Kindle Unlimited — One Writer/Lawyer’s Perspective

You have to be impressed by Amazon’s ability to generate news. Not about books or business or world peace, but about AMAZON. A week doesn’t go by when Jeff Bezos isn’t portrayed in the headlines as a pariah, a genius, or both.

On Friday July 18, 2014, the news was Kindle Unlimited (KU), a subscription plan that allows readers to pay $9.99 per month for unlimited access to over 600,000 ebooks. Interestingly, big publishers have not signed on. While there are some marquee titles (Harry Potter, The Hobbit, Hunger Games…), the bulk of the ebooks are backlisted titles and self-published works.

Within hours of the announcement, the blogosphere was abuzz.

David Pierce at The Verge explained “Why Amazon’s Netflix for Books Might be Doomed From the Start…Without the big publishers, Kindle Unlimited won’t be worth the price.”

Australian booksellers called it “cultural vandalism.”

Slate speculates that KU will cannibalize Amazon Prime and hurt Amazon’s overall income.

How Does KU Affect Self-Publishing Authors?

If you are a self-publishing author with an ebook in KDP Select, then your ebook is included in KU automatically. (If your e-book is not part of KDP Select, it is not included.) Instead of your usual royalty of 70% (35% in some cases), you will receive a share of a Fund based on the number of times your ebook is downloaded. Amazon decides how much to put into this Fund. I know of no published criteria for how much it contributes. Some months it could be millions, other months pennies.

Are the Harry Potter and Hunger Games books subject to the same restrictions and pooled royalty payments? Absolutely not. They get a much better deal. As Digital Book World explains, Amazon has created a two-tier system where self-publishing authors are the second class citizens.

Can they do that?

Yes, Amazon can, at least until someone challenges them and wins. Amazon has a flock of lawyers, smart lawyers. They know what there are doing.

The KDP Terms and Conditions permits Amazon to change the Agreement at any time and puts the duty on writers to check the website for these changes. You are bound by these changes if you continue to distribute your ebook through Amazon. Traditionally, the law required some affirmative action to bind someone to a contract, but courts have been finding ‘we-get-to-change-the-rules’ agreements enforceable as long as the other side has the right to terminate the relationship.

Academically speaking, Amazon could go too far. A judge might rule that some unilateral changes were beyond the reasonable expectations of the parties. The law is full of fuzzy lines and vague distinctions. Judges often rule base on gut feelings of fairness. After all, do writers and publishers really have the option of not selling through Amazon?

If you were to take on this David-and-Goliath battle, the KDP Agreement states that the dispute is submitted to arbitration, and you waive your rights to participate in a class action or have a jury trial. Oh, and the law of Amazon’s home state, Washington, would apply.

Few writers will be willing to take on this battle. They are better off working on their next book.

I see the work of smart lawyers in the amount Amazon puts into the Fund each month. In my experience, it’s typically around $2. ($2.17 per download in May 2014 and $2.24 per download in June 2014. These were downloads as part of KOLL, an older program. KU was not yet up and running.) This is slightly more than the royalty an author would get for an ebook priced at $2.99. I do not know what percentage of ebooks sell for $2.99, but I suspect it’s the majority. For those books, the publishers have no claim for damages because they have lost no royalties.

For all those books with a list price higher than $2.99, the author is earning less per download, but more than she would have through traditional publishing.

(By the way, Amazon attorneys, I suspect KU required a 30-day notice period since includes a change in Royalties (Section 2.2). I’d love an explanation on how you thought your way around that.)

The Power of Amazon’s Promotional Machine

Another cost to not participating in KU—you’ll feel like the outsider of a middle school clique.

Amazon is aggressively promoting the ebooks in KU. Stunning new web pages, recommendations, emails. Amazon is using its entire toolbox to push buyers into KU. Any self-publishing writer who does not join in will be missing out.

Is KU a good business move?

Think about this for a minute. No one has more information about ebook readers and their habits than Amazon. They know who buys what and how often. They know how far readers get into ebooks before putting them down. They know how to target promotions to the right readers and how to move products.

No one has a better idea about how and whether KU will work than Amazon. And if it does not work, Amazon will adapt. An incredibly proactive company, Amazon will tweak KU until it works. My guess is KU will expand, not fade away.

Writers must remember Amazon is not in the literature business; it’s in the consumer sales business. It launches programs like KU not to appeal to authors, but to appeal to buyers, lots and lots of buyers. Perhaps that means more sales overall for authors, but it is painful to see our work treated as a discountable commodity, like single-ply toilet paper on special markdown.

Too many people are asking the question—will writers make enough? The question should be will writers lose too much?

Most self-publishing authors do not make a profit. If a writer has committed to putting his best work out there, then he has spent money on editors, designers, domains, websites, advertisement, not to mentioned thousands of hours writing, editing and agonizing. Self-publishing authors are already subsidizing Amazon by investing money and effort into products they sell at a loss . As Amazon increases its share of the reward, how many writers will continue to risk the heartache, not to mention the pain in the wallet, of creating great books?

What do you think?