Industry & Advocacy News
November 17, 2015
Amazon has been keeping its Kindle Unlimited authors on their toes since it launched the KU subscription service in July 2014. The retailer recently announced yet another change to its compensation model for authors enrolled in the program. According to a letter Amazon sent to Kindle Direct members, starting in November the KU royalty formula—which determines how its indie authors get paid—will take into account “marketplace differences” such as “exchange rates, customer reading behavior and local subscription pricing” in the various countries where Amazon now offers the Kindle Unlimited service. Amazon did not provide details beyond stating that the royalties for authors will be determined by “local country factors.” An American author, for instance, whose books are read in India—where Amazon’s subscription fees are considerably lower than in the U.S.—will receive a lower payout for her Indian readership than she does for her American readership.
According to its letter, Amazon made these changes in view of its long-term goal of rewarding authors and expanding global readership. But the mechanisms of Amazon’s payout model for Kindle Unlimited—already opaque and confusing—have become even murkier. We’ve noted in the past how Amazon’s royalty model unduly distinguishes between traditionally-published authors and indie authors. These latest changes to the royalty model threaten to widen that gulf.
Under Amazon’s agreement with publishers, “traditionally published” authors receive a royalty payout after a portion of their book is read, whereas indie authors receive royalties from a pool of money—the KDP Select Global Fund—the size of which Amazon adjusts each month. Since the company’s contracts with self-published authors are non-negotiable terms of use that Amazon can change at any time, indie authors who want their books in KU are entirely at the mercy of Amazon. For instance, in July of this year, Amazon unilaterally modified the royalty model for indie authors, making payouts to authors keyed to the number of pages read in books “borrowed” by KU subscribers, creating disparity between the authors of longer works and those of shorter works, such as poets and children’s books authors.
Since July’s change to per-page payment, self-published authors with books in Kindle Unlimited have seen the amount paid per page decline each month. This week Amazon announced that, despite the fact it allocated more money ($12.4 million) to the royalty pool than it did in September ($12 million), the number of pages read grew at an even greater rate, so the payment per page dipped below half a cent per page for the first time.
Authors stand to gain a lot through global distribution, but Amazon’s claims about rewarding its authors through its new foreign royalty structure should be taken with a grain of salt, considering that authors have no leverage in negotiating the terms of their agreements with the company. More likely, Amazon is simply trying to take advantage of growing book markets in order to ensure its control of those markets.
