Kindle Select was a great innovation. It made it easy for people who love to read a lot to get a constant supply of books at a fixed price. It also made it easy for new writers to reach lots of readers and make money. The economic model worked because it was a win-win for writers and readers.
Because of Kindle Select, new types of books became popular. People who couldn’t get published before could connect with readers and make a living. Some of my clients have created businesses that will help their families for generations. However, there were some bad things too.
You can’t access customer data, and you can’t choose your price. It also brought in dishonest people who wanted to make money fast. You’re probably already aware of what I just said, but what comes next might be new.
If you haven’t heard, the March 2023 KENP number was at $0.004, hitting the previous low of July 2017.
I created a chart with the monthly rate and a trailing 3- and 12-month chart to see fluctuations in the rate over time. I created this chart for another reason I’ll touch on later, but let’s continue with the story.
The chart gave me pause because a 2023 dollar and a 2017 dollar are not the same. Besides the page price being set by Amazon, there hasn’t been any inflation adjustment.
I made yearly inflation adjustments on the monthly KENP numbers to adjust to 2015 dollars.
This chart paints a bleaker picture. Since 2017 there has been a steeply declining page rate. What we experienced in March, when adjusted for inflation, is 0.00273. This is the fourth low in as many years. While there has been a general downward trend, inflation has further discounted the value of a KENP read by 32%.
Inflation isn’t just a Kindle Select problem. If you are selling a book for $3.99, you now earn $1.89 versus $2.79. That price decrease is on all platforms. Your immediate reaction may be to go and raise prices. Yes, raise your prices but do it as part of a pricing strategy for your business.
The same conditions apply to the overall pool of money allocated to participants. The following chart shows the inflation adjustment to the Global Fund up to 2015 levels. Here, we see a much slower-growing pool than what is advertised.
and that gets us to the title of this post, “a smaller slice of a shrinking pie.” As a Kindle Select supplier, you are allocated smaller and smaller slices of the pie that have a compound annual growth rate of 10%. Yes, it is double-digit growth, but it’s not the rate Amazon advertises.
The next shoe…
The reason I made the KENP chart with moving averages is I wanted a way to evaluate the impact on KENP and the pool when AI has its impact.
So much of the industry focus on folks dropping AI books into the store, creating more content, and making visibility harder.
I don’t see that as a threat. AI will increase the pace of content production, good and bad. As far as too much volume, we crossed that Rubicon a long time ago.
I am worried about scammers who use AI to flip through their low-quality books and loot the global fund. This is an advanced version of past scams, like page stuffing. They will be using advanced models to make this look like real readers.
Will more scammers create bad books and use KU subscriptions to flip through them quickly? This is already happening with music on Spotify. For more information, read my post on Boomy and Spotify.
To solve this problem, Amazon will use bots to remove scammers and real author and reader accounts. The bigger issue will be the impact on the overall pool.
Now, the pool of money will be even smaller and go to the wrong people. You may still have the same number of people reading your book, but you will earn less money each month. Inflation will make this problem even worse.
Solutions:
If you subscribe to my newsletter, then these aren’t new ideas. They may be controversial or counterintuitive, but you know they are the pathway to success in publishing.
Have cash to get through this cycle.
This is not a solution but rather a way to ensure that you survive through difficult times. Many writers live payout to payout and don’t have the financial resources to weather a crisis. It is important to build up personal and business reserves. Finding an audience that can support you independently of Kindle Unlimited will take time, and your business model will be different.
Focus on your ideal customer.
Understand who your ideal customer is and provide them with the best experience. If your ideal customer is someone who reads books through KU, then that’s the market you should focus on. However, for many others, there’s a smaller but more profitable audience to cater to. You don’t have to ignore KU in the future. You can serve them with your pricing strategy later on.
You need a pricing strategy.
Please read my post on price strategy and discrimination. Not all customers are the same and should be valued and treated differently. Have a strategy to extract the most value from your content.
Turn your audience from invisible to visible.
Part of the trap of Amazon is giving you quick access to an audience for a fee. Kindle Select is the epitome of this situation. These subscribers are not your customers but subscribers to a product you can provide your content to at a fixed price. Your costs are decoupled and layered. If you want more discoverability, you’ll need to advertise, thus cutting further into your margins.
With the average cost per click doubling since 2016, a KU author is left with half the margins they used to enjoy.
Get moving now on a holistic marketing system.
It takes time to find and directly connect to your ideal readers. You need a marketing system that is designed to do just that. If you don’t have a place for your readers to congregate (email, community group) visibly, then you’ll always be at the whim of others who control that audience.