You may have heard that in mid-2022 Leanpub introduced the concept of Reader Memberships!
The tl;dr explanation is: Reader Memberships are like Leanpub's version of Amazon Prime, where as a member you get special features and privileges, but with the difference that a) this is in its really early stages and b) we share half the revenue from Reader Membership sales with participating Leanpub authors, who have the option to opt out if it's not for them.
Our intention with Reader Memberships is to start building a set of community features around the core Leanpub platform, which is used primarily by readers and authors for writing, publishing, and buying ebooks, bundles, courses, and tracks.
By buying a Leanpub Reader Membership, people will unlock special features and privileges going forward, hopefully increasing engagement with the platform and each other, and fostering the kind of productive relationships between readers and authors that are core to the Lean Publishing philosophy!
People love building communities around books and reading, and around learning, too! Book clubs and sites like Goodreads are great proof of this, and we're excited to start down this new path, and to see what a Leanpub-style community grows into.
In this article, we're going to explain how Leanpub Reader Memberships work, and the new opportunities they present to Leanpub readers as well as to you as a Leanpub author, including our shared Reader Membership revenue pool for participating authors.
Timing of Allocations from the Reader Membership Revenue Pool and Adding Allocations to Your Unpaid Royalties
The First Reader Membership Feature
For our launch of Reader Memberships, we've built one rather big feature: the ability for Leanpub readers to contribute to our new, unique shared revenue pool for Leanpub authors, in exchange for access to free purchases of participating books, bundles, courses, and tracks.
(Going forward in this article, we're just going to say "product" instead of saying "books, bundles, courses, and tracks" over and over again!)
This means that whenever someone makes a payment for a Reader Membership, not only will they access all the membership-based features and privileges that we build going forward, 50% of the revenue to Leanpub goes into a shared author revenue pool, that will be distributed to participating Leanpub authors.
Then, whenever they "purchase", for free, a participating product on Leanpub, some portion of their contribution to the shared author revenue pool will be allocated to each participating product's author or authors.
Hopefully all of this won't be as hard to explain as Amazon's rules around logging page reads and calculating distributions to authors from its well-known KDP Select Global Fund, which over the years has grown to be huge (proving that some version of a shared revenue pool is an attractive idea to at least some self-published authors), but there are some details we need to go into!
In this article, we're going to explain how people can buy Reader Memberships, which products are eligible to receive revenue from the shared revenue pool, how you can opt out of it or into it on a per-product basis, and how allocations from the shared revenue pool will work.
Buying a Leanpub Reader Membership
A Reader Membership can be purchased for $4.99/month, $29/year or $149 for a Lifetime Reader Membership on the Membership page here:
By default, the Monthly "Reader" plan will be selected:
You can also purchase a one year reader membership by choosing a Free! price for a participating product, and adding the book to your shopping cart.
This will automatically add a $29 One Year Reader Membership purchase to your shopping cart, in addition to the free product purchase:
Please note that the One Year membership does not auto-renew! It's a one-time purchase with no further commitment. If readers want an annual membership that does renew, they can purchase an Annual membership from our Membership page.
Finding Participating Products
Readers can tell they've found a participating product when they see this message, under Free!, above the pricing sliders on a product's Leanpub landing page:
Ordinary products with a free minimum price, that are not participating in the shared Reader Membership revenue pool feature for authors, will show what we've always shown:
Readers will discover participating products either organically, or through our store search for "Free Minimum Price" products:
Active Participating Products, and Opting In or Out of the Shared Revenue Pool
Any product where the author has set the minimum price to $0.00 is automatically opted in to receive revenue from the shared revenue pool.
We've used the term already in this article, but just to be clear, going forward we will call an active, published product that can receive revenue from the shared revenue pool as a "participating product".
You will see this clearly displayed on the Pricing page for any Leanpub product:
Please note that this only matters if your Minimum Price is set to Free.
If you Minimum Price is not free, then your product is not a participating product, and will not be receiving any allocations from the shared Reader Membership revenue pool.
As we mentioned earlier, from a reader's perspective, when your book is opted in to be eligible to receive allocations from the shared revenue pool, and your Minimum Price is set to $0.00, on your product's landing page people will see this above the pricing sliders:
If they decide they want to get the book for free, they'll need to get a Reader Membership, either by buying one along with your purchase (since we add a $29 one year Reader Membership to the cart along with your product) or by going and subscribing to a monthly Reader Membership and then coming back to their cart.
Either way, with a Reader Membership, they can get your participating free-with-membership product for free, and some portion of their Reader Membership payment or payments will be allocated to the product's author or authors.
Opting Out of Eligibility for Receiving Reader Membership Pool Revenue
If you want your book to be available for a free minimum price, but you don't want to receive allocations from the shared revenue pool, and you don't want to require a Reader Membership for people to get your product for free, on the Pricing page for your product, just un-tick the box next to "This book is eligible to receive Reader Membership Pool Revenue" and click the "Update Pricing" button:
Then, if your Minimum Price is set to $0.00, on your product's landing page people will see this above the pricing sliders:
Calculating Allocations to and from the Reader Membership Revenue Pool
50% of the revenue Leanpub receives from Reader Membership payments goes into the shared revenue pool (going forward, we're just going to call it the "Pool").
Allocations from the Pool are calculated based on three factors:
1. The participating products the reader purchases in the next 365 days
After the reader makes a Reader Membership payment, their purchases over the next year determines which participating products receive allocations from that reader's contribution to the shared revenue pool.
For example, if a reader buys 10 participating products for free in the next year, then their contribution will be allocated to those 10 participating products.
The split between co-authors for any participating product will be calculated just like the royalty split is calculated for normal, paid, Leanpub purchases.
Why 365 days? Here's the explanation from our long essay introducing Reader Memberships to our authors:
"The Reader Membership Revenue Pool revenue for an individual Reader Membership is split on an annual (365-day) basis. To be clear: this 365-day period is true for both annual and monthly Reader Memberships. The reason for this is to weight the revenue from free Product purchases more fairly: our expectation is that some months will have many Product purchases, others will have none, and others may only have 1 or 2. If we split revenue on a month-by-month basis with monthly Reader Memberships, some authors would be compensated unfairly. Instead, by splitting the revenue on an annual basis, we add a large initial delay in payment, but the split itself is a lot more fair. Since the revenue share split is calculated separately for each individual Reader Membership, this helps prevent a bad actor from gaming the system. The Reader Membership Pool Revenue calculation and split is done on an individual reader account basis once every 365 days, for both annual and monthly Reader Memberships, to weight the revenue more fairly. So, the Reader Membership Pool Revenue for each individual Reader Membership has the split calculated annually, based on the initial signup date of the Reader Membership. Reader Membership Pool Revenue which has been split annually is paid during the following month’s royalty payments, just like normal Leanpub royalties."
2. A weighting based on the product's Suggested Price For Royalty Split
Lots of people actually pay money for Leanpub books with a minimum price of Free. They do this for lots of reasons, most often to show direct support for authors. This is one aspect of the Leanpub community we're most proud of building.
One important feature of our variable pricing model is that it lets authors show how much they think their book is "really" worth - the suggested price - and also set a lower minimum price, acknowledging that not everyone can afford, or will be willing to pay, the suggested price.
So, we will use a product's suggested price in our calculation of shared revenue pool allocations. Essentially, a single free purchase of a participating product with a higher suggested price, will be granted a higher proportion of each relevant reader's contribution to the shared revenue pool, than for a product with a lower suggested price.
Here's how we explain this decision in the long essay mentioned earlier:
"Our view is that while this approach is not perfect, it is preferable to a simple count: a $7.99 suggested price Book should not count as much as a $29 or $49 suggested price Book, a $99 suggested price Course, or a $499 suggested price Track. (If, however, we determine that a suggested price is being set abusively high in an attempt to game the system, we may treat the suggested price as a lower amount, possibly even the minimum price, for the purposes of the Reader Membership Pool Revenue split.)"
Now, some participating products have a minimum and a suggested price of $0, and others have a suggested price of hundreds of dollars. It would be unfair to just take the suggested price for the product, since that would allocate no money in the $0 suggested price case, and too much money in other cases.
So, the maximum suggested price for royalty split purposes is $50: any suggested price higher than $50 will be treated as a $50 suggested price.
Also, the minimum suggested price for royalty split purposes is the minimum non-free price of the product. For a book, this is $7.99; for a bundle, this is $9.99; for a course, this is $19 and for a track this is $29.
3. A per-reader upper limit of shared revenue pool allocations to participating products, based on the fact that a readers's contribution to the Pool can be "used up" if they purchase enough participating products
Sorry that one's a bit of a mouthful! Here's why we came up with this rule:
Theoretically, someone who gets a $29 annual Reader Membership could go ahead and get free purchases of about two thousand participating products (at the current count).
If every one of these free purchases involved an allocation to the participating products, that would mean there would be some allocations that were under one cent.
At our current scale, we don't think allocations under one cent make sense.
So, we're placing a lower limit on allocations, specifically, at one cent. This means that in effect, a reader could "exhaust" their allocations. After that point, any free purchases they make of participating products going forward, would not result in any allocations from the shared revenue pool to those products.
Timing of Allocations from the Reader Membership Revenue Pool and Adding Allocations to Your Unpaid Royalties
365 days after a readers's first Reader Membership payment was made, all the allocations from their contribution to the shared revenue pool will be added to the participating products they purchased for free in that period. (This will be handled in a common-sense way for people who buy monthly Reader Memberships.)
Since 365 days is long past our 60-day refund period, at that point, the shared revenue will be added to the royalties owing to authors participating products that have received allocations at the beginning of the next month for each participating author who is owed an allocation from the shared revenue pool.
Now, this does mean that the first shared revenue pool allocations will be made to authors only after the first 365 days from our launch of this feature! However, after that the allocations from the shared revenue pool will of course happen regularly, added every month going forward, as they graduate from the 365 period for each reader.
Bonus Feature for Author Standard and Pro Memberships: A Free Reader Membership!
If you are a Leanpub author and you have a Standard or Pro Membership, you get free access to the participating products which require a Reader Membership!
To be clear, your Standard or Pro Membership payments will not go toward the shared Reader Membership revenue pool, but you will get all the other benefits of a Reader Membership.
The reasoning here is as follows:
It would encourage authors to just game the system by buying their own products, and that's a waste of everyone's time.
It would not make sense to allocate half of the entire membership price, since the primary reason to have a Standard or Pro membership is not the free access to participating products. So, there would be more complexity here, which is also a waste of everyone's time.
If our Reader Membership program succeeds, the number of Reader Memberships should end up being about 100x the number of author Standard or Pro memberships, if the typical internet math holds.
OK, that's it! We hope there are authors out there who will be as excited by our new shared revenue pool idea as we are!
If you have any feedback or questions about this article, please email the Leanpub team about it at firstname.lastname@example.org!
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