Downward trend in the Kindle Owners’ Lending Library

Downward trend in the Kindle Owners’ Lending Library

Well, this was fascinating!

I was intrigued when the pool pay per borrow was $2.18 for March.

That’s the amount that publishers using Amazon’s Kindle Direct Publishing who have elected to put their books in the Kindle Owners’ Lending Library (KOLL) got for each time an eligible Prime member borrowed one of their books.

That’s up from February from $2.01. That $2.18 is significant: it means that books which are priced at $2.99 and which are getting the highest 70% royalty rate were worth more to the publisher when borrowed than when purchased (which is about $2.08, depending on the size of the book…there is a delivery charge based on file size).

That’s interesting both philosophically and strategically. People do get less when they borrow a book (they don’t get to keep it), but the publisher is paid more for it.

That’s because the consumer isn’t paying the publisher…Amazon is. Having the KOLL is a great selling point for physical Kindles (you can’t borrow from it with just a reading app). More importantly, I think, is that it increases the value of Prime, which I think is a key part of Amazon’s retailing strategy.

However…

The pool was the same in February and March: $600,000.

If publishers got more per borrow, that means there were fewer borrows.

Yep: people borrowed fewer books from the KOLL in March…and there were two more days in March.

That intrigued me, so I wanted to run some numbers. I knew the number of available books had been going up, so I included that:

Month	Pool	Pool Pay	Borrows	Per Day	Count	BPT
Dec-11	$  500,000	$     1.70	294,118	12,788
Jan-12	$  700,000	$     1.60	437,500	14,113	69,850	6.26
Feb-12	$  600,000	$     2.01	298,507	10,293	95,020	3.14
Mar-12	$  600,000	$     2.18	275,229	8,878	117,652	2.34

As you can see, the number of borrows went down in March over February.

Let me explain those columns:

The month is the month.

The pool is the amount that was divided among the participating publishers.

The pool pay is how much those publishers got for each “borrow”.

The borrows are the number of times that books were borrowed from the KOLL. Note that those aren’t all different titles. It’s possible that The Hunger Games was borrowed a lot more often than Love Your Kindle Fire…in fact, I’d bet on it.

Per day is the number of borrows per day. I did adjust for the program not starting until December 8th.

The count is the number of books I recorded for the KOLL on the first of that month. I considered counting, say, March 1st as being the February number, but I decided not to do that.

BPT is the number of Borrows Per Title. I divided the number of borrows by the   count.

The number of titles is growing…the number of borrows is not growing as quickly, and has even gone down.

This suggests to me that Amazon is succeeding in getting independent publishers to go into the KOLL, giving Amazon more exclusives…but the number of borrows are being concentrated in fewer books. Fewer people making more money…

I thought perhaps the most popular books in the

KOLL

were going to be traditionally published books (I expected Suzanne Collins), but right now at any rate, that’s not the case.

The top five are:

• A Walk in the Snark by Rachel Thompson
• The Mancode: Exposed by Rachel Thompson
• Sleeping with Paris by Juliette Sobanet
• Return to Paradise by Carol Grace
• Ripped Apart by Miriam Minger

Those are all independently published, I believe.

If borrows continue to decline, would Amazon drop the KOLL?

I don’t think so. I don’t think the number of borrows impacts them all that much, if it looks good. More exclusive titles looks good. More “no additional cost” titles looks good.  The pay per borrow going up looks good.

That last one is like a lot of businesses: a few people may make a lot of money, and that attracts people who think that it can happen for them. I believe it used to be true that most union actors were under the poverty level…but some made a lot of money. Most professional baseball players (going down to the feeder leagues) don’t make much money…but some make tons.

The same has been true of authors…and maybe, it’s true of authors in the KOLL.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Sales versus borrows versus giveaways

Sales versus borrows versus giveaways

There are three main ways that my Kindle store books get to readers:

• Sales (people pay for them)
• Borrows (eligible Prime members borrow them from the Kindle Owners’ Lending Library…KOLL…at no additional cost)
• Giveaways (I offer them for free on promo days)

Certainly, those aren’t the only ways. The books could be gifted to someone, loaned to someone not on the account, or shared by people on the same account. I don’t have any way of tracking those, though. My guess is that those may account for a significant proportion of the people who read my books, but I can’t really track that or affect it much. I enable lending on my books…that’s about the only control I could have over it.

So, I’m curious about how the three methods I listed above compare.

People using Amazon’s KDP (Kindle Direct Publishing) like me aren’t really supposed to give you sales figures, but what I can do is giving you comparisons without a scale. In other words, the charts below are based on the real numbers but don’t tell you what those numbers are: 80, 40, and 20 would look the same as 800, 400, and 200.

First, let’s take a look overall. I’m using the figures for March 2012, through what’s been reported to me on March 18. As the month goes on, I’ll presumably have more sales and more borrows, but not more giveaways (I don’t anticipate doing another promo day this month):

• Giveaway: 87%
• Net Sold: 10%
• Borrowed: 3%

As you can see, sold is about three times what the borrowed figure is. I was a bit surprised that more people didn’t get the books during the promo day on March 15th, but I had done a giveaway for most of these titles on February 12th as well.

Now, I have one title I would consider my “front list” right now:

Love Your Kindle Fire: The ILMK Guide to Amazon’s Entertablet

It’s only been available since late November of 2011 (and I’ve updated it considerably since then), and while the sales have lost the initial bloom, it still sells relatively well.

I wanted to compare that to my “backlist” titles, which have been around for a while.

It’s important to note that it is also priced differently. LYKF is $2.99, and the other are $0.99. My guess is that having a lower price may hurt the number of borrows you have…in this hypothesis, people would prefer to borrow more expensive books, so that it seems like a better deal*.

Here’s the chart for LYKF:

Love Your Kindle Fire

• Giveaway: 85%
• Net Sold: 10%
• Borrowed: 5%

As you can see, the percentage that were sold is the same…but a higher percentage borrowed, and a lower percentage took advantage of the giveaway (even though it was the first time this book had been given away).

2% difference in borrows might not seem like much, but it makes sales only twice the borrows (excluding the giveaways) as opposed to more than three times the borrows overall.

For the next comparison, let’s take my second best-selling title, and the best-selling of the backlist:

Free Books for Your Kindle (revised edition)

Free Books for Your Kindle (revised edition)

• Giveaways: 84%
• Net Sold: 13%
• Borrowed: 3%

As you can see, the odds that someone is going to buy this versus borrowing it are much higher than on LYKF.

How about a slow selling title that is available in all three options?

The Collected I Love My Kindle Blog Volume 1

The Collected I Love My Kindle Blog Volume 1

• Giveaway: 96%
• Net Sold: 4%
• Borrowed: 0%

While people will get the book as a giveaway, they don’t want to borrow it.

What does all this tell us?

What publishers (and anyone who puts books out there to be bought is a publisher, even if it is just one person who is the author) will want to know is, which way makes the most money?

That’s a bit hard to tell, because we don’t know how much money we will get per borrow until the month is over and Amazon tells us. I think the per borrow figure is going to continue to drop, unless Amazon raises the pool amount which is split among all of the borrows.

Let’s say it’s…$1 for March.

For a $0.99 book, the royalty when it is purchased is about thirty-five cents (it’s below the minimum price range to get the higher 70% royalty). So, you’d have to sell about three times as many as are borrowed to make more money on sales.  Hmm…that doesn’t tell us much on the overall for me.

For a $2.99 book that qualifies for the 70% range, you get about $2.08 per purchase (there is a delivery charge for books, based on their size…mathematically, 70% would be closer to $2.09, but let’s not quibble).

So, selling roughly half as many would get you the same money as the borrows, again, based on a hypothetical one dollar per borrow.

The nice thing is that you don’t have to choose one or the other.

However, to be eligible for the borrows, you have to put your book exclusively in the Kindle store for ninety days…you can’t also sell it through Barnes & Noble, for example. That’s something some publishers need to really consider. I only sell through Amazon, so that doesn’t have an impact on me.

What about the massively higher giveaway figures? Am I losing all that money?

Nah.

Many of the people who get a free book would never buy it. I think that’s particularly true on the Collected ILMK. People will get it for free…but many of them wouldn’t buy it, so I haven’t lost anything.

Do those giveaways help the sales?

I don’t have enough data yet…but I’ll say, I thought they might result in more reviews, and that hasn’t happened much. I have to face the fact that I’m just not a review magnet.

Regardless, I thought you’d find these figures interesting. It’s a rapidly changing landscape out there, and more data will help people navigate it. After all, just drawing a menacing picture on the map and saying, “Here there be digital” doesn’t help much.

* It occurred to me that I could test this a bit by looking at the most popular books in the KOLL (Kindle Owners’ Lending Library). One thing that complicates that is that many of the books in the KOLL are free, probably due to the promo days that KDP Select participants can do. Looking at the ones that aren’t free, 20 of the top 100 books in the KOLL are $0.99.  48 of them cost more than that…that’s about 29% that are $0.99. Looking at the 100 most popular paid books over all in the Kindle store, 23 of them were ninety-nine cents…which tends to refute that idea.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Amazon gives KDP publishers more info about freebies

Amazon gives KDP publishers more info about freebies

The battle for customers is the battle for readers.

The battle for readers is the battle for content.

The battle for content is the battle for publishers.

The battle for content is the battle for authors.

Amazon has just improved the experience for Kindle Direct Publishers by giving us more information on what happens when we take advantage of their KDP Select program and offer our books for free through the Kindle store.

I did that with most of my books on my birthday on February 12th…and I knew that many of them were downloaded.

However, it was hard to tell exactly how many.

The free downloads were mixed in with the purchases…I couldn’t tell which was which.

I wrote Amazon and asked if I was just missing that somehow. It didn’t seem likely: I’m pretty good at finding stuff.

I’d gotten this response from them on February 24 (less than a week ago):

“At this time, free sales are not shown separately on the sales reports, however, we’re making improvements to our reports to help give the clearest picture of your sales.”

Well, one of my readers, Donna White Glaser, pointed out to me that (as of March 1), they are now giving us more data!

When they say they are making improvements, they mean it.

They’ve added two columns:

Free Units-Promo**	Free Units-Price Match***

That second one happens when a title “… is made available for free due to matching a competitor’s free promotion”

Yep…if your book is free at another retailer, Amazon may price match it and give it away…and, by the way, you don’t get royalties when that happens. You also don’t get royalties when you choose to give away books on promo days.

Still, you need that data to determine if freebies are worth it…and Amazon is now giving it to us.

I do wish we could see the data for months before March 2012, but maybe in the future.

Thanks, Amazon!

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

Over 1 million independent books borrowed through the KOLL

Over 1 million independent books borrowed through the KOLL

November 3, 2011: Amazon adds a new benefit for eligible Prime members who own physical Kindles. They can borrow up to a book a month from a select set of books…the library starts with about 5,000 titles.

December 8, 2011: Amazon introduces KDP Select, a program through which publishers using their Kindle Direct Publishing can add their books to the KOLL (Kindle Owners’ Lending Library). They will be compensated by dividing a pool each month, based on the number of “borrows” they have.

February 29, 2012: In this

press release

Amazon announces that over a million KDP Select books have been borrowed.

Do you know how many years it would take to sell a million paper independently published books? I don’t know either, but trust me, this is a very big number.

Right now, there are 117,395 books in the

KOLL List*

That’s about 9.3% of the 1,262,458 in the USA Kindle store…and growing.

Also significant…that’s probably over 100,000 e-books for which Amazon has exclusive distribution.

I say probably, because the KOLL books that are not in the KDP Select program, that are traditionally published, don’t have to be exclusives.

That’s something that worries some industry people. It’s not a monopoly on e-books…but they do have the monopoly on those specific e-books for at least 90 days.

How is it for publishers (who may be just an author)? For some of them, it’s very good.

Amazon cites some specific people, and gives us their success stories:

• Patricia Hester
• Debora Geary
• Terri Reid

However, as I mentioned when I wrote about the January KOLL results, the more that are borrowed, the less each publisher gets for a borrow…unless Amazon increases the pool amount to match.

How about me?

Too soon to tell.

We aren’t supposed to give specific sales numbers, and I’m not going to do that.

I’ve just gotten paid for December (that’s normal…it’s about two months after the end of the months when sales take place), so I only officially have numbers for that month.

My KOLL royalties weren’t one percent of my regular royalties.

That’s no surprise. That was probably the peak sales month for Love Your Kindle Fire: The ILMK Guide to Amazon’s Entertablet…and it wasn’t in the KOLL at that point (it is now).

I do think, as it’s gone forward, the KOLL may have been good for my sluggish backlist. I’ll have to wait to see if it has apparently boosted sales of them as well, or if the money is going to come mostly from borrows.

I have no doubt that this is good for readers. One of the KDP Select elements is the ability to offer you books for free for five days out of the 90…I’ve done it, and I’m sure readers benefited from that.

Well, let me amend that…it’s good for eligible Prime members.

NOOK users couldn’t get those books for free or otherwise during their enrollment in KDP Select (although they could get the books using a Kindle or a Kindle app…there are people who have both).

I think it’s a brilliant strategy on Amazon’s part. Prime is, I think, where the money is. If content is what drives hardware purchases, this is huge for Amazon.

If this teaches people to buy independently published books, look out traditional publishers!

I always like to consider the risks…

• There could be backlash against Amazon for the exclusive part of the contract
• Publishers may resent the small amount of money per borrow if the quantity keeps increasing without the pool increasing
• Publishers might put less than optimal product in the KOLL, leading to dissatisfaction on the part of borrowers
• Readers may find that the books being made free under the program are good enough to read…so they buy fewer books
• Amazon could raise the cost of Prime, since the demand may increase…and they may have to significantly raise the pool pay

Those are a few possibilities I see…but overall, I think this is an example of Amazon successfully innovating.

What do you think? Feel free to comment on this post to let me and my readers know.

*Note: you can see the books that are available for eligible Prime members to borrow from this list on your computer, but you must borrow them from you Kindle device by clicking a button that says “borrow” not “buy” to have the cost covered by your annual Prime fee.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.

KDP Select results for January 2012

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).

KOLL list*

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.

Earlier post on December KDPS

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.

How?

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?

Dunno.

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.