I've posted a couple of times on this blog about Kindle Unlimited - Amazon's all-you-can-read subscription program. For authors, being in the program means you get paid by the number of pages subcribers read, and for most of my time in KU the pay rate has been around $.005 (roughly, half a cent per page). Being in KU also means that your books have to be exclusively on Amazon. (I abhor the exclusivity provision, but that's another story altogether.) That said, I've been fairly satisfied having my books in KU.
Recently Amazon released a similar service for audiobooks. Dubbed the "Audible Romance Package," it was supposed to be an audio version of KU: for a set price (ranging from $6.95 to $14.95 per month), listeners could have access to a huge swath of romance audiobooks in an all-you-can-listen-to fashion. That being the case, it appears that many romance authors signed up, as the program was advertised as having thousands of audiobooks. It was certainly a logical move: although - like with KU - authors were likely to make less on a per-minute basis than from a full sale, one could reasonably expect to reach more listeners and thereby gain more exposure. And then came the initial payout, which was indeed a shocker: $0.0009556 per minute.
That's not a typo. $0.0009556. Per. Minute.
To put that in perspective, if you had an audiobook in the program that was 10 hours long, you'd make about 57 cents if a subscriber listened to the entire thing. (And about half that if you were doing a royalty split with a narrator.) Needless to say this kind of payout is not only ridiculously absurd but practially obscene - especially when you consider how expensive audiobooks are to produce. You'd think that someone at Amazon would have looked at the numbers and said, "Whoa. Something is way off here." But that seemingly didn't happen, and once participating authors found out the rate, there was much wailing and gnashing of teeth.
But in addition to the low payout, there was another effect: normal sales dropped. Of course, this wasn't entirely unexpected. Why would a listener buy an audiobook for, say, $20, when they can get it and thousands of others for only $14.95? In combination with the low payout, this turned into a double-whammy for participating authors. (Although I don't want to be taken as an alarmist, I believe this also creates a problem which threatens the entire audiobook ecosystem, but I'll circle back to that later.)
As one might imagine, authors in the program have since been demanding that their books be removed from the Romance Package. At that point, after the villagers had all grabbed torches and pitchforks, Amazon decided to issue additional bonuses, ranging - based on what I've read - from about $25 to $150. For most authors, however, it doesn't appear to be nearly enough to make up for this particular debacle.
Plainly speaking, Amazon needs to fix this, and there are a couple of solutions that come to mind. First, if they're going to stick with compensating authors on a per-minute basis, they need to guarantee a minimum rate that is at least several multiples of the current payout. So, if they were to commit to, say, four times the sharp-stick-in-the-eye that constituted the initial rate, a 10-hour book would earn $2.28. That's quite likely less than what the author would get for an average sale, but a passable tradeoff for getting more eyes and ears on one's work.
Next, they could pay authors a flat rate to be in the program - something akin to what happens in Prime Reading. (For those unfamiliar with it, Prime Reading is another KU-like program that lets Amazon Prime members read as much as they want of selected books.) So, instead of being paid on a per-minute basis, an author might get something like $500 for letting their audiobook be in the program for a limited amount of time. This would require that Amazon do a bit of curating, such that - like Prime Reading - authors are invited to participate rather than making it a free-for-all, but it would undoubtedly be more palatable than the publicity nightmare the program has turned into.
Another option would be to combine a payment-per-borrow with the rate-per-minute structure. Much as some salesman get paid on a salary-plus-commission basis, this would pay participating authors a set amount each time one of their audiobooks was listened to, plus a certain amount per minute. Thus, our hypothetical author with a 10-hour audiobook might get, for instance, $2 each time his audiobook was borrowed, plus the 57 cents for a full listen-through. This would result in a total payment of $2.57. Again, that's probably lower than what would be earned with a sale, but probably enticing enough to get authors on board.
Basically, there are probably a lot of options Amazon could pursue to make this program workable. It's also not difficult to see that this is probably a pilot program, paving the way for similar offerings in other genres: mysteries/thrillers, fantasy, sci-fi, etc. However, if they don't fix the payout, I see the damage extending well beyond what we've seen thus far, and here's why:
Audiobooks are typically much more expensive than ebooks to produce - thousands of dollars in many instances - which is why many authors forego releasing them altogether. Now, suppose an author spends $1000 to release a 10-hour audiobook and puts it in the Audible Romance package. Just to keep the numbers fairly nice and even, let's assume he gets an average royalty of $3.33 per sale. Thus, it would take about 300 sales to earn back his $1000 investment. However, in the program, he only earns 57 cents per full listen-through, meaning it would take the equivalent of 1754 sales (1000 divided by .57) to earn back his $1000 - almost 6 times as many as it would take out of the program. Naturally then, our hypothetical author may decide not to put his audiobook in the romance package.
But, as noted above, normal sales are falling off because Audible Romance subscribers are getting their fill with the program offerings. Unless they are rabid fans of a particular author, they're not interested in paying additional money to listen to audiobooks that aren't part of their all-you-can-listen-to package. Thus, our hypothetical author is getting far fewer sales than anticipated.
Now our author has a dilemma: he can't make money in the program because of the low payout, and he can't make money out of the program because of the lack of sales. Bearing in mind the costs involved, the bloom starts to come off the rose with respect to producing audiobooks. Of course, rather than paying upfront for an audio version, the author could agree to a royalty-split with the narrator (which would require splitting any royalties 50-50 with the narrator for 7 years). However, if the author can't make any money from releasing an audiobook, how is the narrator going to earn anything? (After all, 50% of nothing is still nothing.) So, narrators may understandably start refusing to do royalty-splits, meaning that even fewer authors will be creating audiobooks if they have to foot the total bill out of their own pocket.
At the end of the day, the program (in its current iteration) is likely to discourage authors from producing audiobooks - especially if it spreads to other genres. Although Audible is not the only player in terms of audiobooks, they are the biggest and have the most market share, so when they introduce products like the Romance Package, it alters the entire landscape. Ergo, while I'm not saying its the end of audiobooks, the new subscription service clearly disrupts the current ecosystem by making it substantially harder to be profitable in audio. Personally, I've been able to do very well with audiobooks thus far, but authors with better sales than me are now wondering if its worth it continue producing audiobooks. That, to me, is a surefire indicator that this a very serious problem. Amazon needs to fix this asap.