The Following Will Shock You
This is for all creators who use Kindle Unlimited – don’t!
By Doug Owen
Okay, got that off my chest. I guess you’re wondering why I’m screaming that at the top of my lungs. Well, let’s go over what KU is, for those who don’t know.
KU, or Kindle Unlimited, allows readers to read as much as they want for a small monthly fee. Authors add their books to KU and, when a reader starts to read it, the author starts to get paid. On a 300 page book the payout is a maximum of $1.50 per book if it is read from start to finish. If the book is only 50% read, then they get $0.75. Nice system, and all you have to do is advertise your book.
Knowing the world we live in, there are people out there who’ve figured out how to scam the system. They get people to create multiple new KU accounts (free for the first month), download the book and either flip through it quickly or just skip to the end. So, for each individual scammer, the author has the ability to make $15. Do this enough and you could make a few bucks, but not until you have finished hiring a lot of people and losing those bucks.
So why is this bad?
Ask Pauline Creeden, author of the Chronicles of Steele. A while back, Pauline received a generic email saying her KDP account was closed due to a violation of the terms. Like most of us, Pauline sees a majority of her sales through Amazon in ebook format. She is a mid-range author, like many of us, and the closing of her KDP account cut off a large portion of income for her. It took a lot of emailing back and forth, and pain, but her account was reinstated.
Why did Amazon close her account?
Here is the email message she received:
We are reaching out to you because we have detected that borrows for your books are originating from systematically generated accounts. While we support the legitimate efforts of our publishers to promote their books, attempting to manipulate the Kindle platform and/or Kindle programs is not permitted. As a result of the irregular borrow activity, we have removed your books from the KDP store and are terminating your KDP account and your KDP Agreement effective immediately.
As part of the termination process, we will close your KDP account(s) and remove the books you have uploaded through KDP from the Kindle Store. We will issue a negative adjustment to any outstanding royalty payments. Additionally, as per our Terms and Conditions, you are not permitted to open new KDP accounts and will not receive future royalty payments from additional accounts created.
She’d received no advance warning, no information, nor anything to tell her there was a problem.
Basically, when you limit yourself to KDP and the KU program, it means you have the possibility of losing a lot. Pauline advertised this book like she did any other, but maybe the cover art (impressive when you look at it) enticed a number of people to join the KU program and grab her book. Maybe there was an influx of people who joined KU at that time and picked her book to read. We don’t know (and neither does Pauline). All she can tell you is it shocked her, and took a great deal of time to resolve.
Note – the payout for KU usually works out to $0.005/page.
Ouch! Really? Yes, they do, but that shouldn’t stop you from dealing with them indirectly. Here’s why. Warning, I may get a little racy on this one.
Ingram tells you when publishing through their Lightning Source, that book stores like to have the ability to return books that don’t sell. It means limited liability to them (really, no liability). They also tell you that bookstores like to make 40 percent of the sale as profit.
Okay, let’s look at the numbers. A book sells for $20, the bookstore gets $8 and you get $12, right? No. In order for the bookstore to get 40 percent you have to mark your payments at 55 percent (40% to the bookstore and 15 percent to Ingram as the distributor). So now you have only made 45 percent or $9. Then you have to remove the print cost of the book as well, say $4.55, leaving you with $4.45. Okay, I can see that.
Returns kill your income
Ingram, when handling returns, charges you for both the printing of the returned book and their distribution charge. So, you are out the actual distribution fee of the book, or $11. And to add insult to injury, they also charge a $2 fee for handling the return.
That’s not all. If you request for the books to be returned, not destroyed, they charge you $2 per book for delivery—is if you live in the United States. If you live in, say, Canada, they charge an extra $20 per book for the return.
Is your wallet crying yet? There’s more.
Depending on when the return is done, you could be out a lot of money before you see one dime of royalties.
Say it isn’t so, Doug. How could they do that?
Easy. You go to the bookstore and arrange a signing and you live in Canada. They LOVE your book and see you have lots of sales, so they order 200 books through Ingram to stock the shelves and make money. You show up, slogging through the snowstorm to end all snowstorms. The store is open and you wait, hoping to sign and sell at least 100 books. You advertised the sale to all the people following you on Facebook and Twitter. Many people said they would be there.
At the end of the day you’re dejected, and have sold only ten books. Okay, not bad, but horrible for royalties (use the prior financial information to show you made $44.50 from the sale).
Now, the manager at the bookstore shakes your hand and says, “Tough luck with the weather, right?”
You smile, nod, and collect all your things in order to brave the raging storm outside.
Unknown to you, the bookstore packs up all 190 remaining books and ships them back to Ingram that very day, shaking his head at another wannabe author, not realizing the storm caused the lack of sales.
Ingram receives the books back, and promptly checks to see you have return marked on them. They smile, package them up, and send them to you. Your royalty report shows the following:
Sales – $90
Print costs – $910.00
Total Royalties – ($820)
The signing now cost you a lot of money, and they hold that against you, deducting it from royalties owed.
Now, when you get your financial report at the end of the month you’ll see the return of the books, and a fee imposed called “Other”. In this case (we’ll call the author Bill), Bill gets his monthly Ingram statement that shows he owes $820 in royalties and an “Other” charge of $3990 ($2 per book return shipping charge and $20 per book return out of US). Bill closes his account and stops writing. What a shame.
Ingram mentioned two months ago that they are rewriting the ‘agreement’ to remove the charge, but everyone asks, “What agreement?” In fact, there is no actual formal agreement between Author/Publisher and Ingram Lightning Source. Figure that out. So how can they actually hold you to that charge? Well, if you are smart you’ll realize it is a charge from Ingram Distributing, not Lightning Source. You could always say you don’t have an agreement with them—only Lightning Source—and see how that works. Until Ingram gets their heads out of their proverbial ass, I’ll never deal directly with them again.
If you decide to do signings, ask the bookstore if you can supply the copies of the book for sale. Let them know that as a self-published author, it is important you control all returns. Tell them you’ll gladly take back all the books that don’t sell at no cost to them and smile. If you’re a small publisher, make sure your website explains this as well. They should know you accept returns on your terms. And never let Ingram destroy the books.
Follow Doug at: http://daowen.ca