Amazon’s New Royalty Structure

So, twitter was abuzz yesterday with news of Amazon’s announcement about a new two-tier royalty structure for ebooks.  Basically those who are willing to adhere to a certain set of rules can get 70% royalties instead of the 35% offered to self-pubbing authors and the (I think) 50% or so that publishers can expect.

My first thought upon reading it was, Oh boy. Strings! Strings attached! But actually, on the whole? I don’t really disagree with any of them.

• 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.

Now some ebooks do cost less than $2.99, but I understand having to implement a bottom rung there.  Amazon has to be able to make something, and I imagine that paying 70% on a host of $.99 books would become prohibitive.  The cap of $9.99 actually makes me quite happy.  I read ebooks.  You shouldn’t be paying over $10 for them.  Any publisher with reasonable ebook pricing is already going to qualify for this.

Having the list price 20% below the physical book…now that I can see some tricky stuff with.  Especially with remaindered/bargain books.  However, on the whole, I wouldn’t say I disagree that an ebook should be 20% cheaper than a print book.  Likewise with geographical rights–more books for everyone.

The features is a little tricky.  I like text-to-speech options, but who knows what those future features may be.

On the whole, though, I don’t think it’s bad.  The owner of Samhain already pointed out on twitter that Samhain appears to meet all of the requirements already (with, perhaps, the exception of the very short stories that are $2.50.)  I imagine lots of epublishers meet those criteria, because the majority of them are aimed at stopping the sort of inconsistent pricing that tends to drive people crazy to begin with.

As incentives go, it’s a good one.  If you can make as much money pricing a book at $9.99 as you would at $19.99, the customer is a clear winner.  And I would wager you’ll sell more copies of a book priced at $4.99 than $9.99, so the publisher and the author can win, too.   And kindle customers will have more books available at better prices, making the kindle a more valuable item.  Win for Amazon.

I don’t approve of evil empires as a rule, but Amazon foils my best intentions again and again because they get. it. done.  I can’t help but admire them, even as I wonder if some day we’re all going to have Amazon customer cards instead of government IDs.  (Has anyone written that book yet?  You could self-publish it on Amazon!)

What does this do to the world of self-publishing?  Well…it doubles the amount you’re currently making.  This does not make it easier to sell, easier to find customers, or easier to make a name for yourself.  If you’re making $25 a month self-publishing, after June you’ll start making $50 a month.  Yes, 50 is better than 20, but you’re not going to suddenly be able to make a living.

However, having said that…if you could have made $5,000 last month self-publishing, in June you could make $10,000 and yes.  That is a whole different game and a serious increase in cash.

At this point, any author who already enjoys healthy kindle sales has a hell of an opportunity.  Have an out-of-print manuscript with the rights returned to you?  Have a story that doesn’t quite have a home?  Invest in someone to make you a sweet looking cover and you could have a book on sale within the week.  With access to an Author Central account you can make sure the book shows up on your Amazon author page, and will get exposure from anyone shopping for your work or browsing your backlist.

I’ve played around with this a few times, and it really is breathlessly easy, too.  One of our blog serials, Under the Magnolia, is available on Amazon as a 99 cent download.  I helped Ann Aguirre create a cover and get an old manuscript formatted, and now her first fantasy novel, Stone Maiden, is uploaded in all its glory.  I would not give up publishing with companies who do the work for me, but for a manuscript that doesn’t have a home, it is a low-risk chance that just got a little more worth taking.

Me…I’m excited. But I’m easily excited, so that’s nothing new!