Five crafty tactics Amazon uses to lure unsuspecting authors

So, you are about to self-publish a book in e-book or print-on-demand format. It seems like a no-brainer to sign an exclusive contract with Amazon Kindle and up goes your book to Amazon’s vast online audience. After all, presumably they own 60 or 70% of the e-book market. This super-rich company has overall product revenues of more than $107 billion and more than 304 million active customer accounts worldwide.  But are they playing fair with the average author dreaming of selling a million copies of his or her e-book?

When we look at side-by-side comparisons of the giant retailer against competitors, authors may have some better options.

“Market dominance,” we find, does not always equal “market effectiveness” for self-published authors.

Amazon employs at least five crafty tactics that can mislead the unsuspecting author.

    1. First, the company vigorously promotes its 70% royalty plan over its 35% plan to compensate authors on the sale of their e-books.

Which plan earns more?

Believe it or not, the writer earns more money on the 35% plan than on the 70% plan. Why? Because the 70% plan is based on the publisher’s net income and the 35% plan is based on the gross sales price of the book. A book priced at $9.99 based on 70% of the publisher’s net income earns you $3.15. The same book based on 35% of the gross sales price yields $3.50.

The 70% plan also sets price restrictions on the author—from $2.99 to a ceiling of $9.99. If you want to sell your book at a higher price, you need to choose the 35% plan. Other companies sometimes play with the basis for their royalty plans, but Amazon leads the pack in offering authors muddy options.

  1. Second, the 70% plan that Amazon stridently promotes requires the author to sign an exclusive contract with Amazon, meaning they can’t sell the book anywhere else—not even on their own. Thus, the author is restricted from distributing the work to the other 30 or 40% of the marketplace. Many authors may not fully understand the impact of these restrictions.
  2. The author must hand over his or her rights to Amazon without receiving a dime up front. Perhaps the biggest shortcoming of the 70% plan is that the author who signs the exclusive deal has just given away his or her entire content for free to Amazon, at least initially. Unlike traditional publishers who pay advances against potential sales of a book, Amazon pays nothing through its self-publishing portal, Kindle Direct Publishing (KDP). If you are “chosen” to be published by Amazon Publishing (a separate unit usually only for agented authors), you might expect a small cash advance. Otherwise, Amazon gets your content for nothing until several other conditions are met.
  3. The KDP author is not paid on the sale of the book, but upon pages read by Amazon Prime members, who pay nothing other than their annual membership fee for the privilege of browsing your book. Opting for the 70% plan means that your royalties will be calculated upon how many pages of your book are read, divided by the number of other books read that month. If someone bought your book in a bookstore, you’d be paid based on the retail price of the book, whether they read three pages or 300. In hard-to-find data, Digital Book World reported not long ago that Amazon Kindle’s monthly individual author payout equaled $1.38.
  4. Amazon advertises an author royalty pool of about $14 million from which it claims KDP authors are paid for pages read. Is Amazon’s pot of gold a sink hole Instead? The impression one gets is that each month all the money accumulated in the pot is paid out to authors, right down to zero and the fund is then refilled with another $14 million or so the next month. Is the assumption that Amazon is paying out about $168 million or more annually to authors true? When asked, Amazon would not reveal its actual payout amounts. (See Amazon’s response, p.158 of UNLOCKING THE SECRETS OF E-BOOK PUBLISHING, available at major book retail outlets).

Authors do have options when considering how to distribute their books. For some, KDP may be the best way to go; for others, perhaps not. The best way for an author to maximize his or her distribution is to gain as much knowledge as possible about several sales outlets and maximize exposure in them all.

About the Author:

Doris Booth is the author of UNLOCKING THE SECRETS OF E-BOOK PUBLISHING, GET YOUR BOOKS INTO EFFECTIVE SALES CHANNELS (WITH OR WITHOUT AMAZON), available in both e-book and print formats. The book contains a handy grid comparing royalty plans of major author portals.  Among comments of praise for the book: …”imperative information for navigating the channels.”—Ingram Spark/ Ingram Content group

Booth is editor-in-chief of Authorlink.com, the news and information site for editors, agents, writers, and readers, and has overseen the production and distribution of more than 200 e-books.

Website: authorlink.com
E-mail: dbooth@authorlink.com