And Then Kindle Unlimited Exploded...

[With all due apologies to the writers of GalaxyQuest for paraphrasing their wonderful words!]

On Monday, Amazon announced that they were changing how indie authors will be compensated if they belong to the Kindle Select and their books are borrowed through the Kindle Unlimited (KU) program and Kindle Owners' Lending Library (KOLL) program.

Before I get into the specifics of the change in compensation, I'm going to list a glossary of terms because I see way too many people confusing them:

1) Kindle Direct Publishing (KDP) - Once an indie author has uploaded their file and the ebook is on sale on Amazon, they are part of this program.

2) Kindle Select (KS) - An indie author may chose to enter the KS program while they are uploading their file, or any time thereafter. To be in the KS program, the indie author gives Amazon exclusive rights to that particular book. In other words, that particular book can only be sold by Amazon and no other retailer. In return for exclusivity for that particular book, Amazon gives the indie author certain perks. Amazon asks for a minimum 90-day commitment, renewable at the end of the term. The indie author does have the right to leave KS at any time. However, if they leave the KS program prior to the end of each 90-day period, they lose any money earned under the KS perks.

3) Kindle Owners' Lending Library (KOLL) - Amazon Prime members who own a Kindle device are allowed to borrow books that are part of the KOLL free of charge. (Actually, the cost is included in their Prime membership fee of $99 per year.) They are limited to one borrow per calendar month of their Prime membership. Indie authors who opt in to KS are automatically enrolled in KOLL. They cannot pull their books out of KOLL without taking them out of KS.

4) Kindle Unlimited (KU) - For a fee of $9.99 per month, a reader can access any book in the KU library without needing a Kindle device. There is no limit to the number of borrows. Like KOLL, indie authors who opt in to KS are automatically enrolled in KU. They cannot pull their books out of KU without taking them out of KS.

Got all that?

Previously, indie authors were given a pro-rated share of a pool of money from Amazon based on the number of borrows each book received, regardless if the borrow was from a KOLL user or a KU user. For example:

There is $3,000,000 in the pool for June. There was 3,000,000 total borrows during the month of June. The per borrow rate is then $1. Your book(s) were borrowed 300 times so you received $300. The total number of books available to loan was irrelevant (though some people would make the argument that discoverability was an issue.)

There were a couple of problems with this system for writers. The per borrow rate had already been slowly shrinking. It plunged when KU was introduced. Short stories were awarded the same amount as ginormous epic fantasy novels. This made authors do one of three things: pull their full-length books out of KS, add short stories only to KS, or chop up a longer work and feed it into KS serial style. Sometimes, the indie authors did all three.

Then Amazon had readers who couldn't find anything but a chopped-up jumble of works. In other words, the garbage disposal instead of the tsunami of swill. *smile*

So starting July 1, Amazon is introducing a new reimbursement system. Indie authors' pro rata payment will be based on pages read, not the number of borrows.

And the indie world erupted!

Here's my understanding of the new compensation system:

First of all, instead of reading 10% of a book to trigger the borrow compensation threshold, the reader must read 15% to trigger the page compensation threshold.

Let's say the pool remains at $3,000,000 for July. Readers read 300,000,000 pages. The per page rate is $0.01. Assuming I entered a 300-page full-length e-book into KS and if the reader reads all 300 pages, I'd get $3.00. If I enter a 20-page short story and the reader reads all 20 pages, I 'd get $0.20.

But what happens if the reader only gets through the first 30-pages of my hypothetical novel? I get nothing!

If the reader makes it to page 5 of my short story, it triggers the page threshold and I'll get $0.05.

As a result of these changes, folks who've been submitting only short works to KS may see a substantial drop in income. Under the old system, my hypothetical short story would have earned $1.00. Under the new system, it will earn $0.20 at most.

On the other hand, an indie author can just as easily put 15 20-page short stories into KS and earn as much as a 300-page novel.

Please remember, these are not hard numbers, people! These are examples! It will take a few months for indie authors to see how the numbers will truly  work out.

But the new system would encourage indie authors to re-enter the KS ecosystem with their novels. It will also encourage us to put out very best work. Let's face it--we want readers to finish our stories no matter how long they are.

* * *
Now, let me be perfectly honest--I don't have a dog in this fight. I have been making more moola through Barnes & Noble, Apple, etc. than I have from Amazon. I've had no reason to enter KS that won't severely curtail my income through other retailers. So far, I entered one short story, "Love, War and a Bulldog", back in 2013 as an experiment. I wasn't impressed, so I haven't gone back.

However, I plan to publish two new series soon, and I'm considering entering one of them in KS to see how I do as far as borrows go.

The only thing I can really say is don't be afraid to experiment to find YOUR sweet spot!