Sunday, January 24, 2010

Amazon Part 3: 70% Royalty

There are many issues in the Amazon announcement that, starting in June, it will offer 70% royalties on book sales after delivery costs, which are claimed to be less than 6 cents per book. Obviously authors may settle for a lot less from a publisher and hope that they generate significantly more sales and exposure and doing so more gross revenues.

Those who opt in for the new 70% pricing must meet a specific set of criteria as defined by Amazon:

  • The author or publisher-supplied list price must be between $2.99 and $9.99
  • This list price must be at least 20 percent below the lowest physical list price for the physical book
  • The title is made available for sale in all geographies for which the author or publisher has rights
  • The title will be included in a broad set of features in the Kindle Store, such as text-to-speech. This list of features will grow over time as Amazon continues to add more functionality to Kindle and the Kindle Store.
  • Under this royalty option, books must be offered at or below price parity with competition, including physical book prices. Amazon will provide tools to automate that process, and the 70 percent royalty will be calculated off the sales price.

So is the game plan to secure more rights, content, authors or to align itself better for the looming Apple wars?

Next Amazon Part 4: Give it Away


j purdie said...

Em, Amazon offering royalties? Are they trying to squeeze publishers out of the equation?

nkkingston said...

A lot of eBooks are selfpublished on mazon now, through placs like Smashwords. So, yes, Amazon is offering royalties directly to those authors. What interests me is whether they're trying to court ePublishers with this - many price their books far higher on Amazon than they do on their own sites because of the costs involved on listing on Amazon and to drive people back to their sites. The price points fit pretty well (without the print overheads, a lot of ePublished books at $3-$9) and the higher royalties could persuade some ePubs to level the playing field a little. I really can't see enough to persuade print publishers to lower their prices in this, or to change the way they're pricing eBooks compared with print, but the business model is close enough to ePub that I think that's who they're targetting as businesses (self published authors, of course, benefit massively - but they've still got to find a way to tell people they're there!)