Insightful Thoughts Re: Kindle Unlimited

Writers, This post is well worth the read.  Enjoy!

Kindle Unlimited: Will it Affect You?

kindle-unlimitedThe New York Times claims self-published authors are unhappy about Amazon’s Kindle Unlimited pro­gram, which uses an “all you can eat” model sim­i­lar to the one used by Netflix and Spotify. For $9.99 a month, Kindle Unlimited offers access to 700,000 self-published and tra­di­tion­ally pub­lished books. Publishers who par­tic­i­pate in the pro­gram earn less money in exchange for access to Amazon’s sub­scriber community.

But the prob­lem is not Amazon. More often than not, the prob­lem is unre­al­is­tic expec­ta­tions. Kindle Unlimited is a non-issue for most self-publishers.

Kindle Unlimited: Publishers are Opting In.

Nobody forces any­one to buy from Amazon (or sell through them). The world could boy­cott Amazon and shut it down, but they won’t because Amazon makes it cheap and con­ve­nient for con­sumers to find and access every­thing from eBooks to LED trailer lights. If you feel like your pub­lish­ing busi­ness is a second-class cit­i­zen on Amazon, you’re right. The cus­tomer is the one rid­ing up front in a big leather seat. Amazon has built an empire by offer­ing value to cus­tomers—and they know if you opt out, a small army of peo­ple with stuff to sell will be happy to fill the tiny void left by your depar­ture. This doesn’t make Amazon mean or unfair; it makes them smart busi­ness­men. As cap­i­tal­ists, they’re fol­low­ing the money—and they’re exploit­ing the power vested in them by the mar­ket­place to change the pub­lish­ing ecosys­tem to favor their busi­ness. Love it? Hate it? Those aren’t rel­e­vant questions.

Selling Books? Really?

For most small pub­lish­ers, books are a hor­ren­dous retail prod­uct. How much money do you make from a book sale? Probably some­where between $2 and $10. Self-publishers who fail to sell books in vol­ume rarely earn enough rev­enue to recoup their pub­lish­ing costs. And for­get about get­ting paid for those writ­ing and research hours. Sure, there’s always a bell going off some­where in the casino that keeps the rest of the room pop­ping quar­ters and pulling handles—some pub­lish­ers get lucky or clever—but the major­ity of self-publishers sell fewer than 100 books.

Given that big pub­lish­ers keep the prices of eBooks arti­fi­cially high (they’d sell mil­lions of $2 eBooks, but I sus­pect their $20 printed com­ple­ments wouldn’t look very appeal­ing to con­sumers), small pub­lish­ers have exploited the low pro­duc­tion and dis­tri­b­u­tion costs to flood the mar­ket with $1–$3 eBooks. But with the seller skim­ming 30%–70% off of low prices, the retail profit mar­gin remains thin, even with pro­duc­tion costs near zero. Most self-publishers cross their fin­gers, hope read­ers will dis­cover them, and send their mes­sages in bot­tles out into the seas of publishing.

If you opt in to Kindle Unlimited and toss your books in that pool, how much will this really affect your bot­tom line? If you’re one of the minor­ity who sells books in vol­ume, you will see a dif­fer­ence. But if your aver­age book sale returns less than a cup of cof­fee (as is usu­ally the case) and you sell 100 books per year, profit oppor­tu­ni­ties lie out­side the book­selling environment.

Of the authors I work with, the ones who profit from book sales are the ones who sell books at work­shops and keynote speeches. One sold 1000 books at a sin­gle event, sign­ing books and accept­ing cash at the back of the room, but most of us don’t have access to stadium-sized audi­ences. We pub­lish because we want to share our sto­ries and ideas, even if that costs more money than it makes. The rest of my clients don’t worry about book prof­its. They trade on the cred­i­bil­ity that comes with lit­er­ally being the one who “wrote the book on the sub­ject.” For them, a book is a rela­tion­ship builder.

Relationship Marketing

In gen­eral terms, a sales trans­ac­tion is the result of a rela­tion­ship between a buyer and a seller. That rela­tion­ship may be as sim­ple and indi­rect as a con­sumer read­ing a label on a pack­age, decid­ing to trust the peo­ple behind the prod­uct, and buy­ing it. Or it might involve months of nego­ti­a­tion between a sales/support team and an acqui­si­tions depart­ment. In either case, the exchange of money is pred­i­cated upon a con­sumer mak­ing the deci­sion to trust the seller—to enter into a relationship.

Smart sell­ers con­sider the costs in time and money required to ini­ti­ate a rela­tion­ship with a buyer. How much time, effort, and money will you invest to earn $5–$10? If (hypo­thet­i­cally) it takes 15 min­utes to talk to a prospec­tive reader one-on-one, and that results in a sale half the time, your hourly return is $7.50. Spend an hour read­ing to an audi­ence of 25 peo­ple and assume 10 of them will buy a book when you’re done. Your return is $75. But how many of these audi­ences can you assem­ble? It’s clearly more effi­cient to build rela­tion­ships with many prospec­tive read­ers at once, but until your audi­ence exceeds 100 peo­ple, the returns aren’t very grat­i­fy­ing. And how many hours and dol­lars will it take you to prep for your hour behind the lectern? What if you spend $350 on books to sell at your read­ing event and then it rains that day and nobody shows up? If you expect 100 par­tic­i­pants, you’ll want to bring at least 50 books. Larger busi­nesses require more up-front cap­i­tal so you can invest in inven­tory. Risk increases with audi­ence size.

As an author, if I ini­ti­ate a rela­tion­ship with a reader that results in a book sale, I earn $5. As a book designer, if I ini­ti­ate a rela­tion­ship with a reader that results in $3000 worth of design, type­set­ting, and coach­ing work, my effi­ciency increases 6oo times. Personally, I would find it grat­i­fy­ing if you read my books, but pro­fes­sion­ally, I want you to see my books and want yours to look and func­tion like mine. I want you to see my eBooks and pur­chase the soft­ware I devel­oped that empow­ers you to make your own. As an author, I’m an artist who wants to share my work, but as a pub­lisher, I want to derive income from books. Selling them—at least for me—seems the least effec­tive way to accom­plish that goal.

Writing, Publishing, and Kindle Unlimited

As a writer, I think of myself as a lit­er­ary artist. I love shar­ing my sto­ries, and I love help­ing oth­ers share theirs. The art of writ­ing well, of trans­mut­ing thoughts and ideas into ink squig­gles on paper fas­ci­nates me. As a book designer, I under­stand how font choice and page lay­out and other aes­thetic fac­tors empower read­ers to decode those ink squig­gles into some­thing greater than the data on the page. As with most artists, I want to share my work. Paying the bills with it wouldn’t be such a ter­ri­ble thing, but art is not dri­ven by prac­ti­cal con­sid­er­a­tions. Art is about per­sonal expres­sion. Art seeks an audience.

As a pub­lisher, I think about “shal­low” things like rela­tion­ship costs, mar­ket­ing effi­ciency, profit per unit, and how I can make money. Bookselling fell off my radar a long time ago. My books (and this blog) attempt to demon­strate relationship-worthiness—knowledge, expe­ri­ence, capa­bil­ity, taste, and perspective—offerings that pro­vide value to clients and profit to my pub­lish­ing business.

Whether Kindle Unlimited is a god­send or a rip-off can only be assessed in the con­text of where your pub­lish­ing inter­ests lie on the spec­trum between art and busi­ness. We all want to share our work with mil­lions of read­ers, and hope to earn a few coins in the process. But with­out a solid strat­egy and a real­is­tic bud­get with which to imple­ment it, many indie writ­ers will find it valu­able to use Kindle Unlimited to put their work in front of a larger audience—even it if it costs them a big slice of a tiny pie.

If you’re wear­ing your pub­lish­ing busi­ness hat, you’re most likely sell­ing books in vol­ume by appeal­ing to niche audi­ences, speak­ing to groups, or using your writ­ing cre­den­tials to attract big­ger oppor­tu­ni­ties. If you’re sell­ing books well on your own at prices you’ve set your­self, you’re prob­a­bly best off hold­ing your course. If your model involves cast­ing as wide a net as pos­si­ble using your book as oppor­tu­nity bait, Kindle Unlimited might be an excel­lent value.

Kindle Unlimited is an oppor­tu­nity for some writ­ers and a deal killer for oth­ers. Publishing is a tough busi­ness either way. You’ll find excel­lent dis­cus­sions of the program’s prac­ti­cal pros and cons, but the real dan­ger lies in allow­ing such dis­cus­sions to obscure the big­ger picture.

The great­est pit­fall for indie pub­lish­ers is not Amazon or their lat­est eBook dis­tri­b­u­tion strat­egy. The stum­bling block is wish­ful think­ing that pro­motes con­flat­ing the inter­ests of art (writ­ing) with those of busi­ness (pub­lish­ing). Is your book an art book (fic­tion, for exam­ple) designed to enter­tain and inspire, or a prac­ti­cal prod­uct (like a book on pro­gram­ming or invest­ing)? Is your audi­ence easy to iden­tify and reach (peo­ple who col­lect acoustic gui­tars all hang out on a few web­sites) or more neb­u­lous and gen­eral (peo­ple who enjoy nov­els; where do they hang out?)? Do you have a strat­egy and a bud­get, or do you have “a good book and lots of pas­sion?” With a clear busi­ness plan, the impact of Kindle Unlimited on your book busi­ness will be easy to assess. Without one, think about big­ger things first.

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