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Amazon’s new way of paying authors makes sense, and here’s why

Updated: Jun 24, 2015 4:38 PM UTC

Amazon has what you might call a tense relationship with the book-publishing community, including authors who believe its platform devalues the act of writing, so it's not surprising that any change it makes to the way it sells books or pays writers tends to come under heavy fire. Its latest move is no exception: The company is launching a new payment scheme for authors whose books are part of its Netflix-style book-rental program for the Kindle, in which writers will be paid based on how many pages a user reads.

Depending on whom you listen to, this is either the death of writing, an all-out attack on authors, a shameless money grab that will lead to an explosion of shlock, or a combination of all three. But while most authors probably don't want to admit it, what Amazon (amzn)is doing makes a lot of sense—and not just from a business point of view either. Its approach could actually make the market for new books healthier, which would help everyone.

This new approach doesn't apply to every author who publishes through Amazon's Kindle platform, just the ones who are part of the Kindle Direct Publishing Select program, which features self-published titles that are exclusive to the Amazon platform. When one of these books is rented through the Kindle Unlimited or Lending Library programs, authors used to be paid a certain fee for every reader who got past 10% of the book. Now, they will be paid based on the total number of pages that are read by rental users. Here's how Amazon explained it in its announcement:

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).

Some Amazon supporters have pointed out that famous authors like Charles Dickens and Sir Arthur Conan Doyle were also paid based on the number of words they produced and the magazines they sold (although at the time no one could tell how many of them were read), but for the most part the company has been criticized for cheapening the art of writing.

But does the change actually do this? Not really. In fact, it arguably incentivizes new authors to create books that readers will like, so that more people will get through as many pages as possible. In the past, all that mattered was the number of rentals.

If you look past all of the criticism, what Amazon is trying to do is what any retailer or middle-man does: It's trying to figure out the right mix of incentives that will encourage authors to produce what it wants, which is books that sell and that readers enjoy. This may offend writers who don't want to think of their books as retail products, but it's a perfectly reasonable approach for Amazon to take. In fact, you could argue that traditional publishers would probably have done the same thing if they could have.

Author Chuck Wendig made a similar point in a blog post on the changes, arguing that the new approach is better in some ways than the model Amazon used to use. The previous system encouraged writers to produce as many books as possible, Wendig says—even if they weren't very good—in the hope that enough people would rent them that they could get paid. The new model, he argues:

"Fixes the weird inequity and stops punishing people who wrote... y’know, actual-size novels. And it stops incentivizing people to write tiny little no-nothing stories, or for writers to break up actual-size novels into hitching seed-spurts of 'serial content' ('My novel, THE RAMTHONODOX CONSPIRACY, is broken up into 215 downloadable chapters!')"

Author Kerry Wilkinson, whose series of crime novels made it to the top of the Amazon best-seller list and won him a deal with a traditional publisher, also feels that Amazon's new approach for Kindle rentals is fair. "If readers give up on a title after half a dozen pages, why should the writer be paid in full?" he asked in an interview with The Telegraph. Others point out that many books are "padded" by writers who feel as though they should be a certain size, something Amazon's new strategy would discourage.

One of the things some authors seem to be worried about is the potential for Amazon to start paying all Kindle authors in the same way, or for its approach to catch on with other publishers. And it's certainly possible that Amazon might expand its experiment, if it proves to have the right effect on production of new books. But it's not entirely clear that this would be a bad thing—either for readers and book buyers, or for authors themselves. Whether writers like it or not, books are a product that consumers pay for, and encouraging better products arguably benefits the entire marketplace.

Follow Mathew Ingram on Twitter at @mathewi. You can read his coverage of the media industry by going here, or you can subscribe via his RSS feed.