Sunday, December 28, 2014

Kindle Unlimited: Good or Bad for Indie Authors?

There has been some grumbling lately among my Indie compatriots about the decrease in Kindle book sales caused by the advent of Kindle Unlimited.  Having made the decision long ago to go Kindle Select with 13 of my 14 titles, I've watched the effect on my sales and income with considerable interest.  The conclusions I've drawn are at odds with most of what I've read recently, so I thought I'd share my observations.

First, to clear the air on my biases:

I'm an independent, self-published author.  I derive a substantial portion of my income from sales of my books.  Most of that comes from ebooks.  All of my ebook revenue comes from Amazon, because I made a business decision to focus on them as my channel to market.

I haven't always been an author; I published my first book late in 2010.  I have a lot of respect for Amazon as a business.  From my own experience in the corporate environment, I think that no outsider, and that includes the 'investment professionals' and 'industry experts,' is in a position to second-guess Amazon's business decisions.

I think it's safe to discount all of the speculation in the press about what Amazon's doing and why and focus on things closer to home.  Amazon is neither good or evil from my perspective.  They do what is best for them, balancing the interests of suppliers (writers among them), customers, and investors to further their own interests.  We can agree or disagree with what they do, but if we want to sell books, we need to deal with them.

What about Kindle Unlimited?

When Amazon introduced Kindle Unlimited in the U.S. store in July, I saw an immediate increase in the number of borrowed books over the level I was accustomed to from Amazon Prime borrows.  The percentage of my total paid units borrowed went from an average of 5.5 percent to about 14 percent in July.  In August, it jumped to about 24 percent.  The program started in mid July, so that makes sense.  My percentage borrowed has averaged about 25 percent for the last half of 2014.

My first reaction was that borrows were cannibalizing sales, so now that I have several months of data, I've done a little analysis.  I've used some standard analytical tools to normalize the data for the first half and the second half of 2014.  I normalized the numbers to remove the effect that adding new books to the mix had on my total numbers.  Don't get stuck on the math, but if you changed your offerings during the year, it's necessary to wash out the effects of adding or deleting books before you start making comparisons.

In my case, the increase in volume as a result of more borrows has more than offset the effect of price erosion from Kindle Unlimited.  My average revenue per unit dropped by about 9 percent, but my number of paid units in the second half was 35 percent higher than the first half.  The surprise is that my revenue for the second half was 46 percent higher than for the first half.  Borrows increase rankings and make your book more visible, as well as making it less risky to people who don't know your work.

I'm relatively new at this and still building recognition among readers.  Someone with a much bigger base of fans might see different results, but I'm much happier with Kindle Unlimited than I was with the notion of giveaways to build a base of readers.

 Let's hear your thoughts on Kindle Unlimited, whether from the perspective of a writer or a reader.


Anonymous said...

Charles, thanks for the analysis. I always value your observations. Good to hear your books are doing well.

Deanna Lynn Sletten said...

I'm happy to finally see an author who is satisfied with Kindle Unlimited. I also have no problem with it. When I started self-publishing in late 2011, I was exclusive with Amazon in order to take advantage of the five free days offered so I could build my audience. After about a year, I started adding my books to B&N and Kobo, but saw very few sales. Finally, when I had a few .99c deals, I saw my sales grow at those stores, but the majority of my income still came from Amazon. A month or two after each deal, the sales at the other two stores dropped again, and yet I continued to sell at Amazon. Today, almost all of my books are again exclusive with Amazon to take advantage of KU. When I rejoined Kindle Select, not only did the borrows begin to stack up, but my sales increased as well. To me, it's a no brainer. I might think differently if I had a huge following on B&N and Kobo, but I don't. Even with the small amount of money earned on each borrow on Amazon, I'm still making more money than if I were on the other sites. As self-published authors, we have to continually watch the markets and change our strategies as the markets change. Maybe in a few months, I might move onto the other sites again - I don't know. But it's best to keep an open mind and try new things than to sit there grumbling because you're not selling books.

Unknown said...

Wow…thank you for this analysis, it helps me put it all into perspective. There are so many options out there it is a little overwhelming.

Unknown said...

It's nice to see a well thought out and easy to understand analysis of this new venture.

Author Bob Nailor said...

I'm still unsure about Kindle Unlimited but, as you state, it is better than giving it away for free. My sales at Amazon were dismal but since KU, I've seen a slight increase in my royalties. I keep saying I'm getting out of Amazon, but still, I linger since my meager earnings come mostly from sales there versus other places. Even my royalties from my publishers seem to be more Amazon driven. I read your post and feel you have a better grasp of KU - I bow to your judgment and will hang in there. Thanks for a great post.

Scott Bury said...

Thanks for the honest analysis. This makes it easier for an author like me, more skilled in writing than in marketing, to make decisions.

Nichole Hall said...

While I've been writing four about six years now, I have recently considered indie publishing and am amazed at how much is out there. Thank you for making things a bit more clear with your analysis.

Anonymous said...

I am just now starting to get payments from Amazon for my published works so I don't have anything to add to the conversation. I did notice that for every 7-8 books sold I have had 3-4 borrows.

Elyse Salpeter said...

I don't know how I feel about it, but think I'm going to still try other platforms in 2015. I feel everything I do is a learning curve - good luck Charles!

James Prescott said...

Wasn't going to use this, was going to go via Create Space and Kindle Direct - interested to hear others thoughts.

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