Hugh Howey

Bestselling author of Wool and other books. Currently sailing around the world.

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October 2014 Author Earnings Report

The latest Author Earnings report is up. This is our first look at the effects of Kindle Unlimited — we’ll be diving in further in coming months. I wish our conclusions could be more . . . conclusive. To me, weighing all the benefits of KDP Select against the minus of exclusivity, my thinking is that KDP Select is great for those starting out and those selling at the very highest levels. For those in the middle, who might be getting traction on other outlets, the increase in sales does not seem to outweigh the percentage of the market given up.

KDP Select is not an all-or-nothing program, of course. Perhaps it is the ideal place to launch a new series or to give underperforming works a boost. Put them in for 90 days or 180 days, and then branch out once they take hold. It could also be that an expanded readership outweighs cold financial calculations for some authors. The best advice may be to experiment.

I’ve been able to experiment with KU without the exclusivity requirement. It’s not a permanent exclusion, and I’ve been leaning toward exclusivity and staying in KU once it expires. I’m now leaning the other way. Even with the potential of All-Star bonuses, I’m not keen on a system that rewards the top and bottom but leaves out the middle. What I’d love to see is for Amazon to drop exclusivity as a goal. They already have (by far) the best marketplace for discovering ebooks and purchasing them. They have the best lineup of devices (having seen the newest e-ink display). They have one of the best upload and stat dashboards (after having revamped the latter).

So why not make KU elective for all authors? Why not set the pay scale by page rather than reward shorter length works? Compete for readers in all the other ways that Amazon excels (customer service, one-click, search, also-boughts, recommendations, reviews, etc.) and let authors publish their works far and wide. I have a feeling most authors would continue to share Amazon links by default. I have a feeling Amazon would be just fine and continue to dominate in this space. And everyone else would be a little better off.

50 replies to “October 2014 Author Earnings Report”

I totally agree with the last bit. Amazon doesn’t need exclusivity, and it’s actually pretty dangerous for them to try and defend their leadership position through that.
The big problem when relying on exclusivity is that you quite often start slowing innovation at some point, on top of getting bad PR. Look at Microsoft for example…

Amazon could remain market leader just through innovation and being one step ahead of competition, they don’t need to fight for exclusivity.

Let’s take the example of Kobo: Amazon just gives them a fantastic market positioning and PR possibility: “we’re all about non-exclusivity”. It’s a message that sounds so much more author-friendly (all the more when it is accompanied by actual people who are present at all events and conferences).

In term, no matter how competitive Amazon remains, exclusivity will become more of a way for Amazon to loose potential customers (some people hate exclusivity that much, yes) than to gain and retain them.

Hugh:

I’ve been following your blog for some time. I agree with your perspective on non-exclusivity 100%. If Amazon followed your advice, it would be not only good for books, but good for the entire industry.

While I disagree with a number of Amazon’s business practices, I think there is room for market innovators–and without a doubt, Amazon is one of the most innovative companies in the history of publishing.

I hope they listen. Frankly, though, I don’t think they will.

Richard Dean Starr
Co-Founder & CEO,
Eread Technologies, Inc. / Ereading.com

I’m approaching the end of my first 90 days and the struggle of whether to renew in KDP or not has been weighing on my mind. I have a lot people ask if I’m available on Nook or iBooks, but I’ve stayed in best seller lists on Amazon all three months, with half of my “sales” each day being borrows. I’m certain if I branch out and drop KDP that my rank will fall dramatically, but the “What if?” of what will happen in the other outlets is a constant whisper in my ear.

There really is no clear cut answer but I’m glad we have all of this data to assist in our decision-making. Thank you – I’m sure it’s no small feat to interpret all of this!

And yet you use what influence you do have (which I suspect is considerably more than you might think), along with your precious free time, which we all know is very limited, to lend a hand to the rest of us. For that, many, many thanks!

I have to agree. Even though nine of my ten books are available in most venues, 95% of my sales still come from Amazon. If KDP Select/KU were made non-exclusive, it wouldn’t make much of a difference in sales, but I’d have some more flexibility with pricing.

Ironically, since I started using Amazon links by default for promotion, sales from other venues picked up a little. Funky, huh?

Hugh, you started my day right. I made the decision to pull out of KU a week ago as my numbers were just not supporting it. Now I see your report and it just confirmed everything I suspected. I think you’re going to help a lot of authors with their KU decisions and I just wanted to thank you for that.

Between this report and the giant cup of Starbucks on my desk I’m a happy guy. May have to write out by the pool today. :)

Oh, before I forget, Sailboat update? Hello?

Have you looked at Gunboats? Sorry for barging in, but I saw ‘St Francis 50’… We looked at one years and years ago in Annapolis. She’d sailed over from somewhere in Africa as a way of getting some savings out during a regime change, a fascinating story. Anyway, they’d found the bridgedeck slamming to be the hardest work of the crossing. Of course all cats do, but perhaps St Francises especially so due to bridgedeck shape or clearance?

Years and years later, after following Phaedo, a Gunboat 66, in Fastnet (by a long way for a short time), we decided upon Gunboat as our lottery boat. It’s the right mix lux/safety/speed/etc., for us both. Anyway, just wondered. Apologies for hijack.

Have a lovely time shopping, and best of luck with it!

Hugh, your opinion (which I highly respect), is based on your discomfort with a system that rewards the top and the bottom but leaves out the middle, if I’m reading you correctly. For me, one of those with 2.99 books, AE leads me to believe that, regardless of the fairness of the system to all involved, I am still, as a statistical matter, better off being in KU. Is that a fair summary?

I totally agree. I think it’s long past time for Amazon to drop the exclusivity nonsense already. Not only would it benefit authors in ways you mentioned, but it would force the other ebook sellers to ACTUALLY COMPETE, as right now their main draw is “we’re not Amazon.”

Thank you so much for the information. You and Data Guy have done an amazing job. The Author Earnings site is terrific. I’ve been weighing my options because I recently negotiated a deal to get the rights back to five of my books (including the first three in an urban fantasy series). They never sold much on the other sites, so I’m going to give KU a shot for the first 90 days. I’m waiting on the new cover art at the moment. When I re-release the books, I will simultaneously release book four in the fantasy series. I’m hopeful that the borrows will assist in the visibility department.

Again, thanks to you and Data Guy for all your work on this. How can anyone expect to make informed decisions without information? You guys are doing the community a tremendous service.

Unfortunately, I sincerely doubt Amazon will ever summarily drop the exclusivity requirement. They are continually looking for more ways to tie folks to the Kindle brand (KU, Fire TV, Original Shows, Music, etc.) not less. They understand that content is the key to attracting and tying up consumers, not devices. The more things they can offer people that are only available from Amazon, the better.

I do still hold out hope that they will adjust the borrow rates to a sliding scale based on length. It only makes sense and would stem the tide of system gamers as well as increase the overall quality of the offerings I think.

Thanks as always for this tremendous service. What a gift to the community! I was surprised by your conclusion that the average book is 50/50 borrows/sales. My wife and I publish spiritual non-fiction books, and our ratio so far has been more like 20/80 borrows/ sales. This kind of makes sense that non-fiction readers might not be as interested in KU, at least not as much as a heavy reader of fiction.

We have 25 books between us, and so far it seems the best approach is to split them between select and non-select. This gives us the best of both worlds: visibility on KU and also still some visibility on the various other ebookstores. We are moving a few titles out of select now that the first 90 days are up, but we will still keep about a third of our titles (the ones that have had the most borrows) in select.

It would be great if Amazon would drop the exclusivity requirement. Perhaps the increased number of books they would get into KU could make it worth their while.

Dug your KU gym membership analogy in your interview with Russel Blake.

KU is also highly susceptible to gaming via short works. In that same interview (and here again) you mention a KU payscale that scales with page count, so the playing field is more level across the board. It’s really something that should be done.

I definitely think Amazon should look at KU in a broader sense too, mainly because the greatest benefit (profit to Amazon) comes when consumers either don’t use it to its full potential or forget to. KDP already provides a platform for readers of all types to get work on the cheap. I’m not sure the sub model really provides any benefits for writers, your average reader, or even Amazon. The only people really benefitting are voracious readers, who already get a large benefit from Select and much cheaper eBook prices.

As a soon-to-be author this is encouraging. Thank you Hugh for posting this.
My questions…
1-If I sign up for KU, can I still physically publish/sell the same title with Createspace?

2-Do I lose exclusivity for all my books or just the one I choose to enter into the program?

I’m actually having trouble finding the KU website for author concerns/rights (I’m finding lots of responses to KU, but not the official page for author rights). If someone could link me a page that has this info I’d really appreciate it.

You only have to be exclusive to KDP with any title(s) you enroll in Select. My wife and I have some titles that are only on KDP in Select, and other titles that are both on KDP and other digital platforms such as Nook and IBooks.

I agree it is time to allow writers to use KDP and not be locked into Amazon. Come on Amazon, you are a big boy, you do not have competition, why do you need us locked in to a contract? Are there that many new writers leaving the KDP when the big 5 come calling? I doubt it.
I also agree all authors should be paid the same, by the number of borrows, not the price… to a point. If i have a book that is 99 cents, and Hugh has one for ten bucks, people have to borrow ten times more of mine for me to get the same pay? I am not sure of the formula they use now, and until I do I will steer clear of the KU program. I do not think it is great for advertising, not as great as some say. People didn’t find Wool because it was free, it was 99 cents. If it had been free, would it have been as popular? It is hard to say, when people get stuff for free they expect it for free forever. It is like the 99 book collection sales, I rarely buy a book or series of books for more than 99 cents because I am getting used to that price point. If I could borrow enough books to last a lifetime, why would I ever buy one again?
Nah, give an author the chance to allow each bok to be shared once, you sell a copy and it comes with a code they can give to a friend for a free copy to borrow….. Now that idea would work.

Your suggestions are timely, as usual, Hugh. As one of those in the middle, I’ve been rethinking the exclusivity side. I didn’t do well in other markets before I went into Select, but at the time I was only selling a couple hundred books a month. Lately, I’ve been thinking about the kind of traction I could get now that I’m selling more than that every day.

I think in the natural evolution of things, Amazon will eventually lift the exclusivity part and do just as you said, start paying by content. They’re the world leader in ebook technology, so developing the technology to do that would be easy. Imagine the number of ebook borrows many writers who aren’t exclusive would generate. It boggles the mind.

KU is great for certain customers, those who read more than enough to offset the cost of admission. Expanding the number of ebooks offered, by eliminating exclusivity, would be the next evolution in better serving their avid reading customers.

If indie authors want to be included in KLL and KU without having to commit to Amazon exclusivity, it will require collusion on the part of indie authors. Without the power of collective bargaining, indies will likely be ignored on the matter and traditional publishing will continue to get special terms that indies do not.

Realistically, the most important indies are authors like Hugh, but a good portion of the best seller lists matter. It would be best if there were an actual organization to represent indie authors in actual discussions with Amazon and other retailers. However, if most indie authors, especially the best sellers, were to pull out of Kindle Select, then Amazon would probably rethink their terms.

Since this edition of Author Earnings is coming out and suggesting that going exclusive might not be a good fiscal solution for all, there may be some nascent behavioral movement against going exclusive with Amazon. That’s a big speculation though. It’s unlikely that indie authors will all move in the same direction without organization. Further, without collective disciplined action and a voice that represents the interests of that collective, it will be unpredictable how Amazon will react in the face of indie authors leaving KDP Select.

I’m not the organizing type and I would suspect that most indie authors aren’t either. However, Amazon isn’t going to change their policies because they’re asked to. They will act precisely as they please with little regard for outside opinion until confronted by actual leverage wielded by a negotiating entity.

“KDP Select is great for those starting out and those selling at the very highest levels”

I’ve thought this for a while, too. I’m a new author (two novels, one novella) and in Select. KU seems to be helping me quite a bit — borrows are 22% of my shifted units this month. This has helped me find extra readers and gain visibility.

But in another year or two? Who knows. If I can expand my readership it might make sense to expand my distribution to new channels. Though, who knows how else the publishing world will have changed by then.

Thanks for the update! I’ll be sure to mention it on the Back Porch Writer show tomorrow morning.

As a side question: What widget are you using for your progress meters? I tried one, and it broke my site. Now, I’m a it gun shy.

Thank you!
Kori

People have an odd notion they can define Amazon’s objectives, strategy, and tactics for them. They define what they want for Amazon, then criticize it for not complying.

Much of what they want revolves around the welfare of authors, rather than the welfare of Amazon. This applies to both traditional and independent authors. Criticize the actions of others if they are not congruent with the welfare of authors.

If we don’t like what Amazon does, then get out there and compete. This applies to the Big-5, other eTailers, traditional authors, and independent authors. Nobody is so special the rest of us have to spend our time and resources to give them what they want.

>> Why not set the pay scale by page rather than reward shorter length works?

This is a great idea.

I would also like to see rewards for books that are finished, not just read to the 10% mark.

If you borrow a book and read it to the 10% mark, Amazon could increase its rank by half a notch. If you read it to the end, Amazon could increase its rank another half notch. (The “end” could be 95% to account for the acknowledgements, etc)

This would benefit readers – they would know that the higher ranked books were good enough to read all the way through.

Hugh is definitely right on about the length boondoggle. Compensation for a novel and a short story shouldn’t be the same. Another possibility is to split the compensation based upon the retail value of the books borrowed. For example, 100 borrows of a $2 book is equal to 200 borrows of a $1 book. There certainly could be some issues with authors offering individual book chapters at exorbitant prices to increase revenue by strong borrow volume. However, a reasonable price cutoff related to length could also be imposed.

Demanding exclusivity is the one thing that Amazon is doing that could be looked at as an abuse of a monopoly position.

I’m not one of those who believe that they are a monopoly, but why do something that could cause problems if you do become one?

“I’m not keen on a system that rewards the top and bottom but leaves out the middle. What I’d love to see is for Amazon to drop exclusivity as a goal. They already have (by far) the best marketplace for discovering ebooks and purchasing them…So why not make KU elective for all authors?” –

Hugh, really appreciate the integrity and honesty in your post – this is an important post for all writers – thank you!

What I’d be interested in knowing (in the next Author Earnings Report)–the information is certainly available for the taking–is how full-length novels compare to short stories or novellas in the terms of KU borrows? Also, how series (shorts or novels) compare to stand alones (again in KU borrows)? The KU system seems set up to reward the author who publishes shorter works, but with the large number of novels available in the KU system I wonder if the KU readers are investing the time in the shorter works. Each individual author has different anecdotal evidence, but I wonder what the data says.

Regardless, great data once again. Thanks Hugh!

Amen. KU is only good for readers if the content they want is there, and exclusivity is a major deterrent to quality content (I.e. once a book takes hold it’s not desirable to the author). I’ve been experimenting as a reader and auther and don’t think I’ll be continuing as a reader because most of the content I want isn’t there. It would be beneficial to Amazon to make it easier for authors to include content.

The benefit dropping exclusivity is a greater selection of books in KU. The cost is allowing a greater selection in the competing subscription services.

Additionally, if Amazon dropped exclusivity, then the competing subscription services would have access to all books, while Amazon would not have access to the Big-5 books. That would not be in Amazon’s best interests.

People want eTailers to compete for authors. This is competition. The competitor defines the prize he is striving for, then goes after it.

Since only 34% of my sales are from Amazon, I’m not inclined to offer exclusivity to them.

If they’d get off the exclusivity hobby horse (save for Kindle Worlds):

a) I’d buy books from one of my close friends who has an exclusive for a year through Amazon’s White Glove program;

b) I’d offer my books through KU;

c) I might even write a KW novella or two.

Usually, I find myself agreeing with your experienced wisdom, but not on this. Perhaps because my background is business. Advertising/Marketing is the process/means of “letting people know that you exist, and what you offer.” *Normally, this means spending money to “expose” yourself/your books, to potential readers.* (Some businesses/authors do this by making free copies available.) But, KULL *pays* you, the author, (poorly yes, but still _pays_, not costs) for doing it. IMO, the only way to make it better, is to “scale” the length needed “earn payment.” To “complain” about it, is like complaining that “libraries are lost sales.” =8-0
AIUI, if I read 10% of the “book” KULL pays a “royalty,” *on a book that goes away after a set time.* If I want to “read it again” (if it’s any good, I will), *I have to _buy_ a copy.*
If I can’t thoroughly hook you, in the first 10%, I’m not likely to do so, at all. Which means that I’m “pretty sure” to get a sale eventually. I’m in the “buy the Dead Tree version from Amazon, and get the Kindle version for $1.99 (the price I picked), for just that reason. Why settle for just one royalty, when I can get two? :-) What I hope happens, is someone buys the paperback & Kindle versions, then gives the Dead Tree version away, after reading it. Then, the recipient likes it so well that they buy a Kindle version of their own. _Three_ (or more) royalties, from only _two_ sales.
JMO.

Indie authors spend way too much time in utopian thinking about how Amazon should do this or would be better if it worked that way. An independent author is also a business person. In business, the key is in tailoring one’s own actions to best advantage, not in wishing the other players behaved differently. Business information, such as the great data provided here, is essential to good decision making in the roiling and rapidly growing marketplace of publishing today. The time wasted fantasizing and posting better schemes for Amazon would be far better spent using this sort of information for developing business plans and refining business tactics. Daydreams of guilds or consortia of independent authors pressuring Amazon are just short of silly. Not even the Big Five have been able to pull off any substantial gains in relation to Amazon.

Authors who do not want to be in business as publishers should not go go the indie route unless they can be content with a trickle of sales to friends and neighbors.

With the advent of KU, the KU/KOLL portion of my “sales” has jumped from under 5% to nearly 25%, although overall units moved has risen only slightly so revenues are more or less flat. I do not make a decent living from writing, even adding in part-time journalism and residuals from technical publications, but I have had one or more Kindle editions in the top 5% of Amazon ranks for most of the last four years. Technically, that would put me in the “top tier” but still so small that Amazon would not even notice if my works vanished into the void. And you probably never heard of me. Only big name, best-selling authors would have any chance of influencing Amazon, and look what they accomplished in the Hachette dust-up. Enough said.

–Larry Constantine (pen name Lior Samson)

How on earth are people having success with KU? And how are you getting borrows? I’ve been exclusive with Amazon for a while, and granted I haven’t had the option to really take advantage of promoting like crazy, but how are people actually finding you on KU? Are they just browsing the KU section on Amazon? I have an equal amount of borrows to sale this month, which is about 5 apiece. Yeah, I’m really going places. Maybe my expectations are too high, or I just haven’t gotten my name out there enough. I just keep hearing about how KU borrows are going up like made for some authors. I guess I’m a bit jealous, and was wondering if there was something specific everyone was doing that I seem to be completely missing.

I didn’t have a big problem with Amazon’s exclusivity requirement in KDP Select when Kindle Unlimited wasn’t in the picture for one simple reason: Amazon was paying authors more in royalties for being exclusive to KDP. But, now it seems to be punishing those same authors by forcing them into KU if they opt for KDP Select. It also takes away the interest in sponsoring “free days.” I mean, what’s the point now? I think that KU should be an opt-in program for indies. Otherwise KDP Select is going to lose (and has already lost, I’m sure) a bunch of its most loyal authors.

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