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.


This is a cross-posting from April L. Hamiton‘s Indie Author blog.