A kind of downgrade for Amazon, and nowhere near Wall Street The most significant change is that Amazon KDP has slipped to third and also...

A kind of downgrade for Amazon, and nowhere near Wall Street

The most significant change is that Amazon KDP has slipped to third and also reflects the growing discontent self-published authors have with the introduction of Kindle Unlimited and recent communications regarding the new VAT law in Europe for 2015. We also have five new providers entering the Index this month.

That's Mick Rooney in his Independent Publishing Magazine, introducing his December edition of the monthly Publishing Service Index he produces.

In case you're not familiar with it, Rooney's index, more than four years in operation now, is intended, as he writes, to help "guide authors to services on the up, and those, gradually on the down." He likens it to a kind of stock-market ratings service for appraising author-facing operations.

Think of it as a "sentiment index," if you will, based in feedback that authors provide to him. An author and mainstay of the self-publishing sector, Rooney co-wrote with Giacomo Giammatteo the original Choosing a Self-Publishing Service guide for the Alliance of Independent Authors (ALLi).

Notice that he mentions five new services added to his index. One of them is Unbound, the London-based crowd-funding publisher that last month took The FutureBook Innovation Award for best Web site and was profiled by our colleague Philip Jones for The Bookseller in August.

The significance of a total 89 companies, great and small, on Rooney's index may not lie in the number itself but in the fact that author activity is expanding to include -- and report on -- an increasing number of service providers. If this index were named Moody's, we'd be calling what just happened to Amazon Kindle Direct Publishing a downgrade.

What happened? Kindle Unlimited (KU) happened -- Amazon's answer to Oyster and Scribd and 24symbols and other ebook subscription schemes.

KU opened in July. And things just haven't been quite the same in the honeymoon suite ever since.

Holly goes less lightly

I had my serials in it for 60 days and lost approx 75% of my income. That's counting borrows and bonuses. My sales dropped like a stone. The number of borrows was higher than sales. They didn't complement each other, as expected.

Granted, it's not as if the KBoards ("K" for Kindle) are a place authors go to practice diplomacy and gracious deportment.But the comments you're reading are those of the romance writer Holly Ward. She's H.M. Ward on her book covers. And boy, does she have a lot of book covers, lots of work for shirtless men kissing beautiful women:

At the time of enrollment [in Kindle Unlimited], I had about 60 titles total.

With more than 6 million copies sold since 2011 -- and 11 titles becoming New York Times bestsellers in 2013 alone -- Ward is one of the leading corps of "indie outliers," those 20 or 30 authors who headline conferences, minister endlessly to the wider field of aspirational self-publishing authors, and can make everybody stop and listen when they have something to say.

Ward has everyone's attention, and she is fond of the vernacular:

Taking a huge ass pay cut while I'm still working my butt off, well that's not ok. And KU affected my whole list, not just KU titles.

That last bit is especially interesting, or flat-out disturbing if you're an author. Publishers Lunch's Michael Cader may not seem like the kind of guy to hang on the KBoards, but he's watching this operetta pretty carefully. Last week, he followed Ward past her main bombshell post on down the hallway of comments and brought out this potentially pivotal observation:

[Ward] also indicated the KU experience affected all of her titles at Amazon, even the ones that were not part of the subscription service, "because buyers changed into borrowers, who in turn did not spend money on my other titles." And "Ditto on audio sales. They've vanished."

Ward reports that her income is rising again with her titles yanked from the KU subscription system:

I pulled my books. That was on Nov 1, & since then my net revenue has gone up. I'm now at 50% of where I was pre-KU. During the time I was in KU, I had 2 new releases. Neither preformed vastly different than before. They actually earned far less (including borrows).

And she pulls no punches, Million Kindle Club star that she is. This is one ticked-off standout among the sisterhood of Seattle:

This model needs to be changed for it to work. Authors shouldn't be paid lottery style. For this system to work we need a flat rate for borrows, borrowed or not borrowed (not this 10% crap), and it needs to be win win for the reader AND the writer. <-- That is the crux of the matter. I'd like to see Amazon create something new, something better instead of falling in step with Scribd and Oyster. Example: subscribe to an AUTHOR. Easy, clear. When Author X has a new book it automatically gets sent to your kindle, & the card provided is charged. As a reader, I'd want that. As a writer, I'd want that. Amazon, stop following other companies and break the mold. Ok, I'm done ranting. Back to writing.

Can she sway others? You bet she can. Right up top among comments responding to Ward's Black Friday post:

I know if a mega-seller like you can't make it work, I definitely won't be experimenting with it again.

And up and down the boards -- as well as in other hunker-hives for the independent set online -- the comments have rolled in, many along the lines of these:

We shouldn't have to share a "pot". I wish more authors would call them out because it's honestly ridiculous. Music streaming services don't make artist share a pot...You know what? I think I am going to create a new pen name and spread it out to other stores to test the water...KU will probably just fade away over the next few months as more and more writers abandon it...

Ward has not quite yet left her honeymoon haven key on the bureau and harched out -- not in terms of team spirit, anyway. In comment exchanges, she seems to hope her compatriots might join her in demanding change:

We need a win-win idea. I'm rooting for KDP, hoping they'll reexamine things and try again. And this time when the writers with biz brains point out the flaws, plz listen. Too many families depend on you guys, and until this whole KU incident I couldn't think of one bad thing to say about KDP. That alone is astounding because I'm not easy-going.

Many genres of opinion

As you might expect, reactions outside the immediate sphere of Ward's shot across the Amazonian bow have been less unified and unavoidably just as anecdotal as her own comments.And that makes it much harder to gauge the aggregate mood of this far-flung indie-ness that basically owes its digital dollars to the capabilities originally brought into being by Amazon and its Kindle.

In fact, there's some outright sarcasm handed back to Ward and her supporters at that weighty water cooler, The Passive Voice blog. This is the author Greg Strandberg reacting to Ward's woes:

Honestly, I’m a bit humored by this. Here we have all the Amazon loyalists now crying over their spilled milk, their lost sales. But Amazon was the savior! Not so nice now, are they? Isn’t it interesting what a business can do when it wants to make money? I mean, you don’t matter at all. You’re just a tool for them to make money. You’re an author. So who will you all be loyal to now? No one, you’ll jump ship and get all your books on all the platforms. Wow, finally people are taking matters into their own hands!

At the least, it's fair to say that Ward's commentary has helped bring forward some potent negativity toward the big platform..

The author Mimi Strong's comments, for example, weakens those frequent charges that independent authors are blinded by Bezos Bucks this way:

As I explained to my accountant yesterday when asked about projected earnings for the business, we can’t apply logic or rationality to whatever Amazon does. It’s run by a crazy billionaire who does whatever he wants. We authors are little tiny prawns at the ocean’s bottom compared to the big whales who make decisions that affect all of us and our careers. In the end, I go with math and ignore emotions. I’m pulling out of KU. If my sales are better on other platforms, I’ll stay out. If my sales aren’t any better, I’ll go back into KU with gritted teeth and a few choice words. Nobody cares but me. I’ll go with the math.

And just as Cader picked up on this for Publishers Lunch, John Biggs at TechCrunch has become interested -- as I think many of us are -- in Ward's mention of an author-specific approach.

On the weekend, Biggs, in Kindle Needs A “Subscribe To Author” Button, makes some candid remarks about Kindle Unlimited from the reader-consumer's standpoint that will not have brought any sunshine to the Pacific Northwest. He writes:

KU thus far has been a dud. The selection is awful at best and laughable at worst. While some titles, like the Harry Potter series, seem like a great deal, the rest of the KU pool is an undifferentiated mess. By creating a sea of free content, Amazon has reduced the value of paid content. That’s horrible for writers who are trying to live off of their writing.

And he goes for the subscribe-to-your-fave-author idea, using the verb "will," which I'll substitute with the word "would" to avoid having it sound as if this idea has been picked up:

By allowing users to subscribe to writers like Ward, [Amazon would] be doing everyone a solid [favor]. Ward and other writers [would] get a steady stream of income, readers [would] get the work of their favorite authors automatically, and Amazon [would have] a captive source of revenue. Patreon, created by Jack Conte, is a perfect example of this dynamic. That service allows fans to pay a small amount every time an author creates a piece of content, be it a song, a blog post, or a podcast. By ensuring that the creator is paid the consumer ensures the content keeps coming.

Certainly for the "indie bestsellers," whose legions of fans are so faithful, this sort of ad hominum subscription concept might be a boon. It's not unlike the efforts of Beacon Reader to fund news reporters with specific pledges from readers.

But that's all hypothetical. Kindle Unlimited is a reality now, and it's generating complaints unlimited in some high DIY places.

'It's a bad deal for writers'

One of the reasons the "outliers" of the independent authors are so useful in this story is that they have the depth of inventory; histories of proven, solid sales patterns; and the war-room commercial tracking systems they need to develop detailed, data-driven pictures. Each of these folks moves as much or more product on the market in a year as many small publishing houses do. So they have the means and the mettle to generate bona fide snapshots of what's going on. They don't deal in "I have a bad feeling about this." They show you charts.

I rarely use sources who speak on condition of anonymity. We're covering publishing here, after all, not State Department secrets.

But some of our most highly placed independent authors are involved in this unprecedented moment of disagreement with Amazon and I've asked one of them -- without any prior discussion, right out of the blue -- to give me her most straightforward impression of Kindle Unlimited, with her agreement that I'll use her comments without her name.

Like Ward, this is one of our very top indie stars, among the most experienced and hardworking of the pantheon. She holds Million Kindle Club status, the works. You know her. And like Ward and Hugh Howey, she was offered by Amazon a chance to try KU without what for many is its biggest drawback, the exclusivity requirement that an author sell only on Seattle's platform.

This is what she tells me:

The first full month [in Kindle Unlimited], it was very clear that I was not reaching new readers--at least not faster than I was losing sales. I actually did a graph and it was almost a one-to-one correlation for decreased sales compared to KU reads, which meant, since my books are priced at an average of $4.99, I was losing over $2 a read even after [Amazon's] paltry payout -- despite the fact that I got bonuses for those first two months. [These are the "All Star" bonuses for authors who shift the most copies in terms of sales and borrows in KDP Select, Kindle Owner Lending Library (KOLL) and Kindle Unlimited.] I contacted my [Amazon] rep with my concerns and they allowed me to leave the program early, and my monthly income has since rebounded nicely, but that first full month, August, I made less than I have any month in the past three-and-a-half years--and that's with twice as many books out now compared to 2011. Basically, it's a bad deal for writers of full-price, full-length works. Possibly a good deal for short stories or cheap books because you'll make more money from KU reads than you would regular sales. And not a necessarily a great deal for most readers given the number of scammers who have published 11-to-12 page "books" in order to get their payment after you read past the title page.

Seattle, we have a problem

Hugh Howey -- whose newest novel, The Shell Collector, is due out on 14th December -- was among the earliest to start running up warning flags about Kindle Unlimited.

In addition to sales-tracking mechanisms for his own work, he and his unidentified associate nicknamed "Data Guy" produce the quarterly AuthorEarnings.com reports. And in October, in their most recent report, he noted that the launch of KU in July coincided well with quarterly cycle of their calculations, emphases his:

There are 2,908,475 Kindle eBooks in the Amazon store as we write this, of which 744,181 were KU-eligible. This means that 25.6% of the Kindle ebooks available in the Amazon store can be borrowed as part of a Kindle Unlimited subscription program. This is obviously great for readers; it remains to be seen if it’s great for writers.

Putting together a series of logical factors, he writes:

We can estimate that KU borrows alone are generating 14.0% of all daily author earnings on Amazon. Keep in mind, however, that authors in this program are giving up income from other outlets, which must be taken into account and may mean a decrease in earning potential for some or even many authors.

Even earlier, Howey was discerning intriguing dilemmas in how KU was affecting his sales:

Now that a couple of months have gone by, and I’ve been able to watch my dashboard closely, I can say for certain that KU has more than covered the readership I gain from the iBookstore, Nook, and Kobo combined. That is: I would have more readers by being exclusive to Amazon than I would by having my ebooks everywhere else. I might be earning slightly less money, but with considerably more fanbase. This is the conundrum we face as we weigh whether or not to go exclusive, a decision I’m faced with right now as my limited time trial expires.

In more recent comments, Howey has said that he expected to pull most of his work out of the KU programme.

Confusing enough for you?

It's not as if sales patterns and ranking algorithms have been understandable for authors. Or for anyone else on the outside of the Big Smile.

We've become somewhat inured over time to the fact that these self-publishers are valued vendors -- officially deemed a kind of customer, worthy of good service, by Amazon several years ago -- who are daily confounded in this cyber-market.

Discussions go on in forums night and day, Mr. Gershwin, writers comparing notes, trying to piece together a rationale for why an approach this week works and next week falls flat. As Werner Erhart once said in another context, "understanding is the booby prize."

For all the world-changing capability Amazon has offered to the aspirational writer -- and there is no contest there, Amazon is the original and most powerful enabler of the self-publisher -- there's something sad about these endless chatterings about who's getting some sales and how that might be happening and why.

We understand that customers buy sometimes, don't buy at other times, and can mystify us in between.

We do not understand, not yet, a commercial market structure that can seem, itself, as whimsically driven as that customer.

Put another way, the reader was always right, yes, but also a little crazy and impossible to predict. The kasbah, however, was supposed to hold still.

And so the authors try to fathom the doings of the diodes, the weird waltz of darting visibility and promotional promenades and price-point cameos that can come together nicely at one hour and then tank, so quickly, the next.

Going to the Matting: KU 'is not as bad a deal as one might think'

In Germany, the journalist and author Matthias Matting -- faithfully followed in Europe his "Self-Publisher Bibel" site -- has conducted an experiment to see if he could detect what may affect sales rankings on Amazon.

Matting has kindly written up a shortened edition of his report in English -- Test: How Amazon’s algorithms really work – myth and reality -- and comes up with some signal notions.

He starts with four books nominally named "The Self-Publishers Bible: Knowledge for Authors" and "...News for Authors" and "...Tips for Authors" and "Marketing for Authors." Here is one of them on Amazon.de. These are new titles, which he generated from the previous omnibus work, the "Bible" of each title. Two are priced at 0.99 euros, two at 2.99 euros.

He went in with three expectations. Matting thought he would see, as he writes, that:

Price influences sales rank

Enrolling in KDP Select influences sales rank

The dynamics of sales influence sales rank

He came out with five "facts," and I'll leave you to peruse most of the supporting commentary for each at his site. I'm quoting him:

Fact 1: Price does not influence sales rank. Fact 2: Enrollment in KDP Select does not influence sales rank. Fact 3: Organic growth of sales number results in a higher ranking. Fact 4: Sales of (much) more than 24 hours are important for the sales rank. Fact 5: Borrows on Kindle Unlimited influence the sales rank immediately.

Some of Matting's most interesting notes tie to "Fact 4." He writes, emphasis his:

One day without sales decreases the sales rank of a title in the same way as halving its sales numbers. That means the Amazon algorithms devalue a sale by half every 24 hours (approximately, they exact amount is impossible to calculate). Add to this that the sales numbers are increasing exponentially with high ranks and it gets clear how hard it is for a new title to climb into the charts.

And as for "Fact 5," what Howey calls "the KU effect" in which Matting sees immediate impact on sales ranking with Kindle Unlimited, emphasis mine this time:

I couldn’t believe this [at] first. Borrows on Kindle Unlimited are only paid when the user reads at least 10 percent. But for the sales rank all borrows count immediately...You can reach higher visibility on Amazon without having to wait until a borrower actually reads your book. Even if a borrower never reads your book but only returns it later, you still have a higher sales rank (but you won’t get paid, of course).

His advice, in fact, is that Kindle Unlimited may not be so bad for authors, at least in terms of sales rankings, per his test and observations, emphasis mine:

Twenty sales each day for a week [can] get you higher [in sales rankings] than 150 sales one day and none the [next]. Kindle Unlimited is not as bad a deal as one might think – at least, you get an immediate boost if someone borrows your title.

Follow the bouncing books

The comments of self-publishing authors in public spaces about these issues are frequently contradictory, anecdotal, usually emotionally tinged, sometimes obviously exaggerated, hard to assess, impossible to keep up with -- and understandably but ironically dashed off in forum-speak that makes you wonder how some of these writers put four words together in their books.

But some voices can rise above this fray and have had that privileged power for years now: the "indie bestsellers," the outliers, the Kindle Million Club whiz-kids are starting to speak.

The engine of Amazon Kindle created these folks. Now, it's being called into question by them, and in unusually public terms.

This may be the sound of the other shoe falling. Or it may be the "aha" moment experts have warned authors about. Or it may just be the 6,433rd bump along the way in a massive retail and publishing platform's efforts to find an historically unprecedented pathway from writer to reader.

Odd how those squeals of "this is the best time to be an author!" start to fade when you hear about a major self-publishing author's struggles to pay a child's medical bills because 75 percent of her Amazon income evaporated in the advent of KU, isn't it?

Trial and so much error, obviously by Amazon's folks -- who are good people inventing a new wheel -- as well as by authors.

What comes next? We don't know. As usual.

That's the bottom line: the way, the truth, and the lightheadedness of it all. We just don't know.

Main image - Shutterstock: Nadezhda1906