Tomorrow's Book

Amazon announced enhanced royalties for authors and publishers who bring lower-priced titles to the Kindle, as competition from other online stores and new players in the market is forcing the retailing giant to sweeten the pot and work to keep book prices at the sub-$10 level.

One thing is clear: Amazon research shows that eBooks sell much, much better when priced at $9.99 or below, and this new royalty scheme is a big incentive for publishers to price accordingly. So Amazon is offering a higher royalty rate on titles priced between $2.99 and $9.99. But, per Amazon usual operating procedures, the new royalty rate and final payment is a little hard to predict; the advertised royalty is now 70 percent if a book is published through Amazon's DTP program, but Amazon wants both its cut and a little more to cover its delivery costs,

For each Kindle book sold, authors and publishers who choose the new 70 percent royalty option will receive 70 percent of list price, net of delivery costs. This new option will be in addition to and will not replace the existing DTP standard royalty option. This new 70 percent royalty option will become available on June 30, 2010.

Delivery costs will be based on file size and pricing will be $0.15/MB. At today's median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold. For example, on an $8.99 book an author would make $3.15 with the standard option, and $6.25 with the new 70 percent option.

"Today, authors often receive royalties in the range of 7 to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books," said Russ Grandinetti, Vice President of Kindle Content. "We're excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books."

DTP authors and publishers will be able to select the royalty option that best meets their needs. Books from authors and publishers who choose the 70 percent royalty option will have access to all the same features and be subject to all the same requirements as books receiving the standard royalty rate. In addition, to qualify for the 70 percent royalty option, books must satisfy the following set of requirements:

• The author or publisher-supplied list price must be between $2.99 and $9.99
• This list price must be at least 20 percent below the lowest physical list price for the physical book
• The title is made available for sale in all geographies for which the author or publisher has rights
• The title will be included in a broad set of features in the Kindle Store, such as text-to-speech. This list of features will grow over time as Amazon continues to add more functionality to Kindle and the Kindle Store.
• Under this royalty option, books must be offered at or below price parity with competition, including physical book prices. Amazon will provide tools to automate that process, and the 70 percent royalty will be calculated off the sales price.

The 70 percent royalty option is for in-copyright works and is unavailable for works published before 1923 (a.k.a. public domain books). At launch, the 70 percent royalty option will only be available for books sold in the United States.

Now, we're all for higher royalty rates, and while it's a little irritating Amazon is making us pay for its stupid decision to limit Kindle wireless to WhisperNet (given the ubiquity of WiFi, that should have been an option), more money is always a good thing.