The news of Kindle Unlimited expansion into Canada and Mexico may bring smiles to the faces of readers but authors might not be as happy. As Kindle Unlimited launched and continues to expand, payments to authors dropped and remain low, raising concerns that with new expansions into Canada and Mexico will drop again.
Kindle Unlimited draws most of its titles from self-published ebooks which were uploaded to the Kindle Store by indie authors and publishers via KDP, Amazon's publisher portal. The publishers and self-publishers submit their ebooks to Kindle Unlimited in exchange for shares of a monthly pool of money.
An author earns a share when a KU subscriber accesses their book from Kindle Unlimited and reads more than 10%. That's the same system which Amazon has been using since it launched Kindle Owner's Lending Library in late 2011, but with the launch of Kindle Unlimited in July 2014 the situation took a turn for the worst.
As you can see from the following chart, Amazon's payments to authors dipped with the launch of KU, and continued to drop in the following months:
The average payment reached an all time low in October, before creeping up to $1.39 in November and $1.43 in December as Amazon added additional funds to the pool. (There's no info available for January at this time.)
With the expansion into Canada and Mexico today, there's a concern that the payment will dip once more, reducing author earnings yet again.
Authors are already commenting on the previous dips, including Morris Rosenthal of Foner Books, who explains why this is an issue:
My own income from the Select program has fallen sharply since Kindle Unlimited was introduced because I haven’t seen enough of an increase in downloads to compensate for the lower royalty. Most of my Kindle books are priced at $0.99, so at least I’m not hurt by cannibalization – I’d still prefer a $1.39 borrow to a $0.35 sale.
But many publishers whose books are all priced at $2.99 or above have seen a drop in income, as readers who would have purchased a book, resulting in a royalty of $2.00 or more, now read it through their Unlimited subscription, resulting in a lower royalty. If those authors don’t see a substantial increase in readership due to the free availability of their books to subscribers, the result is a net loss.
With 750,000 titles, Amazon clearly has not run out of ebooks, but as the payment drops indies might respond by pulling their longer and more expensive works. That could result in Kindle Unlimited being filled by short stories, serials, excerpts, and other short works.
Is it possible that a subscription ebook service can thrive when focused on short works?