Amazon Raises Kindle Royalties on Eve of Apple Media Event

Amazon announced Wednesday a new royalty program for authors and publishers for Kindle ebooks. The program would increase royalty percentages to 70% for those authors and publishers as long as they conform to two important issues in Amazon's Kindle agenda: The first is that they agree to price Kindle ebooks at least 20% below the hard copy version of the book (the price must also be between $2.99 and $9.99), and the second is that they agree to allow those ebooks to use the Kindle's text-to-speech feature.

The company made the announcement on the eve of Apple's January 27th media event where the company is expected to unveil a tablet device that could compete with the Kindle as an ebook reader. Apple has been rumored to have offered publishers a 70% cut of ebook revenues sold through iTunes, meaning that Amazon is effectively matching Apple's rumored price ahead of the company's announcement. The company's current program pays 35% to authors and publishers.

In addition, however, Amazon is using the higher rates as what Teddy Roosevelt called a Big Stick to get the more aggressive pricing the firm wants on its Kindle ebook offerings. The retailer is also keen to get as much of the Kindle catalog of books as possible utilizing the Kindle's text-to-speech feature.

Amazon ran into resistance from some authors when it first unveiled the text-to-speech feature on the Kindle platform in 2009. Some authors claimed the feature represented an audio performance of their work, something for which Amazon didn't have a license. If authors want the higher royalty percentage being offered by Amazon, they'll have to agree to give permission for that feature to be used.

It's a neat tie in that leverages a change Amazon will have to make if Apple does launch an ebook platform through iTunes with a 70% cut for authors and publishers in order to get these two concessions from the authors and publishers the company works with.

Amazon's list of requirements for the new program:

  • 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 program is in addition to the existing 35% royalty Kindle publishing program. Authors and publishers that don't want to meet the above-mentioned list of requirements can stay with that program.