Amazon is Bad for Authors’ Wealth

I have a love/hate relationship with Amazon. They sell more of my books than all other retailers combined. Through KDP (Kindle Direct Publishing), they make it easy to upload and change files. And for that, they never charge a fee. That’s the love.

What they pay me, and their arbitrary rules and the hoops they employ, trigger a strong hate response.

Amazon Prime Pricing

What does Amazon Prime have to do with my writing business? It sets the stage for my argument about pricing. Amazon introduced Prime in February 2005 at $79 for the year. Adjust that price with inflation[i], that would now be about $126. The actual cost is $139. For that 10% real-dollar increase, Amazon added Prime Video (initially without ads, but now I have to pay more to avoid them). Their initial guaranteed delivery of Prime-eligible merchandise is a thing of the past. Although shipping remains free, if the delivery date slips—well that’s life. To summarize: for the 10% increase I now have ad-supported Amazon Video, and less attractive shipping. Let’s call that a fair deal and move on to things that are not fair.

Kindle Unlimited Pricing

Kindle Unlimited is the subscription service that allows members to read unlimited amounts of the content they make available. It began in 2014 at $9.99 a month. Inflation adjusted to the present, that’s equivalent to about $12.85. The price is now $11.99, so Amazon has taken an inflation-adjusted 7% hit.

How Amazon Pays Authors for books read in Kindle Unlimited

For authors’ books to be available to Kindle Unlimited readers, the book must be exclusive to Amazon under a ninety-day contract (called “Kindle Select”) with Amazon’s Kindle Direct Press (KDP). KDP pays authors based on the number of pages of their works KU members read each month. In July 2015 (the first date included in the data published by Written Word Media[ii]), the payment rate was $.005779 per page. KDP counts pages in a way that makes sense only to them. My ~90,000-word novels average 450-500 pages the way they count for KU payments. (The actual paperbacks have far fewer pages.) We’ll be generous and use 500 pages. That means if someone read my book cover to cover in July 2015, KDP would have paid me $2.89. Adjusting that with inflation to today, it becomes $3.72.

The reimbursement rate per page has steadily declined over the years. For December 2023, it sat at $.00437. That same book would now earn only $2.19. In real dollars, they are paying less than 60% of what they were nine years ago.

Amazon will point out that their total payments have increased considerably. Obviously from the math, pages read have increased even more. I assume the growth has been driven largely by the growth in KU membership rather than in the average number of books read per user. Amazon keeps those statistics to themselves, and they alone determine the payout rates. There are no independent auditors making sure things are fair.

They’ve taken a 7% hit; authors have taken a 40% hit. Explain to any author how that is fair.

The 35%/70% royalty payment rate disaster.

Let’s move to how KDP pays authors for eBooks they sell. In the middle of 2010, Amazon unilaterally decided to pay 70% royalties on ebooks, BUT ONLY those priced between $2.99 and $9.99 inclusive. The number of pages in the book doesn’t matter, only the list price. Whether the book has illustrations is irrelevant. I’ve blogged in the past why there is no economic justification for this prejudice against lower and higher priced books. But even if there were, nearly fourteen years have passed. In inflation-adjusted dollars, the range should now be $3.85 to $12.89, but the range has not changed.

Even worse, the range for the US and Canadian markets is the same $2.99 to $9.99. The problem is C$9.99 is worth only US$7.45. And it’s not like Amazon can’t create different ranges for different currencies. For books sold in the Australia Amazon market, the top of the range to receive 70% is AU$11.99 (which converts to US$7.89). Picky? Yes. Frustrating that they don’t even consistently apply their insane rules? You betcha.

How KDP handles free books

KDP won’t allow authors to list free books. (As a “perk” of joining Kindle Select, they allow you to list them for free for five days out of the 90-day commitment.) What Amazon will do is allow anyone (including the author) to report lower prices on other markets. They’ll confirm the price is lower and then match. This is a labor-intensive task.

I have listed for free the first book in my Seamus McCree series, Ant Farm, on Google, Kobo, etc. Every Wednesday I check to see if Amazon still lists Ant Farm for free on each of their country-specific stores. I’d guess four out of five weeks at least one market has stopped price matching and returned to posting the list price. I write KDP an email, give them the Google and Kobo links to the affected markets to demonstrate they are free elsewhere. They always revert the price to $0.00.

My suggestion for a better way

When I sell a book on Amazon, they reduce my 70% royalty by a small delivery charge. For my novels that runs $0.06 to $0.08. For my three-book boxed sets, it runs $0.13 or $0.14. Why don’t they allow authors to list their books for free and invoice them with the delivery charge? They can set up payment systems the same as they do when an author places ads in the Amazon marketplace. Amazon makes more money. It doesn’t have to expand staff to check competitor prices and manually adjust the sales price, and I don’t have to spend five minutes every Wednesday determining which books I have to rattle their cages about.

Alrighty, then. I feel better now that I have expressed my dissatisfaction. I’ll crawl back into my cave and prepare for the launch of my next book (Hijacked Legacy—Seamus McCree #8, releasing 4/22/24).

What do you think? Are my complaints legit or . . . well, you can complete that sentence in the comments.

* * * * *

James M. Jackson authors the Seamus McCree series. Full of mystery and suspense, these thrillers explore financial crimes, family relationships, and what happens when they mix. To learn more information about Jim and his books, check out his website, https://jamesmjackson.com. You can sign up for his newsletter (and get to read a free Seamus McCree short story).

[This blog was originally posted on Writers Who Kill 2/6/2024.]

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[i] I used CPI-all urban consumers, but any index would work

[ii] https://www.writtenwordmedia.com/kdp-global-fund-payouts/

 

Why I Am All In with Amazon for Ebooks

Every Indy Author (a.k.a. Self-published Author) must make a fundamental decision about how to market their electronic books. Do they jump in bed solely with Amazon or play the field, allowing readers to purchase books from Amazon, B&N, Kobo, iBooks, Google Play and others?

Authors must evaluate many factors before coming to a decision about how to sell a particular book. The size and breadth of their following, including the percentage of readers in the U.S. compared to other parts of the world where Amazon is less dominant can impact their choices. The price of the book can also matter, since Amazon will only pay 70% royalties for ebooks priced between $2.99 and $9.99, inclusive.

Print editions have other considerations. Today I want to concentrate on electronic books.

A year ago I regained rights to Bad Policy from a small publishing company whose philosophy is to go wide, making ebooks available on every platform they could find. During the three years they controlled the distribution and pricing, 80.3% of electronic sales by both volume and royalties were through Amazon and 19.7% through other outlets. My second book, Cabin Fever, (currently, with nearly three years of sales data with the same small publisher) has Amazon at 81.9%, with 18.1% for all others.

For simplicity let’s round the split to 80/20. Choosing to become exclusive with Amazon for Bad Policy, I’d potentially give up 20% of my sales. What would I get from Amazon that could justify reducing revenue flows by 20%?

The main advantages of going exclusive with KDP (Amazon’s self-publishing platform) are (1) simplicity in the publishing process, (2) the use of a limited number of days to use countdown deals/and or give the work away for free, and (3) access to Kindle Unlimited (KU) and Kindle Owners’ Lending Library (KOLL).

Simplicity is nice, but not a very high hurdle. With a broad distribution, you can (with work) nearly duplicate the effect of Amazon’s countdown or free days. The difference-maker from my perspective is access to KU and KOLL.

Ant Farm, the first Seamus McCree novel, was published by Kindle Press (an Amazon imprint), so the ebook is Amazon-exclusive. KU and KOLL revenues for it represented 29.9% of revenue—greater than the 20% I was losing by cutting off alternative sales outlets.

Now, the first thing one must realize is that the extra 10% is not all additional revenue. Some people who read the book would have purchased it from Amazon had it not been available on KU. I cannot quantify that number, but my gut sense is that it is very small. In talking with people who subscribe to KU, they claim to rarely buy books, preferring to read exclusively those available through KU. Amazon probably knows for sure whether that is true, but it seems unlikely those people buy many books from non-Amazon sources—which is why Amazon pushes KU subscriptions.

Offsetting that “double-counting” are people who prefer to read electronically using their Nook or Kobo, but have a Kindle reading app they use when that is their only choice.

I decided the gains would outweigh the losses, so when I reissued Bad Policy, I made the ebook exclusive to Amazon. It’s been less than a year since the reissue. During that time, KU has generated 30% of revenue—the same result I have had for Ant Farm, which has always been exclusive to Amazon.

When I published the fourth Seamus McCree novel, Doubtful Relations, in August 2016, my experiment with Bad Policy was already producing positive results. But I was reluctant to write off the 20% of my readers who were reading my books on non-Amazon platforms. I chose to go wide, using Draft2Digital to distribute to the other platforms. Instead of the expected 20% of sales from the other retailers. I earned less than 10%.

The reasons are not all that clear to me. Perhaps since Bad Policy’s original release in 2013, fewer people are reading on alternative platforms. (I know I initially preferred Nook, partially to help keep competitiveness in the ebook market, partially because I could turn my Nook into a tablet. I gave up on using my Nook as a tablet when much more powerful tablets became ubiquitous, and because it was so difficult to navigate B&N’s website and so easy to find what I wanted on Amazon.) Although I do enjoy detailed numerical analysis, I have not taken the time to do a month-by-month comparison to determine if the Amazon ratio had been increasing in the past year.

After three months with the same low rate of non-Amazon sales, I made Doubtful Relations exclusive to Amazon and enrolled it in KU. It’s too early to know for sure how that decision will play out, but in that partial first month, KU revenue was twice what I had earned from all other retailers in the previous three months.

This past Tuesday, LowcountryCrimes: Four Novellas made its debut. I polled the other three authors to determine if they had very strong readership on non-Amazon platforms. Everyone was noncommittal, so I went with my gut, which said KU readers would be willing to take a gamble on our four novellas. It only cost them reading time to try authors they might not know, and I (technically my publishing arm, Wolf’s Echo Press) made the ebook exclusive to Amazon.

But I also decided to publish each novella separately. And there I went wide! My thinking was that if you could get all four for free in KU, there was no advantage to having individual novellas enrolled in KU. If someone wanted to read (say) Tina Whittle’s “Trouble Like a Freight TrainComing” they could order up the entire anthology and read her story. Maybe they’d give the others a try. But, if Tina did have fans who read exclusively on Nook, I’d give them an opportunity to acquire her novella at B&N as well. Plus, I found a publisher (Pronoun) who pays 70% royalties on books priced less than $2.99, double Amazon’s policy of paying only 35%. The total anthology ebook is priced at $3.99; each novella at $1.99. (So you can purchase the entire anthology for the price of two separate novellas.)

That’s my current thinking. Will it change in the future? You betcha. The publishing industry remains in flux, and any business (and being an author is a business) needs to continue to keep on top of trends and experiment.

I’m curious, dear blog readers: has your way of reading changed over the last few years? Do you expect it to change in the future? Those of you who are authors, what are you finding with your sales?

~ Jim

This blog originally appeared on Writers Who Kill (2/12/17)

A Hybrid Author’s First Ad Buy

As I write this blog, my foray into hybrid author advertising has 19 hours remaining.* When I took back the publishing rights to Bad Policy I decided to (for now) exclusively sell the ebook on Amazon. That allows me to (1) participate in the Kindle Unlimited under which I am paid when people read the book through Amazon’s subscription service, and (2) retain a 70% royalty rate (rather than only 35%) when I run a sale and price the book at $0.99.

Bad Policy is normally priced at $3.99. I dropped it to $0.99 for seven days (the maximum allowed by Amazon for any 3-month period). I chose June 16 through June 22, inclusive. (Amazon is headquartered in the Pacific Time Zone and that is the time zone they use.)

A reduced-price ebook sale doesn’t work without advertising. I tried scoring a BookBub ad. They are believed to be the premier site to advertise ebook deals, but they are very choosy (without defining exactly what their selection rules are). The big publishers have discovered them, and it is now much more difficult for indie authors to score an ad. They turned me down. Based on research and availability, I chose to run three ads. With 19 hours to go, here are my preliminary results.

6/16 (Thurs) Many Books ($25) ad, FB Post, Tweets - sold 40

6/17 (Fri) Tweets - sold 4

6/18 (Sat) Bargain Booksy ($50) ad, Tweets - sold 16

6/19 (Sun) - sold 6

6/20 (Mon) Fussy Librarian ($16) ad, Tweets - sold 28

6/21 (Tues) Tweets - sold 8 (@4pm EDT)

6/22 (Wed) This Blog (which will result in a FB post) & Tweets - sold 11

Total ad cost: $91

Total sales: 113

Estimated Royalties earned: $69.

Net loss, $22.

Takeaways: Since previous week sales were exactly zero, I am attributing all sales to promotional activities. (1) Based on timing, Many Books and Fussy Librarian paid for themselves. (2) Bargain Booksy, the most expensive, was the least effective.

Questions yet unanswered: (1) Are sales on weekends normally worse than weekdays and that is why Bargain Booksy was so ineffective? (2) Although I am a father, mine is deceased so I had no recollection this was Father's Day weekend -- did that also negatively affect weekend sales? I Googled to find out how sales on weekends compared to weekdays for other authors and came up with as many answers as there were people providing opinions. As a result, I don’t know if I made an unlucky choice for the Bargain Booksy ad buy, or they were not as effective for me.

Bonus: My KENP (Kindle Equalized Number of Pages Read—the way Amazon determines payment under the Kindle Unlimited program) skyrocketed from 119 the previous week (less than half a book) to 1,265 during the promotion week. That is worth another approximately $6 (WHEE!) and is probably attributable to the promotional materials. Revised net loss $16.

Other: Best Amazon Bestseller ranking 6,375. Best sub-ranking: #14 Financial Crimes / #61 PIs / #72 Amateur Sleuths. No discernible effect in sales for other books in the series (which I wouldn't expect until people have a chance to read the one they bought).

Was it worth it?

I think so. The purpose was less to make money on this particular week’s sales than to introduce readers to the Seamus McCree series. For the same cost, I could mail only two paperback books to contest winners. With this promotion, I am 113 books ahead.

I’ll try it again in the autumn, but Bargain Booksy won’t be part of my ad buy.

~ Jim

* Figures updated to reflect final promotion results