Amazon increases royalties on low cost ebooks to 70%

70.jpegStarting June 30, Amazon will pay authors of ebooks priced between $2.99 and $9.99 70% of the books list price, net of delivery costs. Given the importance of this I'm reprinting the press release in full: Amazon.com (NASDAQ:AMZN) today announced details of a new program that will enable authors and publishers who use the Kindle Digital Text Platform (DTP) to earn a larger share of revenue from each Kindle book they sell. For each Kindle book sold, authors and publishers who choose the new 70 percent royalty option will receive 70 percent of list price, net of delivery costs. This new option will be in addition to and will not replace the existing DTP standard royalty option. This new 70 percent royalty option will become available on June 30, 2010. 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.

“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.”

DTP authors and publishers will be able to select the royalty option that best meets their needs. Books from authors and publishers who choose the 70 percent royalty option will have access to all the same features and be subject to all the same requirements as books receiving the standard royalty rate. In addition, to qualify for the 70 percent royalty option, books must satisfy the following set of requirements:

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.

The 70 percent royalty option is for in-copyright works and is unavailable for works published before 1923 (a.k.a. public domain books). At launch, the 70 percent royalty option will only be available for books sold in the United States.

The Kindle Digital Text Platform is a fast and easy self-publishing tool that lets anyone upload and format their books for sale in the Kindle Store. To learn more about the Kindle Digital Text Platform, visit http://dtp.amazon.com/

6 Comments on Amazon increases royalties on low cost ebooks to 70%

  1. This is excellent news. It’s a shame it’s not available immediately, I’m guessing they’ve had to announce it sooner than they originally intended.

    I think Amazon need to re-think their wireless delivery pricing. At the moment, customers get unlimited wireless downloads in their own country.

    In the US, Amazon has absorbed this cost, which they could easily do on 65% margin. Outside the US, Amazon is currently charging a one-off $2 fee added to the price of every ebook.

    Moving to 30/70 (net delivery charges), Amazon are effectively asking publishers to pay for the delivery charges in the US. I can’t imagine what they’re going to do when/if they roll 70% out to books sold outside the US.

    I can only imagine that Amazon thought that wireless data charges would fall a lot faster than they have done so far. If they don’t start to fall soon, I think Amazon will have to move to a charging structure where the customer gets charged explicitly for each wireless download, instead of absorbing it or adding it silently to the ebook price.

  2. I like the notion of a nominal fee on the reader for downloads. Something similar to the document conversion fees Amazon charges. It would encourage wifi and web downloads over wireless. I’m guessing that Amazon is at least considering wifi in future Kindles, along with the next-gen features such as color e-paper, Pixel Qi screens, and so on, in addition to Kindle for PC, Kindle for Mac, Kindle app on iPhone and Android and Windows Mobile 7, etc.

    One concern I saw noted in the forum at MobileRead was the wish that this would not discourage publishers from including lots of graphics and illustrations. It also highly encourages the use of native Kindle formats over selling PDFs (to Kindle DX et al).

    It seems clear that Amazon is really in this market and will do whatever it takes to remain a big competitor. And we can only hope that Apple, or Scribd, or B&N, or somebody else sticks in with them, and continues to provide competition.

  3. Before you get too excited, consider that this only applies to books that also come in physical form. Mine don’t. I’m not happy about this. I’m sure there are many others like me.

    Unless I’m reading the release wrong, of course, in which case I’m thrilled!

  4. Frode Aleksandersen // January 20, 2010 at 3:57 pm //

    This is only for those who use the Kindle Digital Text Platform – regular publishers/distributors who sell ebooks can set their own wholesale prices just like normal (and also get much better rates).

    http://dtp.amazon.com/

  5. Are you talking about publishers who use the Amazon Advantage program?

  6. I wonder if this option will be available to those publishers (like BooksForABuck.com) who currently submit to the Kindle store through Mobipocket. It would be inconvenient to have to use the DTP platform when Mobipocket works pretty well. On the other hand, both my authors and I would prefer 70% to 50% and my books certainly fall into the $2.99-$9.99 range with paper prices at least 20% higher.

    So, I’m excited. Thanks for posting this.

    Rob Preece
    Publisher

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