This is confusing. Here is someone with a FANTASTIC first outing of a book and he's whinging about it?
The author raises $8K on Kickstarter, sells his book for $10, and is complaining that the 'gorilla' is taking a bigger percentage of the take?
Using his numbers: of 73%/11%/12%/1% his money was $1117/$231/$333/$20 respectively. So he made three times as much money selling through Amazon as he did on the next closest service (PDF).
So what is his complaint? That he didn't read the contract completely? Would he have forgone selling his book on Amazon if he had? Assuming he was trying to get $7/book out of them would he have raised his book price to $15 to pump that price up? And what would that have done to his volume?
Its all well and good to posit that you could store your book on an FTP server at Hurricane electric but how would people find it? How would they read it?
And then why all this angst over the first few months? The kickerstarter [1] only funded in April, here it is June he has his book out, most travel magazines have like a 3 month lead time on their content, plus folks need to review it etc. What was he expecting? And more importantly since this reads like he is hugely disillusioned by the experience exactly why was he expecting what he was expecting? Didn't he 'get' that he could not have published this book at this level of success at all prior to Amazon?
He is making an entirely justified complaint that Amazon charges unreasonable fees. The idea that any and all corporate behavior is fine simply because "it says so in the contract" is ridiculous.
You aren't actually paying attention to what the author wrote - he even specifically talked about how Amazon's Kindle platform provides a good experience for readers and has accounted for the majority of his sales. His post doesn't display any ignorance of the points you are making - instead, he acknowledges them but makes the entirely valid point that charging several dollars for a "delivery fee" of a digital book is OBVIOUS BS!
There is a huge disconnect between the attitude of "any price that people will pay is a fair price" and the fact that economic systems require that parties engage in transactions in good faith. To me, it seems blatantly obvious that Amazon is engaging in the bad-faith practice of trying to conceal the true costs of their service by loading a lot of the price into a "delivery charge" that is absurd.
This kind of thing is a very old game in business, but that doesn't make it ok. Just because something is common and legal doesn't make it appropriate. A large amount of standard business practices are deliberate, but legal, rip-offs - and calling a rip-off a rip-off is a good thing.
Having a great time with the book, sorry if I came off as whining.
A few notes. A high % of the KS money went into rewards (books printed averaged $20 shipped).
I did make 3x though Amazon, but if I had gone through gumroad, I would have done double the revenue.
Biggest tl;dr complaint is that as an avid reader of about a book a week I had no idea that authors paid both 30% of the total price plus the delivery fee. The other main competitors don't do this... just found it odd and wrote about it.
You assume all of the Amazon traffic was organic. He directed all of his marketing efforts to the book on amazon.com; presumably he could have captured a good number of those purchases elsewhere.
I think the real issue is less about costs and more about how Amazon hides big revenues behind "delivery fees." Most platforms (Apple, Google, PayPal, even Amazon in the AWS world) that take a percentage cut + special fees separate the special fees to mirror actual costs (e.g. credit card processing). In this case Amazon just used it as another place to add significant markup, presumably in a way that was not expected.
Should he have read the contract more closely? Yeah, no question. But it still strikes me as sleazy on Amazon's part, even though I agree with you that a lot of what he did was only possible because of what Amazon's done.
"What is the marketplace doing to earn this percentage of my sales?" seems to be a common question asked by sellers. The last thing on their minds it would seem is the fact that the marketplace is selling their item for them and providing the infrastructure so that they don't have to handle all that PITA interaction. This is especially true of Amazon. You get a lot of value by selling on their marketplace. The high number of sales, delivered to a device that many people own and enjoy using to consume content, the trust associated with the Amazon brand and the reviews by "real people."
The only problem I could see would be if Amazon sales were cannibalizing other avenues, leading to a lower overall profit. But I'm sure even if this is the case, Amazon's volume more than makes up for it.
So yes, this rant is pretty pointless. This is the way every marketplace works nowadays: iTunes or Themeforest are the same. They take a big cut and reinvest the profits in marketing and advertising to grow the marketplace larger (and thus generate more profits for you in the long run).
Exactly. Amazon isn't providing storage and delivery nearly as much as they're providing eyeballs. (The "hot list" is a self-fulfilling prophecy -- you don't need to be incandescent to make the list, but being on the list tends to increase sales -- as are recommendations.) If you think you can drum up the eyeballs yourself, then go for it. Just be prepared for vanity press results if you're not all over the marketing.
I don't disagree with you, but as I understood it the author is partly dismayed by the fact that the delivery fee is so large. Even if every copy were delivered via 3G (which is unlikely), $2.58 for an 18 MB file seems steep. Sure, on one level it's not his place to complain -- he still probably made a boatload by leveraging Amazon's massive sales platform -- but I also understand that pricing schemes like that can feel like a bit of a rip-off (e.g. $20 printers with $40 ink cartridges).
At a guess: the author feels ripped off in the same way I feel ripped off when I buy an airline ticket and have to pay $25 to check a bag, $12 for a sandwich, etc. If amazon's fee is $4.50 they should say so instead of burying a cost almost equal to their quoted fee in fine print.
Edit: also, amazon grants themselves MFN status [1] at the authors' expense. So they exploit their market size to make sure authors can't make up for the kindle being nearly 100% more expensive than competitors.
By "price-match" we mean where we sell the Digital Book in one
or more of the Available Sales Territories at a price (net of
taxes) that is below the List Price to match a third party's sales
price for any digital or physical edition of the Digital Book, or
to match our sales price for any physical edition of the Digital
Book, in any one of the Available Sales Territories.
OK, so for a $10 book, Amazon collects 30% for themselves, which is $3.
For a 19MB download delivered via 3G to a Kindle, Sprint, the wireless carrier, charges .15/MB, or $2.85/19MB. This is paid to Sprint, not Amazon.com. The article errors by comparing this fee to the cost for server bandwidth using S3 to come up with his markup value, but S3 bandwidth covers the internet only and does not include fees involved with passing through any sort of cellular network.
If I were to buy the author's book and download it to my non-3G Kindle over my own wi-fi connection, the author would still be charged $2.85 for it.
Surely the 3G Kindle owners should be paying for it - and only then if they use whispernet. Or rather, I always thought they were because the 3G Kindle touch is $50 more expensive. A cellular radio only costs a dollar or two, I always figured that most of the $50 price difference represented average download costs over the expected lifetime.
I am confused as to why the author of the book paying for the download of the end user in the first place? If the end user decides to download it via 3G it should either come out of their existing data allowance or be billed to their phone bill...
... or alternatively they can download it over Wifi and neither the end user, Amazon or the author should pay for it?
Personally, I'd be more depressed by something that says "Amazon charges authors $2.58 to deliver an e-book (after 30% cut)" than some big fancy number like that 129,000%. It's more meaningful.
This is naive as it fails to consider that Amazon has probably made a considerable loss on the Kindle hardware business to create this market the OP is lucky enough to participate in. This investment alongside the investment in their own AWS infrastructure is why there is a reasonably sized market for ebooks right now. Also how about the cost of cellular data?
The cost might be a little high but if you don't like it, you have the choice to take your business elsewhere.
Some commenters say the post is wrong to complain when the author is making money through amazon's distribution, or when amazon takes a loss on selling kindles.
I disagree with both sentiments.
Main point: It does not cost amazon an average of $2.58 to deliver the author's pdf. Amazon is being dishonest by calling this a delivery cost. I consider it unethical to name a fee something that it is not.
"Be grateful for what you do get" is not a valid argument against dishonesty. If Amazon makes a business decision to take a loss on kindles, this also does not justify dishonesty.
So many commenters seem to see the $2.58 as Amazon saying "this is what it really costs us". I'd think it means something more like "this is punitively high so please make your book smaller."
Consumer here. What I don't like about this absurd per-megabyte price is that it discourages authors from including quality pictures in their books.
This finally explains why the Kindle version of some books I've bought were garbage. In particular, I was enormously disappointed with Lonely Planet books - the maps are poor quality and split out among several pages so it's almost impossible to find anything. It was a terrible mistake not to buy the PDF.
Between the awful maps in Lonely Planet and the absurd number of OCR glitches in Modern Times, I've spent my last Kindle dollar.
Completely agree on this. Moreover, the price of a Kindle book is often HIGHER than for the printed version, which is outrageous, especially because of the poor quality of the layout of many kindle books layouts.
The separation of "service fee" and "delivery fee" is disingenuous, you are basically paying amazon 50% for the use of the marketplace. If you think it's an unfair price, don't put your book in the marketplace. If you think it's fair but deceptive, say so, don't pretend like it's deceptive and unfair at the same time.
Complaining about a 50% margin for Amazon when they have basically created the entire ecosystem for ebooks feels a bit like complaining about the large markups on pharmaceuticals to make up for the millions are poured into R&D.
I don't get his complaint. I have written books for Springer-Verlag, McGraw-Hill, J. Reilly, Apress, etc., etc., and I am used to seeing 10% to 15% royalty.
About 50% royalty from Amazon seems pretty good, but regular publishers provide a lot of help producing a book.
Publishing books with Apple's AppStore also looks pretty good.
It is all good(!), one just has to appreciate having multiple markets available and choose which ones you like.
This post is ridiculous. Amazon has spent billions upon billions of dollars building and maintaining a ridiculously efficient delivery system for electronic content. THAT is what the markup is paying for.
And from a common sense standpoint, if Amazon were really charging the crazy markup this guy claims, then some other company would mark up a mere 1000% or whatever and massively undercut Amazon's offering. Given that this hasn't happened, it is pretty safe to assume that the true costs are much higher than his math suggests. Either that or other companies have just ceded massive eBook profits to Amazon out of the goodness of their hearts. I'm going to guess it's the former.
This is a pretty huge piece of free advertising for Gumroad and its ilk. I know Andrew, and I know he's put his heart and soul into this book. It's a downright shame to see Amazon taking that size of a cut for self-published works.
I strongly suspect Amazon is offering well-known, "must have" authors a much better deal -- possibly even losing money on sales of some of their books -- and making it up by giving a raw deal to less-well-known, independents like Andrew Hyde, the author of this blog post.
The well known must have authors don't self-publish directly on amazon, they have publishers who handle all that sort of negotiation for them. And part of that negotiation surely includes talking amazon down on the delivery fees.
However, authors who publish heir work through a publisher also don't make 55% royalty, so the author of this blog post is still better off than he would have been.
It's not 129,000% markup. You're paying for outgoing bandwidth (at S3 prices) and you're paying for the Kindle's incoming bandwidth, which could be over an internationally-roaming 3G network. Yes, it's dumb that Amazon charges authors and not themselves, but would you prefer they take 40% instead of a fixed $2?
Realistically, how many downloads are really done via international 3G roaming? Much less than 1% I would suspect. And while it's true that there are some plans with absurdly inflated roaming costs that could still drive up the overall average to $2+, it would be beyond incompetent for Amazon to agree to such plans for their Kindles.
One factor that nobody seems to have mentioned so far: was this massive delivery fee in any way knowable to the author beforehand? I'd consider it a bit disingenuous of Amazon if they hide it.
The pricing scheme may explain why so many Kindle books have crappy lo-res images. Text is small (the whole bible is 5 MB == $0.75 delivery charge) but quality images, like in the travel book in the article, bulk it up.
If you use the end user cost you can get a high end estimate for total cost of 3g service. $30 for 2GB of data makes $0.015/MB * 18.1 MB file makes for a total cost to user of $0.27 for delivery.
Sure, on paper you get 2GB for 30$, but really your paying 30$ to be part of a pool of people that use below 500MB on average and some of them pay a lot more than that in overage feels for downloading 2.01+GB.
A more realistic number might be 15$ for 200 MB with the risk of overage fees = 1.35$ for 18.1MB. Amazon may pay more per MB than you do because of that lack of subscription good for life of the device thing or less, but they also have overhead to track that etc.
The fact that you can get 2 GB of data for $30 doesn't mean that you can get 18 MB of data for $0.27. Most people paying $30 for a 2 GB data plan are using far less than 2 GB of data.
Why not make it $10 on Amazon and $9.50 on all the other services. That way, people who are indifferent will go for the service that nets you the highest margin while people who prefer kindle won't care that much about the price differential.
Personally, I'm pretty much indifferent to iBooks vs Kindle since both are just apps on my iPad. If they're both $10, I choose Kindle simply because it's a bigger brand name. If there's even a tiny price differential, I'll choose the iBooks.
You can't. Amazon reserves the right to drop the asking price on your book to the lowest price listed anywhere else. ("Most favoured nation status" is the term used to describe this kind of clause in a contract.)
Step one is to make this cost transparent to people considering selling via Kindle (and to readers who care about this sort of thing). I'm preparing my first novel for sale right now. It's a novel, not a travel book, so I'm basically just delivering a cover image and text so I would expect my "delivery fees" will be much lower, but I didn't even realize that it would be in the realm of possibility that delivery fees would add up to any kind of significant expense. How could I know? Amazon doesn't advertise this anywhere. So we need blog posts like this in order to inform authors so they know that there's strong incentive to look into the other markets.
This kind of thing only works when users looking for "ebooks" are channeled through Amazon. Paid placement on Google may help them in that regard. What happens when users learn they can download ebooks elsewhere?
It's nonsensical to pay a fee for distribution when the distribution channel is the internet.
Project Gutenberg's and Archive.org' ebooks are better than this e-paper or super hi-res screen nonsense. Reading books on these devices is dog slow and awakward. It is just text. It should be searchable using Boyer-Moore algorithm. Fast. searchable ebooks.
It seems like the telco's are the ones making out here. They charge Amazon some ridiculous fee to deliver the content and they charge the consumer for a data plan for the device.
Most US authors pay only a few cents per delivery. [1]
Books with lots of images can become expensive but it seems like the images are likely unnecessarily big for an ebook, and that is why his costs are so disproportionately large.
[+] [-] ChuckMcM|14 years ago|reply
The author raises $8K on Kickstarter, sells his book for $10, and is complaining that the 'gorilla' is taking a bigger percentage of the take?
Using his numbers: of 73%/11%/12%/1% his money was $1117/$231/$333/$20 respectively. So he made three times as much money selling through Amazon as he did on the next closest service (PDF).
So what is his complaint? That he didn't read the contract completely? Would he have forgone selling his book on Amazon if he had? Assuming he was trying to get $7/book out of them would he have raised his book price to $15 to pump that price up? And what would that have done to his volume?
Its all well and good to posit that you could store your book on an FTP server at Hurricane electric but how would people find it? How would they read it?
And then why all this angst over the first few months? The kickerstarter [1] only funded in April, here it is June he has his book out, most travel magazines have like a 3 month lead time on their content, plus folks need to review it etc. What was he expecting? And more importantly since this reads like he is hugely disillusioned by the experience exactly why was he expecting what he was expecting? Didn't he 'get' that he could not have published this book at this level of success at all prior to Amazon?
[1] http://www.kickstarter.com/projects/andrewhyde/this-book-is-...
[+] [-] mycroftiv|14 years ago|reply
You aren't actually paying attention to what the author wrote - he even specifically talked about how Amazon's Kindle platform provides a good experience for readers and has accounted for the majority of his sales. His post doesn't display any ignorance of the points you are making - instead, he acknowledges them but makes the entirely valid point that charging several dollars for a "delivery fee" of a digital book is OBVIOUS BS!
There is a huge disconnect between the attitude of "any price that people will pay is a fair price" and the fact that economic systems require that parties engage in transactions in good faith. To me, it seems blatantly obvious that Amazon is engaging in the bad-faith practice of trying to conceal the true costs of their service by loading a lot of the price into a "delivery charge" that is absurd.
This kind of thing is a very old game in business, but that doesn't make it ok. Just because something is common and legal doesn't make it appropriate. A large amount of standard business practices are deliberate, but legal, rip-offs - and calling a rip-off a rip-off is a good thing.
[+] [-] andrewhyde|14 years ago|reply
A few notes. A high % of the KS money went into rewards (books printed averaged $20 shipped).
I did make 3x though Amazon, but if I had gone through gumroad, I would have done double the revenue.
Biggest tl;dr complaint is that as an avid reader of about a book a week I had no idea that authors paid both 30% of the total price plus the delivery fee. The other main competitors don't do this... just found it odd and wrote about it.
[+] [-] freerobby|14 years ago|reply
I think the real issue is less about costs and more about how Amazon hides big revenues behind "delivery fees." Most platforms (Apple, Google, PayPal, even Amazon in the AWS world) that take a percentage cut + special fees separate the special fees to mirror actual costs (e.g. credit card processing). In this case Amazon just used it as another place to add significant markup, presumably in a way that was not expected.
Should he have read the contract more closely? Yeah, no question. But it still strikes me as sleazy on Amazon's part, even though I agree with you that a lot of what he did was only possible because of what Amazon's done.
[+] [-] coderdude|14 years ago|reply
[+] [-] sgdesign|14 years ago|reply
So yes, this rant is pretty pointless. This is the way every marketplace works nowadays: iTunes or Themeforest are the same. They take a big cut and reinvest the profits in marketing and advertising to grow the marketplace larger (and thus generate more profits for you in the long run).
[+] [-] stan_rogers|14 years ago|reply
[+] [-] drewfrank|14 years ago|reply
[+] [-] earl|14 years ago|reply
Edit: also, amazon grants themselves MFN status [1] at the authors' expense. So they exploit their market size to make sure authors can't make up for the kindle being nearly 100% more expensive than competitors.
[1] https://kdp.amazon.com/self-publishing/help?topicId=A29FL26O...[+] [-] droithomme|14 years ago|reply
For a 19MB download delivered via 3G to a Kindle, Sprint, the wireless carrier, charges .15/MB, or $2.85/19MB. This is paid to Sprint, not Amazon.com. The article errors by comparing this fee to the cost for server bandwidth using S3 to come up with his markup value, but S3 bandwidth covers the internet only and does not include fees involved with passing through any sort of cellular network.
[+] [-] teamonkey|14 years ago|reply
Surely the 3G Kindle owners should be paying for it - and only then if they use whispernet. Or rather, I always thought they were because the 3G Kindle touch is $50 more expensive. A cellular radio only costs a dollar or two, I always figured that most of the $50 price difference represented average download costs over the expected lifetime.
[+] [-] lostsock|14 years ago|reply
... or alternatively they can download it over Wifi and neither the end user, Amazon or the author should pay for it?
[+] [-] fennecfoxen|14 years ago|reply
[+] [-] MBCook|14 years ago|reply
[+] [-] smackfu|13 years ago|reply
He just has a really big delivery fee.
[+] [-] sjtgraham|14 years ago|reply
The cost might be a little high but if you don't like it, you have the choice to take your business elsewhere.
[+] [-] tylerneylon|14 years ago|reply
I disagree with both sentiments.
Main point: It does not cost amazon an average of $2.58 to deliver the author's pdf. Amazon is being dishonest by calling this a delivery cost. I consider it unethical to name a fee something that it is not.
"Be grateful for what you do get" is not a valid argument against dishonesty. If Amazon makes a business decision to take a loss on kindles, this also does not justify dishonesty.
[+] [-] nandemo|14 years ago|reply
[+] [-] smackfu|13 years ago|reply
[+] [-] stickfigure|14 years ago|reply
This finally explains why the Kindle version of some books I've bought were garbage. In particular, I was enormously disappointed with Lonely Planet books - the maps are poor quality and split out among several pages so it's almost impossible to find anything. It was a terrible mistake not to buy the PDF.
Between the awful maps in Lonely Planet and the absurd number of OCR glitches in Modern Times, I've spent my last Kindle dollar.
[+] [-] danmaz74|14 years ago|reply
[+] [-] gfodor|14 years ago|reply
Complaining about a 50% margin for Amazon when they have basically created the entire ecosystem for ebooks feels a bit like complaining about the large markups on pharmaceuticals to make up for the millions are poured into R&D.
[+] [-] mark_l_watson|14 years ago|reply
About 50% royalty from Amazon seems pretty good, but regular publishers provide a lot of help producing a book.
Publishing books with Apple's AppStore also looks pretty good.
It is all good(!), one just has to appreciate having multiple markets available and choose which ones you like.
[+] [-] balloot|14 years ago|reply
And from a common sense standpoint, if Amazon were really charging the crazy markup this guy claims, then some other company would mark up a mere 1000% or whatever and massively undercut Amazon's offering. Given that this hasn't happened, it is pretty safe to assume that the true costs are much higher than his math suggests. Either that or other companies have just ceded massive eBook profits to Amazon out of the goodness of their hearts. I'm going to guess it's the former.
[+] [-] Karunamon|14 years ago|reply
[+] [-] bradmccarty|14 years ago|reply
[+] [-] cs702|14 years ago|reply
Does anyone here know if this is indeed the case?
[+] [-] notatoad|14 years ago|reply
However, authors who publish heir work through a publisher also don't make 55% royalty, so the author of this blog post is still better off than he would have been.
[+] [-] jrockway|14 years ago|reply
[+] [-] brazzy|14 years ago|reply
One factor that nobody seems to have mentioned so far: was this massive delivery fee in any way knowable to the author beforehand? I'd consider it a bit disingenuous of Amazon if they hide it.
[+] [-] tlb|14 years ago|reply
[+] [-] pilom|14 years ago|reply
[+] [-] Retric|14 years ago|reply
A more realistic number might be 15$ for 200 MB with the risk of overage fees = 1.35$ for 18.1MB. Amazon may pay more per MB than you do because of that lack of subscription good for life of the device thing or less, but they also have overhead to track that etc.
[+] [-] cperciva|14 years ago|reply
[+] [-] shalmanese|14 years ago|reply
Personally, I'm pretty much indifferent to iBooks vs Kindle since both are just apps on my iPad. If they're both $10, I choose Kindle simply because it's a bigger brand name. If there's even a tiny price differential, I'll choose the iBooks.
[+] [-] pja|14 years ago|reply
[+] [-] evanprodromou|14 years ago|reply
[+] [-] alanfalcon|14 years ago|reply
[+] [-] tytr|14 years ago|reply
It's nonsensical to pay a fee for distribution when the distribution channel is the internet.
Project Gutenberg's and Archive.org' ebooks are better than this e-paper or super hi-res screen nonsense. Reading books on these devices is dog slow and awakward. It is just text. It should be searchable using Boyer-Moore algorithm. Fast. searchable ebooks.
[+] [-] prbuckley|14 years ago|reply
[+] [-] dangrossman|14 years ago|reply
[+] [-] tvorryn|14 years ago|reply
1 - http://www.thepassivevoice.com/06/2012/amazons-markup-of-dig...
[+] [-] benholmen|14 years ago|reply
1. Buy on Amazon.com for $9.99 (I earn $5.10)
2. Buy on iBooks for $9.99 (I earn $7.00)
3. Buy a PDF for $9.99 (I earn $9.25)
If I felt any connection or goodwill toward the author (highly likely) I would be inclined to pick the best option for me _and_ the author.