Amazon.com today announced a new program that will enable Kindle authors and publishers to earn a larger share of revenue. Amazon is introducing a new 70 percent royalty option where authors receive 70 percent of list price (less the cost of delivery. The original royalty was only 35%, but the cost of delivery was free.
This new option will not replace the existing DTP standard royalty option on the Kindle Digital Text Platform. It will become available on June 30, 2010.
Delivery costs will be based on file size. 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, 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.
The new model would likely make more sense for books, and less appealing to daily blogs. Amazon will provide tools to automate that process, and the 70 percent royalty will be calculated off the sales price.
- 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.
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.
It’s hard to say what impact Amazon’s plan will have on existing challenges from Sony and Barnes & Noble. But it does show that whatever potential threat is coming from Apple, Amazon is already putting its defense in place, concludes Paid Content.
In its announcement, Amazon points out that authors often receive royalties in the range of 7- to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books.
Forester expects sales in 2010 to double their 2009 estimate of 3 million units sold, bringing cumulative sales of eReaders to 10 million by year-end 2010.
