Indie News Beat: The Potential Perils of Percentages

IndieNewsBeatwithCJHave you ever wondered about those percentage royalty rates Amazon offers? What is it with Amazon giving 35% for a sale in a certain price range, and then 70% in a higher price range?

The reason I ask is because of our need for predictability. We like certainty; we like the comfort of knowing what we’re going to get and what’s going to happen. But with many of us, the problem is that predictability tends to evolve into a sense of entitlement. If you’re in a position of power, the fastest way to get people to hate you is to deny them something to which they believe they’re entitled. Parents the world over have to walk the tightrope of whether to discipline their children, since the act of punishing them by denying them something is just as likely to exacerbate undesired behaviour as to correct it. At the societal level, over the last few years regimes in many countries have been finding out the best way to turn a localised insurgency into a full-scale revolution is to deny their populations access to the internet, something which didn’t even exist a generation ago.

My point is that Amazon and the Kindle have been around for a few years now. Independent Authors are used to those royalty figures: 35% and 70%. Perhaps, without realising it, some of us have already developed a sense of entitlement: it has become “unthinkable” that Amazon could lower them. But is it? E-book royalty rates for traditionally published authors are causing litigation as well as debate, and Indie Authors would do well to keep an eye on developments.

In this article in Salon, Laura Miller reports on a New York court case where trad-published authors and the Big Five are slugging it out over e-book royalties on back-list titles. You have to spare a thought for the situation long-standing traditionally published authors find themselves in today. As the story reports, author of the YA classic Julie of the Wolves, Jean Criaghead George, was none too happy at HarperCollins’ insistence on a 25% e-book royalty rate. George published her book with Open Media for a 50% royalty. HarperCollins sued, and won. But other agents and authors continue to push for 50%, while the trads are holding fast on 25%, trotting out the same old overheads/editing/paying-for-gambling-on-new-author excuses they always do.

It is important to consider how cases like this might affect Independent Authors in the future. While we are not obliged to suffer the outrageous terms of Big Five publishing contracts, the two numbers being argued over – 25% or 50% – may take on greater significance, especially if Amazon continues its dominance of the e-book market. It doesn’t take a great leap of imagination to see Amazon revising the current Kindle royalty rates downwards because 50% (or, gulp, 25%) has become the new “market standard”. Unlike the Big Five, Amazon could not blather on about having to pay for editing and other overheads, but then again, when Amazon makes things tougher for its suppliers and content providers, it tends not to justify its actions in any case. If Amazon were to take such a step, it’s difficult to see how Independent Authors could respond, however much our sense of entitlement might be offended.


Author: Chris James

Chris James is an English author who lives in Warsaw, Poland, with his wife and three children. He has published three full-length science fiction novels and is currently writing a series of short story volumes inspired by characters in songs from the rock band Genesis. For more information, please visit his website or Amazon author page.

15 thoughts on “Indie News Beat: The Potential Perils of Percentages”

    1. Exactly – I don’t think they will do something like that just yet; they need to destroy the competition first.

  1. One word: diversify. Much as I appreciate the Zon, I don’t feel comfortable keeping my ebooks with just one etailer. They’ve already got dibs on my print and audiobooks because of convenience and ease of use (and, why, looky there! –they’ve lowered royalties from 50% to 40 at Audible :-/). Sure, my ebooks are available via the Zon, but they’re also with iBooks, Kobo, B&N, Smashwords, etc. Things change so rapidly in this industry, I’m hesitant to go all-in anywhere or with anyone. I’m probably being too cautious, but I’d rather take my risks elsewhere.

    1. I’m hardly the poster child for diversification, but I agree with DV – having all your e-ggs in one basket is never a good idea.

    2. I agree, dv. But also we need readers to buy not only from Amazon. As long as the other platforms can survive, Amazon will be obliged to compete.

  2. And of course, those 25% and 50% percentages are percentages of a number that is not the cover price or the price the book sold at, but a net amount. Some Harlequin author have found that 25% and amount to a low single digit percentage of cover when all is said and done. 🙂

  3. I do thing Amazon is going to adjust the royalty structure down. they recently did it with audible. I bet it will happen soon.

    While I do think that would hurt the all indie authors, I think there is a large number of new and existing indie authors have become very smart about networking and social media.

    I often buy books from people I meet on social media directly from their websites. I’m not saying this is a viable option, but things have changed drastically in the publishing world. Indie authors will find a way to work with serious dip in the royalty structure.

    That being said, I don’t think Amazon will shut off the money tap by forcing authors back to Trad Publisher.

    1. Hi Gina, thanks for dropping by. That’s a good comment, but there are technical challenges for an author to re-tool their website to sell books directly, and then shipping comes into the equation. But if Amazon were to drop its royalty rates, that’s certainly an option.

    1. Thanks, Lynne. Didn’t want to scare-monger, but it occurred to me how easy it is to take things for granted, and then *puff* Amazon changes the rules *sigh*

  4. Chris, Ammy has operated a price and percentage war to win the market. Now the war is over and I believe they do have conquered the market. They can lower—as they with Audible—their royalty percentage but I believe it will happen if the publishers insist on the 25% (in reality, what they pay authors is the 25% of what remains of sales taking out all a nifty list of publishing expenses so the author gets less that 10% of the cover price. Still a scam.

    If traditional publishers want to fight back they need to offer author 50% of the cover price, net, polished, and without hidden reductions. Then they will become interesting to Indie authors again, especially if their contract include marketing.

    To me, this is where a publisher still can win hands down compared to an Indie writer: marketing channels that are—as yet—too difficult to open for an individual.

    Things are changing, tomorrow I will record my third appearance as a guest on a radio network but I don’t have chances to appear on TV, for example 🙂

  5. I think Amazon are actually losing ground. 18 months ago Amazon was almost the only serious player in town if you were an Indie publisher. Signing up for KDP Select was almost a no brainer. Now Apple are sucking up a good chunk of the market, and other players have their own, smaller, chunks.

    But the big difference is that free is no longer such a benefit, especially free for only 5 days out of every 90. So many people (me included) are leaving KDP select and offering their books on more channels. KDP countdown was an interesting diversion, but for me certainly isn’t worth being tied to just Amazon (I did try it a couple of times). So with people already moving to other platforms (while still being on Amazon) it might not be the best time for Amazon to start cutting royalties.

    They’ve certainly been winning the war… but it’s not over yet, and things can change quickly in the modern world.

Comments are closed.