Kindle Unlimited is switching to a pay-per-page system from the present payout of a flat payment per book once 10% of the book has been read.
Amazon gives an extraordinary example of an author earning $20 per borrow under the new deal.
The new payment process starts from July 1, 2015, and will still use the monthly total KDP Select fund for the payout, which will then be divided up according to the share of total pages read by Kindle Unlimited members during the month.
How the new Kindle Unlimited author royalty system will work
Amazon gives three highly unlikely examples of how the fund will be paid out, assuming, for the purpose of illustration, that the KDP fund is $10 million and that 100 million total pages were read in the month:
- The author of a 100-page book which was borrowed and read completely 100 times would earn $1,000 ($10 million multiplied by 10,000 pages for this author divided by 100,000,000 total pages).
That would equate to $10 per borrow or $0.10 per page read in total (which is the going rate per page for all the examples).
- The author of a 200-page book which was borrowed and read completely 100 times would earn $2,000 ($10 million multiplied by 20,000 pages for this author divided by 100,000,000 total pages).
That would equate to $20 per borrow — or over 14 times the May 2015 payout to authors of $1.37 per borrow.
- The author of a 200-page book which was borrowed 100 times but only read halfway through on average would earn $1,000 ($10 million multiplied by 10,000 pages for this author divided by 100,000,000 total pages).
That would equate to $10 per borrow.
Authors’ reward will depend on reader engagement
If an author really will be able to earn $1,000 a month from only 100 fully-read downloads of a 100-page book — that’s just over three downloads a day — then Kindle Unlimited will become truly worthwhile for writers, although the economics of the example payments look shaky, to say the least. I wonder in the real world whether Amazon will be paying out these sorts of sums or if these examples are recklessly using rounded figures to illustrate the method that will be used to gauge payment.
The new payment method does at least put a dent in the mini industry of publishing very short books of little worth aimed solely at snagging KU cash. For example, 20-page books, where the 10% level is triggered after reading just two pages.
The initial reaction has been that the new deal will work better for authors with longer books but there’s nothing working against shorter books if they have a high level of engagement.
Change made in response to feedback from authors
Amazon claims the change is being made after consistent feedback from authors that paying the same for all books regardless of length may not provide a strong enough alignment between the interests of authors and readers.
It’s not exactly a simple formula as there are several unknowns involved, particularly the fact that Amazon can make the KDP Select fund as high or as low as it chooses. Amazon generally sets the KDP Select fund low at $3 million and then adds a bonus but doesn’t reveal any formula for how it calculates the bonus.
KDP Select fund set at ‘in excess of $11 million’ for July and August
However, in a new departure, Amazon has pledged that the KDP Select funds for July and August will both be ‘in excess of $11 million’.
The KDP fund for June will also be $11 million or over as Amazon has said that the total paid out in the first six months of the year will top $60 million (see below).
Presumably, Amazon has done its arithmetic and realised it can probably pay out more to popular authors, who it wants to attract, and discourage those trying to game Kindle Unlimited.
One thing’s for sure — the new system will complicate payouts, with books being read over perhaps a period of several months.
For instance, a reader may start off a 400-page book and read 100 pages before leaving it for a while and then coming back to read another 100 or more pages and so on, with payments being triggered throughout, let’s hope that Amazon’s systems are up to the task.
May payout to authors for Kindle Unlimited
In the circumstances, it seems something of a sideshow to report that the penultimate flat-rate payout to authors on Kindle Unlimited in May was $1.37, following April’s $1.36, but there is a very interesting statistic that can be figured out when looking at total borrows.
As ever, Amazon topped up the basic KDP Select fund, which had been set initially at $3 million, with a bonus of $7.8 million, taking the total fund for May 2015 to yet another record high of $10.8 million — the first time that the fund has gone through the $10 million mark.
Total borrows for May rose by 9% to 7,883,211 after flattening out in April at 7,205,882, which had been an increase of just 0.88% from March’s 7,142,857. These figures are arrived at with my usual back-of-the-envelope method of dividing the total fund by the payout rate (10,800,000/1.37 = May total borrows).
$60 million for KDP select authors in first half of 2015
Among the fascinating statistics reported by Amazon for May, it says:
- KDP Select authors are on track to earn over $60 million in the first half of 2015 from books read in Kindle Unlimited and the Kindle Owners’ Lending Library.
So far in 2015, Amazon has shelled out a total of $46.4 million, adding up the total KDP Select funds for January to May ($8.5m + $8m + $9.3m + $9.8m + $10.8m).
It’s probably also adding in the KDP All-Stars payouts to best-selling authors which come to about $500,000 a month, bringing the total paid out so far in 2015 to nearly $49 million.
We can therefore expect a KDP Select fund of $11.5 million or thereabouts for June to meet Amazon’s forecast of ‘over $60 million’.
KDP Select All-Star bonuses will also be awarded to authors and titles from July based on total KU pages read.
Amazon also said:
- Total royalties across subscription and a la carte sales earned by KDP Select authors in the US are on track to more than double in the first half of 2015 compared to the same period last year.
- Authors have continued to renew their titles in KDP Select at rates in excess of 95% each month since Kindle Unlimited launched.
How do you count pages in an ebook?
One of the big questions of the new KU payment system is just how do you assess what counts as a ‘page’ in an ebook?
Amazon does feature a page count on many ebooks in its Kindle store but, to confuse the issue, this may not be the same method as used for the KU pay-per-page system.
The company has come up with what it calls:
Kindle Edition Normalized Page Count (KENPC v1.0)
It says: ‘To determine a book’s page count in a way that works across genres and devices, we’ve developed the Kindle Edition Normalized Page Count (KENPC).
‘We calculated KENPC based on standard settings (e.g. font, line height, line spacing, etc.), and we’ll use KENPC to measure the number of pages customers read in your book, starting with the Start Reading Location (SRL) to the end of your book.
‘Amazon typically sets SRL at chapter 1, so readers can start reading the core content of your book as soon as they open it.
‘This standardized approach allows us to identify pages in a way that works across genres and devices.
‘When we make this change on July 1, 2015, you’ll be able to see your book’s KENPC listed on the Promote and Advertise page in your Bookshelf, and we’ll report on total pages read on your Sales Dashboard report.
‘Because it’s based on default settings, KENPC may vary from page counts listed on your Amazon detail page, which are derived from other sources.’
I haven’t yet found any concrete details of just what this entails. I’m certainly fascinated that it’s ‘Version 1.0’, and I’m hoping to get more information on just what will make up a page and the wider ramifications of the pay-per-page system. I’ll be setting out my findings in a new article on this site.