Kindle Select: Author Beware

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The Amazon Kindle platform is revolutionary. Anyone can write an ebook, publish it, and place it on the world’s larger bookstore, all at no cost. Amazon founder Jeff Bezos is a genius for developing a system where people can publish ebooks, buy them, and have them delivered immediately over the WhisperNet system.

However, I am beginning to have concerns about the Kindle Direct Publishing (KDP) Select program. If you are a Christian author who intends to sell your ebook on Amazon, you will want to think about the implications of joining their Select program. Select has changed and it no longer favors authors.

A Good Idea Gone Wrong

Kindle Select has been with us since 2011. It was a simple plan in the beginning. It was both an ebook marketing and brand loyalty program. If you, as an author, gave Amazon sales exclusivity for 90 days at a time, they would enroll into the Kindle Owners Lending Library (KOLL), and pay you out of a fund they established. Authors received a share of the fund based on the number of their ebooks borrowed compared to the total number of ebooks borrowed.

Another feature allowed authors to give away their ebook for five days in each 90 day period. The idea was that thousands of people would download your ebook, and you could expect a huge number of reviews, and the buzz would skyrocket paid sales.

This seemed like a fair exchange. It was a win for authors and for Amazon too. However, since that early strong start, KDP Select has started to crumble. There are several reasons for this.

Most free downloaders became freeloaders. They did not write reviews or create buzz. It seems there are a huge number of ebook hoarders who download them when they are free, but never read them.

First, the marketing potential began to wane as free ebooks became pervasive.

• Almost everyone started giving away ebooks. The market was flooded in every genre.

• A proliferation of new web sites started promoting free ebooks. That eliminated the uniqueness of the free offer, and ebooks became a commodity.

• Most free downloaders became freeloaders. They did not write reviews or create buzz. It seems there are a huge number of ebook hoarders who download them when they are free, but never read them.

Initially, authors liked the idea of thousands of people reading their ebook, even if they received no payment. That was a vanity play, and made little economic sense. Brick and mortar bookstores don’t need to give away books to get customers, so why should that be a feature of an ebook store? And why would an author sign up for KDP Select when they could offer their ebook free as long as they wanted without joining?

Amazon realized KDP Select had little logic, so they added an inducement that appealed to many authors. Ebooks given away during the KDP Select-sanctioned 5-day period counted as actual sales. Therefore, an author could get on the Amazon “Bestseller” list, and the prestige of that status, without selling a single ebook. It took a year or so before Amazon started making a distinction between “free” and “paid” bestseller lists.

Second, Amazon began complicating payments made to those enrolled in Select. They consider them improvements, but authors should challenge that claim. The changes included:

• Limiting the 70 percent royalty to 30 percent in some countries unless you joined KDP Select. They are thus eliminating the worldwide market for authors, and their income, unless they sign up for Select. There is a way to work around this and still get 70 percent without signing up for Select, but Amazon will not tell you about it. They use the lure of international sales at full royalty as an incentive to enroll in Select.

• KDP recognized that offering ebooks free as a promotional gimmick was dying. They started offering two other promotional features. One is a “Pre-sales” option. Authors can announce their ebook and sell copies before it is released. The promotional option for KDP Select users is “Kindle Countdown Deals.” An author sets a low price and it increases over time to its normal selling price. This creates an artificial incentive for customers to “buy now” and can work if a huge number of people know your ebook is in this program.

• Kindle Unlimited (KU) is the most disturbing aspect of the KDP Select program. Any Amazon customer can pay $9.95 per month to sign up for KU and they get your ebook at no cost if you are in Select. You drive traffic to your Amazon sales page, and when people get there, the KU members see they can pay the regular price or get it free. You are, in effect, competing against yourself, and that makes no sense at all. A KU member must read at least 10 percent of your ebook before you are paid, and the KDP Select tax is horrific.

KDP Select is designed to drive down the amount of money you get from Amazon. They don’t want you to get 70 percent of your sales price, or even 30 percent. In almost all cases, you pay a heavy financial cost to belong to Select.

How the KDP Select Tax Eats Profits

KDP Select is designed to drive down the amount of money you get from Amazon. They don’t want you to get 70 percent of your sales price, or even 30 percent. In almost all cases, you pay a heavy financial cost to belong to Select.

The problem is with the “pool.” It started with KOLL and now includes KU. It is how Amazon controls the royalty you will get for your ebook. It works this way: Amazon decides how much money they are going to put in the financial pool each month. Say it is $3 million. Your ebook may sell for $3.99 and you would expect a royalty of $2.79 at 70 percent. However, if your ebook is in the KDP Select program, and 3 million ebooks are distributed through it, you can only expect to get $1 instead of $2.79.

By the way, I earned $1.54 per book instead of $2.79 when I was enrolled in the program. That means they didn’t sell 3 million ebooks that month. It also means that people who priced their ebooks at 99 cents profited from the pool because that month everyone got $1.54 regardless of the actual sales price of their ebook. All ebook authors who deserved a royalty of more than $1.54 lost income through the Select tax. Keep in mind that the $1.54 is an example, and the amount varies, but normally by just a few cents, from month-to-month.

Amazon is manipulating your royalty in three ways:

• By limiting the pool to any amount they choose. They can raise or lower it at will. They only raise it when KOLL or KU distribution peaks. An increased pool does not mean that authors will get a big payday. It is just smoke and mirrors that Amazon uses to keep royalty payments from dropping to a few cents per ebook. They never raise it high enough so that individuals get their full retail royalty.

• By dividing the total ebooks sold by the total financial pool, Amazon rewards cheap ebooks and punishes those selling at a fair price. If your ebook sells for $9.99 you could expect a royalty of $6.99 at 70 percent, but you’ll only get about $1.54 if it is sold through KOLL/KU. However, the authors who sell cheap are rewarded—they also get $1.54 for their 99 cent books.

• Amazon puts a notice on sales pages that it is free if that ebook is enrolled in Select and the buyer belongs to KU. That puts you at an unfair advantage. Your ebook may be better than a similar one, but you won’t be able to sell it at regular price if your competition has signed up for KDP Select and is willing to take $1.54 for their work. Even when people want your book and are faced with a free copy with their KU membership, or paying retail, they will go for free. They force a buyer choice that will result in you, the author, getting less money. That is reason enough to not enroll an ebook in Select. It is probably better to drive traffic to your Amazon sales page and get the full royalty for a sale.

You cannot know in advance how much you’ll be paid from the pool. KU/KOLL ebook sales show on your KDP sales graph in blue, but the dollar amount is not included in the totals below the graph. The amount of money in the pool changes from month-to-month, as does the number of eligible ebooks, so you don’t know what your allocation will be until they release payment.

Is there an up-side to the KDP Select tax? I don’t see any at this point, so I removed all my ebooks from the program.

One can only wonder why there has been no uprising among authors for this kind of predatory pricing. Or why the Department of Justice has not investigated Amazon? Perhaps the answer is because people voluntarily sign up for Select without thinking about how it erodes royalty payments.

I have been a writer, editor and publisher for 30 years, and the fundamentals of bookselling remain unchanged. You must write a ebook people want to read and promote it until you drop. Gimmicks like free ebooks or “countdowns” won’t help you, because your goal should be to maximize your financial return, not give your money away to Amazon. KDP is a delivery system, and an excellent one, but Amazon will take hard-earned money out of your pocket if you use KDP Select.


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2 Responses

  1. liviu says:

    Thank you for this VERY USEFUL article.

  2. Good post. Thanks for breaking it down. I’ve wondering whether to stay or opt out of KDP and you have helped me with these facts. Thanks again!

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