How Le Guin (Accidentally) Got It Right: Amazon is Manipulating the eBook Market

3493038584_fb28e25bef_bWhen Ursula K Le Guin posted her Amazon rant a couple weeks ago she was roundly derided by the indie publishing community, but it turns out her arguments may have accidentally hit the mark.

Le Guin blamed Amazon for destroying for destroying the legacy publishing industry through over-commercialization, a hyper-focus on best sellers, and turning books into commodities.  Her arguments were false in that they ignore the historical facts that every complaint she made pointed to a trend which existed long before Amazon was even a gleam in Jeff Bezos' eye (*).

But even though Le Guin was generally wrong in every point she raised, her general argument was true to some degree for a small segment of the ebook market. Amazon is driving  a small part of the ebook market in a way that I'm not sure the larger industry has noticed.

I am referring to Kindle Unlimited, or rather KDP Select, the program which Amazon uses to recruit indie authors and publishers into Amazon's subscription ebook service.

For those not familiar with its history, Amazon created KOLL in late 2011 and used KDP Select to supply the ebooks. They kept the funding high enough that authors would put their novels in, and not just short works. Also, they limited KOLL to a single title, thus making it important that an ebook was worth the rental.

And then Amazon launched KU, and by manipulating the monthly pool of funding they let the payment drop to the point that novels were no longer profitable. Amazon also let KU subscribers read as much as they want, thus encouraging snacking on short works.

As I have been reporting month after month, Amazon has been keeping the funding pool for KDP Select small enough that the payment for each ebook loan has stayed below $1.40 for most of the 11 months since KU launched(**).

As one author explained in a pair of comments over in the comment section for The Passive Voice, that low payment is driving authors to write short works which can be read quickly:

This is truly a new world. Short, episodic fiction will be available and it must be created at extremely high volume in order to stay profitable.

I don’t see how trad pub could even hope to compete. I’ve gotten to the point where if I don’t release a new “book” (and I use this term very loosely) every 3-5 days, I’m seeing a big drop off in my earnings.

In 2012, my idea of frequent releases was probably twice a month (and that was still way more than most authors were doing at the time). Now, twice a month is like a snails pace.

Kindle Unlimited's impact first came to my attention last December when it was mentioned in the comment section of one of my posts about how "Kindle Unlimited is killing retail sales". That trend proved to be less of a trend than an annual cycle amplified by authors seeing their novels do poorly in KU, but in the ensuing debate one commenter raised the point that shorter works were doing better in KU than novels.

And here we are in June, where we find Hugh Howey chiming in, agreeing that he sees the same trend.

Think I haven’t noticed? 🙂 Check out what I’ve been releasing lately. Short stories. And I’ve got two other projects in the works tailor made for KU.

Lest you feel inclined to ignore this as not being part of the true book market, I would remind you that one, when it comes to ebooks length matters less as a distinction than it does in print (where it was primarily a commercial divisor, anyway); and two, these are book authors seeing a market opportunity in short works. Time spent writing those shorter works is time not spent writing novels.

Howey and the unnamed author see a gold rush opportunity in the $9.8 million (and growing) pool of money Amazon is using to fund KDP Select each month.

That is a small sum of money in terms of the entire ebook market, but it is also a section of the market that is both growing and still below the radar of some indie authors. (It is other things as well***.)

And so Le Guin was right to a limited degree.

Just so we're clear, that pool of funding, KDP Select, and Kindle Unlimited are all the creations of Amazon. The retailer invented a market and continues to  manipulate it.

Amazon is driving part of the ebook market, but it is such a small segment that it raises the question of whether Le Guin was wrong on the larger point of Amazon's power.

I leave that point up to the reader to decide.

***

P.S. Some of the trends Le Guin complained about, including the commercialization of book publishing, can actually be traced back to before Le Guin was born. See the use of serial fiction in the Victorian era, to name one example. That was less a storytelling device than a response to market conditions.

P.P.S. While we're on the topics of loans in subscription ebook services, I'd like to point out that the AAP recently announced estimates for the US subscription ebook market for 2014. Those estimates are almost certainly wrong in that they missed most of the activity in Kindle Unlimited and Kindle Owner's lending Library (I'm working on a post).

P.P.S. Kindle Unlimited is also going to prove a greater threat to magazines and anthologies as the number of short increase.

image by Patrick Feller

About Nate Hoffelder (11587 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

17 Comments on How Le Guin (Accidentally) Got It Right: Amazon is Manipulating the eBook Market

  1. The few remaininvg agazines would be at the biggest risk.
    I would suggest single author Anthologies and Omnibusses will *benefit*.

    Writers with novels that can be broken into parts (like the ones typically serialized in the magazines) can both release them as shorts for KDP/KU and collected Novels outside KDP for sale. Ditto for short story collections.

    Amazon has long sought a way to promote short form content. Well, looks like they found a way to do it. Asimov would love KU.

    I don’t really see much of a downside, really; not everybody can write short form and not every novel can be carved into serials. All they’re doing is restoring the pre-BPH status quo of the mid 20th when writers could earn a living writing for magazines.

    We may be going back to the future in both B&M retail and publishing.

    • I would suggest single author Anthologies and Omnibusses will *benefit*

      Yep. They need to break up the collections and toss then on KDP Select.

      Amazon has long sought a way to promote short form content.

      Is this third time a charm? I know of Kindle Singles and Amazon Shorts (a pre-Kindle store). Did I miss any others?

      And you’e right, this doesn’t have much of a downside. It’s too small to hurt very much of the market.

      • It’s growing the market in (recently) neglected directions.

        Back in the day the pulp magazines were a big part of the market, selling up to a million copies an issue in the 20’s and 30’s. That was big money.

        What’s interesting is that the pulps were mostly an american (and british) phenomenon that the BPH continental overlords would never have thought of or even wanted to address. Too low priced, too low margin in the modern incartation.

        It is precisely the kind of low-end, underserved customer base that disruptions feed off.

        It is also the market that BAEN’S late, lamented UNIVERSE tried to address.

        It will be interesting to see the tradpub apologists try to handwave it away now that it’s true nature stands exposed.

    • “Writers with novels that can be broken into parts (like the ones typically serialized in the magazines) can both release them as shorts for KDP/KU and collected Novels outside KDP for sale. Ditto for short story collections.”

      Hugh Howey and a few others might be able to do that, but for the rest of us that are bound by the Select exclusivity clause, how do we release content in KU and then use that same content outside KDP?

    • Selling smaller sections in KU via Select while simultaneously putting them into full novels to sell in other markets is a violation of the Select TOS. Take your chances, risk your account.

  2. In a way, isn’t this a return to how certain genres were published way back when, in a magazine where you would publish chapter by chapter and then release the bound fill volume/novel later if there’s sufficient demand? I recall sci-fi, in particular, was handled like this…. and you got paid to release in such a way.

  3. Serving the market and manipulating the market are different things.

    Creating KU to see if there is interest in a subscription service for readers, is serving the market. Writers then have the choice to put their books in it or not. If writers find a certain kind of book (shorter) does well, particularly from a time/profit standpoint, nothing wrong with that.

    For many years, before Amazon made it easy, writers were bemoaning the fact that the market for short fiction had disappeared. I think it’s a great thing that it’s coming back.

    So what is manipulating the market? Well, if you look at the history of paperbacks, traditional publishers back in the 70’s, (I think, Dean Wesley Smith wrote about it and I’m too lazy to check back) pushed for writers (contractually) to write longer and longer stories so they could could charge more for paperbacks. Writers didn’t really want to write longer books, and readers didn’t really like longer books, but it was a way for publishers to make money. That to me, was manipulating the market.

    I would also say that the push behind literary fiction, where it became very hard for genre writing to be reviewed in the major newspapers (again something pushed by big publishers) was manipulating the market.

    Agency pricing, is pretty obviously an attempt to manipulate the market, by driving up the price of ebooks so people will buy print.

    I would also say, spreading lies about Amazon, to try to convince readers they have a moral obligation not to use their service, like Ursula K Le Guin and her associates do, is manipulating the market (or trying to, if anyone would listen to her).

    I think it’s flat out wonderful that writers can make money with short fiction and serials. Can’t see why anyone would try to turn this into a bad thing. It’s ALWAYS been hard to get an audience for longer works. The longer, the harder. But if you write something great enough (Game of Thrones) you can do it. If you can’t pull it off, don’t blame short fiction.

    • Actually, Amazon created KOLL, and used KDP Select to supply the ebooks. They kept the funding high enough that authors would put their novels in, and not just short works. Also, they limited KOLL to a single title, thus making it important that an ebook was worth the rental.

      And then Amazon launched KU. They let the payment drop to the point that novels were no longer profitable. Amazon also let KU subscribers read as much as they want, thus encouraging snacking on short works.

      And Amazon continues to manage the pool each month so the payment remains low.

      So yes, they do manipulate this market.

      • No. I don’t agree. Any service you provide has limitations and carrots and sticks attached. McDonald’s is not manipulating the market because they make it cheaper to buy a burger with fries in a meal with a drink, rather than separately. If you think any incentives or disincentives qualifies as manipulation, then the word has no meaning.

        McDonalds would be manipulating the market if they put out false rumors, through 3rd parties) about Burger King treating their employees badly or having spoiled food. (Kind of like what big publishing did with Amazon.)

        There are many reasons for Amazon to allow KU payments to drop. There is nothing evil about them giving bonuses for the first few months to encourage people to join, and then allowing payments to drop when they felt they had a big enough catalogue, or they simply weren’t making enough money from KU to justify bigger payments. Or, simply because Oyster and Scribner turned out not to be the threat they thought it would be. Or maybe they found out people like short fiction.

        Writers have the choice to put their novels in or not. Either you think you can make money or you don’t. The writers who are chopping up their books and making them into serials are gaming the system (which is okay too). The writers who are taking advantage of the new medium to write a ton of short fiction are gaming the system too (which is also fine).

        Seems like you’re falling back into this pattern of lamenting that people aren’t being paid enough to do what they want to do, rather than what the world is willing to pay them. It’s not Amazon’s responsibility to pay people more so as to justify them writing longer novels, that apparently people aren’t interested in enough to check out for free on their subscription service. The world is not obligated to financially enrich people who prefer writing a certain way.

        If there aren’t enough long novels to satisfy customers, and people drop KU and start rushing to Scribner and Oyster because they want longer novels, then Amazon will need to react.

        As far as the ultimate effect of this. It seems to me to be a win/win for writers in that they can write a long novel, keep it out of KU so it has to be purchased at full price, and then write a bunch of short fiction to put on KU to build up a fan base that might eventually buy their longer work.

        I don’t get whining, unless we’re back to the idea that subscriptions ruin purchases, which hasn’t been proven to me yet. And there seems to be evidence that it isn’t hurting sales.

  4. Step back and take a bird’s eye view of this.

    Shorter works means that the acquire-read cycle is a lot shorter, which means that you’re back at the Amazon website to acquire another ebook (of whatever length) more often. And that makes you subject to more suggested buys, recommended for you’s, and other great things to purchase that Amazon is so willing to sell to you. And keeps you away from the other evil retailer’s sites.

    • This does give Amazon more opportunity to suggest more sales, yes.

      Similarly, the KU section of the iOS app keeps readers pinned inside the Kindle app. That’s not a sale but it is the next best thing (it keeps readers out of competing reading apps).

  5. They key here is the pot pay out being not only more than the same title would get for a regular sale at 0.99, but more than the 0.99 list price most short works would retail at.

    The moment Amazon decides to change the interest in putting short titles into Select to get the KU payout will fade.

    As to manipulating the market, a lot of indies now believe Amazon is deliberately reducing visibility on non-Select titles, and are abandoning other retailers just to keep their sales level steady at Amazon.

    We’re not convinced Amazon is deliberately reducing visibility on non-Select, so much as titling the playing field ever more in favour of Select and in particular Amazon imprint titles. the end result is the same.

    As for magazines, savvy authors might want to consider that to a large extent the magazine and book markets are different audiences. A savvy author will be looking to put material out in the magazine market as well as the ebook market.

    But of course Amazon exclusivity means that can’t happen with Select titles.

    • “But of course Amazon exclusivity means that can’t happen with Select titles.”

      No, it just means that the magazine publication has to come first. When that pub’s exclusivity expires (usually in 3 months or so), the story can go into KDP Select.

  6. Please give me a break. “Howey and the unnamed author see a gold rush opportunity in the $9.8 million (and growing) pool of money Amazon is using to fund KDP Select each month.”

    I’ll bet they do. I don’t, however, and most authors are just like me. Like I said last December in the comments, those authors are totally in it for that money. You’ll never have the number of borrows needed to get that, so how does it benefit you? I’m ashamed of Howie, being this poster child for this terribly unjust system of awarding the ‘big boys’ of self-publishing, and so flagrantly I might add. When I get that email telling me how much those top KU authors are getting, it makes me feel pretty second-class.

    I guess they earned it, however, as they’re doing everything right and have the fans. If you ask most of them to explain this, they’ll invariably put it down to luck. Wow…thanks.

    Like I said in December, we’re seeing the big names get desperate, batten down the hatches, and focus more on ‘me, me, me.’ It’s easy to ‘show concern’ for the lesser authors, the ones eating the scraps from their table, because you know you’re safe in Amazon’s warm embrace.

    So the split, divide, and earnings gap in self-publishing grows. The big names consolidate and get ready for the storm. It’s here already, though, and washing many authors away. When you’re not a big name, however, why does it matter? You’re worth nothing.

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