Amazon’s markup of digital delivery to indie authors is ~129,000%
From travel author Andrew Hyde:
So my book about travel came out last week! A pretty exciting time. I’ve decided to write a few posts covering the launch and lessons I’ve learned.
. . . .
This post is about the where the sales of the book are coming from, and why Amazon takes 48% of digital book sales. Surprising eh? I thought Amazon was the BEST for indie authors, right?
. . . .
A few months ago I ran a kickstarter for the book to raise the funds to be able to focus on the book, and people from around the world kicked in.
. . . .
So I wrote the book. Finished up with 25 chapters and 52,000 words. So, in plain terms, book book length. A lot based on blog posts and places I visited exploring just what the last two years of my life were living on the road.
. . . .
Kindle CRUSHED on sales. People have their credit cards stored in there and the user experience is amazing. Nook is dead last again, not sure what to think of that. iBooks is at 11% and .pdf at 12%.
So as an author, I should focus on Amazon Kindle 100% right?
. . . .
So, I’m at the end of my week, time to see just how the sales ended up and how much cash I’m taking home for a few months of work.
Wait, Amazon pays out the worst? What? This can’t be right! They are the best right? Everyone loves them. I love them. I dig a bit deeper and find this little gem:
Avg. Delivery Cost ($) 2.58.
So for every $9.99 book I sell I, the author, pay 30% to Amazon for the right to sell on Amazon AND $2.58 for them to deliver the DIGITAL GOOD to your device. It is free for the reader, but the author, not amazon, pays for delivery.
The file itself is under their suggested 50MB cap Amazon says to keep it under at 18.1MB. The book contains upwards of 50 pictures and the one file for Kindle needs to be able to be read on their smallest displays in black and white and their full color large screen Mac app). I’m confused. Amazon stores a ton of the Internet on S3/EC2, they should have the storage and delivery down. If I stored that file on S3/EC2 it would cost me $.01 PER FIVE DOWNLOADS. . . . Use Amazon to run your website: .01 to download a file. Use amazon to sell your book: $2.58 per download + 30% of whatever you sell.
Amazon’s markup of digital delivery to indie authors is ~129,000%
Now that isn’t 100% apples to apples, as it includes 3g delivery (whispernet) of the files but gives me no way of knowing how many devices downloaded via 3g. My book has a lot of pictures. It is about travel after all, it should have those. Double checked the compression of the files, everything looks to be best practices. File size be dammed, this sucks. How do the other services stack up to this?
Link to the rest at Andrew Hyde and thanks to Gary for the tip.
Does anybody else have delivery costs of this magnitude?
For most authors (in the US, at least) delivery costs average a few cents per book. The latest reports from Mrs. PG’s publishing empire
You will see your average delivery costs in the twelfth column of your KDP Prior Six Weeks’ Royalties report and Column K of the current version of your Prior Months’ Royalties downloaded spreadsheet.
Delivery costs are not charged against royalties under Amazon’s 35% royalty option.
The basic formula for Amazon’s 70% royalty calculation is: Royalty Rate x (List Price – Delivery Costs) = Royalty
Here’s what Amazon’s Pricing Page (incorporated into the KDP Terms and Conditions by reference in several locations) says about delivery costs for its 70% royalty rate:
Delivery Costs are equal to the number of megabytes we determine your Digital Book file contains, multiplied by the Delivery Cost rate listed below.
Amazon.com: $0.15/MB
Amazon.co.uk: £0.10/MB
Amazon.de: €0.12/MB
Amazon.fr: €0.12/MB
Amazon.es: €0.12/MB
Amazon.it: €0.12/MBWe will round file sizes up to the nearest kilobyte. The minimum Delivery Cost for a Digital Book will be $0.01 for sales in US Dollars, £0.01 for sales in GB Pounds, and €0.01 for sales in Euros, regardless of file size.
Delivery costs are a good reason to submitted a properly formatted ebook to KDP. If you use Word to create the HTML you get a lot of bloat.
I’m from Canada so I don’t know yet what this will be for me but by the looks of it I will be paid in US dollars which I will have to exchange into canadian dollars. I don’t know what the exchange rate is right now but I know I will end up with less than the 70%. If there are any can authors out there, let me know if I’m wrong.
Yes, us Canucks lose out on the exchange rate but it’s the same thing with Smashwords who also pay in US dollars. Fortunately Smashwords will pay through Paypal. Amazon insists you have a US bank account in the US or you have to wait for your sales to hit $100.00 USD before they cut you a cheque. That’s the one thing I wish they would change for their International authors, the insistance on having a US-based bank account.
Apple has the same requirement. However, there are dozens of countries outside the U.S. where Apple can pay you by direct deposit to your bank account in your own country. Canada is not one of those countries.
I suspect they’re being held up by some ridiculous Canadian regulation about cross-border EFT. As a patriotic Canadian, I have to put in a plug for my country here: Our bureaucrats are second to none at coming up with ridiculous regulations — and then fighting tooth and nail to prevent their repeal.
For a file with a lot of photos, I imagine it does cost a lot. I have two of my books bundled into one book and the cost of delivery went up. That is why I’m hesitating to bundle the third book in with the other two.
Mary, we’re put together four novels with a few promo photos and only been charge 0.25 for delivery. It would seem so long as the content is predominantly text the fees will be quite manageable.
But as the image count goes up the Amazon delivery charge will soar.
1) “So as an author, I should focus on Amazon Kindle 100% right?” This is a stupid premise to begin with.
2) A book loaded with photos should cost more than text-only. It will affect file size, and is addressed in the terms.
3) Even with higher delivery costs, they’ll still make more money through Amazon.
4) This doesn’t affect more than a handful of self-pubbers. I pay seven cents.
“Even with higher delivery costs, they’ll still make more money through Amazon.”
The typical knee-jerk response that has no bearing on reality.
We published several photo-laden ebooks on Amazon and other platforms and made profit on the other platforms and ZERO on Amazon because the two fees combined wiped out the entire profit.
As for how many people it effects, that’s irrelevant. The whole point of developing tablets like the KindleFire and the new Kindle software for enhanced ebooks is to make all books suitable for ereading, not just narrative text.
If you plan to have books w/ lots of photos, you have to optimize all your image files to make sure they’re nice enough but not super big in terms of KB (you may need to use photo editing software for this). Then you have to code everything VERY CLEANLY using HTML, plus when converting (I use mobipocket creator), you should use maximum compression to make your file as small as possible.
According to the product description page on AMZ, the ebook file in question is over 17 MB. That’s HUGE for an ebook, and I suspect it contains a lot of bloat.
His math is good. An 18.1 Mb file, according to their charges, should cost about that much to deliver. Most ebooks (sans pictures) run far smaller, so the charge is not so hideous.
That said, the author is correct in that Amazon is grossly overcharging for delivery of ebooks. My ebooks average about $.15 for delivery, which is ridiculously high for something that downloads in a second and a half. My website, for a very low price (via Hostgator) gives me unlimited bandwidth for downloads, so we know delivery costs simply are not that expensive.
All true, but I have no issue with Amazon charging reasonable delivery rates. I will gladly sacrifice a dime per download to contribute to Amazon’s coffer, because I want them to be motivated to continue to build their self-pub platform for as long as I’m writing.
Neither the author of the shared article nor Michael Stackpole are claiming that these are “reasonable” rates. Mr. Stackpole even calls them “ridiculously high” in the comment you’re responding to. And without explanation from the company as to why they charge more, that chart plainly shows this is offensively ridiculous, especially for a company that has superior traffic.
Given Amazon’s reputation for slashing at every turn to create preposterously low costs, this delivery charge news is confusing. I’d almost be comforted if it turned out the charges went to a better quality of life for the digital-end workers, as opposed to what’s been outed at their physical distribution hubs.
And I’m hardly comforted at the idea of Amazon overcharging writers as a motivation to continue self-pub. One would hope it’s either for ensuring quality infrastructure or simply temporary incompetence in their financial departments that will be worked out in time.
I suspect the charges were drawn up in the early days when enhanced ebooks with photos and video were a distant dream.
But so long as the charges are retained they will harm the development of enhanced ebooks.
It costs me three cents, on average, every time someone downloads one of my books.
I agree that Amazon’s delivery fees should be included in their cut. That said I suspect this is, in part, Amazon’s attempt to force people not to use huge bloated files by bringing the cost of delivery to their attention. If everybody started using giant files, it would have some affect on Amazon’s bandwidth costs. I also suspect the delivery charge is an artifact of the original Kindle’s Whispernet accounting system which has been kept on because it’s now a source of considerable profit. There was a time when the cost of delivery must have been significant to Amazon because they were paying phone companies worldwide for it. With the new wifi Kindles this is not the case but hey– why update the billing system when it’s now making extra dimes on almost every sale?
Hmm. If making your ebook’s file size as small as possible is a good thing — and I’m pretty sure it is — does this raise an issue with using Microsoft Word to generate your original manuscript? MS Word is notorious for creating bloated files. Is it possible that all that hidden fat gets passed through the ebook conversion process, even partially, resulting in ebook files that are bigger than they need to be? Perhaps indie ebook publishers should consider either switching to a word processing program that doesn’t produce bloated files, such as WordPerfect, or they should investigate the various tip online for rendering the fat out of MS Word files, before they run them through Mobipocket Creator or whatever other ebook conversion too they might be using.
From my understanding, no. Even if you create your product in Word, it is translated over to a mobi format in the publication process. Indeed, much of the code is removed in that process, so the end result should be relatively tight.
My stuff — 100K to 136K words, plus a cover, converted to HTML from Word by Amazon’s kindelizer thingie (and then I scan it for certain errors, fix stuff, and re-upload the HTML) — has about 8-12 cents of a transmission fee, for the 70% sales. Outside the Blessed Zones (where you can get the theoretical 70%), I get 35% of the cover price, but have no transmission fees.
At a rough guess, I get at least a third of my Amazon sales, so far, from the 35% zones. It makes me more than a little jaded about Amazon’s rates. Kobo’s, too, as the going-through-Smashwords rates are 38% in some countries, though about 60% in others.
Thanks Rebecca for that bit of info. I didn’t know about the US bank account thing. One more hurdle to go through.
Wait until you learn about ITINs, unless you’re from the US.
You’re right, Larry. Getting an ITIN can be a major pain. But it applies, no matter which U.S. distributor you use.
I didn’t find the process that painful. I got the letter from Smashwords, printed the form, filled it out and sent out everything together with my passport. Got the ITIN and my password back in around a month.
You’re quite right, Ela. The problem occurs if you can’t conveniently give up your passport for a month or so.
OR if you have to go out and cough up $150+ for a passport to begin with.
Createspace pays directly to foreign banks, averting the need for a U.S. bank account. I’ve just set that up for my soon-to-be released novel. They pay in Euros or GBP or dollars. Distribution can be through the U.K. or through Europe as well as the U.S.
Anyone have any numbers on that yet? Will that help or hurt the rates paid out?
You still need the tax clearance, though.
I’m Canadian. I created my book files with Microsoft Word, cleaned them up carefully, following the clear instructions for Smashwords, then converted them for Kindle through Mobipocket Creator (no problems…excellent results). Delivery costs: 5 cents per book.
The exchange, U.S. dollars to Canadian dollars, fluctuates (hardly Amazon’s fault!) but has been inconsiderable for years. They are a U.S. firm, and can hardly be expected to pay in Canadian dollars.
Amazon does still sell 3G Kindles, and downloading books (bought from Amazon) via 3G is still free to the reader. I don’t know what the breakdown is of sales of 3G vs wifi only, nor what percentage of downloads are 3G, but Amazon does still have some costs to phone companies.
If I’m reading it correctly, the author is complaining about paying additional charges for the commenting, rating, and other marketing tools, plus the extremely large distribution network Amazon provides. Those are likely the reason the Amazon Kindle sales are larger than everything else combines. In other words, he wants first class treatment for steerage class prices.
Does Amazon charge too much? I’m honestly not sure, yet. I think that we’ll know when a competitor provides as much marketing and other assistance. Apple doesn’t (something the author notes), nor do any of the other competitors. So for now, you’re paying more to get more, and “too much” remains to be seen.
Kirk, you’re reading it wrong.
He is complaining about being charged ridiculous sums to upload an ebook. Commenting, rating and other marketing tools have nothing to do with it. Her gets exactly the same service being charge $3 as you do being charged 3c.
On the one hand Amazon is going out of its way to encourage us to develop enhanced ebooks, providing fancy software and, for Americans, tablets to view them on.
But then it charges the author so much to deliver the enhanced ebooks that the authors have to charge crazy prices to cover the fees. And then bear the brunt of neg reviews fro the many Amazon users who have the old devices that can’t view the enhanced ebooks properly in the first place.
Wow… I’ve never heard of costs this high. My books are always less than a few cents. It sounds like his image compression is not as standard as he thinks. He’s also making a big thing of whispernet fees. Fees that don’t apply in all areas. I would say the actual make up is .58 cents. The $2 is an additional fee charged occassionally depending on location.
Other retailers average it among all authors. Amazon doesn’t. That’s one of the reasons Amazon can give us 70% and others can’t; personally, I’m happy to not be paying for part of the delivery cost of this guys books (although I am as he’s on sites I sell through.) I’m also glad that photo heavy books aren’t common. Imagine me losing more royalties to the cost of sending other people’s books. Want to see my angry face? That would do it.
Agreed. Why should my lean, trim, de-bloated ebooks subsidize someone else’s fatsos? If this guy doesn’t want to do what it takes to get his delivery costs down, then he shouldn’t complain about paying the price for that.
K. W. Jeter!!
It’s good to see you back in production, lean, trim, de-bloated and all. I never cease to be impressed and delighted at the people I run across on The Passive Voice.
I agree that Amazon’s bandwidth charges must be vastly in excess of their marginal costs, and are due for a revision downwards. But still more strongly I agree with you that the fatsos need to pull their own weight. If some slubberdegullion wants to burden the system with a ‘book’ full of Flash video or other monstrosities, he can jolly well pay the freight for it.
I, too, agree. I don’t quite understand the problem he’s having, but I certainly wouldn’t support making it MY problem.
Yes I have heard of the ITIN numbers but through author David Gaughran he told of an easier way and that was to apply for a W8-BEN number. He went through the steps and it was pretty easy so I think I will go through that route.
As for the way Amazon pays out, don’t they pay in euros and pounds? Why not Canadian?
Yes, Vera. That’s the way it’s done. Not always as easy as it looks.
And if Amazon were to pay out in Canadian dollars, they would still calculate the exchange, and send the adjusted amount.
Just deposit the U.S. cheque, and your bank will convert it to Canadian dollars.
Hey Vera – It’s an EIN number you want – you can get it on the phone pretty easily. I blogged about it in this guest post: http://catherineryanhoward.com/2012/02/24/non-us-self-publisher-tax-issues-dont-need-to-be-taxing/
Thank you! That’s exactly the information I needed at this point in my own process.
For 102 books I paid .053 cents per book. The delivery fee is only assessed on books meeting the 70% threshold on price.
OK I admit I never was a math whiz. All of this confuses me and makes me think twice about what my author friends tell me about e-publishing and offering your first book at even lower rate than 9.99. If it would mean all of these additional losses on a lower-rated book, I’d be lucky to main pennies per book.
This guy’s numbers only apply to bloated books, and not your run-of-the-mill text novel. My novel “Orpheus” is priced at $2.99, and I make $2.02 per sale.
Thank you for given a concrete example. 30% cut for a $2.99 book is what I had actually calculated, but it is nice to see that confirmed.
Also, good marketing choice for price.
Sorry David I said that wrong. What I mentioned is the form you fill out to send to Amazon and smashword. It’s a EIN number I meant to say. That is the route I will go through, it seems less painful.
Hey, I’m a long-time reader, first-time commenter. Thanks, Passive Guy, for the fantastic blog.
I had to comment here because I’ve seen so few authors mention this issue, and it’s something I deal with. I write illustrated books. In addition to other projects, I have a 5-book illustrated fantasy series for adults. My adult books have gorgeous watercolors and inks. There are usually about 18 full-page illustrations + character portraits and maps. These books are 50 – 60K words.
I sell most of my illustrated books for $4.99. Deliver costs average about 30 cents – not inconsequential, but manageable. As a point of reference, my text-only 300K omnibus also ends up costing about 30 cents per download in deliver fees. 50K words with illustrations vs 300K words without = same deliver costs for my books.
Whenever someone says that Amazon pays 70%, I always want to say, well…no, not quite. For me, it’s usually 63 – 68%, depending on the book. That’s still fantastic! I love KDP! But it doesn’t really pay 70% for most of my books. It’s more like BN’s 65%. Which is fine.
My illustrated books are all 5 MB or less. Why? Smashwords.
I format my illustrated books with the dreaded meat grinder. I give a step-by-step on my blog if you’re interested: http://www.abigailhilton.net/abbies-blog/2011/5/21/how-to-format-an-illustrated-or-unillustrated-ebook-using-sm.html I use SW to distribute to Apple, Kobo, etc, so I figure I might as well make it a one-stop shop. I upload the SW file to KDP and Pubit. I test-drive the results on the devices in question. They look good, although it took a lot of trial and error (mostly error).
File size is a major issue for authors of illustrated ebooks books. Distribution fees will eat up your profits if you’re not careful. Fortunately for me, SW has a 5 MB file limit, so I was never allowed to make the mistake of taking Amazon up on their 50 MB’s (eep! I probably would have owed *them* money!). I compress my images to 96 dpi and reduce the dimensions until the file comes in under 5 MB. You’d think this would destroy the quality of the images, but it really doesn’t – not on the Kindle.
Here’s my advice to authors of illustrated books who simply cannot get the file under 5 MB: Start a photo/art blog for your book and direct readers there. It’s good practice to get them interacting with you outside the book anyway. This will promote a fan base. Remember: most readers of eBooks have access to the internet, often on their devices. They can leave their book and look at your blog if they *really* want to see a picture. I tried putting the afterward to one of my books on my blog, and I had excellent results with fans stopping by to read it. Then they could do things like sign up for my mailing list.
Good guide!
I think shooting for less than 5MB is good practice in any case, but sometimes it ain’t gonna happen, esp. as eBook readers become better at illustrated books. This needs to be resolved before then.
I agree with the author’s point. It just doesn’t cost that much to deliver, so Amazon should be more upfront about it, instead of pretending to still be giving a 70% royalty and “sneaking” in a fee.
It’s like a restaurant sneaking that “service charge” on to my bill. Lame.
Oh, I agree. I think Amazon is pricing itself right out of the market for, say, self-published comics. You can’t cheat by moving the images off-book or by making them much smaller (text becomes illegible).
I think if I had an ebook comic, I’d focus on BN, because it’s got a respectable 20 MB file size limit, no distributor fees, and a color device. I think I’d regretfully skip KDP right now for that kind of project. That’s too bad, because the Fire handles comics pretty well, and I sell 2/3 of my books on Amazon.
I’m sure that when Amazon decides they want comics and heavily illustrated ebooks, they’ll change the distribution fees. I honestly see it as an intentional deterrent. For some reason, they just don’t want those books right now.
I don’t think they’re trying to sneak in charges. I think they’re trying to get you not to send them big files.
Interestingly, I give away the first book in my illustrated series for free, and Amazon chooses to eat the cost of that. It’s only 5MB, but still… They’d be making 30 cents per download in distribution fees if they kicked the bill back to me as they do on my other illustrated books. Since thousands of copies of that free book get downloaded, that’s a chunk of potential income they’re absorbing on the freebies.
Thank you for the guide! I’m not at the point where any of the pen names I’ll be using will require it, but I’ve gone into this knowing at least one of them will be adding illustrations to their works. I asked around and your blog was recommended to me as someone who would know how to do it, so I’ve had your main blog bookmarked for awhile. Now I also have a direct link to this guide. :3 Thanks!
You’re welcome.
My delivery cost is $.07. I might get excited if that were several dollars, but like others have commented, that seems to be a function of the author’s file size. To me, this is a non-issue. I can’t really see any KDP author getting exercised over a few cents, given the fact that we’re all pretty much indebted to Amazon for making it possible for us to earn a decent income. That’s my opinion anyway.
Name 70% 2.99 0.51 2.99 0.08
Heart of Stone 70% 2.99 0.51 2.99 0.08
05/19/2012 Skid Row ‘… h lynn kei… B007WHDIMG 1 0 1 35% 0.99 N/A N/A N/A 0.35
I pay 3 cents per download of a 50k novel on Amazon, which isn’t so bad, but I keep my file size as small as possible. (Yes, the file does include the book cover.)
Everything I’ve read shows a negligible impact on most indie books. However, that’s not to say it’s something we should ignore. For most folks right now, it’s something to keep an eye on.
A lot of comments here seem to be missing the point.
Amazon is great for straight-text files, but ebooks aren’t just about text-novels. As the world changes and textbooks, photo-books and other image-laden books move to ebook format this is becoming a huge problem.
Furthermore it appears only Amazon, among all they key retailers, charge by file-size.
We launched several image-laden books earlier this year. We set the price at 2.99 with 70% “royalty” and were somewhat unimpressed when, come the royalties report, we found many titles were bringing in zero royalties because the combined delivery charge and fees were wiping out the entire profit margin.
After further investigation and experiment we found a solution. If you opt for the 30% royalty there is no delivery charge. Consequently we now price all our image-laden books under the 30% royalty, pay Amazon 70%, and actually get some profit.
But taking less to get more seems a bizarre way of doing business. Especially when other platforms can deliver without these charges.
As enhanced ebooks develop and video clips and other extras become standard for children’s books and non-fiction this issue of download fees needs to be addressed.
Like the international surcharges, it’s an Amazon policy that hurts both readers and writers.
Mark, you’re right (at least in my case). I did miss the point, so apologies for shooting from the lip. Having said that, I strongly suspect (but have no proof whatsoever) that the current Amazon policy might be more a legacy of an early policy to protect bandwidth than an intentional device to soak authors for distribution fees.
That’s speculation on my part, of course, and not even informed speculation. Given that I owe whatever success I’ve had to date to Amazon, I tend to cut them a lot of slack.
However, I think you’re also right that unless and until the impacted authors voice complaints, the situation is unlikely to be rectified. All of us have to be squeaking wheels from time to time.
Regarding the $2 international surcharge, I spoke to a KDP rep last week and he confirmed that it was originally brought in to subsidize the cost of delivery books to international readers via the 3G network.
I pointed out to him that it was manifestly unfair as it was also being paid by international readers who downloaded books via their own connections, a WiFi network, or those who read on their phones or computers. I also argued that it abolishing it would benefit authors, readers, AND Amazon by increasing sales (and lowering prices and increasing device adoption). He said he would pass on the feedback.
Congratulations! A response from Amazon on the surcharge, after how long trying?
That id had some past justification is reassuring, but the fact that it is still in force , and as you say, is harming readers, writers and the company, is a little worrying.
They conveniently void the surcharge when a new Kindle country comes on board, so it’s not as if they’ve forgotten it exists.
Valid points.
I’ve been of the opinion (and am open to persuasion otherwise) that heavy illustration books are one of the places p-print will continue to dominate e-print. The dominant factor is display size. As a consequence I just don’t think of the needs of data-heavy ebook writers.
On something like the new iPad with its 10-inch ‘Retina’ display, heavily illustrated books actually begin to be worth reading — particularly if you can zoom in on the illustrations. In that light it’s not surprising that Apple’s iBooks Author program is intended for the iPad only.
It would be nice if Apple licensed its extensions to the EPUB format to other manufacturers, and allowed enhanced ebooks to be sold via other vendors. But they have to make their nut somehow, and that would probably be the end of iBooks Author as a free app. One way or another the piper must be paid.
For the rest of us, the existing EPUB and MOBI formats (and readers) just don’t do a great job of handling graphic-intensive books. I’m sure this will improve rapidly, and five years from now this complaint will seem positively quaint. Until then, print on paper will continue to have the advantage you mention. (And always will, for large-format things like art books and atlases. Nobody is going to haul around a Kindle or iPad with a 22-inch screen.)