Many Kindle owners may care very little about issues such as author and publisher royalties, digital rights management, the finer points of Kindle book pricing, or whether Kindle authors need traditional publishers like a fish needs a bicycle. But some of these issues ultimately will have a powerful effect on the selection of books that are available to us as Kindle owners.
As of yesterday, the prospect of Apple unleashing a popular tablet device and negotiating great deals that would lure authors and publishers away from the Kindle was looking like the first real threat to the growing dominance of the Kindle in the field of ebook reading devices and content.
Today, not so much.
Any fears that authors and publishers were about to begin jumping ship in droves from Amazon’s Kindle catalog were vaporized this morning when the company announced a suite of dramatic changes in its relationship with authors and publishers. The headlines will be all about the fact that Amazon is promising to begin, on June 30, paying a 70 per cent royalty on qualifying Kindle books, but there is much more to ponder in the requirements that Amazon will use to qualify authors and publishers for that 70 per cent royalty, and in the overall impact that these moves will have on the book business. Amazon never seems to be short on arrows in its quiver, and in this case its tactical moves are bound to have a chilling effect on Apple’s apparent efforts to lure authors and publishers away from the Kindle platform.
"Today, 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," said Russ Grandinetti, Amazon’s vice president of Kindle Content, in today’s news release. "We’re excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books."
Indeed. There’s plenty for authors, publishers, and literary agents to chew on here:
- Amazon is prepared to compensate authors and publishers more generously than they will be compensated anywhere else.
- For authors who deal directly with Amazon rather than through the mediation of a publisher, royalty compensation could be astonishingly high.
- Despite all the buzz about "Kindle Killers," the Kindle Store is the only real game in town if it is true, as some have claimed, that the Kindle Store currently accounts for over 90% of all ebook sales.
- Even at the current 35 percent Kindle royalty, popular authors like Anne Rice are already thinking about making Kindle "their primary publisher." At 70 per cent, there may be no stopping them.
Back on December 13, Rice went on an Amazon customer forum and asked:
What do you think? If regular publishing is having a very hard time marketing and distributing books effectively, should major authors think about making Kindle (if possible) their primary publisher? Kindle would then be the one to introduce and advertise the book, and Kindle could license limited hard cover editions for those addicted to the "real book." Would this be good for authors? Would it be good for readers? Would Kindle do it?
Of course, it’s not like Amazon’s sole purpose here is to do better by authors. Like nearly every major occurrence in the economic marketplace, today’s announcement is driven a complex web of market forces, of which the key factors here are Amazon’s desire
- to maintain the dominance of the Kindle catalog,
- to outflank Apple in that potential ebook newcomer’s effort to negotiate with book publishers,
- to organize Kindle Store pricing into a logical $2.99 to $9.99 range (at least 20 percent below competing hardcopy prices but higher than the zero-to-99 cent range that has been growing in the Kindle Store and threatening the overall Kindle pricing structure),
- to strengthen participation by authors and publishers in the Kindle text-to-speech feature and other coming Kindle features, and
- to persuade publishers to play nice with the Kindle ecosystem, in part by making them aware how easily they could end up losing authors who might opt for the direct relationship whose possibility Rice raised in her aforementioned post.
Nobody but Amazon and the publishers really knows what deals, percentages, and subsidies may have informed Amazon’s previous dealings with corporate publishers of Kindle content over the past 26 months, but one thing that seems likely today is that, with the royalties and qualifying requirements noted in this 70 percent royalty option, Amazon may be pushing more and more of its corporate publishing partners in the direction of the Digital Text Platform that has been seen heretofore as a publishing platform for smaller indie publishers and self-published authors. After all, for example, participation in the text-to-speech program has never been optional for DTP publishers, so the inclusion of it as a qualifying requirement for the new royalty program suggests that publishers who have accessed the Kindle via corporate publishing channels in the past may be pushed now directly into the DTP. And, like the major music labels that participate in Amazon’s "self publisher" print-on-demand subsidiary, CreateSpace, in order to market their previously out-of-print backlist music titles, the smartest of the major book publishing houses are going to go where the best terms are.
If they lag behind, they run the risk of arriving there only to find that some of their authors are already there.
This is a cross-posting from Stephen Windwalker’s Kindle Nation Daily blog.