I don't know of any reports on how subscription services have cut into ebook sales, but just looking at Amazon and its KDP Select with free ebook days and its Kindle Unlimited subscription service I have to think the only winner there is Amazon.
According to Amazon its Kindle Unlimited royalties are determined by:
"For example, if the monthly global fund amount is $1,000,000, all participating KDP titles were read 300,000 times, and customers read your book 1,500 times, you will earn 0.5% (1,500/300,000 = 0.5%), or $5,000 for that month."
Please note the Kindle Unlimited monthly amount for distribution is the KDP Select fund amount. Bear this in mind.
However, Amazon says more than 700,000 books are accessible through the service, so already the hypothetical royalty income is cut in half to $2,500. (
www.bbc.com/news/technology-29572724 )
There are well over 30 million Kindle e-readers of one type or another reckoned to be in current use, plus hundreds of millions of iPads, tablets and smartphones using the Kindle app.
But it’s worth noting that the KDP Select Fund also covers payment on the Kindle Owners’ Lending Library scheme, which is one of the benefits of Amazon Prime membership, so this confuses the issue.
The payout figures for borrows are going down, from $2.20 in pre-Kindle Unlimited June, to $1.81 in July when the Kindle Unlimited service was launched.
Let's do the math.
A self-published author would get $1.75 on the outright sale of an ebook priced at $2.50, as that would be the amount received on a 70% royalty at Amazon.
For books priced higher than $2.50, an author would seemingly be losing money with a Kindle Unlimited borrow. For example, a book priced at $5.00 would get a 70% royalty of $3.50, so you would only be getting half of that amount at $1.75 through Kindle Unlimited. If you had a book priced at that level or higher, then you might think you would be better off by opting out of Kindle Unlimited.
But you also might think again if you look at the big rise in business that Kindle Unlimited has brought for many authors. If you’re seeing, for example, 100 borrows for every 100 sales compared with just a trickle of borrows previously, say, about 10% of sales, then that would be a very worthwhile increase in cash received.
For example, a $5.00 title with 100 borrows at $1.75 and 100 sales at $3.50 would net $535, while the surmised previous position of 10 borrows at $2.20 and 100 sales at $3.50 would have brought in just $372.
Many authors will never have ebooks with Kindle Unlimited because of the KDP Select requirement to be exclusive to Amazon. If you are selling well on other ebook retailers such as iBooks, Nook or Kobo, then you would be very reluctant to take your books away from a proven source of income to be in Kindle Unlimited. This narrows the field down even more and means authors who can focus on Kindle can benefit.
These are all, of course, highly theoretical calculations but they do show the range of possibilities, although there is also the question of whether and how Kindle Unlimited borrows will cannibalize outright sales. There is also the distinct possibility that the ebook business could move sharply towards largely becoming a subscription or borrow-based business in the future, perhaps the near future.
Subscribers paying $8.99 a month for up to 10 books are not going to see any value in downloading $0.99 ebooks and it’s unlikely they’ll be bothering too much with books at $1.99 either.
They’ll be looking to get at least their money back over a month, so possibly the lowest price point they’ll be downloading will be $2.99, but even that level might see some reluctance. After all, if a subscriber downloads 10 $4.99 ebooks a month, then they know they’re getting a good deal for their money.
If you’ve got a cheap ebook on sale at the Kindle store and the figures you’ve seen so far show your borrows as a substantial portion of your outright sales, you might want to consider raising your price to see the effect on Kindle Unlimited borrowing figures and calculate the borrow/sales differential.
Another major point to consider in light of Kindle Unlimited is length of your book.
The KDP Select Fund pays out when 10% of a book is read. If someone borrows your book in August but doesn’t read 10% until October then you’ll still get paid when they reach 10%. But the reality is that people are unlikely to leave it that long, they’ll probably churn your book for something else without getting to the 10% point.
If you’ve got a 600-page saga, then the subscriber has to wade through 60 pages before you get your money. If you’ve got a 100-page novella, they could breeze through 10 pages in a matter of minutes to trigger your payout.
Some non-fiction ebooks have lengthy tables of content which take up almost 10% of a short ebook, especially when combined with up-front features such as title pages, copyright detail pages, etc.
Amazon has so far not set any parameters for inclusion in Kindle Unlimited and it would be difficult for it to do so really when you consider that, for example, detailed tables of content are usually a great source of help for readers.
The conclusion to be drawn is if you’re aiming seriously at the Kindle Unlimited market, you should be looking at writing and publishing short ebooks of around 100-150 pages at a price of around $3.99.
A series of short novels could be the perfect vehicle for a self-published author to make the most of Kindle Unlimited before the arrival of the Big Five, if they ever do arrive.
I'm betting the big 5 publishers will be taking a very serious and very close look at subscription models.