The Kindle Publishing Business Model Explained
Who doesn’t want to be a writer?
There’s a few common trends that most people, at some point in their life, feel a tug to be:
- Write a book
- Work for yourself
- Work from home or be able to work and travel
So, what happens when you could combine all three of these items into one very profitable business?
Enter the Kindle publishing business model! Another amazing online business model that could make you potentially six-figures per year. Amazon launched their Kindle program on September 14th, 2012. The platform and device revolutionized the world of reading overnight. There was a huge gold rush of indie writers cashing in by publishing entire backlists of books onto the platform, and new writers making a killing writing brand new content.
Fast forward a few years, the wild gold rush is over but that doesn’t mean you can’t make a profit selling ebooks on Kindle.
It is possible to make serious money with this business model, whether you just want a monthly cash flow or you want to build a real digital asset that you can sell.
How Do You Make Money Publishing Kindle eBooks?
The process of making money on Kindle is pretty straightforward.
You write a book, you get some cover art, you upload the book to Kindle inside of the KDP platform, and in a couple of days, Kindle will approve the title and it will go live on Amazon. When someone finds your book and buys it, Amazon will deliver the digital copy of the book to that person’s laptop, or directly to their Kindle device (or Kindle app if they’re reading on their smartphones).
This seamless process is one of the big reasons why Kindle is so effective at capturing a huge market share of book readers.
Once the book is purchased, Amazon takes a portion of the book’s profits and gives the rest to you, the author, as royalties.
There are two royalty structures within KDP, depending on geography and pricing. One gives 35%, the other gives 70%. If you are familiar with traditional publishing, then you know this is exceptionally generous. The typical traditionally-published author can expect anywhere from 8-15% royalties from their work on the high end. Often the high end in traditional publishing can include limited runs or promotions, which means any additional promotion you do will be out of your pocket instead of the publishing house.. In addition, you will lose the rights to your work to the publishing house once you sign a traditional contract, often for several years.
This means that, by going the direct route, you’re leaving a large amount of money on the table that you could pocket if you went with Amazon’s Kindle program.
Over the years, Kindle has rolled numerous other ways to earn money through your books.
Choosing KDP Select for Your Business
KDP Select is an optional way to publish your books. There is a common phrase in self-publishing called going wide or going narrow. Going narrow refers to focusing on just one ebook platform, almost always KDP Select.
If you chose KDP Select, then that means you will not be able to publish your books on other platforms like Apple Books, Kobo, Barnes & Noble’s Nook, etc. This might not be a bad thing for you considering the huge amount of traffic Amazon can send to your books.
Right off the bat, you’re able to claim 70% royalties in Brazil, Mexico, Japan, and India. This could be a nice little commission boost if you have strong international sales. You’ll also be able to take part in the KDP Select Global Fund.
The KDP Select Global Fund is money set aside to pay KDP Select authors., KDP Select also enrolls you in Kindle Unlimited (KU) and Kindle Owners Lending Library (KOLL). These two programs allow people to read your book for free by enrolling with Amazon’s subscription service. It’s a great deal for voracious readers considering how many books they can get their hands on at no extra cost every single month. Amazon pays out the authors in these programs based off page reads. So, the more of your pages are consumed, the more money you’ll make as the writer.
Amazon rewards page reads because they would prefer that their readers spend more time on one book rather than blaze through multiple titles. In this sense, you’ll be rewarded for writing longer books. This is unlike the normal commission structure where you’re rewarded for having more titles for people to buy.
In addition to these extra ways to earn (your book can still be bought like normal on Amazon for those not enrolled in KU or KOLL), you also get access to useful promotional tools. The main two tools being the ability to run a promotional discount with an actual “countdown” time, and a promotion that makes your book completely free worldwide.
These features can be useful to get your book more exposure. This is especially true if you’re writing a series of books, making Book One your lead magnet as a gateway drug into the rest of the series.
The downside to Kindle Select is that you will be locked exclusively with Kindle for at least 90 days. If you forget to cancel after 90 days, Kindle will just automatically renew your title. So, you’ll want to watch out for that if you’re only looking to stay in Kindle Select for a short while. Some authors choose to only stay for 90 days as a way to boost the overall exposure of their books quick in Amazon’s algorithm. Other authors though prefer to stay in the program for the long haul as it gives them more earning opportunities and they have no real desire to “go wide” onto other book platforms.
How Page Reads Convert into Commissions for KU and KOLL
You might be wondering… what is considered a page read in KU and KOLL? It is an important question, considering that page reads are how you get paid as a Kindle author enrolled in the Select program.
To keep everything standardized, Amazon introduced the Kindle Edition Normalized Page Count (KENPC). KENPC is constantly being adjusted with new iterations to make the overall payout from the KDP Select Global Fund fairer to writers. It acts as a baseline to determine the actual “page count” of your book, regardless of the font sizes, devices, or apps.
Since every month there is a different amount of money set aside in the Kindle Select Global Fund, the amount you can earn changes every month based off all kinds of factors. There are no hard and fast rules to explain it.
Here is a basic explanation from Amazon how it works:
Remember, this could change. Always read Amazon’s policy page to remain up-to-date with what is happening. You can read more about this here.
As you can see from the snapshot above, the amount of money you can earn by going Select huge in comparison to traditional book sales. Amazon realizes you’re taking a risk by putting all of your eggs in one basket, and they reward you accordingly by letting you continue to collect normal sales and an additional stream of revenue from KU and KOLL.
Kindle Publishing Examples
There are two kinds of business models you can run with a Kindle business:
You’re a Prolific Writer
This is the most common business model we think of. You write every title yourself. You come up with the idea, the outline, you bang out the first draft and refine it through multiple revisions before finally publishing and promoting the book.
Contrary to popular belief, this is a great way to become a six-figure author if you put in a few years worth of hard work. However, you need to be disciplined and write every single day. If you can’t write more than 1,500 words per day, then this path might be difficult for you.
If you can, the sky’s the limit. After all, Stephen King’s daily word quota is only 2,000 words. A prolific writer should be able to punch out 1,500-12,000 words per day, especially if this becomes your full-time profession.
This will give you the speed you need to build your “products.” Every book you write becomes another product you fill out your bookstore with. So, you need to get to work smithing some words.
Building a Book Factory
This is the more attractive model for you if you’re looking to start a powerful online business. Instead of writing all the books yourself, you’re creating writing systems and hiring writers to write for you. You might do a brief or create an outline but the bulk of the actual writing is done by fleet of freelance writers. In some KDP businesses, the entrepreneur may have as many as 12 freelance writers creating books for them.
Often, you can have these authors write underneath the same pen name so that you can build up an author persona and a fanbase.
If you get good at managing your stable of writers, and creating good systems and marketing strategies, then this is the KDP business model has the most leverage for you. Not coincidentally, this is the kind of KDP business model available as a digital asset on our marketplace.
How Does a Kindle Store Look Like?
As you grow your book catalog, you will also be able to fill out an Author Page (whether that author is you or a pen name you have ghostwriters writing under). These Author Pages show your entire catalog, and add some personality behind who is writing the book.
This can serve as a great way to connect with your potential audience on Amazon, and perhaps even develop an offsite mailing list of yours.
Now that you know how Kindle publishing works, let’s look into some of the advantages and disadvantages this business model offers.
The Pros of a Kindle Publishing Model
Similar to content sites that are monetized with Adsense or affiliate marketing, Kindle publishing business does not have a lot of costs associated with it. In fact, you could argue the costs of starting a Kindle publishing business is actually cheaper than other content sites since you don’t need to purchase a domain name or pay for web hosting.
The only tools you’ll need to start are a Word doc and good research skills—whether you choose to write fiction or nonfiction.
No Need for a Website
As mentioned above, you don’t need a website at all when you’re starting out with this model. Amazon is effectively your website, so there’s no need to learn any kind of design or development skills.
Hands Off Once the “Machine” is Going
All of your products are digital, which means you’ll never run out of stock regardless of the demand you have for your product. You’ll never run into logistics issues and Amazon will sell your books 24/7, 365 days of the year on your behalf. If you can get a spike in sales to boost your books in the Amazon algorithm, Amazon will even promote your books for you.
Remember, Amazon WANTS to spend money promoting products they know convert traffic into customers because it is a win-win for them and their content creators.
You Can Grow a “Brand”
One great thing about the Kindle publishing business is that you can go about creating a brand for your books. Let’s say you created a litany of books on health. All of these books might be underneath the same brand name. That brand name could later become a content site, or maybe even a jumping off point for some kind of ecommerce store down the road.
This holds true even if you decide to go the fiction route with your business. If you wrote a series of romance or high fantasy novels, they could all be written underneath the same pen name, even if it includes different writers. All you would need to do is write the story outlines and make sure your writers stay in tune with the voice you’re aiming for.
Using your Kindle ebooks in this fashion could lead you to being the owner of several different successful “author” names that could lead to all sorts of special advertising perks you can leverage, such as book bundling.
The Cons of a Kindle Publishing Model
One of the Kindle’s greatest strengths is also one of its greatest weaknesses: Amazon.
You benefit from the sheer amount of monstrous traffic that Amazon can deliver, but you’re also cursed to deal with whatever policy changes Amazon makes down the road about their program. Amazon could dramatically change their Kindle program, or even possibly get rid of it altogether.
While the latter is unlikely, it is not outside the realm of possibility.
That means you are operating in risky waters, as is always the case when your business is built on someone else’s platform. One way to mitigate this is by building an email list early for your books, so that if something does happen, you still have a valuable list of clients you can promote your ebooks to on other platforms.
Unlike with traditional info product businesses, you are ultimately limited with how much you can charge for your ebooks. As you go higher with your price, your commissions will start to get worse as well.
Depending what kind of info products you are selling, this may not matter for you. Most niches cannot support the traditional $497-$997 prices that many lucrative informational niches charge for their products.
You will want to get around potential price capping by writing series, or books that build on previous books to up your overall lifetime value per customer.
What Buyers Need to Know
You’ll Need a Roster of Writers & SOPs
If you plan on growing the Kindle business you’re acquiring, you will want to make sure you get the seller’s entire rosters of writers and all the SOPs related to the business. You’ll want as much of the work as possible templated so you can focus on just scaling the business. Luckily, this is usually something that a Kindle business seller has already built before selling the business.
Make Sure Everything is Compliant with Amazon’s Terms
Since you are building the business on Amazon’s platform, it is worthwhile to read the actual Kindle publishing terms. You’ll want to cross-reference these terms with the business you’re acquiring to make sure the business is compliant with everything.
The last thing you want is to buy a business that gets the ban hammer from Amazon just weeks after you send the capital. It is extremely important that your due diligence includes making sure the business is compliant with Amazon’s terms.
Are Books Selling After Promotions?
Another thing to consider is the velocity of book sales the business has. You will want to make sure that the books are still selling a good amount of units every single month when there is zero promotion going on.
If you notice that the majority of the book titles only sell during paid promotions, then there is likely an issue with the seller’s Amazon optimization for the book’s listing. This could mean there is a lot of organic traffic the seller is missing out on by simply not targeting the proper keywords. Or, it could mean there is not enough of an audience routinely searching for that topic to lead to any meaningful sales without a promotion.
Either way, if the books aren’t making money when there are no ads running to it, then you should dig a bit more to find out why that is the case.
It could mean a large opportunity for you or that you should pass on buying that business.
What Sellers Need to Know
Your Personal Email is Going With the Sale
If your Kindle email is the same email associated with your other Amazon accounts (such as a shopping account or seller central account), then be aware that your email for your Kindle account MUST go with the new owner of your Kindle business.
You will have to be willing to give up this email if you want to sell your Kindle business. Unfortunately, at the time of writing, there is no real way around this obstacle.
Before you decide to sell the business, double check that the email is not associated with anything else—including non-Amazon accounts. If it is associated, remove it from those other accounts so you’ll be able to hand over the email to the new owner of the Kindle business.
Buyers Will Want a Book Creation System
While Kindle publishing businesses are very attractive to buyers, it is a more esoteric online business model. That means a buyer will want to be reassured that they will actually be able to run the business successfully.
One of the best ways you can make sure the buyer feels confident is by giving them not just your writer’s contact details or your writing SOPs, but also your entire book creation system such as:
- Book cover designers
- Writing templates for different stories/books
- Outline creation templates
- Keyword research to discover new titles
- How you go about researching the books
- Editing system (do you do 2 rounds of revisions? How?)
- Promotion system (do you use Bookbub? Amazon ppc? Facebook ads?)
The more you can give an actual system that lays out your entire process, the more confident the buyer is going to be in buying your business.
What Buyer Persona Best Fits the Kindle Publishing Business Model?
If you’re looking for a way to fund your lifestyle so you can go travel or replace your job income to spend more time with your family, then buying a Kindle business makes sense. As long you did your due diligence correctly that all the books sell even when there are zero promotions , then it is likely you’ll be acquiring a business that is very hands-off.
The majority of Kindle businesses in “maintenance” mode requires very few hours per week, if any, to keep the same volume of sales.
Of course, you will want to make sure you keep your titles updated, change covers, and add new titles from time to time to make sure your book sales don’t diminish into nothing.
A Kindle business can be a great way to diversify a portfolio of online business properties. What is nice about diversifying with a Kindle business is that you don’t create any new headaches by adding more products you’ll need to logistically manage as you would with an ecommerce business.
Kindle businesses make a great asset for someone looking to add a completely unrelated and easy to manage income stream to their online business portfolio.
For those looking to “open the hood” of the business, Kindle also provides plenty of opportunities for you. You can dive deep into title conversion rate optimization, ranking in Amazon for organic keywords related to your book niches, or even split-test cover designs to see which one performs the best.
There are many different dials to choose from when it comes to refining the entire book creation and marketing process.
Considering most investors would rather collect the dividends than run the business Kindle businesses make great acquisitions since they’re so hands-off. It is rare you’ll need an active full-time operator to keep a Kindle business up and running. In many cases, a part-time operator will be more than enough if you plan on just keeping the business in maintenance mode to collect the cash flow dividends.
If one of those buyer personas resonate with you, then make sure to schedule a criteria discovery call with us. We can use your persona to make sure you find the perfect business for you.
Now that you know what kind of advantages, disadvantages, and the kinds of personalities that would enjoy a Kindle business, let’s look at what you can do to dramatically grow a Kindle publishing business.
Hiring More Writers
The first and most obvious lever you can pull is simply hiring more writers. If you have the right processes in place, you should be able to create a veritable pipeline of candidates looking to write books for you. The more writers you have, the more books you’ll be able to produce, which will lead to more products you can sell.
Hiring Content Managers
This is an often overlooked position, but as your Kindle business grows you should consider hiring a content manager. These content managers will be managing your stable of writers, checking in on book progress, and also managing the promotions of the book and scheduling any kind of advertisements.
These content managers could effectively become an operator for the business, putting larger Kindle businesses on autopilot for the entrepreneur.
Building Out a Social Media Presence
Kindle businesses have a similar problem to Amazon FBA businesses, in that they never build any kind of meaningful presence outside of the Amazon ecosystem. While this isn’t terrible, it is something worth considering if you want to really grow your presence.
You could create social media fan page for the pen name you use, or a fan page around the broader subject that your books are about. For instance, if you were writing horror novels you might create a fan page on Facebook around the concept of horror which would allow you to attract a much larger audience.
Creating an Email List
Similar to above, every Kindle entrepreneur should build an email list. The email list is perhaps the most valuable asset you could ever build in your business. When you create this list, all sorts of new marketing avenues open up to you that weren’t there before.
You can create lookalike audiences for Facebook ads, you can email the list with the launch of your new book which could game Amazon’s organic traffic algorithm, and you could even ask your audience of fans what kind of book you should write next.
One of the easiest ways to start building an email list in the Kindle business is to simply include a lead capture at the end of every book. A common strategy to get people to actually opt in after they finish your book is by offering a free chapter in your next book or by offering a small short story related to the book they just read.
Build a Website Brand (Not an Author Website)
If you decide to really scale up your writers and content managers, consider building a branded website that is more akin to a small publishing house rather than an author’s website. This will let you create a brand that could span over several different pen names all at once, each with their own base of dedicated fans on your various email lists.
This could also lead to a potentially more lucrative business where you end up creating such a large audience that you become an actual small publishing house. In this scenario, you’re not just paying writers to write books for you, but you have actual writers approaching you that want you to handle all of the business ends for their books.
The extra royalties you could get from this could become (and has become for some) a business all of its own that could eventually overshadow your original kindle business if you grow that audience.
Resources to Learn More
Some of my personal favorite resources on Kindle publishing and book marketing are below:
This podcast is hosted by three very successful indie fiction published authors. They talk mainly about marketing books rather than storytelling craft, which makes their podcast applicable whether you decide to write nonfiction or fiction with your Kindle business.
They also often feature guests that are deep in the details using the latest marketing strategy to sell more books.
The Creative Penn is one of the oldest blogs around on the self-publishing business. It is full of useful blog posts, interviews, tips, and guides that can help you optimize your Kindle business even further.
Steve Scott is a longtime internet marketer whose blog I’ve followed for years. A few years back, Steve switched from building out affiliate sites to writing Kindle ebooks. Since then, he’s become a full-time Kindle writer and is a big evangelist for the business model overall.
He has a series of blogs and podcasts you can listen to that will help you grow in your habits, writing skills, and your overall online business skills.