Thursday, January 8, 2015

Kindle Unlimited: Another Take-Over-The-World Scheme By Amazon?

I love I have been a loyal customer for about fifteen years. I buy everything on Amazon, from books to chocolate, and everything in between. When my twins were born, I signed up for a 'subscription' for Pampers (diapers) and just kept them coming. It was awesome. We saved money and never ever ran out. No last minute trips to the store at inopportune times for us. I even buy all of my Christmas presents on Amazon. Easy one-click shopping and usually hassle-free returns for those picky recipients that have to carefully choose everything themselves, mainly my husband, are a huge draw for me.

I find that it is the easiest place to shop. Everything is searchable, organized by categories, and every product is reviewed in a five star system with commentary. Nothing else facilitates educated decision making like Amazon does. My favorite thing to buy on Amazon is, you've guessed it... books.

Yet in spite of all of my love for this formidable web-store, in my dealings as a Literary Agent and Consultant to authors I have encountered many issues with Amazon's pesky, complicated and cryptic algorithms used to recommend, rank, and promote products such as books. Although I haven't entirely figured them out mathematically, I've certainly determined some patterns and learned some things that work and don't work. So I'm sort of OK with the algorithms for now. I can also overlook some of the other issues they are having with some top publishing houses (Hachette), returnability, and low prices. I can even deal with the massive number of books competing for sales (currently about 3 Million books- up from 600,000 just 4 years ago). The thing that I'm having a difficult time rationalizing is Amazon's introduction of Kindle Unlimited.

For anyone that isn't aware of the all-the-books-you-can-devour program offered by Amazon, here is the short scoop. Basically, for a $9.99 monthly fee you can download (borrow) all the Kindle books your heart desires. As a book lover and avid reader this is heaven for me. As a publishing professional however, I see the effect this program is having on the industry, and how it affects independent authors whose livelihood depend on their online book sales. 

The above mentioned rigorous competition coupled with all time low e-book pricing (as low as $.99 e-books or even offered for free) have led to revenues leveling off after nearly doubling just just two years ago in 2012. Even though e-books have been selling more than print books since February 2011, overall profits have reached a plateau. And offering unlimited e-books for less than ten dollars per month is making matters much worse.

Some successful self-published authors have recently reported that after short term participation in the program their income decreased by as much as 75%. When an author publishes their work on Amazon they earn a 70% royalty.  A rate that is highest in the industry, especially when compared to traditional publishers. Even some of the best e-book profit sharing models aren't as high. This means that the average book selling on Amazon at $3.99 will earn $2.79 per book.

On the other hand, books in the Kindle Unlimited program don't receive consistent payments, with the current average payment of about $1.39 per download regardless of the book's length. Most authors can't afford, and shouldn't accept such a loss for the benefit of a company that claims to be saving all of them from other publishing models.

Luckily the program isn't mandatory, so self-published authors are not required to sign up to participate. But at what cost? This brings us back to the mysterious algorithms and unilateral control. Many believe that their books will lose not only a lot of attention, but also may be excluded from certain promotions and recommendations Amazon offers to their shoppers.

The solution is simple. Amazon should find a way to make it clear to authors that they can safely opt-out of the program without fearing exclusion or intentional retaliation. Algorithms should be clearly and mathematically explained. Success should be strictly based on merit and quality of work, not some abstract methodology that holds us hostage and at their mercy. No one should be forced to accept decreased profits out of fear.

An alternative in the case of Amazon's lack of cooperation would be proper organization and alignment of author's interests. I'm by no means suggesting boycotting or protests, but perhaps something along the same lines as a legalized union.

Monopolies are the enemy of capitalism. Likewise, a go to place for publishing like Amazon should remain loyal to the people that made it successful, and strive to level the playing field in the so called partnership. 

This is of course just my opinion based on my experiences, what I know of the industry, and the belief that fair business practices and ethical standards are imperative for success. No company should be allowed to dominate any industry and call all the shots, and no one should bite the hand that feeds them. 

So even though I am a fan of Amazon, my reservations are quickly gaining strength. This fantastic company has done a lot for the publishing industry and made a lot of people money. But greed is the ugly cousin of self righteousness. If Amazon is not carefully listening to the proverbial pulse of the industry, and continues on their unchecked journey to world domination, they should prepare for a stand off.

Happy Journey!