Amazon announces a 70 percent royalty option

[Nate the great]

from the press release:

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.

...

• 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.

So if a book was listed for $9.99 and was about 1.4MB in size, then the seller should now get $6.69 instead of (about) $3.49. Looks like Amazon has switched to taking an agent's commission rather than that of a distributor & retailer.

[wayrad]

"Net of delivery costs" is a rather odd usage, but it makes it sound like they are subtracting distribution costs before calculating royalties. Any idea what those costs are estimated at?
Edited to add: Oops, sorry, I didn't read far enough. Haven't had my coffee yet.

[kennyc]

Originally Posted by wayrad

"Net of delivery costs" is a rather odd usage, but it makes it sound like they are subtracting distribution costs before calculating royalties. Any idea what those costs are estimated at?

Right. So what they get is pure profit.

[Nate the great]

Originally Posted by kennyc

Right. So what they get is pure profit.

Nope, not at all. It's income, not profit. Profit is what you have left after covering your costs.

[Blue Tyson]

Ok - In addition to - why would you want to use the old one? Or does that mean only newly uploaded stuff would get the benefit?

[Over]

I hope it doesn't mean authors will use less images (or use ones with less quality) in thier ebooks to lower the costs.

[raulf]

Originally Posted by Blue Tyson

Ok - In addition to - why would you want to use the old one? Or does that mean only newly uploaded stuff would get the benefit?

reading on...

This is the fine print:

********

• 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.
******

[rcuadro]

I just finished reading that over at Engadget and something sure has Amazon spooked...

[Pardoz]

Looks to me like Amazon may be returning fire at the publishers who've been pushing delayed, overpriced, ebook releases (and thus costing Amazon money). This move appeals to both the writers (moar moneyz!) and the readers (no geographical restrictions, lower prices, no limits on TTS).

[yagiz]

Originally Posted by Pardoz

(no geographical restrictions.

Are you sure about this?

[darius]

Originally Posted by rcuadro

I just finished reading that over at Engadget and something sure has Amazon spooked...

Hmm... I wonder who could that be.

Not only are they spooked, they've adopted the same pricing model as the spookers. If it were not for some impending announcement the spookee would not be spooked, therefore the only ones to remain spooked would be the authors. Good for writers everywhere.

[Pardoz]

Originally Posted by yagiz

Are you sure about this?

Straight from the press release at http://phx.corporate-ir.net/phoenix....977&highlight=:

Originally Posted by AmazonPR

The title is made available for sale in all geographies for which the author or publisher has rights

Since the author has global rights by default unless they sell them, it's a nice tactic to encourage authors to keep global electronic rights, squeezing publishers out of the picture (and leaving a bigger piece of pie for Amazon), while also pleasing readers.

[pdurrant]

Originally Posted by Nate the great

Excellent news. Much, much better than existing terms. For my book, RRP $6, 3.1MB, I think that means that instead of the $2.10 I get at the moment, I'll get $3.78. That's 63% instead of 35%.

-[EDIT] Hopefully it'll also be available to non-US sales shortly.

[pdurrant]

Originally Posted by Nate the great

Excellent news. Much, much better than existing terms. For my book, RRP $6, 3.1MB, I think that means that instead of the $2.10 I get at the moment, I'll get $3.78. That's 63% instead of 30%.

I note that to be eligible for 70%, the title must enable text-to-speech. I wish they'd also insist on DRM-free.

[Daithi]

This is huge news. I also see it as a major shot back at the publishers. At those kinds of royalties its makes self-publishing a no brainer for many types of books. If you are a new author hoping to become the next Rowling or Meyers you might want to use a big publisher (if you can get one to accept you). However, even then you may want to start with Amazon and then contract with a big publisher after proving yourself (and nothing says you have to give up your ebook rights). Even huge blockbuster authors can take advantage of this -- they have the clout to retain their ebook rights.