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At Kindle Unlimited, Even a Higher Royalty Pool Yields Shrinking Payouts for Indies

Last week Amazon made the monthly announcement of how much money it would share with the indie authors whose work is part of its Kindle Unlimited service, a program where readers can pay a monthly fee for unlimited access to over 700,000 e-books. Most of KU’s repertoire consists of books self-published through the Kindle Direct Select Program, whose members choose to earn a higher royalty rate in exchange for making their books exclusive to the Kindle platform. KDP Select books are automatically enrolled in Kindle Unlimited, though authors can opt out at any time, forgoing the higher royalty rate in the process.

In many subscription programs, when a reader “borrows” a book and reads past a certain threshold, authors are paid at their regular e-book royalty rate, as if the book were sold. For Kindle Unlimited, however, authors are compensated by a pro-rated share of a monthly royalty pool, the size of which is determined unilaterally by Amazon. For the month of March, Amazon filled the royalty pool with a record high $9.3 million. At the same time, though, the number of subscribers in that period jumped, and the number of books subscribers actually read (or read a significant portion of) also increased, according to Publishers Lunch, resulting in the second-lowest payment per read since KU started: $1.337.

As we explained in a previous post on Kindle Unlimited, we have concerns with the way the royalty pool model affects indie authors. While traditionally-published authors whose books are part of KU are paid for an e-book sale as soon as a reader has accessed more than 10% of a book, indie authors are paid out of a royalty pool that is split among all self-published authors. This ignores the fact that indie authors aren’t just writers, they’re publishers too. Why should indies get less per book than traditional publishers?

Also troubling is the fact that KU pays authors the same rate per read whether a book is short or long. As we wrote last December:

This provides a strange incentive for authors to break up their works into smaller and smaller units—chapters rather than books. (Not that we have anything against short works; for example, we’ve always been supportive of Amazon’s Kindle Singles program.) But more importantly, it reflects Amazon’s tacit denial of the idea that books represent intellectual enterprise, that they contain ideas, and that they represent differing levels of investment on their authors’ parts. A market that values all books identically is inconsistent with the realities of authorship and the value readers place on different books.

And while $1.34 a read might seem a pittance, it’s doesn’t lag that far behind what many Big Five authors are earning per e-book sale. An e-book sold under the agency model at $10.99 would yield the author a royalty of about $1.92, owing mainly to the publishing establishment’s entrenched–and inequitable–commitment to paying authors a mere 25% of net e-book receipts.