Tuesday, July 22, 2014

Kindle Unlimited: changing the reading game?

There's a lot of controversy among authors (particularly independent authors such as myself) about the likely impact of Amazon's new Kindle Unlimited program.  Briefly, for those who haven't yet heard about it, it's a subscription library for e-books.  You pay $9.95 per month, and can 'borrow' up to 10 books at a time.  As soon as you finish one and 'return' it, you can download another.

Authors have to enroll in the KDP Select program, publishing their books exclusively through Amazon.com, in order to participate in Kindle Unlimited.  They'll receive a fee per book borrowed (provided that the borrower reads more than 10% of it), and the loan will count towards their sales rank in Amazon.com's Kindle Store.  In the past, with the much more limited Kindle Owners Lending Library (KOLL) program for Prime members (which will continue), authors received a fee every time their book was borrowed, whether or not it was read.  That fee averaged about $2 per loan, but I expect the much greater volumes of borrowing likely to be generated by Kindle Unlimited will make it impossible for Amazon to continue that level of support.  I expect the amount paid to authors per loan to drop by at least 50% in the short term, perhaps by as much as two-thirds to three-quarters.  If this reduction is compensated for by increased borrowing, that might not be too bad;  but I suspect it'll end up costing authors money.

There's a lot of controversy in the author community right now over Kindle Unlimited.  Some fear it'll mean a default subscription model for independent authors, forcing them into membership in order to attract sufficient readers to earn a living - even though their income per book will (they suspect) be drastically reduced.  Others see it as an opportunity, promising an additional income stream that should more than compensate for any reduction in sales.  I suspect those who are already doing well will fall into the second camp, while those who aren't selling many books will probably gravitate towards the first.

However, I think that such controversies are missing the point.  Remember the fabled buggy whip industry?  It's long been taught in business schools that many companies making accessories for the horse-drawn transport market went out of business when the automobile came along because they misunderstood their market.  They thought they were in (say) the buggy or wagon business, when in fact they were in the transport business.  When a new mode of transport replaced an older one, their 'blinkered' approach prevented them from adapting in time to the changing market, and they went out of business.

In the same way, I think that authors must realize that we're not in the book business;  we're in the entertainment business.  Our potential customers can choose to spend their money on a movie (at a theater, or downloaded from a service like Netflix, or on a DVD);  they can buy or rent a video game;  they can invest in virtual reality hardware and software to immerse themselves in new and up-and-coming forms of entertainment;  they can watch (or attend) a music concert or band performance;  or they can read a book.  We're competing for the reader's 'entertainment dollar' with all of those other resources.

I think Amazon may be on to something with Kindle Unlimited.  They view the book market from a very lofty vantage-point indeed.  They can see where entertainment customers are spending their dollars.  They know that in order to keep books and reading relevant to modern consumers, they have to be offered in more easily accessible forms - and 'accessible' includes price, when comparing books to other forms of entertainment.  Amazon's putting pressure on mainstream publishers to lower the prices of their e-books, and rightly so, I think;  but it's also looking at the overall market and trying to figure out how it can get more books into the hands of more readers, to the benefit of the book segment of the entertainment market overall.  It's taking the broad view.  Many of my fellow independent authors are instead taking the narrow view that "if it's not good for me, it's not good, period".  I think there are many avid readers who'll look at the economics of Kindle Unlimited and disagree profoundly that it's "not good".  For them as readers, it's very good economics indeed.

That means that we, as independent authors, have to adjust our business model.  We probably can't expect to make as much per book - so what can we do to maximize our income in this new age of entertainment?  Can we introduce different formats of our work - audio books, for example?  Can we use collections, both our own and collaborating with other authors, to put out our work under more covers and make it more accessible to readers?  Can we develop skills in new areas (e.g. moving from novels to novellas to short stories and back again, varying our output so as to appeal to as many potential readers as possible)?  Are we going to be guilty of the "buggy whip industry" syndrome, or will we adapt to the new technologies that are changing the world around us?

We have to be realistic.  As an old African proverb reminds us:  "It's no good farting against thunder."  We've got to ride the winds of the storm, and make sure we come out ahead - no matter where it takes us.  Kindle Unlimited is just the latest manifestation of the storm that's sweeping the entertainment industry throughout the world.  I'm sure our children will be entertained in ways we can only dream of, and that I won't live to see - but I'm sure there'll still be authors, and they'll still be making a living one way or another.



Dirk said...

I'm of two minds - while I like cheaper prices, I want to "own" what I pay for, not just rent it. I have never thrown a book away, whether dead-tree or e-book. But, I read a lot of stuff that I go back and re-read years later. I wouldn't want to have to pay again to re-read, say, Weber's Honor Harrington series, or McCaffrey's Pern series, just to name two that I've re-read at least twice.

My wife, on the other hand, wouldn't care whether she could keep a book or not. She frequently downloads ebooks from the library, and never looks back. Then again, I don't think what she reads has much re-reading value, as her tastes are somewhat...simpler.

dan said...

I think Dirk is right....
for my money :
books on CD's (still get the nifty cover art) or even thumb-drive ?

Anonymous said...

The thing is, Amazon is pretty much a monopsony at this point. What's their market share ? 70-80%?

It's hardly ever a good situation, to have only one real choice of publisher.

What would people do if Amazon managed to gain even larger market share and then started to offer less-favorable terms?

As of now, you can read non-Amazon ebooks on kindle devices, but that could change any time.