Amazon added a massive bonus to the KDP Select fund for December 2014 to strengthen the Kindle Unlimited payout for authors to $1.43 per borrow and revealed that total royalties to KDP Select authors have more than doubled in the five months since KU launched compared with the previous year.
A huge bonus of $4.25 million was added to the $3 million that had been set previously for the KDP Select fund in December, bringing the total fund to a new monthly record high of $7.25 million, up from the previous high of $6.5 million in November.
The borrow pay rate for authors rose to $1.43 in December from $1.40 in November, continuing a recovery from a low of $1.33 in October, which had sparked widespread protests from authors who saw their incomes being affected.
Amazon has revealed some initial results from the first few months of Kindle Unlimited:
Authors renewed their titles in KDP Select at rates in excess of 95% in each month of 2014.
À La Carte Sales Growth
- Over the five full months since Kindle launched, spanning August to December 2014, royalties to KDP Select authors from à la carte sales grew faster than à la carte sales on KDP overall or on Kindle overall.
- Adding in the payments for the Kindle Owners’ Lending Library (KOLL) and KU over that time, total royalties to KDP Select authors more than doubled when compared to the same period in 2013.
Higher growth for higher-priced and longer books
Total earnings on titles priced $2.99 or greater are growing faster than the overall average. The same is true for titles that are 150-plus pages in length.
This is an impressive string of claims from Amazon. It appears that despite misgivings from many authors, the vast majority of self-publishers are sticking with KDP Select, with only around 5% pulling out at any time during the year.
À la carte sales refer to normal sales of ebooks through the Kindle stores, excluding borrows through Kindle Unlimited and KOLL.
Amazon says authors enrolled in KDP Select (and therefore eligible for Kindle Unlimited) saw faster growth in sales than non-KDP Select authors — and this sector of non-KDP Select authors includes not only self-publishers but also traditionally published authors on Kindle.
Adding sales and Kindle Unlimited and KOLL payments, Amazon says KDP Select authors benefited from a doubling of total royalties in the five months of KU as compared with the same period in 2013.
Perhaps the most intriguing finding is that total earnings are growing faster on ebooks priced $2.99 and above (70% commission lower limit) than for the overall average, and faster growth is also being seen on ebooks of over 150 pages compared with shorter books.
This would seem to fly in the face of logic, as a Kindle Unlimited borrow in December of a book priced at $2.99 would pay the author only $1.43, while a sale would net the author $2.09 at the 70% royalty rate.
It can only be the case that Kindle Unlimited has raised the volume of business considerably, and thus total earnings.
For example, before Kindle Unlimited, if a $2.99 book sold 100 copies in June 2014 and had 5 KOLL borrows at the then prevailing rate of $2.20, then the total net earnings for the month would have been 100 x $2.09 = $209 + 5 x 2.20 ($11) = $220.
If sales had stayed steady at 100 in November 2014, but there had been 50 KU borrows at $1.40 apiece, then total net earnings would have been 100 x $2.09 =$209 + 50 x 1.40 ($70) = $279.
But many authors have said they have seen big falls in outright sales which have not been made up by increased borrows.
If sales had halved to 50 in November, with 50 KU borrows, then total net earnings would have been 50 x $2.09 = $104 + 50 x 1.40 ($70) = $174. There would have had to be at least 83 borrows at $1.40 ($116) to make up for a drop of 50% in sales and match the pre-KU June earnings of $220.
These are, of course, all hypothetical figures, but nonetheless fascinating to consider. There is a lot to consider and analyse here and I will be looking more closely at various aspects of Kindle Unlimited in a series of new posts coming shortly.
Kindle Unlimited ‘borrows’ top 5 million in December
It looks like Kindle Unlimited broke through the five million mark for borrows in the traditionally best-selling month of December.
I have done the usual maths and divided the total KDP Select fund of $7.75 million by the borrow payout rate of $1.43, which results in the grand total of 5,069,930.
This represents a rise of 9% from 4,642,857 in November, which was itself a 12% increase from 4,135,338 using the same method of calculation in October.
Japan gets its own All-Stars payouts
Japan has been added to the KDP Select All-Stars’ scheme and Amazon will pay a separate bonus for KOLL loans in Japan. The firm is continuing to pay monthly All-Stars bonuses to the most-read authors and titles in the US, UK and Germany.
Amazon is continuing to set relatively low levels initially for the KDP Select fund. For January 2015, this has been set at $3 million, which means Amazon will again (we hope) be planning to add substantial sums once they work out the borrowing trends.
The company says it has had ‘lots of great feedback’ in the past weeks and months, including ideas on how to further improve the structure of the program and make it work better for authors and readers alike. It says it’s looking hard at all the feedback and expects to keep tweaking and improving the program in the future.