Amazon and 70% Royalties

The big news this month for independent authors and publishers is that Amazon has unveiled a new 70% royalty option for e-books published directly through their DTP service. (The old rate was 35%.) Doubling the royalty percentage is a big step (and matches what Apple offers in its iBook and App stores), but there a few catches; to qualify, books must:

• Be priced between $2.99 and $9.99
• Be priced at least 20% less than the cheapest print version
• Enable text-to-speech
• Be made available in all worldwide territories where the publisher/author has rights

There are a few other important differences: first, your list price must be the same across all sales channels, so you can’t list a book for $2.99 on Amazon but $1.99 on Barnes & Noble or your own web site. Second, books sold at the higher royalty rate receive 70% of the SALE price, not the list price you set, and Amazon checks other retailers and will discount your titles to match the lowest prices it finds elsewhere. B&N and Kobo both customarily discount e-books by 20%, and if Amazon matches those prices, you will only get paid 70% based on the discounted price. Finally, Amazon now deducts 15 cents per MB, based on the file size of your book (most books are about 368K, so this is only about 5 cents).

Authors can choose either the 35% or 70% option, and can switch back and forth.

There have been a few hiccups: most indie authors’ books show up on B&N, Kobo, Apple, and Sony through a distributor called Smashwords, and updating the price at Smashwords can take weeks or months to trickle down to the retailers (The Twiller JUST went up on B&N three weeks after release, and isn’t up elsewhere yet; Right Ascension took eight months to hit Sony). So, you could change the Amazon price (which takes 1-3 days), and Amazon may de-list your book because there’s a lower list price elsewhere. Also, other retailers may decide to discount your book (we have no control over this), and that would affect your Amazon price and how much they paid you in royalties.

Due to these and other delays, Amazon hasn’t yet updated the price of Right Ascension to $2.99, but it should be done shortly.

Nonetheless, these details should be ironed out soon (the e-book revolution / indie author resurgence is new territory for everyone, after all), and earning $2.05 on a $2.99 e-book compares very favorably to earning $0.35 per sale (at 35% of $0.99), or even the $0.50 – $0.80 most traditional authors earn on an $8.00 paperback. This new system at least allows talented indie authors a chance to earn a living writing books, and possibly to improve them by paying for cover design, proofreading, or formatting help. I would like to live in a world where authors who are very good at writing novels are compensated enough to continue to hone their craft and write more books for me to enjoy. As a reader, I’d rather they earn a living writing than go write ad copy or do something else to pay the bills, and I consider $2.99 a very reasonable price to pay for a high-quality e-book. I think it’s a win-win for readers and authors, and I’m excited to see if the general public agrees.