The Kindle Unlimited payout to authors bounced back with a welcome rise to $1.40 per borrow in November, up from a low of $1.33 in October.
Amazon added a massive $3.5 million to the KDP Select fund for November, which had originally been set at $3 million, bringing the total fund to a new record of $6.5 million.
In previous months, Amazon has also added big amounts to the original fund to prop up the payout. For October, the company added $2.5 million to the original fund of $3 million to make a total of $5.5 million, while in September it added $2 million to the original $3 million for a total fund of $5 million.
Despite the extra cash, the payouts in both September ($1.51) and October ($1.33) had continued on a downward spiral.
It looks like Amazon may be responding to growing criticism from many indie authors who have seen their earnings hit badly after going exclusive on Kindle Select to take part in KU.
Best-seller H M Ward pulled her books out of Kindle Unlimited recently after her income plunged by 75% over two months despite getting a Kindle Select All Stars cash awards for both months.
The new borrow rate of $1.40 (I’ve rounded up the figure from the actual outturn of $1.39½) means all Kindle authors with books priced in the 35% royalty range will gain from borrows compared with sales, but authors in the 70% royalty range will lose out even at the minimum of $2.99 where a sale would net $2.09.
However, even authors on 35% royalties could still lose out as they have to go exclusive with Kindle for KU, meaning they miss out on earnings through other retailers such as Kobo, Nook and iBooks.
To get a very rough estimate of how many books were borrowed through Kindle Unlimited during November, I have divided the fund of $6.5 million by the payout per borrow of $1.40, which results in 4,642,857 — a 12% increase from 4,135,338 using the same method of calculation in October.
Estimating total membership of Kindle Unlimited is very much a back-of-the envelope calculation depending on how many books are borrowed per member on average. Payments to authors are triggered when a reader has completed just 10% of a book.
The maximum a member can borrow at any one time is 10 books, so if each member borrowed 10 new (new to them, rather than necessarily newly published) books per month (4,642,857/10), then Kindle Unlimited would now have around 464,285 members.
But if they borrowed or ‘churned’ only five books a month on average (4,642,857/5), there would be around 928,571 members. If Kindle Unlimited really did have 928,571 members, then Amazon would be making good money at over $9.2 million a month — well in excess of the total $6.5 million KDP Select fund for November (averaging out a $9.99 charge per month). Even if it had only half that total at 464,285, it would still be bringing in $4.6 million.
There is, of course, nothing, in theory, to stop a Kindle Unlimited member reading 20, 30 or even hundreds of books a month, so long as they only have 10 books in total at any one time. Amazon’s nightmare must be someone who reads 10% of, for example, 30 books, which would trigger payouts of $42 at $1.40 a borrow, well over the $9.99 monthly subscription fee.
Reading 10% of 30 books is only the equivalent of reading the whole of just three books, so it’s possible that ‘super samplers’ could get through 10% of, say, 300 books in a month (the equivalent of reading 30 entire books, or a book a day), which would produce payments to authors of $420 at the $1.40 borrow rate.
At this sort of level, however, Amazon would probably invoke the clause in the KU terms and conditions, which says, ‘We may take reasonable actions necessary to prevent fraud, including placing restrictions on the number of titles that can be accessed from the program at any one time.’
Some authors have called for the 10% limit to be lifted, with payments made purely on the basis of a book being borrowed, but this could lead to an upsurge in churning.
Amazon does need to look again at the Kindle Unlimited details to iron out some of the problems. Many commentators have claimed that the whole ebook subscription business is unsustainable, but Amazon is in a unique position of never worrying too much over whether it’s making a straightforward profit, but instead more concerned about whether it’s building business.
It will be interesting to see just where the payout ends up for the massive-selling month of December. Amazon has yet again set the KDP Select fund at ‘just’ $3 million, so it will certainly need another record addition to that to keep the pay-per-borrow at a decent level, but the obvious effort to restore authors’ faith in Kindle Unlimited is very encouraging.
None of the Big Five traditional publishers takes part in Kindle Unlimited, while the trad firms that do make their books available are paid for a borrow on the same basis as a sale.
Kindle Unlimited started as a US-only operation in mid-July this year, but it has widened its range steadily, with the UK, Spain, Italy, France and Brazil being added.