March 12, 2013

Amazon kills 70% royalties for authors who won’t play ball on pricing


A Daily Telegraph story reports that Amazon is cutting royalties for self-published works priced above $9.99.

The current royalty rate is 70% of all sales, so long as the price is between $2.99 and $9.99. If a book is priced above $9.99, the author’s royalties will now slump to 35%. Does Amazon need the royalties of self-published authors? No. This is about price regulation, and Amazon’s efforts to continue to dominate the e-book market.

The 70% royalty rate was set in 2010. At the time, it required that the e-book rate fall at least 20% below the price of the physical book; this clause no longer appears on Kindle Direct Publishing pricing page. The 70% rate only applies to select countries. Authors are also responsible for delivery fees for their own books.

Authors in niche markets will be hurt by this, according to the Telegraph:

Richard Fitt, editor of Authors Online, which specialises in supporting self-publishers, said: “Amazon is proving very detrimental to the niche author.

To the public they are wonderful because they sell books cheaply but for anyone that has to deal with them they are a nightmare. All they are concerned with is driving the prices down. ”

Kate Pool, deputy chief executive of the Society of Authors, said that with Amazon taking an increasing hold on the online market many writers will be left facing lower cover prices or lower royalties.

“Our concern is the increasing dominance that Amazon is having,” she said. “It is starting to change the perception of books entirely and the danger is people will start to see them in terms of cheap items rather than the price reflecting the time and research that has gone in to it.”

Amazon taking a loss on an e-book by underpricing is wildly different than cutting in half the potential profit an author can make if he or she does not agree with that price point. As author Jim C. Hines reported last year, Amazon can calculate royalties based on the sale price, not your list price. If Amazon wants to change the sale price of a self-published work to $.99, for example, it is only required to pay 35% royalties.

In related news, a Reuters wire story says US District Judge Denise Cote will consider a request on Wednesday for Apple’s CEO, Tim Cook, to testify in the DoJ case over ebook pricing.



Kirsten Reach is an editor at Melville House.