Indie Author Earnings: Should You Be Worried?

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INDIE AUTHOR EARNINGS (3rd Quarter, 2016)

The October, 2016 edition of the Author Earnings Report is out, and the surprising activity has sparked much speculation and debate.

Whereas the indie share of the e-book market has steadily climbed in the past, this last quarter of 2016 has shown a marked drop.

As a physicist, when I look at this data, what I see are several data points of continued growth, and a single point of decline. Thinking statistically, one data point isn’t significant.

These data points are a little different, though, when you consider that each “data point” consists of 3 months of data (it’s a quarterly report, roughly).

So the combined sales for three consecutive months show indie author earnings losing a significant share of the e-book market.

Three months is a long time in the e-book publishing industry.

And we’re heading into the big fourth quarter.

So if we could learn anything from the data, or if we could uncover a reason behind the drop, we might be able to use that information to make smarter publishing and marketing decisions this coming quarter.

Still, it’s a big IF, and the information begins with one data point. It’s not much to go on. But it’s the reason for ample speculation and debate on the topic.

ANY IDEAS?

If you simply read the comments on the Indie Author Report, or read any of the many articles that have been written on the topic, you’ll encounter possible explanations.

When I looked at the first graph of the Author Earnings Report, what instantly caught my eye was significant growth in the earnings of Amazon published e-books. Amazon actually has its own imprints (which are by invitation only, last time I checked). For indie authors, you can publish with Amazon if you land a deal with Kindle Scout.

The Indie Author Earnings Report actually discusses this very point. According to the report, KindleFirst had several bestsellers during the quarter, and there appears to be improvement among most of the Amazon published e-books (on average). (By Amazon published, I don’t mean KDP, I mean Amazon’s imprints, Kindle Scout, etc.)

Personally, I think it’s good for Amazon’s imprints to be doing well. I’ve read some of their e-books myself, and so I know that there are good books in there.

Amazon seems to think long-term, and this why Amazon seems to place a premium on customer satisfaction. If Amazon published e-books take a larger share of the e-book market and if this improves overall customer satisfaction, then it would help Amazon maintain (perhaps even grow) its large customer base. Presently, Amazon published books are in limited supply, so you shouldn’t run for the hills worried that they will suddenly saturate and dominate the marketplace. Amazon published e-books have shown a more up-and-down behavior (compared to previous steady growth of the indie share) in the past, too, so we really need more data to see if this will simply drop back down or if it’s really a new trend.

Another thing I see is Kindle Unlimited. Over the past three months, Amazon paid out $45 million in royalties for pages read of KDP Select books. (That’s in addition to royalties for sales, it’s on top of whatever Amazon pays for Harry Potter and other traditionally published books in Select, and it’s in addition to the All-Star bonuses. The $45 million is for KDP Select books, which Harry Potter is not part of, and Amazon published books might also be separate from it, though this last point I’ve never inquired about or considered until recently.)

That $45 million (it was paid as $15 million per month) over the past quarter is significant, and it’s separate from royalties for sales. There are significant indie royalties in the KDP Select Global Fund.

And guess what: Amazon published e-books are part of Kindle Unlimited. So if Amazon published e-books start pulling in more customers, this is good for Kindle Unlimited (which has shown continued growth, with the Global Fund rising from $10 to $15 million per month over the past year or more, and with the payout holding fairly steady just under half a penny per page read).

BEST SELLERS

One thing to remember is that bestsellers hold a significant share of the marketplace. As bestselling e-books switch from indie to traditional to small publisher to Amazon imprints, each share of the e-book marketplace can show a big swing.

For the millions of e-books that aren’t bestsellers, or aren’t even close to being bestsellers (and I’m talking overall bestsellers, or major category bestsellers, not subcategories), what’s true of the e-book market on average is less likely to be directly related to your own sales.

Another thing I know from interacting with authors regularly over the years is that EVERY SINGLE MONTH there is a large group of indie authors loudly complaining about how sales or borrows have suddenly dropped off in dramatic fashion. No doubt you’ll hear the stories from such a group this month, too, only now it will be natural to try to tie it to the latest author earnings report.

If you happen to be seeing a drop this month, it could be completely unrelated to whatever else is going on in the e-book marketplace. It’s very common for sales to drop off after 30 days, after 90 days, or on one random month where the algorithm throws in one of its change-ups that suddenly affects your books.

The best thing is to keep writing, keep marketing, learn new ways to market, thing long-term, and try your best to stay positive and productive (which will be your advantage over anyone who doesn’t).

AMAZON IS ACTIVELY PROMOTING INDIES. YES, RIGHT NOW.

I can offer some proof of this point.

Visit www.amazon.com/poweredbyindie. This dedicated Amazon page (at least for October, 2016) says Powered By Indies at the top.

Amazon is sponsoring #PoweredByIndie and has invited indie authors to participate this October. (I received an email about this from Amazon, and if you subscribe to KDP announcements, you probably did, too.)

Over the past years, Amazon has regularly highlighted stories of successful indie authors.

It appears to me that Amazon wants many indie authors to succeed, and no doubt many indie books have benefited from Amazon’s internal marketing and Amazon’s algorithm. Amazon tweaks their internal marketing (like customers-also-bought lists) and their algorithm periodically (the latter is usually intended to improve customer satisfaction in various ways, and is sometimes responsive to attempts to manipulate the algorithm). Even if Kindle sales are down for indie authors overall this last quarter, I still see Amazon as being very indie-friendly (compared to the much of the publishing industry, Amazon is rolling out the red carpet to indies).

Again, this is just a single data point. I’ll wait for more data, and I’ll continue to focus on writing and marketing, which will serve me well regardless of the future of the e-book market.

Good luck!

Chris McMullen

Copyright © 2016

Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

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Are authors earning more or less with Kindle Unlimited?

Unlimited Reading

KINDLE UNLIMITED

Now that customers can subscribe to Kindle Unlimited for $9.99 to read unlimited books, authors are wondering whether the grass is greener inside or outside of KDP Select.

One trade-off is exclusivity. Titles enrolled in KDP Select can’t be available in digital format anywhere other than Kindle.

Exclusivity actually works two ways:

  • The obvious way is that KDP Select books may lose potential sales to customers who love to read on Nooks, Kobos, etc.
  • Another way is that books not enrolled in KDP Select may lose potential borrows from Kindle Unlimited customers, who may strongly prefer not to purchase books outright.

There is another trade-off for higher-priced e-books: Kindle Unlimited has paid about $1.50 for the first two months, which is less than the usual royalties for most books priced $2.99 and up.

Another issue is that customers must read 10% of the book before the author will receive a royalty for the download.

In exchange for exclusivity, authors with books in KDP Select hope to:

  • Gain additional exposure through Kindle Unlimited. Customers may be more willing to try a new or self-published author through this program.
  • Improve sales rank. Every download through Kindle Unlimited helps sales rank, even if the book isn’t read to 10% (but no royalty is paid until the book is read to 10%). Better sales rank helps with exposure.
  • Get more sales. Even if the royalties may be somewhat less through Kindle Unlimited, more sales has word-of-mouth potential.
  • Occasionally earn double royalties. A customer who borrows a book may later purchase the book so as not to have to return it. This happens.

Authors with books not in KDP Select hope to:

  • Gain additional exposure on other markets, such as Nook and Kobo.
  • Sell more books on other markets than the sales that they may be losing by not being in KDP Select.

Kindle Unlimited is definitely affecting sales ranks of all books, whether or not they are in KDP Select. Some books are doing better, others are doing worse. Each book is different.

The question is:

Is it better to enroll in KDP Select, or is it better to opt out and sell across all digital markets?

It’s a tough choice. Some books do better in KDP Select, others do better outside of it, and some may net about the same either way.

Personally, I’m seeing a small increase in Kindle sales and the improved borrows are gravy. I sell many more paperbacks than Kindle e-books, yet I’m glad to see Kindle growing a little.

Following are a few very handy resources to help you with this decision:

OCTOBER 2014 AUTHOR EARNINGS

http://authorearnings.com/report/october-2014-author-earnings-report-2

  • This report breaks down author earnings and looks specifically at the impact of Kindle Unlimited.
  • On average, enrolling in KDP Select appears to reap a 13% reward. Again, it’s an average, so some are earning much more, some are losing.

KINDLE UNLIMITED ANALYSIS

Nicholas Rossis has a detailed analysis of the impact of Kindle Unlimited on his blog.

http://nicholasrossis.me/2014/10/25/kindle-unlimited-conclusions-from-hugh-howeys-latest-author-earnings-report

When you get about halfway through, you’ll start to see the Kindle Unlimited analysis.

HUGH HOWEY

This brief note from Hugh Howey is worth a read.

http://www.hughhowey.com/october-2014-author-earnings-report

One thing Hugh stresses is that it would be nice to see KU pay a different royalty for very short books. Many authors who aren’t selling short books agree with this.

Just imagine earning $1.62 for a book with a list price of 99 cents (where the royalty for a sale is 34 cents).

Amazon is inconsistent on this point:

  • If you price your book under $2.99, instead of earning a 70% royalty, you earn 35%. It seems like a clear incentive to produce enough content so you can charge $2.99.
  • If you price your book at 99 cents, we’ll pay you a royalty of $1.62 if you enroll your book in KDP Select.

I don’t think authors with 99-cent books could complain too much if, say, Amazon paid them 50 cents for every Kindle Unlimited download, so that Amazon could pay a higher rate per download of higher-priced KDP Select books.

If you feel strongly about this, well, you could send a message to KDP to express your opinion. KDP has made changes in the past (the new sales dashboard, pre-order options, grade and age ranges), which many authors had been requesting. So if you really want to see a new feature, it may help to voice your opinion.

Read Tuesday

Imagine a Black Friday type of event just for book lovers.

You don’t have to imagine it. It’s called Read Tuesday, and it’s free: www.readtuesday.com.

Please support the Read Tuesday Thunderclap. This will help spread awareness on the morning of Read Tuesday (December 9, 2014). It’s easy to help:

  • Visit http://thndr.it/1CkO2Bg.
  • Click Facebook, Twitter, or Tumblr and sign in.
  • Customize the message. (Optional.)
  • Agree to the terms. All that will happen is that the Thunderclap post about Read Tuesday will go out the morning of December 9.
  • (The warning message simply means that Facebook, Twitter, or Tumblr need your permission to post the Thunderclap message on December 9. This is the only post that Thunderclap will make.)

Halloween Reading

Looking for some spooky books to read this Halloween month?

https://chrismcmullen.wordpress.com/scary-books

Chris McMullen

Copyright © 2014 Chris McMullen, Author of A Detailed Guide to Self-Publishing with Amazon and Other Online Booksellers

  • Volume 1 on formatting and publishing
  • Volume 2 on marketability and marketing
  • Boxed set (of 4 books) now available for Kindle pre-order

Follow me at WordPress, find my author page on Facebook, or connect with me through Twitter.

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