KDP Select results for January 2012
Amazon has reported the results of the KDP (Kindle Direct Publishing) Select (KDPS) program for January 2012.
That’s a way that publishers who use KDPS can be compensated when eligible Prime members borrow their books from the Kindle Owners’ Lending Library (KOLL).
Let me explain that a little more before I get into the figures.
Eligible Prime members typically pay $79 a year for two-day shipping on many items at no additional cost. Another significant group who are eligible Prime members are Kindle Fire owners in their first month (when they get a free month of Prime).
One of the added benefits of Prime is the ability to borrow up to one book a calendar month from a special set of books called the Kindle Owners’ Lending Library (KOLL).
Independent publishers (often just the author of the book) can get their books into the Kindle store by using Kindle Direct Publishing (KDP), which was formerly called the Digital Text Platform (DTP).
Why would an author, though, want their books to be given away when they could be sold?
Obviously, one reason is to promote sales through what I call “word of mouse” (tweets, reviews, blog posts, and so on).
However, that may not be enough of a motivation. Amazon needs the KOLL to be attractive to get people interested in Prime so those customers buy physical goods (what I call “diapers to windshield wipers”), where the profit is.
When the KOLL started it had about 5,000 titles.
It now has 111,598…that’s the jump just since November 3, 2011 (not even four months).
Clearly, KDP Select was a big part of that. KDP Select started on December 8, 2011…we’ve only seen figures so far for December and January (which was just announced).
Publishers divide a pool of cash, with each “borrow” during the period getting one share.
In December, there were 295,000 borrows, and a $500,000 pool…which came out to about $1.70 per borrow.
It was quite exciting when Amazon announced that they were increasing the pool for January from $500,000 to $700,000. I’m sure publishers figured they would make more money in January.
Well, with the same number of borrows it would have been more money, of course.
Instead, the number of borrows went up so much, that KDP Select participants are getting less per borrow $1.60 approximately, instead of $1.70.
I think it’s also pretty likely that there are a lot more publishers in the pool. Even though some publishers probably added titles (I added my Love Your Kindle Fire: The ILMK Guide to Amazon’s Entertablet to it in February), I would guess that it was spread a lot more thinly. Oh, some publishers probably made more, but others probably made less.
There were 437,000 borrows in January.
Does that mean that the trend will continue and there will be close to 650,000 borrows in February?
If it did, publishers would make a lot less per borrow: the pool for February has gone down to $600,000 from the $700,000 in January…that would drop it down to about ninety-three cents per borrow.
However, as Amazon noted in the announcement to KDP publishers, January was likely an especially good month. January is a good sales month: there are returns, for one thing, and people who held off buying something for themselves until they saw what other people got them. The Kindle Fire owners are part of the KOLL…and that may have bumped up more in December than it did in January.
February is also two days shorter than January this year.
My guess, though, is that KOLL borrows are front-loaded in a month…that a lot more of them happen in the beginning of the month than in the middle or at the end.
That just makes sense to me, since the limitation is up to one book per calendar month. If you borrow a book in January, you can’t borrow another one until February. So, there is pent-up borrowing demand until the next calendar month starts.
Even given that, I think it is possible that there will be fewer borrows in January than in February…but about fifteen percent fewer? That’s what it would have to be for $600,000 to pay as much as $700,000.
Let’s say that publishers make less for KOLL borrows in February than in January (as they did in January compared to December). Does that mean that publishers should stay out of the KOLL?
We still don’t have enough data. If the KOLL borrows increase paid sales, it could be worth it. If the KOLL borrows represent additional income, rather than replacing sales, that could make it worth it.
We do have to balance the ninety-day exclusivity period…if publishers are making sales through Barnes & Noble, Smashwords, or their own websites (not through Amazon), the KOLL is less attractive.
I’m staying in it, but I’m keeping an eye on it, too.
One last fascinating question for me on this…was Amazon deliberately manipulating the pool amount to try to get the per borrow pay to be about $1.50? They are presumably really good at estimating demand (although they’ve underestimated it on Kindles in the past). The example that Amazon uses to show the math uses 100,000 borrows with a $500,000 pool…or $5 per borrow. That may, perhaps, suggest to people an overly optimistic outcome.
Living on Lending, Banking on Borrows
I noticed something interesting the other day, and it is related to this discussion.
I managed a game store (in addition to having managed a bookstore), and I do like to play around with (but still within) the rules.
When it was time for me to borrow a book from the KOLL, I sorted them by most expensive. I figure I want to get my $79 a year out of our Prime membership. Yes, the Prime streaming videos are a great plus. Yes, we’re having fun with the Prime shipping (but I’m not convinced that actually saves us any money…it didn’t in the previous analyses I did). If I can borrow books that cost more than the annual Prime fee divided by twelve (about $6.58), I’m making a profit.
Of course, I may also be getting books I wouldn’t have gotten otherwise.
However, here’s what I noticed…over forty Kindle store books priced at $200!
Who would buy a Kindle store book for $200?
Well, there are some expensive books where it makes sense…textbooks and such. There are even Kindle store books that cost more than $5,000.
That doesn’t seem to be the case here, though. There are a bunch of books by the same person, but there are a number of books. Some of them are smaller than a regular novel (based on file size), and some appear to be fiction. Here, for instance, is a book that costs $200…and is a tiny 41KB.
Who would pay $200 for it?
Well, the thing here is that nobody has to pay that…and the publisher can still make money.
If people borrow it in the KOLL.
Why would people borrow this?
Curiosity, maybe…and maybe they found it by sorting the prices high to low like I did.
Does that strategy work?
It’s like when people are saying that some odd collectible is going for a thousand dollars. I often say, “No, it’s being offered for a thousand dollars.” That doesn’t mean it has ever sold for that…and I don’t know if anybody has borrowed one of these $200 books.
Oh, and why is it $200 and not, say, a gazillion dollars? Kindle Direct Publishing books have to be priced from ninety-nine cents to $200. Some people want to know how to tell if a book is published through the KDP…if it’s priced over $200, it isn’t.
What do you think? If you are a publisher, are you staying with the KOLL? Is Amazon trying to keep the borrow pay down around a buck and a half? Is anybody going to borrow This Book Shows Everyone Just How Rich You Really Are by Mon. E. Bags, priced at $200? Feel free to let me know by commenting on this post.
* Note: while you can see the books you can borrow as an eligible Prime member at the link I have provided, you can only borrow one from you physical Kindle . If you are reading this blog on your computer, you will not see a “borrow” button on the product pages for the books. If you want to borrow a book for free (technically, for no additional cost), you must click a button that says “borrow”, not “buy”.
This post by Bufo Calvin originally appeared in the I Love My Kindle blog.