The ongoing furor over the changes to KDP Select payment terms continues to generate debate in all quarters. Earlier today TechCrunch weighed in on the story, and all the attention focused on Kindle Unlimited has lead to a novel discussion over on the Kboards forum.
Kboards member Vevo has noticed that the rise in the monthly funding pool for KDP Select was leading towards Kindle Unlimited being bigger than the Nook Store in terms of author revenue.
A lot of his math is utter bunk, but he does have a point. While we can’t directly compare the two figures (B&N reports their digital content revenue – including their cut – and the KDP Select figure is what authors actually receive) it is worth our time to consider them.
For example, in the fiscal year ending 2 May 2015, B&N reported digital content revenues of $177 million. Even if you take out B&N’s cut (and knock off another few points for video and app sales), that is still far greater than the $69 million and change that KDP Select paid to authors over the same period:
- May 2014: $1.2 million
- June 2014: $1.2 million
- July: $2.5 million
- August: $4.7 million
- September: $5 million
- October: $5.5 million
- November 2014: $6.5 million
- December 2014: $7.25 million
- January 2015 – $8.5 million
- February 2015: $8 million
- March 2015: $9.3 million
- April 2015: $9.8 million
- May 2015: $10.8 million (the thirteenth month)
We are of course comparing B&N’s actual market share with the funds Amazon pays to authors. (We’re not comparing revenues generated by Kindle Unlimited from paying subscribers; Amazon won’t share that info.)
Over the past year the Nook Store was bigger, but here’s where things get fun. Over the last 3 months of B&N’s fiscal year, KDP Select was arguably paying authors more than the Nook Store.
KDP Select paid $27.1 million, while B&N reported $40 million in digital content sales. The best we can manage is a very fuzzy comparison between the two, but if we make a reasonable deduction from B&N’s sales figure then one could argue that KDP Select is actually a greater source of ebook revenue for the publishing industry.
On the other hand, the point can be argued the other way as well, and that is why I would much rather wait until B&N reports its next quarterly revenues. Then it will be more clear.
But on the gripping hand, whether KU or the Nook Store is larger matters less than the fact that we need to start making that comparison. The subscription ebook market has grown large enough that the largest player, Kindle Unlimited, should be mentioned in the same breath as the major ebookstores (Kindle, iBooks, Kobo, Nook, and Play Books).
Kindle Unlimited is on its way to proving Scribd CEO Trip Adler half right. Adler made a prediction in late 2013 that the leading player in the subscription ebook market would be seeing annual revenues of a billion dollars. It’s happening, just not happening to his company.
Instead, it looks like Kindle Unlimited could be the lucky one, with authors being the real winner.
The rise of Kindle Unlimited is going to directly boost author income, and if Nielsen’s consumer surveys are accurate then that growth will not come at the expense of the overall book market. Consumers who subscribe to an ebook subscription service spend more per month than non-subscribers, and so far there has been no sign that getting a subscription encourages a reader to buy less.
If this trend continues then the publishing industry will look very different in ten years.