Amazon’s Digital Self Publishing platform was updated yesterday. (Perhaps the cause of their brief outage? Or maybe we can blame Android. Or me refreshing too much.) I was poking around this morning and naturally wandered over to the Pricing Page, even though I don’t have any books that I want to sell at the minimum $2.99 that is required to earn that fabled 70% royalty price.
This is what I found:
1. Royalty Options. Subject to the limitations set forth in this Pricing Page, for each Digital Book, you may choose, in accordance with our then-current procedures, either the 35% Royalty Option or the 70% Royalty Option, each described below.
…
b. 70% Royalty Option.i. The 70% Royalty Option is only applicable to sales to United States customers, so if you choose this option, the Royalty on sales to non-United States customers will be as provided under the 35% Royalty Option.
ii. The Royalty will be equal to 70% of the amount equal to the applicable List Price for the Digital Book less the Delivery Costs (as defined below) for the Digital Book. But if we sell the Digital Book at a price below the List Price to match the price at which a third party sells any digital or physical edition of the Digital Book or to match the price at which we sell any physical edition of the Digital Book, the Royalty will be equal to 70% of the amount equal to the price at which we sell the Digital Book less the Delivery Costs for the Digital Book. Our determinations regarding price-matching are final and non-reviewable. If you object to our price-matching determination with regard to one of your books, your sole and exclusive remedy is to switch your Royalty option for future sales of the Digital Book to the 35% Royalty Option as described below.
iii. The Delivery Costs for a Digital Book will be equal to $0.15 multiplied by our determination of the number of megabytes your Digital Book file contains, once uploaded by you and converted by us into our then-current Digital Book format. One megabyte equals 1024 kilobytes. One kilobyte equals 1024 bytes. We will round file sizes up to the nearest kilobyte. The minimum Delivery Cost for a Digital Book will be $0.01 regardless of file size.
iv. Example: If your book has a file size of 0.400 megabytes and a List Price of $8.99, the Delivery Cost will be $0.06 (0.400 MB x $0.15 = $0.06), and your Royalty will be $6.25 (($8.99 – $0.06) x 70% = $6.25).…
So. $6.25! That’s not so bad. We can even do math! (Oh boy, you all know how I love math.)
Sell 1,000 copies
($8.99 – $0.06) x 70% = $6.25
$6.25 x 1000 = $6,250
Wow, you’re in the money now! Except you’re assuming that Amazon isn’t going to discount your $8.99 book. I would say that’s a dangerous assumption, since Amazon discounts damn near anything they can and, according to these terms, they only have to pay you on the discounted price. You’re footing the bill for this discount. So let’s assume they take their (all but standard) 20% off.
Sell 1,000 copies
(($8.99 x 80%) – $0.06) x 70% = $4.99
$4.99 x 1000 = $4990
Okay, well, that’s a little less, but it’s still awesome, right? Except…you’re assuming every single one of those sales is going to come from the US. Maybe the bulk of them will. Maybe you’re a print author who has never had wide distribution in other countries. Maybe you’re going to restrict the territories on your kindle book so that no one can buy it but people from the US. (Do I need to state here that I think that’s an incredibly poor idea? Maybe…)
Just for the sake of argument, let’s assume 15% of those people who bought your book weren’t in the US.
Sell 850 copies in the US, 150 copies outside
(($8.99 x 80%) – $0.06) x 70% = $4.99 | $8.99 x 35% = $3.15
850 x $4.99 + 150 x $3.15 = $4714
Hell, what if half of them weren’t?
Sell 500 copies in the US, 500 copies outside
(($8.99 x 80%) – $0.06) x 70% = $4.99 | $8.99 x 35% = $3.15
500 x $4.99 + 500 x $3.15 = $4070
What am I saying here? Well, I’m not saying much of anything new…I’m saying understand what you’re getting into. Amazon is not offering you 70% royalties. What they’re offering is still better than 35%, and if you’ve got books that fit the criteria, you will almost certainly make more on the “70%” royalties than on the 35%. However, multiplying your current numbers by two isn’t going to give you a real answer, and isn’t that what we all need?
If you’re a consumer, it’s okay to assume that Amazon is too good to be true. (Oh Amazon prime, how I love thee.) If you’re a content provider, you might be better off assuming they’re not giving you as much as it seems on the surface. They’re not out to strike back against Big Bad Publishing on behalf of little guys everywhere. They’re trying to make a buck. They’re very, very good at it.
And hey, kindle sales are literally paying my bills, so I’m in a mutually benficial relationship with them. Doesn’t mean I can forget that paying my bills is not their endgame. I’m the only one invested in that, so it’s my job to make sure I get it done.
About Bree
Wow, that’s a lot of caveats with the price matching, esp with the whole rule about it being totally up to them, etc. Does that mean they also have the right to price match your book according to used copies of the book (not that digital files can be sold as used but….)? Some used copies cost a penny.
I’m not a lawyer or anything remotely approaching one, but I would say that since they can price match for “any physical or digital edition” at “any third party” that they have an awful lot of freedom. It’s not like you can review or appeal. :p
Great post. Thanks!
It’s just something else in a long list of BS that Amazon is lately introducing. They also now have Draconian nondisclosure rules where no one is allowed to talk about their sales numbers or income earned from Amazon.
I think we’re also not allowed to talk about what’s in the DTP contract. Amazon is going COMPLETELY insane here.
I did fine-tooth my way through the Terms of Service after I read the pricing rules, since I was worried about whether or not they were going to come down on me for this post! Of course, I TECHNICALLY didn’t quote the ToS, I quoted a public page that I linked to that is linked from the ToS, but god knows where the line is there. If I’m told to knock it off, I imagine I will.
I really, really dislike the nondisclosure rules. I think that the spirit of adventure and experimentation that makes self-publishing so interesting is being a wee bit squashed here. Especially when they get to make all of your pricing decisions.
To be honest, they’ve deep-sixed any interest I had in dealing with them personally from here on out. I’m a lot more comfortable letting my epublishers be the ones to negotiate with them. I’m fairly sure Samhain’s going to get better terms than I can. And these terms…well, they’re not stellar.
As I said on my own blog, I will still absolutely share how much I’m selling and how much I’m making, I just won’t bring Amazon’s name into it. My books are available in more than one outlet and NO ONE has the right to control another person’s business to the point that that independent business can’t even share their sales numbers.
Re: pricing decisions, Amazon is eroding the line between being a wholesaler and a publisher. At the 35% they would still pay 35% on whatever your list price was. And that is how it should be. This decision not discount something and not pay 70% is insane.
My thinking is that they may do this to get out of paying 70% to a lot of people. If you set your price at $2.99 and Amazon discounts one of your books, automatically you are outside the range of what makes you eligible or the 70% in the first place. So then are you getting 70% on their discounted price or 35% on their discounted price? Or 35% on your list price? It’s really not super clear. And I think Amazon likes it that way.
I think you also make a very good point about the people they are turning away. They are creating less freedom so fewer people who aren’t self-published authors will deal with them.
I know that I’m very concerned about interfacing directly with my readers and getting in as many channels as possible. Amazon being the 800 pound gorilla is a problem in this instance.
I think most midlist authors are going to avoid going direct to Amazon because of these policies. Supposedly they were trying to attract more authors to them. But it seems like they just want to bully everyone. But Apple is very draconian too, and it remains to be seen how bad B&N will be. So it’s all a case of which bully wins. It seems there is no good guy here.
I am always very impressed with you as a self-published author. I think you’re one of the many smart people who do it right and do it well, and it’s showing in you success!
I think a lot of people are just not going to be able to be equipped to survive going a few rounds with Amazon on this, though. They were never the advocate of the author, but before I felt like DTP was a little bit like the wild west. No one was really looking out for you, but they weren’t actively out to get you, either.
Authors always have to be watching their backs, but I just worry at how many people appear not to realize that Amazon is really not the ally of the little dude in this. I understand the value for them in branding themselves the face of the small author revolution, but I hate seeing so many people buying the PR campaign hook, line and sinker.
But all of that aside, I wish you, personally, the very best of luck.
I’ve got more than one of your books on my kindle, waiting for my next book binge!
Hey Bree, thank you so much for the kind words! I always wonder if I come off as “that delusional self-publishing author” LOL It’s always nice when someone thinks that I don’t.
I think definitely authors need to read all the fine print and be very careful. Right now I think it’s of greater benefit for an indie to accept Amazon’s terms. Because it’s better to be in Amazon than not in Amazon. But I think the biggest thing authors need to do is work on getting into as many channels as possible, and work on building their author platform and the places people are directly plugged into them such as Twitter, Facebook, GoodReads, their blogs, and a newsletter.
I hope you like the novellas!
Wow, what a cool post. I’m one of those people who need to have my hand taken and SHOWN the how and why…I’m about as nontechnical as it gets. I didn’t think much about ebooks in fiction until I got into your books. Lately, I’ve come to look at it all differently and I think once I get my WIPs finished it may be the way to go. I really respect both of you and how you run your website/blog and do your promo. I ran a website and wrote nonfiction for it for ten years. I can understand online promotion because of that, but I’m really intimidated by print publishers and offline promotion. Maybe I won’t always feel that way, but it seems overwhelming right now. I know by time I’m ready many things may have changed, but it helps a lot to read posts like this one.
By the way, I finished the first two Southern Arcana books on my vacation and I am hooked…sigh, and now have to wait til January:)
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