This goes out to all those people who sit there on the Amazon forums and complain about how expensive Kindle books are.

Previously, Amazon was only giving the publisher (which can also mean the author if it is a self-published book) 35% of the sales price. So if your book was, say, $1, the profits going to the publisher were $0.35 cents. Now if you were about to to say that 35 cents is a fair price for an author to get per book, I was first going to laugh at you, then slap you, then remind you that that $0.35 had to be split between publisher and author in every case where a publisher was involved.

Now, granted, most books were priced higher than $1, but you get the idea. Authors and publishers had to either raise the price to more than people would prefer to pay or make almost nothing per copy.

So for every dollar, Amazon was making $0.65 while the publisher/author were making $0.35. Even my readers that aren’t authors or publishers can appreciate just how unfair that is.

But Amazon is trying to remedy this with a new royalty rate of 70%. Word on the street is that they are doing this to compete with the upcoming Apple Tablet. I don’t care why they are doing it, frankly, as long as they are doing it. You can read the official Amazon press release on this topic here.

On a side note, Amazon has always been a little greedy with their share of the profits. If you source printed books to them, you have to give them 75% of the list price with printed books through CreateSpace or 55% of the list price with Amazon Advantage (that one sounds like a deal until you realize that with Advantage, you have to handle all printing and shipping of the books yourself).

But there is a big mess of fine print on this new deal that we have to look into. For starters, if I may quote this fantastic article from CNET (the bolds are mine for emphasis).

Starting on June 30, Amazon says that for each Kindle book sold, authors and publishers who select the new 70 percent royalty option will receive 70 percent of the list price, minus delivery costs. This new option will be in addition to and will not replace the existing DTP standard royalty option, which is set at a 65-35 split, with 65 percent going to Amazon.

Amazon didn’t have any comment about whether the new pricing was a response to Apple’s royalty program for its App Store, which offers thousands of e-books as self-contained apps along with e-reader apps from Amazon (Kindle for iPhone, Stanza), Barnes & Noble, and other e-book stores. But it did say that delivery costs will be based on file size and pricing will be 15 cents per megabyte.

“At today’s median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold,” the news release notes. “This new program can thus enable authors and publishers to make more money on every sale. For example, on an $8.99 book an author would make $3.15 with the standard option, and $6.25 with the new 70 percent option.”

The announcement also sets some parameters around the 70 percent royalty option. To qualify, books must satisfy the following set of requirements:

  • 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 the competition, including physical book prices. Amazon will provide tools to automate that process, and the 70 percent royalty will be calculated off the sales price.
  • The 70 percent royalty option is for in-copyright works and is unavailable for works published before 1923 (aka public-domain books). At launch, the 70 percent royalty option will only be available for books sold in the United States.

So there are a few things to note.

  • First off, they are charging publishers in this new program a delivery fee. Now, if I have to pay even a dollar per download of my book to get 70% it may well be worth it so I’m not really upset about this part. But it is worth noting that you aren’t really getting a straight 70%, they are taking a fee out first. The one thing that this makes me think about is what happens when they launch a color Kindle with hi-res color photo books become en vogue. Won’t fees for those be really high? (Gee, I wonder why Hillary is worried about this? Could she be thinking of an eBook version of this?)
  • You can’t get the 70% rate on public domain books. Fair enough, I say, but there are quite a few companies that make a good share of their profits by selling public domain eBooks who will not like this one bit.
  • Secondly, they are making publishers jump through a fair bit of hoops to get this better price. The disparity between the print and ebook versions aren’t unreasonable but the guarantee that it will be priced below the competition makes my eyebrows raise. So they raised their royalty to match Apple’s only to ask you to give it to them for less? Isn’t Apple going to just turn around and offer me something better for giving them the better price? Haven’t you just started a really stupid price war?

Not 100% sure I follow all of their logic and I am very curious to see what Apple is offering. I cannot help but feel that Amazon is trying to lock publishers into giving them the better price because they know Apple has some trump card but I do want to wait and see.

That said, for all my skepticism and obnoxiousness above, I have been very pleased with the process of publishing on the Kindle so I am very glad to see them taking a step in the right direction.

But enough about me, what do you think?