Home » Amazon, Royalties, Self-Publishing » I Think It’s Time for Indies to Join Publishers in Their Fight Against Amazon

I Think It’s Time for Indies to Join Publishers in Their Fight Against Amazon

26 June 2014

From The Digital Reader:

Over the past two months Amazon has been supporting their very public and very rough book contract negotiations with a subtle media campaign which has kept indies on the sideline. By saying little and letting the publishers leak details, Amazon has avoided giving indies a reason to join sides with the major publishers that Amazon is fighting.

That was a smart move, but yesterday everything changed. Amazon released a statement which inadvertently confirmed that indie authors and publishers have a horse in this race.

. . . .

In short, Amazon has confirmed the rumors that the Bonnier negotiations include a fight over ebook payments.

. . . .

Indie authors might not care whether Amazon is extracting increased and specific co-op service fees from Hachette (they might actually want to pay for the services – if they boost sales), but now that Amazon is pushing major publishers to accept a smaller cut of ebook sales it is time to be concerned.

Tell me, if Amazon manages to force the major publishers to accept a smaller cut of ebook sales, how long do you think Amazon will continue to offer the 70% option in KDP?

. . . .

I think Amazon is using the high royalty rate to keep the publishing industry fragmented. By offering better terms, Amazon keeps power from concentrating into fewer hands. But if Amazon manages to force publishers to accept a lower rate, it won’t need to offer such a high rate via KDP any more.

Link to the rest at The Digital Reader and thanks to Meryl for the tip.

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Amazon, Royalties, Self-Publishing

104 Comments to “I Think It’s Time for Indies to Join Publishers in Their Fight Against Amazon”

  1. Not convincing.

    • As the guy who wrote it, I am not convinced either. Several people have already explained how I am wrong.

      • I think Amazon is using the high royalty rate to keep the publishing industry fragmented. By offering better terms, Amazon keeps power from concentrating into fewer hands. But if Amazon manages to force publishers to accept a lower rate, it won’t need to offer such a high rate via KDP any more.

        This is where you get it wrong, Nate. You’re attributing a motive that doesn’t exist. If you look at the history of the Big5 publisher you will discover that they don’t operate through competition. When they got big, it wasn’t through better product and better customer service. They got big by merging with really big fish in order to swallow smaller fish. If you go back to the 1980s and the 1990s, you can track how they were slowly declining. Amazon could not have become what it is today (in the book sales department) if the publishers and their distributors and retailers had been doing their job.

        Amazon is consumer-centric. Low prices, huge selection. THAT is what is anathema to the Big5. That’s the complete opposite of what they do.

        As long as Bezos is running things, he’s going to do whatever it is that is best for consumers. That’s his motive.

        For indies to side with Hachette in this is to be ANTI-consumer. I can’t speak for anyone else, but that’s a problem for me.

      • Nothing wrong with keeping your eye on the ball and voicing a concern.
        Here in New England, where we sometimes use the A/C and the furnace in the same day, if it smells like snow we get the shovels out of the shed – calendar be damned.

  2. Chris Armstrong

    I should side against Amazon in their contractual dispute with a publisher because of something that hasn’t happened to me but may?

    • Sometimes, yes?

      There is a history of things like this happening in other markets. Amazon comes out of the early web era, which means I (still) tend to associate it with computer companies more than anything else (once upon a time providing a web service was a development effort as much as a service offering). Which means I tend to compare what it does to Microsoft, often nervously.

      For those who don’t specifically remember Microsoft “back in the day,” it was unquestionably the best partner to have, without a doubt… until they decided otherwise. They spent a lot of time bringing in small companies to fill in whatever gaps their operating system might have had, and those companies did GREAT… until Microsoft finally decided they wanted to add those functions as a native part of the OS, and then they did so and cut all ties with those companies, who went under, went away, were no longer seen.

      It’s not a one-to-one translation into Amazon’s world, but the similarities are close enough to make me nervous every time something like this happens. It could be Amazon will never, ever think of doing something like this to indie authors. Or it could be they have no reason to get to us yet. I don’t know.

      And in this case, again, I don’t know that I should be leaping to Hatchette’s defense. But I’m never going to assume that just because specific behavior and tactics don’t affect me now, they won’t potentially affect me in the future.

      Label me with ADS if you must. It’s not Amazon specifically, I think all large companies are ultimately sociopaths.

      • I won’t label you. I think perhaps I’m less concerned because I’m a newbie and I see things changing pretty dramatically on a year-to-year basis.

        So I can definitely see that the indie market may change dramatically. It might split off to a competitor – and it would likely have financial impact as the market readjusts.

        I think to me there is always a silver lining in that nobody in today’s era is required to take their work and give up control for life. The options may not be as great as they are now – they might be better – but there will be options.

      • But I’m never going to assume that just because specific behavior and tactics don’t affect me now, they won’t potentially affect me in the future.

        No one is. Most everyone on this site is aware that terms could change. Amazon could lower royalties. We all know Amazon might lower KDP royalties, and that could certainly affect us.

        But there’s no indication it will happen, and so why fear the possibility it might occur?

        I think all large companies are ultimately sociopaths.

        Clever. Also close to the truth: all large companies are businesses.

        Business operate to make profits, which they do by offering the best services they possibly can.

        Funny: the idea of ethics often came up in the business courses I took, and I sometimes had trouble with the idea. I know . . . morals and “what’s right” and blah blah blah, but I think of business the same way I think of evolution. It’s survival of the fittest. Biology and evolution occur without regard to ethics and morals; they’re hard and brutal and ruthless and then you die.

        Amazon has demonstrated, time and time again, that it’s concerned with its customers. Its readers. It’s said so time and time again, as well. It wants to keep prices low. The corporate publishers colluded to prevent Amazon from doing so, and they got spanked for it.

        Now they can’t, so Amazon can play harder, and it is. Amazon is bringing its A game; that the corporate publishers are playing minor league ball is their own problem. They never tried to be better.

        I don’t know.

        Exactly.

        Edit to add: Boy, I hope that didn’t sound too harsh. Sorry if it did, Chris. Hadn’t been my intention.

        • Funny: the idea of ethics often came up in the business courses I took, and I sometimes had trouble with the idea. I know . . . morals and “what’s right” and blah blah blah, but I think of business the same way I think of evolution. It’s survival of the fittest. Biology and evolution occur without regard to ethics and morals; they’re hard and brutal and ruthless and then you die.

          I’m not sure what you’re arguing in favor of here. We defy biology and evolution all the time, and whether or not biology and evolution have a “regard” for ethics and morals, we also continue to have ethics and morals. I don’t think you’re advocating that the human race turn into sociopaths as a species (if you are, I guess there’s no point in continuing to argue since there’s no common ground to be found). You might be arguing that business is an area where we are required to divorce ourselves from ethics and morals, and… well, OK. In that case, the only thing I’m really interested in, in this scenario, is me — and despite Hatchette being a… um… company that I don’t have a lot of sympathy for, in general, if they can stop Amazon from doing something that will give them a leg up on doing something to ME, later (keeping in mind that I will have far fewer resources on hand to actually fight whatever it is they do) then I’ll strange bedfellows it as far as I can manage.

          The question is, is this that kind of situation? I don’t know that it is, but again, I’m not willing to dismiss it out of hand, which is historically what it looks like happens among most of the indie authors I follow.

          • Oh, I wasn’t arguing anything, and certainly not that we should all be sociopaths. Intended as comment on your remark that large companies are sociopaths.

            But I get you. I’m not dismissing it out of hand. Like I said, it’s possible. That’s why it’s a great idea for indie authors to diversify and use all platforms. iBooks, Kobo, et al. Explore options. Amazon’s not the only game in town, even if it is the most watched.

      • Those sociopaths operating under capitalism and free markets have brought more prosperity to more people than any system in history.

        If the $199 Chromebook I am using right now is a product of sociopaths, lets have more of them.

  3. What is it with the Amazon bashers and never linking back to the actual source so we can go read the full statements Amazon makes in the original context? Pffft.

  4. Even if Amazon dropped their rates to half of what they are now, it would still be better than anything a traditional publisher would give. I don’t see how their current contracts with traditional publishers prevent them from cutting rates now.

    • ^^This

    • Not to mention instant reversion (unless you’re in Select, then TECHNICALLY it’s up to 90 days. Ninety whole days!) No non-compete clauses. No perpetual free options. No rights being held hostage. Getting paid every month and seeing sales figures HOURLY.

      Amazon would have to devolve a very long way to get anywhere near as bad as a traditional publisher, even if it cut royalties by half tomorrow.

    • About half my ‘70%’ sales are at 35% anyway, because they’re not in a country where Amazon pays 70%. So what’s the fuss?

      Other retailers already pay better royalties than Amazon, but that doesn’t much matter when my best sales month at Amazon has been about 20x my best sales month at everyone else.

  5. Why must our moral outrage always be the motivation behind boycotting Amazon?

    Why can’t publishers create a platform that’s even somewhat close to KDP? Hell, give us 50% royalties and we’d try it.

    We should not have to pretend that we are moralistic kingmakers whose decisions can move markets. The markets should change to attract us instead of simply complaining.

    • Among other things, publishers are caught in the classic position of an established competitor when faced with disruptive technology.

      Their most important customers are bookstores – Barnes & Noble in particular – and they won’t do anything that will upset their most important customers.

      A publisher offering books at discounted prices on its own website would send Barnes & Noble through the roof.

      Amazon’s most important customers are readers, not bookstores, so it doesn’t operate with those constraints.

      • “Pay no attention to those silly tar pits. Keep marching my dear dinosaurs…Marching unto Victory!”
        Does that about sum it up?

      • That is exactly what happened to encyclopedia publishers in the CDROM era.
        Microsoft in the early 90s went to Britannica, World Book, etc , trying to get a non-exclusive license to do a CD-ROM encyclopedia to promote CD-ROM adoption. No matter how much money, no matter the terms, they got the same answer: “We’d love to but we can’t afford to annoy our sales force.”
        So microsoft was forced to buy outright a low end encyclopedia text, hire a bunch of researchers, writers and editors (most of them being recent layoffs from Britannica and Grolier) and create their own encyplopedia. After Encarta ate away half the business, then Britannica and the rest had to rush out half-baked CD editions to try to catch up to the competitor they created.
        They never did get even close to competitive before another tech disruption put them all out of the consumer encyclopedia business.

        Classic case of “If you don’t disrupt yourself, somebody else will do it for you.”

        And so it goes… more examples emerge every day.

      • If only they were willing to cultivate new customers… like maybe millions of them.

  6. Yeah, even IF they were to lower the rate (and they might someday, who knows?) it would still be a better deal than 25% of net, which is all you’ll get from a publisher, and will suck even worse for traditionally published authors with publishers getting a smaller portion from Amazon.

    So why on earth should I be siding with traditional publishers over this?

    • Not to mention those of us used to 70% would do everything in our power to move to another platform that still offered such rates (Apple, B&N, Smashwords, etc.).

      Sure, a lot of us do a large majority of our sales at Amazon, but if it ever comes to that, I don’t think we’ll crumble and die. For some, a lot of headache (and heartache) would follow until they get set up on other platforms and convince their readers to follow, but good readers will follow, regardless of platform.

      But no matter how much the sky has apparently fallen, I’m not a believer that Amazon will lower rates on something that is almost pure profit for them (it costs about $.00001 or less for the bandwidth to transmit an ‘average sized’ novel to a customer). It costs less than that to store the file on their cloud servers. The 30% they receive when you sell a book through their site means they are getting about 29.9% or more of that money.

      For doing nothing but storing a digital file and offering it for sale/download.

      So, again, not convinced they’ll move away from that 70% anytime in the future. Especially if B&N and Kobo and Apple all laugh and remain at 70%.

      But it is entertaining to watch people run around, covering their head while screaming about how the Amazon roof is falling in on their heads.

      • They also take care of the transaction, provide a fairly nice reporting platform, do some advertising for you, run and constantly update and improve a recommendation engine, and send money to your bank. So, they provide a number of services besides storage and distribution.

        But I agree, they must do ok with that 30+ percent cut that they take. I keep hearing people say that their book store loses money, but I simply can’t see that being true. I think other book retailers say that to feel better about themselves.

  7. Chris Armstrong

    And doesn’t being indie mean that your IP belongs to you? If Amazon starts doing stuff indies don’t like, then indies can leave!

    I really don’t buy arguments predicated on the notion that Amazon will eventually “own everything” and nobody will ever be able to build another ebook store. Let’s face it, books are a small fraction of what Amazon sells – and readers are a smallish subset of the populace. They act as though Amazon has a monopoly on air.

    • “notion that Amazon will eventually “own everything””

      As we’ve seen, that didn’t happen with Wal-Mart.

      • As we’ve seen, that didn’t happen with Wal-Mart.

        But they would have gotten away with it, too, if it hadn’t been for that pesky Amazon!

        Back in the real world, selling things is generally easier than making things, so the ‘OMG, they’ll take over everything!’ retailers are always at the mercy of some newer and more efficient startup.

    • Yeah, this line of thinking drives me crazy. A) Amazon makes way more money on other goods than it does on books. Book-centric people like authors and publishers and Mike Shatzkin often forget that books are not the only thing Amazon does. B) Amazon, being a retailer, presumably offers a similar retail split on other products, to other suppliers, that it offers to indie booksellers. (70/30.) If Amazon were going to change its retail split, we’d probably hear other industries screaming about it by now.

      And it still might change it someday. I wouldn’t be surprised if it went to 60/40 at some point, which is the standard. But a big reason why it’s so popular with customers is its huge selection, and if it dinks around with suppliers too much, the selection will diminish. As pointed out above, we own our IP, and we can take our business elsewhere if a better retailer comes along. Amazon didn’t get where it is today by ignoring customer satisfaction (broadest selection/lowest prices/best service) or by ignoring the fact that competition is a real thing.

      Changes can happen in any industry, and nobody should put all their eggs into one basket. But I haven’t seen a good reason to start pooping my pants over Amazon’s “royalties” (retail split) yet.

  8. Perhaps this, from Amazon, plays a role?

    “For the vast majority of the books we sell from Bonnier (a division of the 3 billion Euro international media conglomerate, Bonnier Media Group AB), they are asking us to pay them significantly more when we sell a digital edition than when we sell a print edition of the same title.”

    Last I saw, no indy author ever asked Amazon to pay them what they didn’t want to pay.

    That’s not to say they wouldn’t drop the royalty to, say, fifty percent. Amazon’s critics can be right about that. So could Apple. So could Smashwords.

    The only thing authors can do is to diversify their distribution. If you’re relying on Amazon for 80 percent of your income, you need to focus on other outlets. Make sure they’re carrying your books. Make sure you advertise on your site that they’re available there. Beyond that, I don’t know what else is possible (as the author of the blogpost admits in the comments).

  9. Posted there :
    “they are asking us to pay them significantly more when we sell a digital edition than when we sell a print edition of the same title.”

    Do we read it right ? Could also be that Amazon is talking absolute value, not rate. In which case it’s a way to ask Hachette to decrease the ebooks price. By decreasing the ebook’s price, would indeed get less for the ebook than for the paper versions.

    • That’s a huge point. Sounds like this isn’t about percentages as they apply to self-publishing. Hachette says Amazon has to pay a full $10.99 to them for the sale of a digital book, and then Amazon decides what to charge. If Amazon sells the book at only $11.99, Hachette makes more than 70%. If Amazon charges more, they get more. If Amazon charges less, they might take a loss.

      So there’s really no connection to the 70% self-publishing deal.

  10. In the “olden days” before e-books were moneymakers Traditional publishers split the e-book royalties 50%/50% with their authors.

    Then, they changed the terms to 25% for the authors and 75% for the publisher. That 25% publishers “took” from authors now is the source of their profits, in many cases.

    So, Amazon wants a piece of that 25%. I say, as an indie go for it.

  11. Every time I see one of these scare stories re “Ohmygod, Amazon is going to cut your royalties!” I always wonder if the writers of said stories are either a) trying any way they can to convince writers they shouldn’t go indie; or b) they’re just stupid.

    Let’s give them the benefit of the doubt and assume they’re stupid.

    Let’s look at this from Amazon’s POV. First, outlay versus profit. That 30% commission it’s taking for every unit sold (and our cut is NOT a royalty) involves, on Amazon’s part, some IT magic, some bandwidth, and some accounting and dispersal. In hard cash, what do you figure it costs Amazon per ebook unit sold? Half a cent? Three cents? Even if it’s a nickel, the Zon is making a nice profit–cash-wise. But look at what else they gain.

    A marketing force. A huge, noisy bunch of eager, ambitious self-publishers who aren’t just trying to sell their own books, but EBOOKS. And by association, they are selling Amazon. When a customer pops over to Amazon for a cheap ebook, they just might hang around to shop electronics, clothing, food, baby supplies, and the rest of Amazon’s goods. Links to Amazon. “BUY IT ON AMAZON!” Amazon, Amazon, Amazon–and that doesn’t cost the Zon a single dime.

    Okay, it’s a few years from now and Bezos rubs his greedy hands together and twirls his mustache a few times and cackles, “I have them now!” Overnight, he increases his cut to 65% across the board, leaving self-publishers with only 35%. What he would gain would be NOTHING compared to what he loses.

    Because the Big5 publishers are NOT his competition. And he doesn’t even have to worry much about Apple because Apple cares far more about selling iCrap than it does about selling content. And B&N already screwed the pooch as far as internet retailing. Who does that leave?

    Every ambitious geek with a brilliant idea and a garage.

    If Bezos pissed off thousands of self-publishers (and by association their millions of readers), they’d go looking for the next Bezos. And when they found him, they’d be behind him with all the noise and linking and evangelism they could muster.

    Amazon isn’t outcompeting the competition because they’re big. They’re big because they are better.

    The Big5 are a completely different animal than self-publishers. I imagine in PITA costs alone the Big5 are ten times as expensive (per unit) as any self-publisher. Especially since they really, really want Amazon to help them game their broken system of producing mega blockbusters.

    If Hachette “wins” against Amazon in this battle, they’ll be dead in five years. Because Hachette does NOT understand internet retailing, or retailing in general, and they sure as hell don’t understand book buyers. Amazon could stop selling Hachette books today and still manage just fine. In terms of marketing power, one self-publisher is worth twenty Hachette authors. Even so, the book biz is a very small portion of Amazon’s business. They don’t NEED books to survive. But if the Big5 think book buyers will happily return to the days of high prices and limited selection, well, how many ways can we discuss “stupid”?

    • Overnight, he increases his cut to 65% across the board, leaving self-publishers with only 35%. What he would gain would be NOTHING compared to what he loses.

      EXACTLY.

      The people who flip their lids about this are not remembering one thing about Jeff Bezos — something he’s kept as a part of his brand, and his company’s brand, since the beginning. He cares more about customer experience than ANYTHING ELSE…EVEN MORE THAN HE CARES ABOUT PROFITS.

      I feel pretty confident that nothing will change dramatically (some things will undoubtedly change, but not in a huge or fast way) while Jeff Bezos is still in charge of Amazon. After he retires or dies, well…let the disruption begin, because god only knows who’ll take over the company at that time, and what his or her philosophy will be.

      • Agreed.

        • If you can see the relationship between Amazon and Indie Authors as Bezo’s does it becomes simple to understand.

          My take is that he sees Indie authors as customers MORE THAN he sees them as suppliers. He aims to keep us happy, and there-by secure the future of the whole Kindle store, by treating us as customers.

          It’s something he’s rather good at.

          So when I hear the latest sky is falling cry I have to say why? So far I’ve yet to hear and answer that makes sense.

          • Good point. Probably most self-published authors already spend more on Amazon for other stuff than they make back in royalties. Offering a good deal on self-publishing for newbie is an easy way to get customer loyalty from those very same people (who like to buy stuff too).

            Scene: “Oh, I just got $28.38 in royalties from by book about a struggling writer who can’t find love in Bakersfield,” says the struggling writer in Bakersfield. “Time to buy that new $199.99 Chrome book to start work on my next novel!”

      • Not to mention that indie authors with established readership would simply raise the price of their books, mitigating some of the damage. And that would make customers unhappy.

        • I’m not so sure that tactic will work for long. Say Amazon reduces the royalty from 70% to 50% sometime in the future. A KDP author bumps up the list price of an eBook from $3.99 to $5.49 to compensate. Amazon then sets the promotional list price on this eBook to $3.99 (as per the KDP Terms of Service: “…we have sole and complete discretion to set the retail customer price at which your Digital Books are sold through the Program”) and pays the KDP author 50% of this promotional list price (as per the KDP Terms of Service Pricing Page, modified for the new 50% royalty, of course).

          And that would make Amazon’s customers happy again, because they’re back to paying the lower price.

          • D.A. currently, when Amazon chooses to run a sale on an indie title, they eat the loss and pay you your percentage on the full list price. They *do* do this – I’ve seen it on my own titles, particularly on Cyber Monday when they seemed to discount by .25-40 cents a bunch of indie titles for that day only.

            NOT to be confused with Amazon price-matching to a lower price out there, in which case they only pay you on the discounted amount. 😉

    • Well said.

      I’d like to add that even in a world without Garage Geek, Amazon still has incentive to offer its suppliers a healthy cut.

      If Amazon shifts from taking 30% to taking 50%, then some indie writers will have to drop out of the game so they can do work that makes up for that lost income. At some point, the income gained by taking more is offset by the sales lost because suppliers have been forced to produce less.

      The 70-30 split is probably very close to the split that maximizes revenue for Amazon. And if they discover that it isn’t, they will will change it. But 80-20 is just as likely as 50-50.

      • “After he retires or dies, well…let the disruption begin …”

        That could very well happen. Walmart (who people like to compare to Amazon to make the ‘Zon look bad) changed a lot when Sam Walton died, I suspect none of those changes for the better from the POV of either employees or customers.

        The same could happen at Amazon. However, I’ve got to believe there is also a chance that Bezos might be in a position to pick his replacement. If that happens and he chooses someone from within who has become indoctrinated in the Amazon Way, they might have a few more years on top even then.

    • If Amazon suddenly made it impossible to sideload books on the Kindle, I might start to get worried. They haven’t done that, though. In fact they’ve gone out of their way to make it easy. Anyone, anywhere, can deliver content to your Kindle via email.

      Granted, the requirement that the Kindle owner preapprove the publisher’s email address is a barrier, but compared to not being able to do it at all, it’s trivial.

  12. So, I should lobby for lower royalty rates for my work? Sounds great! Where do I sign up?

    • Wow. Way to misunderstand the post.

      • 1. Amazon offers me the higher rates.
        2. From the last paragraph of your article, you say: “I think it’s time for indies to hold our noses and side with publishers.”
        3. The publishers offer the lowest rates NOW.
        4. Siding with (or lobbying for) those offering the lowest rates means lobbying for lower royalties (unless you think the publishers suddenly decide to cut their profits and raise royalties, something they have never done.).

    • Step 1: Send a query letter to an agent, because Hachette made it clear that they are a “privileged access”-only company.

      Step 2: Get your agent to sell the book to Hachette

      Step 3: Don’t profit.

      • Where did I say that you should sign a contract with Hachette or any other publisher?

        • Well, if you aren’t saying that, then what are you saying? What’s your specific call to action? I sincerely want to know.

          • I think the idea is that we should all post articles telling people to support Hatchette over Amazon because otherwise Bezos will cut our royalties to 5%.

            It’s either that, or there’s a concerted astroturfing campaign going on, because I’m seeing this meme all over the Internet to a tedious degree.

        • You didn’t say it. I was joking with the person who said “Where do I sign up?”

  13. Let me see if I follow this argument:

    1. Amazon is negotiating for a bigger cut of ebook revenue.

    2. If Amazon gets a bigger cut from Huge Publishing House X, then they will feel bold enough to ask for a bigger cut from tiny individual Y.

    3. Therefore, tiny individual Y should should shake his tiny fist at Amazon.

    4. Because that will help.

    Yeah … that … doesn’t make any sense.

    • I think you got crossways on step 3 (“then a miracle occurs”) 🙂

      3. Therefore, encourage readers to buy their books from a variety of services and vendors that offer equal or higher royalty rates. (Smashwords and Gumroad, for example).

      4. Remind and show readers how easy it is to buy from other vendors and sideload.

      5. Direct readers to recommendation and promotional sites that feature a variety of retailers, not just Amazon.

      6. Repeat 3-5.

      All of these steps will cumulatively encourage a healthy and diverse marketplace where no one vendor can overnight slash payment rates.

  14. I think there are a couple of factors that these articles overlook:

    If Amazon were to drop it’s rates, that will open the doors for a competitor to start taking Amazon’s lunch in the e-book market.

    Also, Indie published authors have a really huge advantage over Traditional published; They have the ability to follow the money. Indie publishers can move/expand to a different platform, as many have done already, that may well offer a better deal than Amazon. Traditional published still remain locked in to the same royalty rate, irreguardless of the rates the publisher would gain by performing the same platform move/expansion.

    • This. Upvote. Smashwords, Draft2Digital, others that will have a good reason to be birthed.

  15. I generally agree with, and almost always enjoy reading, Nate’s pieces over at The Digital Reader. Unfortunately, this piece reads much more like a Shatzkin “Let’s discuss what it would be like if Amazon broke into our houses at night (p.s.- big publishers are great)” arguments.

    But in his defense, reading through the comments section of the article, Nate has admitted that he saw this article as more in the vain of “raising a concern” and less fear mongering, but seems to admit he’s failed in delivering.

    In reference to being featured here on The PV, “well, crap. This is one I would rather PG had ignored.”

  16. Patricia Sierra

    This is on my list of things not to worry about.

    • +1

    • Right? I couldn’t hear / read it over the World Cup game going on in the background (and the clack of the keyboard as I’m writing whatever book I’m working on).

      I got my eye(s) on Amazon (and all retailers I sell through). But I haven’t smoked enough weed to grow that paranoid.

  17. We’ll help you reach an audience–Amazon offer.
    We don’t need you–tradpub offer.

    That’s really a hard choice. I feel like Robbie the Robot and all my circuits are frying trying to figure this one out.

  18. If Amazon reduces my cut, I will raise my prices. Even then my ebooks will still be considerably cheaper than my trade pub’d competition.

    • Yeah. Amazon has deliberately been using royalty rates to force indie books into the price range they consider to be best ($2.99-9.99). I could certainly imagine them changing the range in which they offer those rates, but, as you say, if they suddenly said all books will get 35%, one reaction from many indie authors would be to increase prices to compensate.

      • So why are so few indies talking about this? To me, it’s a no-brainer. Amazon lowers our cut … we raise prices to compensate. We *may* lose a few readers, but quite honestly most readers will pay another buck for books they like, especially if those books are part of a series.

  19. I do expect Amazon to change their payment structure at some point. I think it will go to 60/40 and may even go to 50/50. But that’s still way better than I could get from a trad publisher…if I could even get published through a trad publisher.

    But here’s the kicker for me. Even if Amazon went to the same royalty structure as the trad publishers, I’d still publish through Amazon. By self-publishing on KDP I control the content, the cover art, the title, and the price. I can run sales and discount or increase the price whenever I want. I can also publish when I want. The book is available within 12-24 hours, not in 12-18 months. I don’t get an advance, but I do get monthly royalty payments, not semi-annual or annual payments. And I get reports that are updated hourly that let me know how my books are selling. None of that is an option with a trad publisher.

    From my perspective, Amazon is still the best game in town and the sky hasn’t fallen yet. I’m still getting 70% of the books I sell…just like I was 4 years ago when I published my first book through KDP.

  20. I’m still trying to figure out how agency/wholesale = co-op. They are two separate issues, though they may be in the same potential contract being negotiated. And again, that’s assuming those are the real issues on the table since Hatchette has shown a marked propensity for propaganda over the last month.

    When it comes to business, the only side I’m on is mine. This battle is between Hatchette and Amazon. And if the Hatchette leaks are true, they are trying to shove agency down Amazon’s throat, which they already got slapped by a federal judge for trying to do the same thing illegally. So tell me again why I should side with a company who has no problem with illegal business tactics?

  21. Over the past two months Amazon has been supporting their very public and very rough book contract negotiations with a subtle media campaign which has kept indies on the sideline.

    I don’t see this.

    1. Contract negotiations generally are not a public spectacle. The public finds out any info, if anything, after contracts have been signed. Usually you are not even aware it has happened.

    2. Amazon isn’t the one making this public, Hachette, the publishers are the ones dragging this into the public arena. So it’s not Amazon’s public contract negotiations. Amazon has done the smart thing by not responding publicly anymore than they have to.

    3. Seems completely fair and equitable for Amazon to demand the same cut on ebooks as they are getting for paperbacks from a publisher. What logical reason does the publisher have other than a desire to “slow down” ebook sales to preserve their print sales when ebooks cost less than paper to produce? If I were in Amazon’s shoes, I’d do the same.

    4. Cutting a deal is about negotiating who gets how much of what. Of course Amazon wants more of the money. Of course the publisher wants more of the money. That’s why they need to negotiate. There is nothing inherently evil in trying to get the best deal for your investors and customers.

    Amazon has done lots of contract negotiations with publishers over the years, most we’ve never heard about. It hasn’t changed the KDP rates except when the “Big 5” colluded and forced Amazon into agency agreements with the most favored nation clause to protect Apple. That ended up increasing indie author’s cuts, not reducing them.

    I don’t see any reason to join in bashing Amazon based on this. It is silly to me that anyone is doing so based on one-side PR spin with little to no context of what is actually being discussed behind closed doors. It makes most of the prognostications come across as little more than Chicken Little screaming, “The sky is falling! The sky is falling!”

  22. I’m a tad ashamed to admit, but my gut reaction after reading the post was: “Quickly, to the tinfoil hats!”

  23. I read the comments on the original post and something struck me. It was the post about authors needing to steer their readers to other sites than Amazons and teaching thime how to side load. I can side load very well, thank you, and frankly I hang with Amazon because they offer me what I want in all areas– not just ebooks.

    My very favorite author set up a web site with a few other authors. I would have been happy to buy directly from her thus insuring that she had some extra dollars in her pocket but she wanted payment through PayPal or a check through the mail. Needless to say I ordered her books in the future from Amazon.

    If you want not to be dependent on Amazon offering your readers a worse experience is not the way to do it.

  24. We keep hearing about how Amazon will cut royalties, and increase its margin because there will be no competition.

    Can someone point to a retail monopoly so we know what they look like? If Amazon is going to do it, surely someone else must have already done it. Who? When?

    We also have to remember that when one company increases its margin, it becomes another company’s opportunity. I think Bezos said something like that. I wonder if he thinks Amazon is immune?

  25. I’m sick of hearing the 70% rate KDP pays authors called ‘royalties’ – it’s not. The author retails all rights and Amazon is only a retailer and takes a retailers cut, giving whatever remains to the author. That’s 100% of net. Stop comparing a retailer to publishers, it’s illogical.

    • From the KDP ToS:

      5.4.1 Royalties. If you are not in breach of your obligations under this Agreement, for each Digital Book sold to a customer through the Program, the Amazon party that made the sale (or whose affiliate made the sale) will pay you the applicable Royalty set forth in the Pricing Page, net of refunds, bad debt, and any VAT, sales or other taxes charged to a customer or applied with respect to sales to a customer.

      • Yes it is miss-named, and KDP have been told repeatedly to amend their nomenclature. Because they mistakenly call it a royalty doesn’t mean it is.

        • Agree.

          The author sets a fixed price that Amazon pays him for each book. He does that by setting a list price and multiplying by 70%. That is still a fixed price.

          Amazon then sells the book for whatever price it chooses. The author has no control over that.

          That’s about as close to wholesale as it gets. I suspect they call it a royalty to make authors feel good.

  26. I know Nate backed off on the statements he made in the OP, but I keep reading this stuff, and it’s just…not reasonable.

    We’re supposed to “join publishers in their fight against Amazon.” Um…okay. So I’m supposed to do what, exactly? Write blog posts saying what a big meanie Amazon is? Pull my books from my main distributor? And that helps me how? For a problem that doesn’t even exist, and may never exist.

    I can’t envision any scenario in which I would “side” with trad pub. Trad pub has made it abundantly clear that they place no value on writers. If Trad pub were even to accept whatever indies could do for them, do you honestly think any reward would be forthcoming?

    So no, I won’t be joining any “fight” against Amazon at this time. As someone said upthread, Amazon treats writers like valued customers,and not disposable raw material. As long as they continue to do so, I’ll continue to value and use the services they provide.

    • If anything, I suspect Amazon will work to make the KDP programs MORE user-friendly, useful, and mutually beneficial. I don’t see any justification for them alienating a large stream of income for their corp. And even if they chose to take 10 or 15% more, I suspect there will be refinements and additions to the program that make that highly worthwhile & profitable to continue the partnership. They will continue to want to innovate and be the BEST self-pubbing program.

      I may be idealistic, but this wouldn’t surprise me that they endeavor to stay on top of this biz and do cool (patent-able) stuff.

      What does suprise me is how lacking foresight and innovative vision MSFT has been to shine in the indie publishing arena. They should be the go-to guys for all things cover design, template, do-it-yourself, stock images, etc.

      • “I don’t see any justification for them alienating a large stream of income for their corp”

        This is what I don’t understand — isn’t this exactly what they’re doing with Hachette? I could be wrong, I don’t know the comparative size of indie pubbing vs. Hachette for Amazon. But Hachette isn’t insignificant (for the book side of things, all books are insignificant in the grand scheme of Amazon as a whole).

        This isn’t an argument to say that Amazon will lower rates — there are other factors to consider. But to me it seems that if Amazon is willing to tick off Hachette, they’re willing to do the same to any publisher, including indie authors/publishers.

        • Amazon doesn’t have to negotiate with indies, do they? They set rates–take it or leave it. THey are going to make 30% or 65% from each sale. I don’t believe they make that nice a cut from selling trad pub books. And they know that if they ask for too much, indies may start trickling away, and there go those easy 30 or 65% cuts to other sellers.

          They HAVE to negotiate with trad publishers if they want to keep a bookstore where folks can get ALL books.

          And while there have been a lot of rumor and leaks and whatnot, we actually don’t know for certain what they are talking about as this goes on for months and months. I note that Hachette has not walked away. Clearly, they still think they can make money at Amazon. As do indies.

          When Amazon stops making it profitable to sell at their store, or makes it burdensome, folks will walk.

          And I do wonder how much Amazon makes from the trad pubs if the margins are “razor thin” as some have posted, given how much Amazon wants to keep ebook prices low. It may well be that the generous percentages they get from oodles of indies versus tiny margins from trad pubs may make it not wise to alienate indies: a group they don’t need to negotiate with and a steady stream of easy revenue when they sell, and not much cloud storage cost if they don’t sell.

          • That’s a good point about negotiations vs. take it or leave it — I hadn’t thought of that. I also agree that the money they make from indies is pretty easy from their end. I’m not sure about the profit margins. My understanding (and I could be wrong) is that Amazon takes a 30% discount on ebooks from trad publishers and either takes that difference in profit or passes some of it along to readers in savings.

            So for a $9.99 ebook, they’d pay the publisher $6.99 which leaves Amazon with $3. About half of my trad ebooks seem to be discounted on Amazon at the moment and at the current rate that would leave Amazon with $1.50, but a good chunk of the other ebooks I looked up were still at the full $9.99 price (which surprised me).

            I sell my indie ebooks at .99-4.99 which gives Amazon a cut between $.69-$1.49.

            So it seems to me that they make at least even if not a bit more per ebook sale from trad publishers. The issue would just be the quantity — does anyone know the ratio of trad vs. indie ebook sales on Amazon?

            I doubt Hachette will walk away — they know it doesn’t make business sense. In the same way I’m unlikely to walk away with my indie books if Amazon changes the rate on indies — it’s still a pretty large volume of sales that I wouldn’t want to give up.

            • Except the numbers you’re laying out aren’t what I”m seeing reported from folks who are in the biz. Isn’t the whole point that publishers balk at low ebook prices (ie 9.99 or less, which is what Amazon wants), especially if those prices are attached to ebooks simultaneously published with hardcovers?

              I’ll post this from a blog entry by Howey last month: “The problem is, Hachette does not get 70% of the list price the way indies do. Hachette gets paid a set discount on the digital MSRP, just like bookstores pay a set discount for physical books. This is why Hachette sets the MSRP for e-books at crazy prices like $14.99. If Amazon is getting a 40% discount, their wholesale cost for that e-book is $8.99. They then sell the e-book to the customer for $9.99 and make a measly dollar, or 10%. Compare that 10% margin to the 30% they make from indies. Not to mention that Amazon sells a LOT more e-books at indies’ reasonable prices.”

              If Amazon wants to price ebooks LOWER, and Hachette wants to maximize their already high ebook profits, I can see the negotiating sticking point. 14.99 is what they are setting ebooks at. But Amazon wants 9.99 and less to serve customers better. Amazon, understandably, can say to Hachette: “Guys, you sell 60% of your US sales via our store. We want preferential rates. More money, bub.” And they have a right to. I’d ask for better discounts in order to give customers better ebook prices (keep sales up) and get more profits. Why not? Hachette is only thinking profits. Amazon is thinking profits and happy customers.

              I”m a customer. I want them to win and make me happy.

              And as a soon-to-be indie author, I may have mixed feelings (ie, let the trad pubs have high prices, screw em), but if Amazon makes more moolah, they may hang around longer to innovate more for indie authors. Hence, I side with Amazon on this one. I think for NOW, it’s best for customer and indie author.

  27. Traditional publishers who want Amazon to go down should pray for them to start throwing their weight around and acting like a monopoly. Because that would be an incredibly dumb move.

    KDP could slash their royalty rates to hell and back, but that’s not the “greedy” move for Amazon–it’s the short-sighted move. It’s like a farmer killing all his chickens for meat, rather than just letting them lay eggs.

    If royalty rates fall, KDP becomes a less attractive platform. I wouldn’t be surprised if Amazon cuts it down from 70% at some point. But if it ever comes to a point where authors can’t make good money publishing on KDP, then KDP will just die.

    This always puts me in mind of that one XKCD comic about Google.

    “It’s time to go evil. What now?”
    “Make tons of money?”
    “We already do!”

    The “greedy” move for Amazon is to keep doing more or less what they’ve BEEN doing.

    That being said, this is just my opinion. And I’m not particularly well-versed in economics, so take it with a grain of salt…

  28. I don’t think it’s all as hypothetical as some are suggesting considering Amazon’s move with ACX.com/Audible.com to alter their royalty payments and rates with already contracted projects to audio talent. The generous percentages shifted without warning and many people involved were caught off guard without any channel for complaint. Once again, authors were left untouched and didn’t seem to make a fuss on behalf of their performance partners–but I can’t help but wonder if that wasn’t a mistake. A precedence was set.

    Authors are THRILLED with Amazon’s current royalty rates and KDP however some have already learned the hard way that no complaints are tolerated (i.e. regarding the online review process, etc.) so it’s a fragile alliance. IF Amazon betrayed or altered those Nirvana-like royalty rates, I think it kicks open the door for smaller Indies to step up and make their mark. (And I suspect Bezos is too smart to let that happen. Or maybe that’s just my deepest hope and prayer sneaking in there…)

    Just my Very Humble Opinion.

    • One important difference between KDP and ACX/Audible is that the latter was putting up a certain amount of front money towards recording costs.

      With KDP, Amazon does not pay any of the costs involved in producing, editing, or packaging the book. It is not exposed to any expenses that might cause a given ebook to come in at a loss. The cost of paying voice talent and recording engineers will certainly cause an audiobook to come in at a loss unless it has a fairly large sale. Amazon could not carry those losses and pay audiobook authors the kind of wholesale percentage that is possible on KDP.

  29. Tom, ACX doesn’t pay for any talent. It’s all between the author and talent (unless I’ve missed something). An author either agrees to a 50-50 royalty split on sales, or an author pays the talent to make the audiobook. ACX doesn’t put up any front money, other than to maintain the site etc – which Amazon does as well.

    • Actually, Renee, that’s not true. You can get a stipend offered on your audiobook through ACX, which will pay the narrator/producer $100 per finished hour of audio. I’ve had nine audiobooks produced this way. You then have no option but to sign a 50/50 split and are stuck in a 7-year contract with ACX as your only way to sell the books, but it did make it possible for me to have audiobooks at all, so it was worth it to me.

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