How KU Destroyed the Ebook Market

At first glance, Amazon’s Kindle Unlimited looks like a great deal to serious readers. For only $9.99 per month, you can read whatever you want from a catalog of more than 2.5 million books. And it is a great deal, for now. The downside is that it has had terrible consequences for authors and publishers alike, consequences that will only continue to get worse over time. Here is the fundamental problem with the KU program from a book industry professional’s point of view.

The proper price range for an ebook, as defined by Amazon, is $2.99 to $9.99. Outside that range, the 70 percent royalty is halved, so those are the relevant price boundaries. While the Big 4 publishers price their new ebook releases at $9.99, Castalia generally prices its ebooks at $4.99, so we’ll use that for the purposes of analysis.

Using a hypothetical 300-page book as an example, an ebook sale generates around $3.49 in royalties for the publisher after Amazon deducts its delivery fee and infrastructure charges. A full Kindle read of the same ebook generates around $1.20 per finished book, the precise amount depending upon the monthly KENP royalty, which has recently averaged around .0040 per page read.

So, on it’s face, KU means reducing the payout to the author by about $2.29, or 52 percent. That’s bad, but superficially survivable for a successful writer.

However, the reality is considerably worse. Think about what percentage of the books you read that you actually finish. I read 4.5x faster than the average reader, I consciously try to finish every book I read on principle, and I would still estimate that my book-completion rate is only around 90 percent. Sometimes a book just isn’t that interesting, sometimes a better book comes along, and sometimes you only want a specific piece of information contained in a particular book that is otherwise of no interest to you.

And consider the fact that Amazon literally markets KU as a means of “trying out new authors”, which tends to increase the number of books that the average individual samples, but doesn’t finish, as he tries, and discards, new authors he doesn’t like.

“I would never be able to afford reading so many books if not for KU. It also allows trying new authors and series. Since I don’t need to pay extra, I’m willing to try books/authors I would normally hesitate to spend money on.”

For the sake of argument, let’s assume that KU readers finish one out of every 3 books they download onto their Kindles. That estimate is probably on the high side, given the way there is a strong correlation between readers and collectors, but it will serve to illustrate the point. This means that while an author gets paid for every ebook sold, whether it is read or not, he’s only going to get paid for the partial percentage of his KU books that were actually read.

(This is probably why KU only reports normalized pages read, not book downloads. It would likely be depressing to a lot of authors to realize how few of their books downloaded are actually read at all, let alone in full.)

Multiplying the difference between a sale and a book read (0.48) by the percentage of completed books (0.33) suggests that on average, authors are making about 15.84 percent of what they were making prior to Kindle Unlimited being introduced. It also means we can estimate the amount of ebook sales revenues that has been eliminated by Kindle Unlimited by multiplying the monthly KDP Select Global Fund for Kindle Unlimited by 6.3131, which is the inverse of that 15.84 percent.

Since the September 2023 KDP Select Global Fund was $49.6 million, this suggests that Amazon is now destroying about $313 million in potential ebook sales every single month. And this doesn’t even get into the fact that because Amazon controls the sales across its site with its A9-A11 algorithms, as well as secret algorithms like Project Nessie, to influence prices and pick winners and losers on a monthly basis.

People familiar with the FTC’s allegations in the complaint told the Journal that it all started when Amazon developed an algorithm code-named “Project Nessie.” It allegedly works by manipulating rivals’ weaker pricing algorithms and locking competitors into higher prices. The controversial algorithm was allegedly used for years and helped Amazon to “improve its profits on items across shopping categories” and “led competitors to raise their prices and charge customers more,” the WSJ reported.

So, if you want to know why so many great little independent publishers have disappeared, why independent authors are struggling, and why genre publishing houses like Tor and Baen Books are teetering on the edge of failure, and why the comics publishers like Marvel, DC, Dark Horse, and IDW are facing the prospect of looming shutdowns, you’ve got your answer: Amazon ebook sales hurt the print market, and Kindle Unlimited is killing the ebook sales market.

Now, you don’t need to worry about Castalia. Even though we’ve seen the same cataclysmic decline in ebook sales that other publishers and authors have, starting in October, you’re going to see us publishing more hardcovers, paperbacks, and ebooks than you’ve seen us publish in the last three years. We just published CARAVAN OF THE DAMNED by Chuck Dixon, and next week we’ll be publishing THE ALTAR OF HATE by yours truly and QUANTUM MORTIS: A MIND PROGRAMMED & OTHER STORIES as soon as the cover art is ready. And a whole host of books that haven’t appeared in print before, including THE CASTALIA JUNIOR CLASSICS Volumes 7 and 8, are in production. We’re also going to systematically expand the number of ebooks and print editions available on the Arkhaven Store over the next year.


But while we probably deserve some credit for anticipating the negative consequences of KU and taking steps to avoid them, it’s your support of Library, History, and our various crowdfunding projects, and your willingness to buy books directly from us, that is the main reason Castalia is healthy while publishers who relied upon bookstores, comic stores, and Amazon to keep them afloat are rapidly circling the dustbin of history.