Amazon Kindle Unlimited. Part 3

Now that the data is out for the KU royalty for August, time to do some further analysis where we are going with KU.

In my first post on this subject (which somehow disappeared in cyber space), I predicted after the announcement of the KU commission of $1.81 in July, that we MIGHT be in for a downwards spiral.

$2 in June, $1.80 in July and than $1.6, $1.4 etc.

Now that the KU for August is announced at $1.54, I wasn’t far off. In my previous post I stated that the KU units in August would approximately be the same as in July, calculated over a complete month. (Ku only started mid-July). In July we had roughly 1.5 mln KU/KOLL’s, so I had counted on about 3 Mln in August.

Now let’s do some math and try to understand what is going on:

Given that the KU is $1.54 and that the pot is 4.7 Mln, it means that the number of units is exactly what I predicted .  About 3 million. My KU/KOLL units over the first half of September (recalculated over a complete month) are 13% less than for August. I don’t take into account the 80K that was aside for the non-US KU’s, because for the far majority of authors (=US) this doesn’t help. I’m outside the US, and the majority of my sales are in US/UK anyway , so even for me it doesn’t change anything.

As I wrote in my previous post, it was clear that the 2mln set aside for August wouldn’t be enough to make some decent payout and that Amazon would have to top it up. So comes the question for Amazon, by how much? With 3.5mln to ensure a $1.80 payout, or less? And if so, how much less? They topped it up with only 2.7 mln, which makes that the payout is $1.54.

And I think that confirms my prediction that we’re into a downwards spiral. I think Amazon will continue to lower it, until they notice a massive departure from KDP by authors.

If your book is on 2.99 you cannot go any lower, because your royalties will be ridiculous. At this price, to not lose out on a KU, the KU would have to be $2 which it was in June (well, at that time it were only KOLLS). In July it went to 1.80 so you were losing out 10%. Now it is down to $1.50, so now your losing out 25%. And if it goes down to $1.30 next month you will be losing out 35%.

Every author has it’s own threshold were he will get out. For me, losing out 25% is enough to go and look elsewhere. So I’ll pull my books out of KDP at the end of the running period. Maybe I’ll be back when I’ve made it into the top 100 bestsellers to participate in KDPS.

Now let’s look at my sales/KU/KOLL chart.

KU Analysis 3

 

Because my first post with the explanations disappeared, I’ll explain again:

I’ve plotted here: sales, borrows(KU) and sales+borrows. For every line I have plotted a short-term chart using the moving average over the last 10 days, and a long-term chart using a 30 day moving average. This technique is frequently used by traders to detect changes into trends. When the short-term line crosses the long-term trend in a downwards direction, the downward trend is confirmed. When the short-term line crosses the long-term line in the upwards direction an upward trend is confirmed. The vertical scale doesn’t really matter because it’s only to show trends. You can put on the vertical axis 0-10 or 0-100 or whatever.

Sales: (blue and green). It’s a bit difficult to see what’s happening because the lines keep crossing. So there isn’t really a confirmed trend in one direction or the other. But what’s clear is that if it remains on that level, I’ve lost about 30% on the volume of my sales compared with the pre-KU period.

Borrows:(orange and black). After an initial peak, things nose-dived till end of August, but seem to pick up slightly again. And seem to stabilize between the peek of July and the bottom of August. This would mean that KU over September would be slightly down compared with August. This is confirmed by my own KU figures which are 13% down.

sales+borrows:(red and brown). The volume is slightly down compared with the average volume of the pre-KU period. I lost about 14% in volume in August, but about 20% in revenue. And I’m afraid that this trend will continue, until authors will abandon KDP massively.

For my part, I’ve unchecked all my auto renewals on KDP and I will start moving my books to other platforms. At the same time I will increase the price of all my books to $3.99.

Now what can we do about this? Not a lot. But if we don’t give a signal to Amazon that $1.50 is not enough, it will very likely go even lower next month. So what I suggest: Uncheck all your books for auto renewal of KDP select. You do this by going to your bookshelf and clicking on “info” under the KDP select column. Notice that this doesn’t change anything for you immediately. So if you still have a month or two to go, nothing changes. But if hundreds or even better , thousands of authors will uncheck their auto renewal over the next days, I’m sure that that will not remain unnoticed at Amazon. And maybe they will say : “Hmmm apparently $1.50 was too low, so next month we put it back to $1.80.”. If you don’t do it NOW and you wait another month when it’s down to $1.30, they will reason “Ahh ok, we’ve reached the limit. They don’t accept $1.30, but they did accept $1.50 last month, so we’ll put it back to $1.50″.

So, do it NOW! Uncheck all your auto renewals. Share as much as you can to spread this amongst authors!

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2 Responses to Amazon Kindle Unlimited. Part 3

  1. Interesting analysis, Timo, but I’m concerned that promotions such as the Kindle Countdown deal you’re running now would skew the data.

    Neil.

  2. Timo Hofstee says:

    Thank you Neil. I don’t think so, because the effect of Countdown Deals is only VERY marginal. At least, in my case. Had I taken out the couple of Countdown Sales I made in August, things would look even worse… (but not significantly).

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