Thursday, July 29, 2010

The 70 Per Cent Solution

By now you've probably heard all about Amazon's new 70% royalty option for authors and publishers who release Kindle books through the Amazon Digital Text Platform (DTP), and many of you who have Kindle books in release may have already opted in for the higher royalty. But there's a major gotcha here no one seems to be talking about.

No, I'm not talking about the 'delivery price' factor, which dictates the fee Amazon will hold back on your 70% royalty Kindle book based on the book's file size. Despite all the panic-mongering on that point, and all the worry about whether Amazon may choose to increase that fee at some point in the future, I think it's really no big deal. What I'm talking about is this little nugget from the terms of the 70% offer:

"Under this royalty option, books must be offered at or below price parity with competition, including physical book prices."

What this means is that if your book is being offered anywhere else, in any format, at a lower price than the price you've listed for your Kindle book on Amazon, Amazon will reduce your Kindle book's list price on Amazon to match the lowest price at which your book is being sold elsewhere. You'll still get your 70% royalty, but it will be on that lowest price. It's kind of hard to extrapolate all that from this one-liner in their terms, but I've learned it the hard way.

When I opted in for the 70% royalty and raised my Kindle book prices to $2.99 on Amazon to qualify for the program, I didn't remember my ebooks were being offered on Smashwords and Scribd in non-Kindle formats for $.99. I didn't realize my error until I was reviewing a sales report a couple of weeks later. So I immediately changed the prices on my Smashwords and Scribd editions to $2.99, and waited for Amazon to catch up. And waited. And waited some more, as every single day, I lost royalty money on every copy sold.

After a week I contacted DTP support, and it took another week to get their conclusive response: that my ebooks were still listed on Barnes and Noble's website at a price of $.99. See, B&N is among the expanded distribution resellers which carry Smashwords books when the author of the book in question has opted in for expanded distribution on the Smashwords site---which I had. Even though I changed the prices of my books on Smashwords, it can take weeks, many weeks, for those changes to propagate out to all the expanded distribution resellers. This isn't Smashwords' fault or doing, it's just the reality of waiting for outside companies to make database changes according to whatever processes they have in place. And like most things in mainstream publishing and bookselling, it's a very, very slow process.

So it actually would've been wiser for me to stay out of the 70% royalty option until after I'd raised my book prices outside Amazon and waited for those changes to propagate across all distribution channels. Since I didn't, all I can do is either stay with the 70% on a $.99 pricetag while I wait however long it takes for B&N to catch up, or change back to the 35% royalty option so Amazon will only base my royalties on my Amazon prices.

I chose the latter, but it's still going to cost me. You see, every time you change the price on your DTP Kindle book, or your royalty option, or pretty much anything else about it, you are forced to "re-publish" that book before your changes will be applied. Re-publishing makes the book unavailable for purchase for a minimum of two business days, and sometimes when you re-publish, the book gets stuck in a 'pending' status. When that happens you have to contact DTP support to resolve the issue, all of which means more days your book is not available for sale. When I re-published to opt in for the 70% royalty, my books all got stuck in the 'pending' status; one of them was unavailable for purchase on Amazon for seven calendar days.

Today I started that clock all over again, and I am again running the risk of my Kindle books getting stuck in 'pending' status---all just so I can get back to the 35% royalty option.

Now, don't misunderstand me. I am not saying this is all Amazon's fault, nor that any of it is Smashwords' or B&N's fault. All of my lost royalties in this are ultimately the result of my original oversight.

However, I DO think Amazon should be a little clearer about the full implications of their "price parity" policy, and the importance of matching your Kindle book's price across all resellers---including expanded distribution partners---before opting in for the 70% royalty. I also think the DTP should not require re-publication of a Kindle book when the author/publisher wants to make changes only to its price or royalty option. Why is it necessary to take the book off the virtual sales shelf for these things?

Here's hoping I don't get stuck in 'pending' again.


Michelle Davidson Argyle said...

Oh, thank you for this. Yes, I agree especially on the point that to change a pricing option you should not have to republish the book. That's ridiculous, and I hope they change it in the future.

JaxPop said...

Was recently advised to put mine up w/ iBook & stay away from Kindle & Smashwords. Thinking that I'll follow that advice.

Goood info.

David Derrico said...

I had a very similar issue. My books were de-listed by Amazon twice, for over a week in total. I didn't get it resolved and at the right price/royalty rate for over 3 weeks. During that time, I lost money every single day. Even after I bugged the retailers to update the prices, it took Amazon over a week to re-list my books -- and they admitted the delay was due to a "glitch" in their system.

I love Amazon, but this was a frustrating experience that cost me hundreds of sales and a not-insignifigant amount of money.

April L. Hamilton said...

Thanks for reading and commenting, all.

And Jax - I'd strongly suggest you stick with Kindle, as it's the biggest player in the ebook market right now, and Smashwords, since Smashwords currently provides the easiest means of getting your ebook onto the iPad and B&N's listings. Just make sure you don't repeat my mistake! ;')

AnneMarie Novark said...

Thank you for this information. I'm getting ready to put my first indie-pubbed ebook on Kindle and knew there was a glitch in the pricing system. Your post answered many of my questions.

I'm now debating whether to price my book at .99 or 2.99. I already have two books up from a small press priced at $6.00 and not selling great, although I've had some great reviews.

Of course, I was thinking of starting out at 2.99 and changing, but if it's going to be such a hassle, perhaps I'll just go with .99 and see what happens.

I'm so excited. I've enjoyed the journey of being in total control of my work and making it the best it can be.

Thanks again for the helpful information.

David Wood said...

It's definitely something to watch out for. I had the same problem with BN not picking up my price update via Smashwords. I contacted Smashwords customer service, they contacted BN, and the price was corrected by the next morning. Considering how fast they've expanded, and how many kinks they have to iron out, I've found Smashwords to be very responsive when I have a concern. Kindle's customer service is slower, and sometimes frustrating, but they haven't been bad in the big picture.

Lea Ryan said...

Ok, so what happens if you list the book for free on SmashWords? Would that enable you to post the book for free on Kindle and bypass the .99 minimum price for the self-published?

April L. Hamilton said...

Lea -
Self-pubbers aren't allowed to offer their Kindle books for free on Amazon. Also, to qualify for the 70% royalty your Kindle book must be priced at a minimum of $2.99 on Amazon.

J. M. Strother said...

Thanks, April. So glad to know this up front, before diving in.

Rudy said...

I’m just about to self publish something on Amazon, and although there have been some formatting hassles, it’s really only taken a few days, so I can’t complain. I’ll be updating my progress at

I wonder if anyone has any opinions on publishing with iBooks? In all the legal agreements one signs (or clicks), does it disallow releasing the same book on different sites?

Samuel L. Lytle said...

Rudy, As long as you have the rights to your book, I don't think they can stop you from selling it anywhere else. I could be wrong though and have not read Apples terms of service...