Amazon’s market-building move

Amazon has moved to change the publishing game with a new 70% royalty offer for authors and publishers on the Kindle. The standard rate is much less but Amazon is offering authors/publishers the option to move to the new scheme provided they do certain things including:

  • Paying for delivery (at a cost of 15 cents per MB)
  • 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.

So Amazon wants books to be competitive with the competition and to be low priced and available world wide. The delivery cost is low — the median book would cost about 6 cents to deliver so this is a future sorting device for high graphic content books like textbooks. The offer is only for books sold in the US but what is interesting is that if Australian publishers want the higher royalty then it seems that they can’t charge more than the price in the US. This is going to be interesting.

4 thoughts on “Amazon’s market-building move”

  1. I wonder if this is a response to reports that publishers are keen to push the price of e-books above $US10 (perhaps to $US20), in part by introducing an e-book equivalent to a hardcover book (with useless add-ons like video interviews with the author, and released well in advance of the cheaper softcover. The suggestion is that this would fit well with the Apple thingy.) It’s depressing that the publishers want prices equivalent to paper books, given the absence of printing, storage or distribution costs. But it’s also surely hopeless in the long run, as authors will want to start bypassing publishers.
    And that’s the question: are authors allowed to published e-books at the kindle store without a publisher? Will they be allowed to do so under Apple’s deal? If not, why not?

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  2. Because (as you often point out!) authors may prefer to eliminate the middle man (either to get all the profit for themselves or because publishers suck for other reasons.)

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