly has better things to do than be publicly chewed on). Every time that happens, the conversation is the poorer for it, and before you know it there’s nothing left but a snarky, ignorant echo chamber.

Anonymous Author

I stopped commenting on KBoards last year. Learned my lesson and I won’t ever comment there again. The backlash is not just a verbal thing.

I totally understand, Anon. I chose to go anonymous on kb after a little “situation.” I’m a little nervous using my real name here. It’s frustrating for those of us whose goal is to stay reasonable and have a place for some camaraderie as well as some seasoned advice from a more experienced cohort. I’m starting to feel like all the cool kids found a new tree fort and I still haven’t learned all the dance steps to the watusi. :D

You’ll definitely be missed.

I don’t comment a lot in blogs, I don’t think I’ve ever commented on your blog, and I watch what I post on that forum, but I wanted to say, Hugh, that you will be missed, A LOT over there.

You’ve been (and continue to be) a huge advocate for Indies and even though I might not agree with everything you say, I value and respect your opinion.

It’s sad that it seems so difficult to have meaningful and respectful conversations online, even if people don’t agree.

I became a member of Kboards just as Wool started to take off and to watch that unfold in almost forum real time was a lot of fun!

You stayed on even after hitting it big, so it’s disheartening to see the truckload of crap dumped on you on the forum this past week simply over your opinion on something.

Hopefully once things calm down you’ll come back.

I tried to support Hugh one last time this morning on Kboards by pointing out that Amazon is paying authors for keeping their books in a “lending library”, and that I would rather have that money in my pocket than a one-time royalty from my print copies that are in certain college libraries.

Then, I commented that I have some books to write.

While I may go there to lurk, I doubt that I’ll speak there again. Disagreeing with someone is one thing, but attacking them for having a differing opinion is ridiculous. It makes my head and my heart hurt.

Let me rephrase part of my statement: I probably won’t speak there as much as I have. Negativity rules and personal attacks for business decisions are frequent, and a waste of time and talent.

David Gatewood

Absolutely agree that not normalizing KENPC to be roughly the same as normal page counts was a misstep. It doesn’t matter in terms of policy, but it greatly confused the message.

And in general, my only complaints with Amazon on any of this have to do with communication, not policy. I like KU 2.0. Love it even. But better communication could have mitigated unnecessary angst and made it easier for authors to make informed business decisions. That’ll all be resolved soon though.

Agreed. Amazon is a technology company, and I haven’t seen any of them handle the art of PR very well. Apple comes the closest, but even then, Steve Jobs once told his customers they were holding their phones wrong.

We are the writers. Maybe what we need to do is spend as much time going over these industry changes as we spend going over our rough drafts. I’m as guilty of this as anyone. One of the best is Passive Guy, who has a sharp mind and says little, but bears listening to when he does speak. And authors do a great job of sorting these things out and talking to one another, but unfortunately, most of the great conversations I see have moved into private groups, as everyone is scared of the 1-star treatment if they say anything unpopular. And whatever you say, you’re bound to upset someone who has more time than you and less to lose by engaging in combat.

The paradox there is that those who are most insulated from 1-star retribution and can speak freely are those that no one wants to hear from, because the already-successful have the unfair advantage of an existing readership. So what do they know?

That leaves us with mere editors and anthologists to provide their viewpoints, and I haven’t met an editor whose opinions I respect.

Jennifer Daydreamer

I have said things I regret, here. I did not say anything mean, but I was uninformed in regards to what Amazon is doing. Good business has clarity and smoothness and an easy to understand vision.

Chris McMullen estimated for me that KENPC works out to about 200 word per a ‘page’ of standard fiction.

At that rate, a novel of 150-160K, read to completion, nets the writer who has it in KU $4.50 to 4.80. VERY decent rate.

There are all kinds of adjustments necessary for books with fixed formats or lots of images, but straight text is easy – if you have a rough conversion factor.

Being a writer of long novels, this is appealing. And no, that isn’t an incentive to pad them: I’m going through the process right now of making sure every word is necessary, which should lose a few of them (I use a few too many auxiliary verb forms).

Why not leave it as is? Because improved quality usually means MORE readers who go the distance. And it teaches me to writer leaner prose from the beginning, and to edit well as I go.

Thanks for being the voice of reason – sorry those people who don’t read carefully got on your case. This isn’t that hard to figure out.

At those rates, I’m better off with a KU borrow than a sale on other outlets.

Exactly!

And the more people who panic and leave KU, the better for those who stay and work (not game) the system: write fiction people want to keep reading.

Another awesome post that inserts some reason into my current pessimistic thinking. Thanks for that. And yes, KB is getting a little more hostile now and I’m steering clear for the moment (at least in terms of posting). It’s a shame, but there you go.

I’m still just keeping my eyes open on KU and letting some time pass before I pull anything or make any decisions. That said, I’m seeing some major upsets with respect to pages read, ranking, and so on. I’m hoping that it’s just a dry spell for me (though that is heart-breaking enough) and not some change in the algos, but it does worry me that everything of mine is tanking all at once. The first day was fine, but after that, it’s almost like Amazon isn’t showing my books to people or something anymore.

Let’s hope it’s just the holiday.

“My fear is that they’ll pay so much that all of this will collapse”

Is it? My fear is that it will wind up like music, where the Spotifys and Pandoras have driven musicians and composers to use music as a promotional loss-leader for t-shirt sales.

I addressed why I think music and literature are very different when it comes to subscription models. I guess we’ll see. I tend to be overly optimistic.

Hi Hugh,

I think you’re right about music’s value proposition but I also think there’s another angle. At the beginning of the disruption for music, Apple ‘saved’ the day with iTunes where the MP3 was priced specifically as a loss leader for iPods. In a weird way — and we need a better word for it — but this becomes a type of market patronage. (The leftist in me just had a bit of sick in my mouth). We got more for our music than the straightforward demand/supply economics would supply because a bit corporation could see an upsell. “Do you want a iPod with that?”

Then along comes YouTube and streaming and then Spotify (and the rest, now including Apple Music). The rub here is that streaming is a move away from this corporate patronage. It’s first iteration was an attempt at ad-funded content. Doesn’t work. Don’t know why (not enough high paying advertisers? not enough conversion delivered to those advertisers) but if it did: musicians would get more than $0.006 per song (which, in time/cost to produce, is probably more akin to a 15,000 word short, for yours truly). With music, the patronage is over. It’s been dying out for years and you could feasibly argue that major recording labels (with their 1 in 10 hit rate) is the same thing pre-digital. It’s okay. We’ve got live shows and merch….and maybe at scale, paid subscription is going to deliver revenue to musicians.

The great/sinister thing about Amazon is that Bezos has a brand that still *somehow* feels centred around books. And while that’s the case – and while we still deliver site traffic – Amazon has the most incentive to patronise our work. That’s where you were bang on re: Scribd and Oyster. That was never going to work. There’s no sell-thru. The money isn’t in books alone.

This is related to why I think exclusivity with Amazon is GOOD for books and GOOD for literature. You need to create critical mass and maximum public awareness around “reading” and “books.” The Kindle and Amazon.com do that. Publishers hurt ALL of reading and ALL of literature by fighting Amazon. It would be like the 6 biggest auto manufacturers fighting the interstate highway system. Having a single outlet for some goods (like electricity) is a good thing for adoption. Same with standards (Blu-Ray vs. HD-DVD). Splintering is horrible until the system is so saturated that it can handle competition. Reading is not that saturated. We need an iPod for reading, and it’s the Kindle, and anyone who loves literature should be throwing every ounce of their might behind that device to make it a must-have item, and make reading a must-do pastime. Once we establish that, THEN we can quibble over how to divide the new, massive pie.

>This is related to why I think exclusivity with Amazon is GOOD for books and GOOD for literature

Exclusivity or even a narrow market has never been good for producers of creative work, and in the long run, rarely for the consumers.

I disagree. New York City had an effective monopoly on stagecraft, with “Broadway” creating a concentration of talent and offerings that … diluted across the country … may have fizzled and died. Instead, seeing a Broadway show became a favorite activity for the millions of tourists streaming through Manhattan every year. And when the demand grew, and the supply was saturated, many of those shows went on tour, and stagecraft became a large part of other tourist meccas, as those tourists took their newfound love home with them.

Part of this comes down to ebook file format standards as well. Would photography have taken off without 35mm film rolls? Many look at Amazon as a retailer with too much marketshare. As an artist trying to reach the biggest audience possible, I see the Kindle, Amazon.com, and .mobi as the best chance for ebooks to go mainstream. I see the device, the cloud library, the architecture, and the places where consolidation lead to more growth than a fractured landscape. Like what Microsoft did for the PC or Apple for the smartphone and music player.

If you want to sell a lot of books and make reading a favorite pastime, you need lots of people to buy Kindles. Not Nooks, where you can’t find the ebook you’re searching for, or iPads, where emails and games distract. You want them to have the best device with the best storefront in their hands, in order to hook them. Otherwise, you lose them to some other pursuit.

People who want literature to succeed, but want to hold down Amazon’s market share, are left with this proposition: “Here, friend, try this second-rate shopping and reading experience, and get hooked.” That’s like sending someone to the community theater and hoping they get crazed about live performances. No … send them to NYC. At least until we’ve reached saturation.

Hey, those are my numbers up there, Hugh! I’m glad you found them useful (here’s the original post for anyone who wants to check it out).

And I agree with your point about the mis-step in not having more normalized page numbers. That could have quelled some of the wailing, but in truth… probably not much.

As an author who writes both serials and shorts (both in KU and out), I’m mostly holding tight where I am right now. Not because I’m waiting for more data… simply because with the published rates, it still makes financial sense to keep my stuff where it is. The borrow on my short fiction still pays better than a sale (and better than I can get elsewhere), and my payout on the novels I have in KU just got sweeter. All to the good; plus the system is now more fair, i.e. blind to story length.

Although changing the conversation to page-reads is an interesting one, and puts the emphasis on writers providing reading enjoyment to readers. I like this. A lot. I comes down to the essence of what many of us are in this for: connecting with readers.

I want my readers to read every page; not because that’s how I get paid, but because that’s the connection I want to make with them. (And I wish Amazon would give us even more data in this regard.)

Should’ve known it was you! You’re so brilliant.

I think an interesting point in Susan’s blog that differs slightly from yours is that the KENP inflation appears to vary by writing style. Novels that are thrift in their style (statistically speaking in number of words per sentence and length of sentences) are the the ones with the fewer KENP page counts. An assumption would be that Hemingway would not see a double in his page count.

Exactly. KENPC isn’t just page count. It’s some balance of word count as well.

Personally, I hope the exact nature of KENPC is never pinned down. It prevents the people wanting to scam the system from easily being able to.

Good post! The other day, we came across an interesting article about Jeff Bezos.

Base Your Strategy on Things That Won’t Change (Bezos at re: Invent, November 2012)

=-=-=-=-=
“I very frequently get the question: ‘what’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘what’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two – because you can build a business strategy around the things that are stable in time….in our retail business, we know that customers want low prices and I know that’s going to be true 10 years from now. They want fast delivery, they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon, I just wish the prices were a little higher [or] I love Amazon, I just wish you’d deliver a little more slowly.’ Impossible [to imagine that future]. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long-term, you can afford to put a lot of energy into it.
=-=-=-=-=-=-=-=
Source: https://blog.kissmetrics.com/lessons-from-jeff-bezos/

This is sound advice. KU 1.0 wasn’t going to last forever. Some made hay while the sun was shining. Smart authors will make hay under the life giving light of KU 2.0.

Make readers happy and build an email list is a very sound strategy that can weather the many storms authors face in the constantly evolving landscape that is modern publishing.

At Ebook Itch, we believe we’re in another Golden Age for writers. Look to the Pulp writers (John Milton Edwards, Earl Stanley Gardner, et al) and heed their lessons. Make readers happy. The rest will fall into place.

The “Fiction Factory” is alive and well in the 21st century.

Keep up the good work, Hugh. You’re appreciated by many!

Hugh your calc results assume that everyone’s KENPC page count will be greater by a certain amount. Unfortunately the actual results cary widely; some report page count doubling or more, others report little to no change in page count i.e a 1:1 ratio.

I’m all for the 2.0 but Amazon really needs to be upfront about what’s happening with their page count formula. If someone with the same word count gets their KENPC doubled while you don’t, well, that’s a problem…

Good point. I’d love for them to be clear about this. Can we think of a way they can do that without giving scammers the keys to the kingdom? Sadly, this is the position Amazon is now in: They can’t give us honest writers information that might be used by Wiki copy and pasters the ability to ruin the customer experience or take money out of honest writers’ pockets.

We’ve seen Amazon taking a lot of plays from Google’s playbook recently re: keeping quiet about data. When Google took away data about keywords in referrals, it caused an uproar in the SEO community because that information was useful in many ways. They did it to help battle spam and the tricksters. We imagine Amazon is doing the same by withholding as much information as they can. Data is important in the modern age. A few bad apples ruin it for everyone. Onward and upward in words!

I don’t know what’s going on inside the walls of Amazon, but I did take some of the books on that KENPC thread where authors posted page counts and took a look at some of them (Yay! They got sales for my research!) I also used a few from a different forum where that was posted. Here’s what I found.

I did notice that the more dialogue, the shorter the dialogue, the more “hard returns”, the longer the KENPC compared to the prior page count.

To cancel out any possible extra inflation, I only chose those books that had an “estimated page count” by Amazon (no print edition).

Those with more internal dialogue, long dialogue, non-dialogue paragraphs got a shorter KENPC.

So, after looking at those, (plus my own books using word and html), I found that it “appears” (not knowing for sure, just appears) that KENPC is largely based on what you get when you “nuke” a book file prior to formatting to get rid of Word artifacts.

Would love if someone else could take a look at theirs and see if this is consistent in their titles.

Ann,
Could you please explain what you mean by “nuke” a book file?
I would like to check my KENPC count, but I’m not sure how to do it.
Thanks!

As a caveat, it does look like Susan’s estimates are opposite of mine, so who knows, but here’s the answer to your question.

When you write a book in Word, it can leave lots of “artifacts” that will bloat the end file or cause weird formatting, so often the best bet is to “nuke” the file. To nuke it, you copy/paste the entire document into a plain text editor and get rid of all formatting. All you’re left with is hard returns and text. That’s it.

I couldn’t do that for the books I bought for the research (since those are just .mobi files) but I went through the books and sort of informally tallied the paragraphs and dialogue and hard returns, etc. For my books, I checked the nuked file, which I keep for each book in case of need. I compared my nuked file length (print preview pages of nuked file) with the original estimated page count by Amazon and the KENPC.

I see. I haven’t used a plain text editor before, but I will see what that tells me.
Mine don’t seem to match what other folks’ calculations are, so I wanted to double-check all the ways I can.
Thanks!

It is easy to find out the KENPC of one of your own ebooks. Just go to your bookshelf on KDP.amazon.com and then click on the “Promote and Advertise” button under “Book Actions:”

In the page that opens, the KENPC for that book is listed at the bottom of the box labeled, “Earn royalties from the KDP Select Global Fund “

Thanks, Nirmala! I meant to include that too but got distracted. :)

Great post. Did you notice the they do refer to the new system as “KENPC v1.0” on your Bookshelf? e.g: “Kindle Edition Normalized Page Count (KENPC) v1.0: 1199”

I do fear this might be their way of trying to ease the transition, with a planned contraction of page counts in the future. I hope not, because that would put us through another round of bitterness.

Outstanding post. I’m just now playing catch up and the numbers you’ve posted help tremendously. I’ve always known I’d need to be nimble – on my toes ready to deal with changes with Amazon and the e-pub marketplace in general. No one should put themselves in the position to ‘count’ on anything staying the same … no one owes us an income. Change is inevitable. Embrace it as it comes or at the very least we should spend our extra moments getting back into the game … not griping. You took a lot of punches over the last few days, Hugh … love that you respond by taking the high road.

This is the best analysis of pages read that I’ve seen so far. I love your proactive ideas for children’s authors, and how you show that the pages read model helps the borrow royalties better align with the sales royalties. Those are also great points about how the media has misrepresented the data.

Of course, it’s only been four days, but so far, I’m liking the new system. I have the Book Report tool with the PRC payment set to .006, and used it to compare same days of the week last week to this week. (Thursday 6/25 to 7/3 and 6/26 to 7/3) Both comparisons yielded less than ten dollars difference in earnings. Yes, last week’s days were slightly higher, but the Thursday comparisons can be explained by the 7 extra sales I had vs this Thursday. When I computed the borrows, I came up with almost exactly the same number of borrows as I had last Thursday. Same with Friday, and keep in mind, last night a lot of people were beginning their holiday celebrations, going to fireworks, etc. I expected my earnings to be a lot less, not just $5 less.

Today, I’m surprised to discover that I’m having my best day of page reads so far. I thought people would be at picnics and parties, but maybe they’re at the beach, reading on their Kindles, or traveling and reading in the car. Who knows, but I’m very happy so far. If it continues like this, I will be re-enrolling my books when they are set to expire in a little over a week.

++ KU 2.0 pays per page a higher rate for an ebook borrow than major publishers pay per page for a print sale.

Ya. But they do, you know, like, print stuff.

++ KU 2.0 seems to be an attempt by Amazon to pay the same per borrow that they pay per sale, if ebooks are priced according to their recommendations.

Who appointed Jeff God of all publishing? Isn’t the free market where everybody can price their own work the way they want and allow the market choose?

++ KU 2.0 more fairly rewards time invested by authors and time spent by readers than KU 1.0

We’ll agree to differ. It’s more fair to some and very unfair to others. We could agree that KU 1.0 was also unfair to some, but new unfairness isn’t inherently better than old unfairness.

Exactly. A $0.30 increase per read for novelists equates to a $1.00 loss for short story authors. Readers like short stories. And we like to give them what they like. It makes for a very happy symbiosis between us.

I personally prefer a tiered structure over a per-page method, one that locks in hard numbers. If they used KENPC another way, for example (to constrain page counts based on word counts, perhaps), we could have a model like this:

20 – 50 pages: $1.00/borrow
51 – 100 pages: $1.10/borrow
101 – 200 pages: $1.20/borrow
200+ pages: $1.30/borrow.

So instead of KU1.0, which paid every author $1.35/borrow regardless of length, Amazon saves money. Novelists get top-tier earnings. Short story writers see a $0.30 decrease, depending on length, but it’s a number that makes sense and allows them to predict their income (and still makes writing profitable). In fact, all authors can predict their income. Everybody wins.

Regarding scamphlets, Amazon was already working to remove those, so I don’t think that is a huge issue. Nor do I think “padding” is a huge issue, since that’s what many authors will feel the need to do now under KU2.0. And with KENPC being utilized to standardize page counts this way, everyone should come out sitting pretty in a very realistic way.

Anyway, that’s my take on it. It seems the fairest system, to me. Way fairer than half a penny per page.

Ah, and for clarity’s sake, those numbers above are examples. They could easily be tweaked to suit any actualities that may differ or pose a problem.

The problem with a tiered system is that it would be too easy to game. It’d favor word bloat over quality.

It’s clear Amazon wants quality works of all lengths and not a system that favors one over the other. This pay out setup does that.

I do agree that this system isn’t perfect. But the previous system was toxic, to the point authors that didn’t have short stories were pulling out of KU completely.

How is paying by the page not encouraging word bloat already? More pages = more money, either way. In the tiered model, you just know exactly what you’ll be making and it makes all levels profitable.

I am guessing that the KENP algorithm in itself is an attempt to measure against word bloat (though writers will still attempt it.) Not every story or novel receives the same KENP page count. Susan Kaye Quinn collated data from the work of several authors and found -“Basically, the fewer sentences per paragraph and words per sentence (aka more dialogue, or your style is closer to Hemingway than Franzen), then your number of words/page will be lower (and lower is good for payout rate).” Her post can be read here http://susankayequinn.blogspot.com/2015/07/analyzing-kindle-unlimiteds-new-page.html

More words and more pages does not necessarily translate into more money. If there is a lot of bloat, then the reader may just give up sooner rather than later. Of course, there are styles of writing that are naturally more wordy, but being very wordy just to try and make more money would most likely backfire.

It would seem the best “strategy” is to simply write the best story or book that you can so that readers read it, instead of dumping it and moving onto another book.

KU also pays more per page on a 300 page ebook that is borrowed than a traditional publisher pays the author for a 300 page ebook that is sold on Amazon for $9.99, and much more if the traditionally published ebook is priced at say $7.99 or 5.99. The publishers don’t print the ebooks they sell on Amazon, but they still pay their authors less than Amazon does for an ebook borrow.

It is a free market: you can remove your ebooks from Select. No one is god of all publishing, not even Jeff Bezos. But Amazon does get to decide what they do on their website. That is how a free market works. You are free to do it differently on your own website. Amazon is not running a public service for authors.

New unfairness is better than old unfairness if overall it is less unfair. And it seems that Amazon is listening, so let’s see if we can come up with ways to make KU even fairer.

Excellent post, Huey. Thanks.

I meant to write Hugh, not Huey. Sorry about that.

I agree with a lot of your article. I don’t have a problem with Amazon fixing kindle unlimited to pay more for longer for works. The problem for me is what I have to give up to be part of the program. It’s not worth half a cent per page to be exclusive with amazon. Or at least that’s my gut reaction. I’d much rather be paid what I earn for amazon be it sale or borrow and not have to be exclusive.

I agree with Richard Pemberly. The main issue here is having to be exclusive with Amazon in KDP Select. Selling with only Amazon is risky and a bad move in the long run. I want to be able to sell with multiple companies rather than existing at the mercy of just one. I say that as someone who likes Amazon.

Do you like
KU 2.0 and
Kindle Select?

We do not like them,
Ebook Itch!

Would you like
per word rates
here or there?

We don’t like them
anywhere!

Would you, could you,
read your Kindle on a boat?

We would not!
Not on a train,
Not in the rain.
We’re done with
Bezos and his game!

You do not like them,
you say?
Have you even seen
the numbers yet?
What if the PPRC
was even higher,
as “at least…”
suggests?

Ebook Itch, if you let us be,
we’ll wait til August 15th and see.
We will try it and you will see
it’s crazy to pay per page read!

[Time passes.]

Say!
This KU 2.0
is not so bad.
In fact, it’s very
not bad indeed.
Wait, we need
to improve our
craft. We’ll be
right back and
spread the cheer,
when KU 3.0 is here!

We will love KU in our houses
and with our spouses,
we will love KU here,
there and everywhere!

[RIP Dr. Seuss…]

Haha! Nice! I just read Green Eggs & Ham to my little grandson last night.

Would you could you, in a car?
Read them! Read them!
Here they are!

Brilliant.

But you’re an exception to the rule when it comes to gaming the system, most of us would lose our account by attempting an Amazon price match while in kdp select because we have to give Amazon exclusive rights to our titles. That means if we had it anywhere else for free, Amazon would drop us right there, game over.
It’s great you have some leverage in the matter but Amazon is free to run the rest of us over with a steamroller. Why stop publishing on other channels and give Amazon full control? I have yet to see an convincing argument or data there. Some months I make 2-3 time what I make on Amazon on iBooks alone. Their exclusivity and propensity to dictate new terms with barely an explanation, or delete reviews or books and just point to a vague and completely unhelpful set of guidelines, are the things that need fixed before I could ever consider exclusivity let alone a payment system that is barely more reliable than a lottery.

I don’t do permafree for any item in KDP Select. So I’m not an exception.

@Hugh — One thing to note about KENPC —

As long as it judges book length relatively consistently across others and formats, how far off it is will not change how much you are paid.

KENPC is a scalar factor that also applies to the total page count. Regardless of how many pages KENPC says you have or how grossly it counts pages in either direction, the % of PAGES READ against the TOTAL PAGES READ will be exactly the same.

To make the math simple, say you have a 100 page work. The rest of KU has 900 pages read, making the total 1000 pages. You make 10% of the total communal pool which is a set amount.

If KENPC instead grossly inflated word count, there would be no difference.

-Example: Your 100 pages becomes 4,000 pages in KENPC
-Everyone else’s becomes 36,000, making a total of 40,000
-You make the same 10% regardless of how many pages KENPC says you have or don’t have.

I think the changes to KU should lead us to consider a wider issue: the future of subscription services as a whole, across all forms of entertainment (music, movies, books, etc.).

I agree with Joe Konrath that the electronic entertainment market is moving to a rental, subscription model where the consumer seldom if ever owns the content he’s consuming. This is radically different to the print book market where the consumer buys and owns what he’s consuming (unless he borrows it from a library or a friend, of course). It means that traditional publishers are going to have to reconsider their entire ‘way of life’, if I can put it like that. They’ll be acquiring works (books, whatever) that fit the consumption model of their subscription customers (which may be radically different from traditional print customers – in the case of modern teens, for example, it almost certainly is already – and may change over time. They’ll expect authors to be familiar with those trends and to submit works accordingly. Writers who want to just ‘write books’ rather than ‘write to the market’ are going to find themselves left out in the cold.

It also means that we, as authors, are going to have to become much more proactive in considering what we write and how we write it. Electronic media can greatly expand the definition of what is a ‘book’ to include interactive elements, video, music, etc. We might even find programs inserted in a book so that the content changes depending on reader selection of options, or reader reaction to a given scenario. (That might even include a virtual reality component . . . there’s no reason why a Kindle reader can’t be built into an headset, after all!) Can we still write books in the same way, or will we find ourselves part of a team of content providers, all working together to build our piece of the puzzle, then assemble them into a functional whole?

I’m both threatened and excited by the possibilities.

Great post, Hugh and interesting replies.

Some people appear to have forgetten that there have always been ‘borrows’ which could be said to penalise authors. You could get these borrows in public libraries and, if it hadn’t been for them, many of us would not have been able to read so much.

I get a little sick of all this Amazon bashing. I’ve wanted to be a writer for 50 years and I doubt it would have been possible without the company.

And, whether I stand to gain or lose financially from the new system, I’ll certainly benefit from knowing which of my books hold the interest of readers more than others. And it’s nice to be able to see hour by hour that people are actually reading my stories.

“My fear is that they’ll pay so much that all of this will collapse”

This is my biggest concern also. While everyone is so busy gripping about how little Amazon is paying for a “page read”, we are all losing sight of the fact that Amazon, Oyster, and Scribd are all losing huge buckets of money competing with each other for authors to make their subscription services attractive to potential subscribers. Amazon is putting not only the whole of their subscriptions fees into the author pot, taking out no profits, they are tripling the size of the pot with their own money-losing subsidies.

So authors are basically living high on the hog off these subscriptions services, making far more money for now from than that is sustainable at current subscription levels. That is free money being tossed at authors, who ought to be grateful for it while it lasts.

Can it last? Only if none of these companies runs out of investor money or will power to keep throwing cash at authors. But that’s not likely to go on forever. Someone is going to go broke. Amazon is making sure it isn’t them. I am willing to bet they will be the last subscription service standing. But what happens then?

Depends on how many people like the subscription model. Eventually, there’s going to have to be a pot taken out of subscription fees with no subsidies from Amazon, but a cut for them instead. How big will that pot be? How much will authors make from this? Hard to say so far. My guess is: not enough to keep authors in the subscription business.

The fact is, as long as readers are willing to pay for individual books by the better authors (better in the sense of being appealing to readers), authors will make more money that way than through unsubsidized subscription services. And as soon as subscriptions services are unsubsidized, these better authors will split and rely only on sales. Or, competitors will come in and subsidize a new service and the whole game goes round and round again. That would be the best of all possible worlds.

Will readers become so accustomed to subscription services that they will demand them, the way they demand cable TV service? I doubt it. Reading just isn’t like these other forms of entertainment. Most people only read a few books a year. They won’t be subscribers in any case. But even heavy readers don’t sit down every night and read indiscriminately. They want what they like, and if it isn’t in their subscription service, they’ll buy it. As long as it isn’t grossly overpriced. So I’m not sure the economics of book subscription services work the way it does for other forms of media.

We’ll see, of course. But in the meantime, eat high on the hog with all these subsidies for authors. It probably won’t last, but it won’t destroy the literary world either if it collapses.

Hi Broken Yogi,

Just curious where you get your information that Amazon is losing money every month. At 1.1 million subscribers they would about break even (less operating costs). Do you know how many subscribers they currently have in KU? And of course it is hard to quantify what the effects are of their Prime program which also figures into this due to KOLL.

You seem to be sure that they are losing lots of money, but how do you know?

Thanks!

Nirmala,

I read it on the interwebs, so maybe it’s inaccurate. But there’s this comment that says pretty much the same thing:

“Annie
June 22, 2015
Technically, the 3 million is the base of the pot. They added 7.8 million for a total pot this month of 10.8 million.

They stated in the email about the changes that the pot for July and August would be over 11 million each.”

Here’s the thing. I know you are making your calculations on what the pot for KDP authors should be based on the total number of subscribers times the monthly rate. But that doesn’t factor in the fact that Amazon has a great many deals in place with conventional publishers that pay higher rates for borrows in KU. And they are not being paid out of a pot by the page. They have a different kind of deal with KU. So not all of that subscriber fee is put into the pot the KDP authors split according to page views. A lot of those fees go to pay conventional publishers. So Amazon figures somehow that the KDP part of the pot is 3 million, to which they add an extra 7.8 million to make it more attractive to KDP authors to take part in KU. They are losing money on that to be sure, just as they are losing money on their payments to conventional publishers. How much they are losing every month total to both KDP and conventional publishers would be hard to calculate, and I’m not sure if Amazon releases that information. But it’s probably a lot.

How much does Microsoft lose by developing and bundling browsers and other components into Windows that they don’t directly profit from? How much of that is to limit the use of competing products? How much do they see those costs as value added services?

What about advertising costs? Or the money lost with WhisperSync and the very low audiobook sales price? Or the cost of R&D for hardware features?

Amazon could probably justify losing $10,000,000 per month for 5-10 years on KU, and see it as a value-add for getting readers into Kindles, where they end up spending a lot of money on retail ebooks. In fact, they might be looking at their numbers, the buying habits of KU subscribers vs. non-KU subscribers, or the growth trends and re-subscribe rates, and see where the profitability threshold is at some current date.

Just looking at one raw number without considering all the ancillary benefits might be a mistake. In fact, I think that’s the very mistake indies are making if they simply look at the payout on a borrow, without considering factors like visibility, the number of purchases gained, boost in ranking, customer reviews, etc.

Hugh,

Yeah, those are all good points. Certainly Amazon wouldn’t be sinking all that money into KU if they didn’t think it was worth it long term. I’m not sure how they’d calculate the value of all those ancilliary rights, but maybe they have and it pays off somehow. Or maybe they are just playing defense against the other subscription services because it would really hurt Amazon’s business model if they let them take over that part of the business and threatened Amazon’s sales. I would hope the first is the real reason, but I suspect the latter, which is why I wonder if KU has a long-term future once the competition fails (and I feel pretty certain they will indeed fail).

But I also strongly agree with the notion that an independent author being in KU has many strong ancillary benefits, especially to less established authors trying to be read and develop some name recognition for themselves. Even if they don’t make as much from each borrow as they might from a sale, they potential for overall exposure is greater with KU. Maybe not so much a benefit for an established author like yourself, but I gather you are still trying to figure that out.

In any case, the point remains that being in KU or the other subscription services right now is a good deal for most authors on a strictly monetary basis, in that a whole lot of author earnings are being subsidized by investors rather than subscribers. And that’s free money for everyone – readers included. For authors, it’s cause for both celebration and guilt-free exploitation.

I did a rough calculation and 1.9 billion pages divided by 1.1 million subscribers (the break even point for Amazon) comes out to about 1700 pages per month. Say the average ebook on KU is 300 pages according to KENPC. Then that is close to six books a month for each of the 1.1 million. That sounds about right. Of course some subscribers read 20-30 books a month, but some probably read just a couple or even none in a particular month. And of course if any of my figures are off, then so are my conclusions.

Anyways, still curious how you have determined that Amazon is losing money.

And just as another data point, my wife’s nonfiction books that have no dialogue and so have mostly longer paragraphs are still coming in at about 1.3 times the number of pages when comparing paperback pages to KENPC.

Nirmala,

I’m not sure how you fail to see that Amazon is losing money on KU. They are paying out really high fees to conventional publishers for each borrower in order to compete with Oyster and Squib, who are also losing money. They are not bringing in enough money in subscription fees to pay for that. And they are putting in 11 million dollars every month just for KDP authors, which would be the whole of their income from subscribers. The fact that they only credit 3 million of that to KDP authors tells us that there’s a whole lot of money going to conventional publishers, and probably much more than the 8 million leftover. Plus they have all their own operational and marketing costs. So, yeah, they are losing a lot of money. How on earth do you think they are not losing money, and a lot of it? As I pointed out, your calculation completely ignores the fact that KU has to pay conventional publishers also, and often at or close to what they’d get from a purchase. So all three of these services are big money losers, because investors think there’s a future here worth fighting for. And authors and readers benefit from that out of all proportion to what readers are actually paying in.

Thanks! All good points. I was not actually questioning your conclusion, just pondering the possibilities, and obviously all of my figures were incomplete and mostly made up (I pulled the 1.1 million out of my hat simply because that times $10 equals the pot for Select authors).

I think Hugh is making good points also about how it may be worth Amazon’s investment overall, even if they are losing money. Amazon thinks like that a lot!

Thanks again for filling in some of the missing pieces I was overlooking regarding the trad publishers books that are included. And since it is Amazon, we probably will never know for sure exactly how much they directly lose or make with KU.

I’m one of the people who gets away with charging $2.99 for 15K-22K works. KU has ALWAYS paid less than a sale for me. I have to compare what I make in KU (and the readers I pick up) to what I make in non-Amazon sales, and that comparison makes me think I should keep the shorter works out of KU and pass the longer ones through it, for at least the first 90 days.

From a previous commenter’s suggestion:
20 – 50 pages: $1.00/borrow
51 – 100 pages: $1.10/borrow
101 – 200 pages: $1.20/borrow
200+ pages: $1.30/borrow.

I don’t understand why short stories should get such a huge slice of the pie compared to longer works. All that would do is encourage authors to write a kick-ass beginning, cause if the next 50 pages are crap, all they lose is 10cents.
Why is it at all fair to pay a short story $1.00 for their 20 pages of work.. and then reward the longer writer 10 more cents for making the next 50 pages interesting enough to keep reading.

The ONLY fair way to do this is to pay everyone the same amount for each page read.
So if you write a great short story, lots of people will read it and it will go up in ranking and have lots of visibility.
You write a crappy novel, people bail after 10 pages. Maybe you’ll get paid the same amount but those readers won’t be back for your other work. You’ll get no visibility and no word of mouth. They’re not joining your mailing list.

Etc. Etc.

I mean it’s too bad that you might lose income. But why are your 20 pages more valuable than the 20 pages that occur later in the story, that a novelist convinced someone to keep reading too. (I have read way too many boring novels… if you write well enough to keep me reading, you deserve more than 10cents. You deserve equal pay for each of your interesting pages that everyone else gets)

Yes short stories can be classic, amazing reads. But guess what, that means people will read them. Quality is just being treated equally under the new system.

This whole short story uproar just totally sticks in my craw.
A page = a page.

Ok, the thing that bugs me though is… why won’t they tell me how many people are borrowing? So say I have 100 pages read- is that 100 readers stopping at page 1, 1 reader making it all the way through, or 10 readers reading about 10 pages each?
I mean let me know so I can actually use it to improve the book

OK:
edit:

20 – 50 pages: $1.00/borrow … 50cents
51 – 100 pages: $1.10/borrow …. 100cents
101 – 200 pages: $1.20/borrow … 150cents
200+ pages: $1.30/borrow. …. 200 cents

lol.. .fixed it. flat rate for everyone. oh wait, that’s what they’re doing but you aren’t getting more for your 20 pages than I get for my 20 pages that happen to occur later in the book.

And, I might add, I shouldn’t have to write 100 pages if the story I want to tell is only going to take 25. The way the system is set up right now, if I wanted to make money, I’d have to write longer even though I didn’t want to. Not every idea deserves a novel.

I can’t seem to use reply… so frustrating.

Amber
JULY 7, 2015 AT 7:45 PM
And, I might add, I shouldn’t have to write 100 pages if the story I want to tell is only going to take 25. The way the system is set up right now, if I wanted to make money, I’d have to write longer even though I didn’t want to. Not every idea deserves a novel.

Amber
JULY 7, 2015 AT 7:41 PM
Er, but see, short stories aren’t getting paid fairly, though. Right now, fifty pages is twenty-five cents. The way it’s set up currently, short story authors are getting punished for writing what readers want to read in short form. Giving readers what they want at the length they want it shouldn’t be unprofitable, either. And if you’re writing novels, you still get $0.30 more per borrow than the lowest rung of the ladder under the plan I suggested. Literally everyone is profiting from that system.

***
This whole thing… I really don’t understand this at all.
Please explain.

If you have a story that only takes 25 pages to tell, then take 25 pages to tell it.

It’s a pie. You get 25 pages worth of the pie for that month.
Why should you get a bigger ratio of the pie than everyone else?

Short stories are shorter length. They tend to be focused on one character in one situation/slice of life.
A novel tends to be a sweeping epic, multiple POV, shifting timelines, etc. and many, many words… that you’re trying to keep interesting enough that your reader will stay with you past the first 25 pages.

I have started reading so many novels… or skimmed them… nothing happens. It is so boring.
I’ve read lots of short stories and I’m glued to the page.

(and lets be honest, most erotica shorts are written in about 4 hours to a day or two.
A novel can take 3 months if the author writes really, really fast.)

So you write a 25 page story, and I read the whole thing.
You write a 100 page novel, and I stop reading at 25 pages.

The other 75 pages that you wrote, you don’t get anything for. It’s just wasted time.
That’s the way it should be.

A page = a page = a page.

If you write 4 short stories or 1 long novel, you get paid for how many of your pages that you can entice a reader to read.

This is the fairest way to handle things.

It’s a pie. Why do you get more of the pie for your 25 pages than for someone else’s 250 pages.

Cause let’s be honest. Most novels are pretty big. and you’re trying to argue that they should get a tippance for the additional work of weaving together a longer storyline that gives the reader a longer enjoyment period and took the author longer to write as well.
In what world is that fair? (not to mention just the time spent brainstorming the setting and backstory). Erotica shorts hit a kink that sells well.
But how does that mean they should therefore get paid as much for a novel?

I don’t understand why people keep bringing up the classic short stories. Those authors couldn’t sell the SHORTer stories for MORE than the novels either.
They boxed them up in anthologies or collections or sold them to magazines for pennies on the word.

But they got read by lots of people… so there’s money for the sales. They got name recognition and readers seeking out their books.

I know there is a tendency for indie authors to race to the bottom of the price.
But most authors, if you ask them about their pricing, they use word count as a measure of how much they think they can get away for charging for the story.
Because it is a logical measure… because you have to use something.
So measuring by time spent reading works.

Value is something different. It’s subjective.
Amazon can’t pay us based on how much value you think your short story added to the pie.

You SHOW your value by pulling in readers, getting them to read the next story, sign up for your mailing list.

Please explain why the first 25 pages should get a bigger portion of the pie than the later 75 pages. Cause every page takes just as much effort. And I would argue that sustaining interest through more pages can take MUCH more effort than a quick zippy read.

I write both short stories and novels. Yes, that includes erotica. And I can tell you that for erotica writers, short stories can take much longer than “just a few hours.”

Writing sex and love is a craft, just like anything else we write. I mean, you’ve read bad sex scenes before, right? They’re awful. Take you right out of the book. Writing good erotica requires skill. It requires market research (yes, really) and honing your craft. It takes time and effort.

And sometimes, writing short is way harder than writing long. I have pages and pages and pages to play with if I decide to write a novel (which I’m in the midst of doing now). A short story? I’ve got to keep it tight. Succinct. Make sure every word counts. Make sure every word gives the reader what they want.

I’m confused by your position that short story writers are getting a “bigger piece of the pie than everyone else.” In the model I posted, they are on the lowest rung. They are getting $1.00 per while novels are making $1.30 per borrow. In KU 1.0, that number was $1.35 regardless of page count. Erotica/short story authors were on the same level as novelists, and you’re right. That wasn’t necessarily fair.

In the model I suggested, novelists are valued more. They’re getting $0.30 more per borrow than short story authors are. But short story authors can continue to make money. They can continue writing what they love. Because $1.00 allows them to make a profit. $0.25? Not so much.

In my model, novelists are making the most money. Everyone else is making less. But everyone is also profiting, because there is enough room in this for all of us. As long as a reader consumes more than 10% of the product (which I think is fair, given that you can preview 20% of the book on Amazon.com before you buy it), you get paid. Literally everybody wins.

Short story authors continue to make decent money.

Novella writers get paid more.

Novelists get paid the most.

Amazon ends up actually paying less than they were in KU 1.0 because they’re not paying $1.35 to everyone anymore.

We could all benefit from this. Every single one of us. Being on both sides of the fence, I’d be happy my novels earn more while still being happy that I can continue writing shorter work to support my family while I spend a longer amount of time on my novels.

And! And we’d all know what we were making, month-to-month. No more guessing games. No more waiting 45 days to see if the rate is going to change. We’d know. We could plan. Pay our rent, feed our kids. Etc., etc., etc.

I hope that helps explain what a tiered payment system could accomplish.

And (again, sorry), like I said in my original post, those numbers could change a little. Set up the tiers differently. $0.90 for 20 – 50 pages. $1.10 for 51 – 100. $1.20 for 101 – 200. $1.30 for 200+. There are a myriad of ways to tailor it.

“And I can tell you that for erotica writers, short stories can take much longer than “just a few hours.””

I have written several novella erotica shorts that took 2 weeks. And a few that took 4 hours (not counting revising)
I have worked on a novel that took years (ok a decade because I kept getting stuck and putting it aside and coming back to it)

But regardless of how long it takes, you aren’t trying to say that a short story takes as long to write or has as much risk as a novel to write, are you?

Because the short story you can publish/look at how it does/pivot.
A novel… not so much.
I mean you can take another year to write a different novel, and in that way pivot, but it’s on a much longer/slower timescale than a short story, regardless of how fast a writer you are.
So inherently there is more risk.

Which is why a short story is a great way to break into the market.
You can put more out, get more visibility, pivot fast.

***

“I’m confused by your position that short story writers are getting a “bigger piece of the pie than everyone else…They are getting $1.00 per while novels are making $1.30 per borrow.”
For the first 20-50 pages, you get 1.00
For the next 50 pages, you get another 10cents. Yippee.
How is that not a bigger slice of the pie?

You release 4 20 page shorts, you get 4.00
You release 1 100 page novel you get 1.10
Equals Bigger piece of the pie.

***
” Because $1.00 allows them to make a profit. $0.25? Not so much.”
So i spend a year on my novel and get 1.30
But you spend a day or two and get 1.00

But that means you’re the LOWEST rung??
I don’t see that at all.

***

” But everyone is also profiting, because there is enough room in this for all of us.”
But what is my incentive/reward for risking a long time on a novel?
Yes, there are short story readers. They love the short story market.
But not all readers are. And novelist should be getting an equal portion of the pot.
It should not be weighted so you can invest a short time and get paid as much (within 10 cents) as someone who invested a much longer time.

***

“And! And we’d all know what we were making, month-to-month. No more guessing games. No more waiting 45 days to see if the rate is going to change.”

I agree with this. But the problem is it already took out one of the subscription services because they couldn’t afford to pay everyone a flat rate.
Because a short story is fast to read and the reader is on to the next one.
And Amazon is having to pay you $1.00 for each of those short, quick reads.
But don’t worry novelist, you get .30 more cents for your novel. Is that incentive?

***
“those numbers could change a little. Set up the tiers differently. $0.90 for 20 – 50 pages. $1.10 for 51 – 100. $1.20 for 101 – 200. $1.30 for 200+.”

again, why are the first 50 pages worth more than the next 50 pages.
50 pages of writing = 90cents
the next 50 pages get me 10 more cents.

was that worth my investment in time to write a larger story with more plot?)
Were the next 50 pages easier for me to write than the first 50 pages or something?

***

The problem I have is that you want to keep your $1 for every short.
and to do that but keep the rate affordable to amazon, you are making my additional pages worth less than yours.

You’re forcing everyone who enjoys writing longer novels (or readers… yes, there are readers who love shorts. But there are also readers that love longer stories) to cut them up into 25 page chunks so that I can get the same value for my 100 page novel as you do for four of your 25 page shorts.

(ok so math isn’t my strong suit but this is the exact thing that Amazon is trying to counter. A page is a page is a page.)

And I should say I am not pleased that I am facing maybe 30 cents on my short.
That’s not even worth it.
And because of KU it’s not like most readers are really wanting to spend $2.99 on my erotica short. I mean I get some sales but way more borrows. Weirdly more sales than borrows since KU 2.0)
So I drop the price to 99cents (because Amazon has trained readers that this is a good price for a sexy short) and get 30 cents for a sale or I get 30 cents for a borrow.
Either way… it sucks for me.
So I have to keep the price at 2.99 and contemplate dropping out of KU. Even though the voracious readers have the subscription.. and can get their fun somewhere else.

But does that make it okay that my novel (that I spent so many more months/years on) would only make 20 more cents using your model?

I mean I want KU to go away. I want to be able to set the price for my short.
KU took that ability away from me.

But the solution isn’t to give me $1.00 for my short and $1.30 for my novel.
Why do I want to spend years working on my novel?

I mean… I do it because I love writing, that’s why.
But why should the short be so well compensated when I get almost nothing extra for my intricate, well-plotted novel?

And also, per your LATEST latest comment ;), I hear you about wanting to be compensated more for novels. Basically, my position is that all of us deserve a fair amount of pay, and I think KU 2.0 does not see to that need. It rewards novelists in some ways, yes, but at the expense of a MAJOR pay gap. Even if my proposed system isn’t perfect, with a little fiddling, we could come up with something that was.

“Ok, we are definitely talking around each other at this point.
I did post above about my unhappiness with KU and the fact that my shorts now face 30cents for a borrow.
I wish KU would just go away and die. I wish everyone would pull out. Cause the whole thing is horrible. But it’s not going anywhere. and new writers would just jump in.”

I agree, only I do think KU can be better, profitable, and more fair for everyone. I think there’s a way, but paid-per-page isn’t it (UNLESS the rate jumps SIGNIFICANTLY).

“But the part I am opposed to is that you want to earn as much for a short as a novel (within a few cents). Which I do not agree is fair compensation.”

It isn’t a few cents, though. It’s anywhere from $0.30 to $0.50 per borrow. Currently, the gap is much wider to the point where one side isn’t profitable anymore and a 300-page novel, IF it is read to completion, is getting a whopping $0.20 more than they would have under the original program. I don’t think that $0.20 is worth shafting short story authors.

“What it does is protect your current income.
You don’t want to see your income drop which would allow novels to be be equally compensated for the reading experience they offer.”

That isn’t true at all. In fact, I’m willing to forfeit $0.55 cents or so per borrow in order to raise novelists up. That’s not exactly peanuts.

“Are you saying that you spend as much time on a short story as novel?”

I never said this. I said that short stories take effort, and can sometimes be more DIFFICULT to write than novels, because you don’t have as much room to play.

It’s sort of like saying sculpture is more valuable than abstract canvas art because sculpture takes longer. That’s a subjective metric and one that isn’t fair to artists, whose works both have value, but are accomplished through different means. A painting might take a few weeks or days while a sculpture might take months or years. Doesn’t mean abstract art should be devalued to the point where one cannot make a living off it anymore.

I can’t reply to your latest comment, so just know this response is in reply to your latest one.

$1.00/$0.90 because that is the absolute bare minimum an author should be making from their work. Period. We have to start at a fair rate. We can’t make shorts unprofitable. That’s a terrible thing to do, sets an awful precedent, and will deny readers what they want.

Consider the $1.30 figure. You’d be making $1.50 off of a 300-page novel under the current system. And—I can’t stress this enough—that is ONLY if the reader COMPLETELY reads your work. We know that as of 2014, the completion rate for novels was an average of 60%. So the fact of the matter is that you’d be way more likely to make only $1.02 or so. $1.30 is $0.20 less than the absolute best-case scenario, sure, but it gives other authors the opportunity to earn a living wage AND it ensures you’re getting more than if a reader quit at 60% (which again, we know from the Kobo study is VERY common).

And again, play with the pricing structure. Get the $1.30 number closer to $1.40 or $1.50, which would have been your cap under the current KU 2.0 system anyway (assuming $0.0057/page, 300 pages).

The way it’s set up now, if you write 400 pages, 500 pages, what-have-you, sure, there is a CHANCE you’ll earn more. But at the expense of short story and novella authors. That isn’t fair. Or ethical.

I know your position is “I worked harder, so I should earn more,” and I’m not necessarily disputing that. What I’m saying is that erotica authors/short story authors work hard, too. And they deserve to be fairly compensated. While you’re balking at the possibility of $1.30 for your work, they’re having to live with $0.25 for theirs. That is a huge discrepancy. The answer, IMO, isn’t to stop crapping on one side by crapping on the other.

And as for the argument that I could release four, five shorts and break even, under this new system, that’s not true either. $0.25/borrow is not a sustainable rate on the side of the author. If you’re getting $1.50 for a 300-page book, I’d have to have 6 copies borrowed just to equal one of yours. If you’re having… let’s say 50 copies borrowed a day, you’ve made $75 and I’ve made $12.50. The gap has become too wide.

Whereas in a tiered system, assuming $0.90 for shorts and $1.50 for 200+ pages, you’ve made $75 and I’ve made $45. It’s still a significant gap, but it’s one that an author can live with.

I think what frustrates me most about these arguments, however, is that it sort of seems to go like this:

NOVELISTS: If you short story authors don’t think it’s fair, just write more novels! Adapt!

SHORT STORY AUTHORS: Well, how about we come up with a fairer system where shorts are still profitable?

NOVELISTS: But then a collection of shorts might be more valuable than a single novel and I don’t want to have to write shorts!

I mean, it’s disingenuous to tell short story authors to tighten up and write longer when novelists could have done the same and wrote shorter, but they didn’t because they didn’t feel it was fair to them.

And that’s the thing. Under a tiered system, even if the numbers differ from my original estimates, we could have a system that allows everyone to profit. Even at $0.90 vs. $1.50, you’d still be making $30/day more than I would with 50 borrows. You’re still being compensated more than I am.

The only way it wouldn’t benefit you was if readers read more short stories than novels… and some of them might. But that’s the READER’S decision, and short story authors shouldn’t be penalized for being popular. That isn’t fair for a whole slew of other reasons.

Ok, we are definitely talking around each other at this point.
I did post above about my unhappiness with KU and the fact that my shorts now face 30cents for a borrow.

I wish KU would just go away and die. I wish everyone would pull out. Cause the whole thing is horrible. But it’s not going anywhere. and new writers would just jump in.

But the part I am opposed to is that you want to earn as much for a short as a novel (within a few cents). Which I do not agree is fair compensation.
What it does is protect your current income.
You don’t want to see your income drop which would allow novels to be be equally compensated for the reading experience they offer.

Are you saying that you spend as much time on a short story as novel?

Er, but see, short stories aren’t getting paid fairly, though. Right now, fifty pages is twenty-five cents. The way it’s set up currently, short story authors are getting punished for writing what readers want to read in short form. Giving readers what they want at the length they want it shouldn’t be unprofitable, either. And if you’re writing novels, you still get $0.30 more per borrow than the lowest rung of the ladder under the plan I suggested. Literally everyone is profiting from that system.

This is way fun for me. “In response to your latest comment on 7/7 at 5:58pm… see sub-section 3b, where you stated…” :)

Ugh, KU. that’s what we both have to say about it.
That’s what it all boils down to.

Let me just set my price and be done with it. Let a reader buy it if they want to.
Or not.

To explain I am not saying 20 cents or 50 cents or whatever is fair to a writer of a short story.
I’m saying that you can’t compensate for that by taking money away from a novelist. Or throwing me an extra dime or two. That’s not fair to me. and the extra time/investment I put into all the extra pages.

The only thing that approximates fair is that every page you get a reader to read is worth a set amount.
As a short story writer you can put more out there faster. And in a world where KU exists, we have to put more content out there to equal the number of pages of a novel.

And I argue that this is actually a fair way to do it.

But really, Amazon just kill KU. Please. It’s not sustainable. The pots going to keep getting smaller.
Without KU, I could set the price again, get my $2.99 for my spicy short

I mean it’s totally worth the price of a cup of coffee. Heck, you can read it while you’re drinking your cup of coffee.

Hahaha, I know, right? I’m disappointed the site’s comments don’t allow for repeated replies past a certain number. Boo.

I do wonder how getting rid of KU would affect us, at this point. I do 100% agree that $2.99 is a fair price and ideally, we’d all go back to that and be fine. But I wonder if readers, who have now experienced $10 for unlimited book heaven, would continue to buy at that price. If we’d all see a significant drop because of that.

I was against KU from the beginning, and I feel like we should’ve killed it a year ago, but now that it’s here we may be screwed. :(

yes, but i mean we never had a say about KU, not really.

I don’t even get why they were ever so worried about scribd and oyster. they already dying. cause to pay an author a fair rate… well they can’t…
and meanwhile they’re training readers to expect enjoyable stories for less than a candy bar.

“yes, but i mean we never had a say about KU, not really.
I don’t even get why they were ever so worried about scribd and oyster. they already dying. cause to pay an author a fair rate… well they can’t…
and meanwhile they’re training readers to expect enjoyable stories for less than a candy bar.”

This. 1000% this.

Thanks for your article.
The Internet (not just Amazon) is a world-wide game changer for writers, small business owners, musicians, movie directors, mommies, sharks, cats…and there’s nothing we can do about it.
I do not defend or agree with or cry over what Amazon is doing at this point in time either for or against writers’ wishes. They are flopping about like we writers are, trying to figure this thing out, trying to gauge what makes the customer happy. Don’t forget, their mission statement is in favor of the customer, not the seller. Whether you sell through KU or out of the trunk of your car, we writers have opportunities today that have never been seen before. It’s a brave new world. Only those who aren’t afraid of what the future holds will endure. Which is fine by me: less competition!
I do agree that Amazon’s dust is far from settling, and it is important to know the facts so that we can weigh our options, even if sometimes it doesn’t feel like we have many.
I also like the idea of adding a note to readers (Ray Bradbury was famous for speaking to his readers about this or that) explaining how little writers often make compared to the time put into it, and to politely ask for reviews, word spreading, etc.
As an aside, I have never written anything in as short a time as two weeks. Six months, a year, or more…but hey, I’m not complaining. Too happy writing!
I can whine when I’m dead.

Good perspective and insights. I would only add that sometimes, when the muse is with you, a good story can flow quickly. I wrote a 55K word “novel” in three weeks this January, and I think it is one of my better works. Linking that to this topic, I never would have written it if I had not been contacted the Senior Acquisitions Editor for Kindle Worlds and offered a bonus to write it in less than a month. So, yes, Amazon is a business that puts its customers and itself ahead of its suppliers, but not by much. Amazon has been the best business partner I ever had, even if few people working there know me from Adam. Just saying.

Wow. I think my novels are too steeped in research. But I don’t mind! I love it! Congrats on your success. I totally agree that Amazon isn’t only a business, but a business partner. I’m just ready for my yearly bonus. ; )

Clearly, I’m a little late to this party…

According to Amazon’s example page, the formula to calculate the author’s payment per month for books borrowed is as follows:

A = Number pages read from your book(s)
B = $$ in Amazon’s Global Fund
C = Total of all pages read from books in the KU library for the month.

(A x B)/C = Author’s pay

For A, it is unclear how page-length, and thence the number of pages read, is determined. This is worrisome for many authors because this variable can affect how much income one makes and there doesn’t seem to be consistency yet.

For B, this number is obvious. Amazon posts what the fund will be at the beginning of each month.

C is vitally important. Amazon uses 100M pages total in their example for KUv2 payments. The end result was around 10¢ per page. If that was the case, I’d be throwing everything into Kindle Unlimited! Until we know the true total of pages read, we won’t really know what Amazon is paying. At 500M pages per month, the per page payout would be around 2¢ which is a little more realistic. It is around 800M pages read that the payout drops to 1¢ per page.

If the average novel is 350 pages long, then the 800M pages read would suggest Amazon has roughly 2.3 million books available in the KU Lending Library. As I’m quite certain Amazon doesn’t have that many titles available, then the only way to keep payments down would be to tweak the KENPC to manage the number of pages read. (Shorter pages = More pages read.)

Amazon has updated their wording on the example page stating that the author is paid for only one reading of author’s book. This implies that the reader can borrow and read that book as many times as they wish.

I posit that the best way to make a subscription service work best is to allow the readers to read as many books as they want for their subscription fee. But a reader may only read any given book once. If the reader wants to read it a second time, then the reader must actually buy the book.

Voracious readers generally only ever read a book once. I know a lot of people who can’t imagine reading a book a second time. They will be unaffected by this rule, and they will benefit greatly from the subscription because it will reduce their cost of buying books. These people also tend to read any book cover to cover, even if they didn’t like it. If they do like your book, they will load up on all your books and read them through.

For readers who enjoy reading favorite books over and over again, it means if they like a book, they will have to buy it outright. It’s no different than buying a book because you don’t want to have to keep going to the library to take it out each time you want to read it. The benefit they get is that they won’t get stuck with books they paid for but didn’t like. The author benefits most from this by double-dipping: they get paid for the pages read and paid again for the sale.

For readers who prefer to own the book… Buy it! They probably won’t be subscribing to the service, anyway.

As far as word padding to extend the length of a novel, that won’t work. If a writer starts adding useless passages to a story, it will ruin the quality of the read and readers won’t bother continuing with the book. Do it enough and readers will start to avoid books written by you. This encourages authors to just write the story and do their best to make it an enjoyable read. A gripping book will get the reader to turn through all the pages. A bad or boring book will stop the reader part way through.

Subscription libraries will probably require tweaking over time to get it right. I expect we will see changes over time.

Your math is off. The payout is about $0.006 (half a penny) per page read. The KU/KOLL pool is also fluid and not finalized until the 15th of the following month (when Amazon adds to the pot and declares payouts). That’s why we must wait until August 15 to see what the new system will pay for July borrows. The number of pages read is determined the same way your Kindle syncs your progress when reading on different devices. Whenever your Kindle (or other device) links to Amazon online it updates your progress on any book you are reading on any of them. This is how they know the number of pages consumed. The major change is that novels (if read cover to cover) will now earn more per borrow than a short story. That is a good change. I don’t think limiting the subscriber to a single read-through is fair, but I always encourage people to borrow before they buy. It’s the only way for a fan to pay an author twice for the same title (unless they gift it to others). All in all, I’m optimistic with the new KU system.

I definitely did not stress it not strongly enough, it is Amazon’s example that suggests a 10¢ payout. My bad. I expect the final payouts to be no more than 1¢ per page at most.

The key flaw in my math is I don’t know how many readers there are in Kindle Unlimited and therefore cannot know how many pages per month can be read. By Amazon’s formula, the way to get us a .6¢ payout is to have 1.7 billion pages read in that month. That requires about 4.9 million (rounded) people to read at least one 350-page novel each month. Or, 1 million people to read roughly 5 novels in a month. Entirely doable.

You are quite correct—and I really didn’t address this point properly—we won’t really know what the end result is until we get hard numbers next month.

Either way, I think the new KUv2 system is much fairer in the payouts. Novel writers were unintentionally cut off by the earlier system.

What I really hope to see, along with the hard payout numbers, is if Amazon is reporting to the author how many pages per book were read. If I discovered that lots of people were reading one of my books up to a certain page and then stopping, that would strongly suggest something was wrong in the narrative and needs fixing; that I need to address something in my writing. I should read that part and see if I can understand what went wrong.

Amazon confused a lot people with their arbitrary example of page reads last month. They clarified it in an email sent on July 1st which explained that, “As measured using KENPC, during the month of June, KU and KOLL customers read nearly 1.9 billion Kindle Edition Normalized Pages (KENPs) of KDP Select books.” They also committed to a KU/KOLL pool of about $11 million per month for at least the next few months. That’s where the roughly half a penny per page figure comes from. I agree that it would be very helpful to know how many readers/borrows are represented in the page counts. You make an excellent point about knowing if a large percentage quit reading at roughly the same point. We can already tell which titles the page reads come from, but not how many copies they represent. The system requires further refinement, but I think it is moving in the right direction.

That’s the number I didn’t have. At 1.9 billion total reads, the payout with $11 million in the kitty becomes .6¢ (rounded) per page read.

Oddly, I’m relieved because this is far more financially feasible and sustainable than their misleading example of 10¢ per page. Sure, it means less money for borrows, but it means the program will continue.

A more encouraging point to all this is the number of eyes that are reading is much greater than even in my most liberal estimates. The more people that are reading, the more books we can sell and make a living. :)