Amazon greeted writers with a big surprise this month. The method for determining Kindle Unlimited royalties is going to change on July 1, 2015. The current model pays out once a reader consumes the first 10 percent of a given book. The new revenue model will be based solely on the number of pages the reader views on the first pass through the book.
Amazon provides the following explanation and examples for the new approach:
Here are some examples of how it would work if the fund was $10M and 100,000,000 total pages were read in the month:
The author of a 100-page book that was borrowed and read completely 100 times would earn $1,000 ($10 million multiplied by 10,000 pages for this author divided by 100,000,000 total pages).
The author of a 200 page book that was borrowed and read completely 100 times would earn $2,000 ($10 million multiplied by 20,000 pages for this author divided by 100,000,000 total pages).
The author of a 200 page book that was borrowed 100 times but only read halfway through on average would earn $1,000 ($10 million multiplied by 10,000 pages for this author divided by 100,000,000 total pages).
Can Amazon Do That?
A few people have asked me as an Internet lawyer if Amazon can make these changes unilaterally? In a word – yes. Section 2.2 of the Amazon Kindle Direct Terms provides the legal basis for the new approach.
2.2 Changes to the Terms of Sections 5.4.1 (Royalties) and 5.5 (Grant of Rights). Changes to terms of this Agreement contained in Sections 5.4.1 (Royalties) and 5.5 (Grant of Rights) will be effective and binding on you on the date 30 days from posting or on the date you accept the changes, whichever first occurs. You accept the changes by either (a) clicking agree or accept where you’re given the option to do so or (b) by using the Program to make additional Digital Books available through the Program. Changes to the terms of Sections 5.4.1 and 5.5 will only apply prospectively with respect to Digital Books sold after the date thirty days from our posting of the changes, unless you accept the changes as provided above. If you do not accept the changes, you must withdraw your Digital Books from further distribution through the Program and terminate your use of the Program prior to the date thirty days from our posting of the changes. Note that we may make acceptance of changes a condition to continued use of the Program.
As a writer, you agreed to these terms when first joining the Kindle publishing program, which allows Amazon to make changes pursuant to the highlighted text. The only issue writers might contest is a lack of sufficient notice for the changes. Amazon is required to provide 30 days notice for these changes pursuant to the terms, but is only giving roughly 14 days in this case. This defect provides the basis for a minor legal squabble that might extend the notice period a few weeks, but will not prevent Amazon from instituting the new program.
Like this article? Click here to tweet it.
Two Other Thoughts
These Kindle Unlimited changes have been met with applause by some writers while others are less enthusiastic. Whatever your opinion, the new royalty program highlights a key characteristic of the current publishing industry. Has Amazon broken the monopolistic control of the publishing houses? Yes. Publishing a book is clearly much easier now than it ever has been. Still, I would argue writers need to take notice of the fact they are almost completely at the mercy of Amazon now. The King is dead. Long live the King?
Then we have the “creepy factor” associated with the announcement. Amazon can track my reading habits down to the number of pages I’ve read in a particular book downloaded to my Kindle? That is fairly alarming. What other information can a Kindle device monitor and collect? All I can say is my Kindle will be stored face down when not in use from now on.
Perhaps in a shoe box.
In the garage.
The New Master
Many writers are waking up to a new realization this month. While the potential of making a living on Amazon obviously still exists, Kindle Unlimited isn’t the stable platform many writers believed it to be. Amazon’s unilateral modification of the royalty arrangement for Kindle Unlimited should make writers nervous. After all, what is to stop Amazon from cutting the royalty rates paid for general books sales as well?
The Kindle Direct Terms allow the company to make such a change any time it wishes.
How would you react if your royalty rate dropped from 70 to 40 percent starting next month?
Richard A. Chapo, Esq.