Amazon upping its e-book royalties to authors in effort to fight off Apple
While Amazon didn’t come right out and say it, one has to wonder about the timing of announcing higher royalties for authors exactly one week before the announcement of the long rumored Apple Tablet.
Yesterday we reported that there were rumors that Apple had entered into negotiations with publishers such as HarperCollins about bringing content to the new Apple Tablet device expected to be announced next week. Not even 24 hours after that news broke, Amazon has announced a new royalty plan for authors that publish e-books on the Kindle Digital Text Platform (DTP). Needless to say, it is a significant improvement over the old plan.
“Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books,” said Russ Grandinetti, Vice President of Kindle Content. “We’re excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books.”
The new system will be 70 percent of the net price calculated after delivery costs:
Delivery costs will be based on file size and pricing will be $0.15/MB. At today’s median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold. This new program can thus enable authors and publishers to make more money on every sale. For example, on an $8.99 book an author would make $3.15 with the standard option, and $6.25 with the new 70 percent option.
The new plan does have a few caveats that work to Amazon’s favor, though:
- 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.
In short, Amazon is dangling a carrot in front of publishers to make sure that books aren’t offered for cheaper through Apple’s rumored e-book store, while also making sure the Kindle editions get as many features as possible.
As we said, this announcement comes one week to the day before the Apple announcement, and still nothing is firmed up as to what the company is doing next week. It seems to be an amazing testament to how Apple can make other companies run scared without even saying a word.
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January 20th, 2010
This just screams Intel shenanigans (the kind where they bribe and threaten their customers so they won’t go with AMD), though not as bad of course.
As for the 70%, Amazon must be absolutely petrified of Apple!
January 29th, 2010
There is undeniably a strong connexion to the Apple announcement. But I do not necessarily agree with Glenn (“petrified”). I think this new type of royalty arrangement might be very good business. with or without Apple in the picture, not only as seen from all the authors’ perspectives, but also from Amazon’s. And the idea of NOT following Simon & Schuster et al in LOWERING the effective author royalties is very refreshing.