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.
- 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.