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Thursday, January 21, 2010

In The News: Amazon to Up Authors' Royalties--Drastically

Amazon is in the news. The thing is, though the major media is covering the story, they aren’t covering it from an author’s viewpoint. So here goes. My take for authors. In the smallest nutshell I could fit it into:

The LA Times business page headlines, “Amazon Ups the Ante for E-books.” Then comes a deck (fancy newspaper talk for a sort of subtitle) that says, “Juicy digital royalties could tempt authors to bypass traditional publishers altogether.”

So far they have it right.

As a quick review, the VP of Amazon says, “Today, authors receive royalties in the range of 7% to 15% of the list price that publishers set for their physical books . . . . “ Amazon just announced that they would pay a whopping 70% royalty to authors who publish their book(s) on Kindle.

Here are the advantages and disadvantages. You decide which, though you’ll usually be able to tell which side I’m on!

~Authors set their own price for the Kindle digital version of their book but it must be between $2.99 and $9.99. Sure Amazon is trying to maintain a low retail on all their Kindle books. Low prices attract buyers.

~The price the author sets must be at least 20% lower than the same book in its print edition.

~Authors are free to place their books with other readers or in other formats (like B&N’s Nook and Sony’s Reader), but they must set the Kindle price lower than or the same as the price they ask for in other digital formats.

~Authors must sign over some rights to Amazon including the ability to turn the book into speech and to allow Kindle to use the book on future iterations of the Kindle reader. This applies only to digital copies. not print.

From there most all the news outlets are focusing on the timing of Amazon’s announcement: That it coincides with an expected announcement that Apple will be making an e-reader of its own.

Or they’re focusing on the fact that this offer is not going to make traditional publishers happy. Well, duhhhh. They’re not happy about any of Amazon’s strong competitive stances on the pricing of books (and other perks). In the past several of the real big publishers started delaying the release of digital editions until long after hardcovers and paperbacks were released. That’s been sort of standard for publishers. They’ve also delayed the release of paperbacks some time after hardcovers. That policy only makes sense.

Articles in the business media are focusing on the influence Amazon has on the publishing world in terms of pricing. And about Amazon’s brute commercial power.

So, how will this specifically affect authors?

~It won’t mean much to those who are traditionally published other than that they might want to press for better royalties on Kindle sales when they sign their contracts. And, of course, the long term effect this move may have on publishing in general.

~To indie authors--self published or subsidy published--it means that having their books offered digitally will be more important than ever. It won’t just be about making their books available to readers the way they want to read them at a good price, it will be about making their books available at the only price some may feel they can afford. The price differential can make a difference but so will the rush by authors to have their books available on Kindle and the more books, the more choice, the more reading folks are going to like that.

~If more people are buying books because they’re cheaper, that broadens an author’s audience. The more people who read a good book, the better a book sells. Remember when Clinton said “It’s the economy, stupid!” Well, it’s the word-of-mouth, stupid.

~I like this last reason best (though there may be other I haven’t thought of). Here it is. Amazon, once again, is giving more power to the author. Even the new author, the emerging author. Treating us as if our pocketbooks are important. That’s a move in the right direction. With their clout, they may start a trend.

Carolyn Howard-Johnson, author of This Is the Place; Harkening: A Collection of Stories Remembered; Tracings, a chapbook of poetry; and two how to books for writers, The Frugal Book Promoter: How To Do What Your Publisher Won't and The Frugal Editor: Put Your Best Book Forward to Avoid Humiliation and Ensure Success. Her FRUGAL book for retailers is A Retailer’s Guide to Frugal In-Store Promotions: How To Increase Profits and Spit in the Eyes of Economic Downturns with Thrifty Events and Sales Techniques. She is also the author of the Amazon Short, "The Great First Impression Book Proposal". Some of her other blogs are TheNewBookReview.blogspot.com, a blog where authors can recycle their favorite reviews. She also blogs at all things editing, grammar, formatting and more at The Frugal, Smart and Tuned-In Editor blog.

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  1. That's nice to see they are giving authors a better deal than publishers. The industry is changing. Perhaps we are seeing the beginning of the end of big traditional publishers? Time will tell...

  2. Very interesting info Carolyn. Thanks for sharing.

  3. I own a Kindle and I have a book available on Kindle only. I set up my own publishing company, so all profits via Amazon are mine alone. All I had to do was to upload my book from my Word file (and fill out a short form). The ease of making a Kindle book available means that they are going to have a lot of 'trash' for readers to wade through/read through. Since by book is in Kindle only and cost nothing to produce (except time), the price I set was fairly low. No printing costs.

  4. So if your book retails for $25 and you have to set the price at least 20% lower than the print version and you are capped at $9.99, guess what - you are losing money. Because 20% less than the retail would be $20, so I don't see how this really can be better for the authors. It's still putting everything at amazon's command, not at the author's.

    Years ago when I self-published on lulu.com - we could set the royalty up to 80% of the cost, and I didn't see a cap on the price. Of course, ebooks don't cost anything to produce (there is a base price for ebooks built in, or was the last time I used them) so setting an 80% royalty was a good thing.

    As an author, I'd weigh this carefully even though it looks like it is a benefit to the author; in reality, it seems more of a benefit to amazon.

    Just food for thought E :)

  5. Elysbeth, I see your reasoning but it seems you are comparing apples with oranges.

    ~Amazon's new royalty is a terrific deal compared to what Amazon offered before.
    ~It is a competitive deal if one compares it to other e-book publishing.
    ~It is a terrific deal if compared to what an author would get for their e-books if they had the average contract offered by a traditional publisher.

    One shouldn't compare any e-book situation to print situations or royalties. You pointed out the the huge differential in producing copies in each format. They ARE two very different publishing entities. (Though comparing them would look good percentage wise if one had a 7% contract with their publisher for print and e-books. )

    If you are self publishing and take all the profits from your the print version of your book, things do look different.

    But here's the thing. You WANT your book available to readers in every format possible. That's because of marketing. You want to give readers your book in the format THEY want it.

    So, if you are thinking like that (and it is my opinion you should be--where are we without our readers? --even one individual reader who might want an e-book to read on his way to Paris and doesn't by your book because it isn't available on his handy Kindle!) you are way ahead by having your book available every which way. I also believe we should think in terms of overall sales as opposed to each individual sale. When we do authors should come out ahead by offering their books digitally in addition to print. And not just with Amazon. With all of them. Nook. Sony Reader, etc.

    And about benefitting Amazon. Yes, it does. They are in business, too. However big, they deserve a profit, too. We sometimes tend to forget all the expenses a huge firm like that has but they wouldn't be there if their company weren't profitable. I see them providing the structure for a free digital upload, templates for creating covers, huge accounting services to pay their authors. These services, too, are digital. But the expense and training required to get them set up! The advertising! The tech expenses behind them! Huge!

    And, no, I'm not an Amazon employee. NO, they don't give me a cut. LOL.

    Thanks all, for dropping by.


  6. Anonymous8:54 AM

    So, you sign away your subsidiary rights to an audio book when you sign with Amazon as well as making your content available to future generations of Kindle? Careful, friends, careful. Technology is changing fast. Don't sign away the future. I'm sure it will soon be possible for a writer to offer this stuff directly from their own website. I would just proceed with caution when you are dealing with giants like Amazon, Google, and Apple. Do you really want them to be 'publishers'?

  7. That's exactly why my e-book Online Promotion Made Easy is NOT on Amazon. It retails for $25 and I would be nuts to give it away just to do business with Amazon.

    Thanks for the update, Carolyn. As always, you are on top of things in this industry.


  8. Very interesting post and comments. It's all worth considering. Thanks for the info, Carolyn.

  9. No, the author keeps all rights. So you can have the book published traditionally if a publisher finds it and wants to pick it up - as I understand. The Kindle is a book READER. All copyrights remain as they are in place. When I said that I self-published, I set up my own publishing company. I did choose to buy ISBNs, but other than a small fee for state business license, that's all I've spent. As I understand, Lulu charges a fee? If I want to have my book printed, I've been in touch with an independent printer (that's all he does) who will print my book for about $4.00 plus shipping. Of course, I have to do my own publicity (see Carolyn's book!). Right now I'm only interested in the Kindle market. It cost me nothing to put it on their site. No, I'm not getting rich from one ebook; but it's there and I've sold several copies. How much money would it have cost to publish independently and go the print route? As Carolyn stated, the two cannot be compared very well.

    Originally Amazon thought their target market for the Kindle would be the 20-30 year-olds. New technology and all of that. But most of the users have ended up being 40-60! I'm 61 and I won't consider buying a fiction book unless it's available for my Kindle. I don't pay any attention to who's published it. So I've read some excellent work that I never would have found otherwise.

    Why do I care if a reader uses the voice feature instead of reading it from the Kindle silently? The reader has still bought a book. Yep, Amazon is making money. It's called free enterprise.

  10. Very interesting. And, I agree that no matter what your selling price will be on Kindle, you are making money that you would not have otherwise.

    I don't agree that Amazon is doing this to help authors - they are a business, a BIG business. But, again, this shouldn't matter. If I make a dollar, without having to spend a penny, what's the downside.

    I would though, as anonymous mentioned, take note of the agreement, just to protect myself.

    But, all-in-all, this seems like a good deal for writers.

    Karen Cioffi

  11. Anonymous12:42 PM

    My only concern would be that authors of books (not written well) flock to Amazon to get their book published and the overall impression of Kindle books is BAD.
    For that reason the author's sales might suffer. 70% of nothing is nothing. I wish they had implimented some quality control. It may not matter.

    J. Aday Kennedy
    The Differently-Abled Writer

  12. This is very interesting, Carolyn. It certainly gives me pause. I do think it sounds like a good way to further market your books. I don't know what my publisher is doing as far as ebooks are concerned, or Kindle books. I'll have to check. Thanks for getting the word out.

  13. Anonymous6:23 AM

    I agree with J. Aday. There are no gatekeepers or, 'quality control' people (editors) , if you will. How will readers find the good books? But does Amazon have the power to delete offensive material? That brings up a whole other issue. Yikes!

  14. I checked on lulu.com again (for ebooks) and again, you still set the price you want to get from the book. If the base price of the ebook is $1.25 and you want to make $8 on the book - then the download will cost $9.25. I think, yes, it's great to make more in royalties for ebooks, but like many of you have pointed out, there is no way of keeping the trash out of the system. If I want a good book to read, I don't want to wade through a ton of stuff to get there. And there are other ebook sites that probably offer similar benefits (higher royalties) and will still benefit the author in the long run. I see this as another way for Amazon to monopolize the industry. They were already in a litagation about trying to force publishers to pay them or loose their buy now buttons and lost.

    If you are telling authors they can only sell their books between $2.99 and $9.99, again, you are limiting the author's ability to bring in funds. I think that in reality, all the options need to be weighed before jumping on and saying this is a good deal. I agreee that making anything on books is a good thing but when you are restricted, then what? If you sign a contract that gives you nothing (signing away future rights and whatnot0, then you are still with nothing.

    Just my opinion - E :)

  15. From Amazon's Kindle (DTP fine print) re Rights, etc.:

    "Subject to the authorizations granted to us hereunder, as between us and you, you retain all ownership rights in and to the copyrights and all other rights and interest in and to your Digital Books."

    Of course there was much more. And I'm going to have to admit to a certain amount of unease that I couldn't copy and paste the info. above from the Amazon site. Ummmmm..... But, doesn't this mean that I can do anything I want with print and digital rights to my book? It's very possible that I missed other legalese that would contradict this idea.

    As to the amount of junk that readers will have to wade through - when I'm looking for a new book to read on my Kindle, I do the same kind of search I would do for any book on Amazon. Then I look at the number of stars (rating) and read a couple of the reviews. I can also download the first few pages free to my Kindle and decide if I want to buy the book - just as in a bookstore.

    I realize that my comments are a jumble of thoughts as reader and writer.

    P.S. Here's the link to the Terms and Conditions page for Kindle. If you can't get to it, just go to the Kindle page on Amazon, scroll to the very bottom and follow the links to Publishing on Kindle.

    (ooooouuuuu. Red Flags. I can't even copy and paste the http addy for that page. Verrrrry interesting.) Of course I could be doing it all wrong. ;-)

  16. Another P.S. As a rule, I won't spend over $6.99 for a Kindle book. Most I download are about $3.99. Because I know that it's costing the authors nothing to make their books available for me, I think that's reasonable.

  17. I’m still trying to sort this all out. Here are two related articles from the Authors Guild which may be of interest.



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