Why are authors so angry at Amazon?

Why are authors so angry at Amazon?

I don’t get it.

Okay, yes.  They took your Macmillan books out of the store for a week.  Yes, that cost you royalties.  I get that part, really.  For your sake, I wish they hadn’t done that.  I know that a week’s worth of royalties can make a huge difference to many of you, not to mention the possibility of a drop in the bestseller rankings.

If you think that was just a grandstand play, that Amazon just did it to look good, and knew they were going to agree to the same thing whether or not they pulled out the books, you’ve got a right to be mad.

Let’s say, though, that wasn’t the case.  Even if it might have been wrong-headed, let’s say that the Macmillan books were removed because they thought that might make a difference.

Why would they do that to you?  You were innocent bystanders, right?

Amazon bad, Macmillan good, right?

Well, you know that Macmillan was threatening to “window” all the e-books if Amazon didn’t take the new agency agreement, right?

That would mean weeks or more where you wouldn’t be getting e-book royalties. 

On all the e-books.

For the forseeable future.

Yes, you are probably currently selling a lot more copies of paperbooks (p-books) than you are licenses for e-books.  Still, e-book royalties are important…and becoming increasingly so.

What are you getting for e-book royalties?  20, 25% of receipts?

What are you getting for p-book royalties?  Half that? 

Let’s see: if the agency plan was in effect, you’d get maybe 25% of the receipts for e-books.  Are you getting 12% of receipts on paper?  Used to be figured on list price, right?  That varies a lot, I know.

Let’s make it 25% of receipts for e-books and 12.5% of list price on p-books. 

Before the agency plan, you would have gotten about the same, right?

For a $25 list price book (for which Amazon paid the publisher $12.50), you would have gotten $3.13, approximately, for either one.

Under the agency arrangement, you would get that 25% of the publisher’s receipt.  The publisher would get 70% of the price, and you would get 25% of that. 

That sounds better, right?  Seventy percent of $25 is $17.50.  25% of that is $4.38, approximately.  A buck twenty-five more per sale…that could add up.

Oh, wait.  Macmillan says the price of new popular books would be $14.99.  That’s the price we saw in the iPad demo, too. 

So, let’s figure for that.

Seventy percent of $14.99 is $10.50, approximately.   That only comes out to about $2.62 per sale.   That’s right…$3.13-$2.62…that’s fifty-one cents less per sale. 

Big, bad, Amazon…trying to keep that status quo that makes you fifty-one cents more per sale.

That’s per sale…not overall.  Are you going to sell more books at $9.99 or $14.99?

That’s a little tough to predict, especially if a lot of the books go up to that price range.  When I ran the numbers on bestsellers on January 27, only one book in the top 100 Kindle books was ten dollars or over.  That was one percent of the bestsellers…when 24% of the store was in that price range.  On the other hand, 18% of the bestsellers were at that $9.99 price point…when only 13% of the store was.  You can see the numbers in this earlier post.

So, Amazon’s plan for you is more royalty per sale and more sales, most likely. 

That’s if everything stayed the way it was before the agency agreement.

I understand that you may feel a loyalty to your publisher.  That, I get. 

It’s Amazon that takes the loss on the $9.99 bestsellers, not the publisher, and not you.

So, if you kept on with business as usual and Amazon didn’t go to this new agency agreement, you’d do better.

Why the anger?

Let’s look at a possible emotional reason…anger is emotional, after all.

Amazon is selling your books for a lower price.  Yes, that’s an insult.  I can see that one.  Even though it probably makes you more money, you’d rather have people think a book is worth twenty-five dollars than $9.99.  Any price ending in an even number suggests quality…prices ending in ninety-nine cents suggest a bargain.  Who wants to be a bargain?

Even though it means more people will read your books.

Many more people, thanks to the enlarging text sizes and text-to-speech (if it hasn’t been blocked by your publisher). 

Yes, print disabled people could get your books before text-to-speech and enlarging text.

But they either had to pay a lot more for it (large print books or audiobooks) or they got it for free.

If they got it for free, did you get a royalty?

Probably not, but that might have been okay with you…because you were reaching disabled people.

Those people are often willing to pay for books, if they can access what you’ve written. 

Mean old Amazon, expanding your markets.

What else is Amazon doing to you?

Well, they give you a way to self-publish in a scale that’s never been available before. 

Oh, self-publishing has been around for awhile, but it really hasn’t been on equal footing.  You could pay to have paperbooks printed, but stores generally wouldn’t carry them.   You could do e-books on special sites, but your average book buyer wasn’t going there…and wasn’t reading them on computers, for that matter.

Now, through Amazon’s Digital Text Platform, you can self-publish…and it ends up right alongside all the other books.  In fact, you can’t even tell easily which books were independently published and which were done by traditional publishers.  Published by one of the Big Six or published from a laptop in a Starbucks somewhere, the book looks the same on Amazon.  Well, okay, they don’t all have good cover images, but they can.  It shows up the same in the searches.

More options!  How dare they?  😉

Yeah, but what does Amazon pay you for those books?

Currently, 35% of list price (which you set). 

That’s pretty good compared to 25% of receipts, right?  That $9.99 book?  You get about $3.50 for it.  You think your book should cost $14.99?  Fine, you’ll get about $5 for it.  You want to list price it for $25,00, so it looks classy?  If people buy it, you’ll get $8.75.

Amazon has announced another plan that will be available soon.  You can get a seventy percent royalty.  Seventy percent!  Sell a $9.99 book, get about $7.  However, you do have to agree to certain things to get that.  You can’t list price the book over $9.99 (or under $2.99), and you have to agree to certain features, like text-to-speech. 

Amazon does have things they think are good for the e-book business.  They can’t force people to do them, though.   That’s why they are using a carrot, an increased royalty…they don’t really have a stick they can use.

That’s one of the weird things I’ve seen an author say…that Amazon has a monopoly, and that they are using this monopolistic power to force lower prices.

The Kindle came into a US market with more than ten e-book readers in it.  Several of those are still around.  More competitors have come into the picture..and many more will in the next couple of years.  Amazon doesn’t have a monopoly on e-book readers. 

It’s true that when you buy a book from the Kindle store, you can’t read it on another EBR (E-Book Reader).  Yes, you can read it on  an iPhone, iPod touch, or a PC (that’s an important one), and Macs and Blackberrys are coming soon.

Is that using a monopoly?

No, and this is key: Amazon does not ask for an exclusive license.  You can publish the same book other places, even competitors.  Sell it yourself, sell it through SmashWords, make an audiobook, sell it to the movies…whatever you want.

Does your publisher do that?

More freedom…the tyrants!  😉

Self-publishing (or independently publishing, if you don’t like that “self-publishing” term) will enable authors to get their books out to readers who might otherwise never see it.  It’s hard for traditional publishers to take big chances, and that’s completely understandable.  Maybe somebody with an unconventional style or an unpopular viewpoint in nonfiction can reach the public, when she or he couldn’t before. 

I wonder if that’s from whence some of the anger derives.  Do you really not want new authors to have it easier than you did?  Maybe that seems unfair to you.  Oh, I don’t think that would be a rationally thought out position, but it might be part of the emotional response.  If anybody can get published, it cheapens the hard work you had to go through.   Back then, you might get twenty-five rejections, and have to walk through the literary slush pile to school in the morning.  Kids today…they don’t know how easy they have it!

I don’t think writers really tend to feel that way…I think they tend to want new writers to have a chance. 

I’ve been writing from a point of mock indignation, but seriously, I don’t get the anger.  Amazon has been growing a brand new market for writers, and taking a short-term loss doing it.  They’ve been making backlist books valuable in an unprecedented way, and they’ve made it easier for new authors to publish.  They don’t make independents sign an exclusive contract, and they give you higher royalties.

So, tell me…why the anger?

This post by Bufo Calvin originally appeared in the I Love My Kindle blog.