Katie MarsalThe new deal will take place June 30, offering publishers a much higher share of revenue than the current system. When factoring in the cost of delivery at 15 cents per megabyte, Amazon said the average $8.99 book would earn the content provider $6.25. Under the previous plan, they would have taken just $3.15.
Those who opt in for the new 70 percent pricing must meet a specific set of criteria as defined by Amazon:
- 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.
"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."
The 70-30 share of revenue happens to be identical to the business model employed by Apple with its App Store for the iPhone and iPod touch. With more than 3 billion total downloads and over 100,000 applications available, Apple has found great success.
That success has also been profitable for the developers who sell software on the App Store. One upstart company, Tapulous, now makes more than $1 million per month in total sales.
Amazon is not the first to adopt the 70-30 revenue model popularized by Apple. AT&T has announced it intends to take a 30 percent cut of software sold via its new app platform, and Intel's AppUp Center for Atom processor-powered netbooks will also employ the same split between it and developers.
Recent reports have said that Apple intends to continue that strategy in providing content for its forthcoming tablet, which is expected to serve as a multimedia device that can, among other tasks, be used for reading printed content. HarperCollins and other major publishers are said to be in talks with Apple to provide their content for the tablet.
While speculation suggests Apple's tablet will not function solely as a device intended for reading, its alleged ability to display e-books has had some dub it a "Kindle killer." In an interview last September, Apple CEO Steve Jobs said he believes "dedicated devices" like Amazon's Kindle will remain niche products while multi-purpose devices like the iPhone "will win the day."
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60 Comments
Doesn't matter Mr Kindle....If all it does is books, it will remain a niche product. Bring the cost down to under 100 bucks and make deals with schools. Of course, lack of multimedia is necessary to be the next "walkman".
Its very pleasing to see Amazon's move on the chessboard. Clearly its a response to what is happening or about to happen to the market for text.
I just hope this means we end up with Kindle app plus the Itunes/Apple app plus some other options so that the tablet is like a virtual street with the all the books sellers competing hard to sell us books, magazines, audio books, comics, reference material, video etc.
I cannot think of a better situation than that... books for consistently 20% less than hard copy, plus no doubt other promotions, and the benefits of cheap delivery is a win for us consumers.
Too late Mr. Bezos ... you should have taken action earlier to ensure build the distribution side of the Kindle platform. A simple case of network effects here ... more content providers/publishers would have signed up with a 70% royalty rate. This would have ensured that content providers would be a bit more locked-in to the Kindle platform. Now Apple is about to change the game and you're surely gonna see a migration to Apple's tablet platform.
From a consumer's perspective a color screen and overall better user experience will put a significant dent in the Kindle on the other side of the platform. A double whammy to the Kindle.
Sorry Jeff, you should have changed your royalty rate a long time ago. Not the week before Apple announces the product/platform.
Amazon's new split to match the App Store is irrelevant, as they don't sell apps. And since the don't know what Apple is going to charge for content for a mythical e-reader, it's sort of stupid to set their prices now.
Unless they know something, and if they do, why don't we know?
Too late Mr. Bezos ... you should have taken action earlier to ensure build the distribution side of the Kindle platform. A simple case of network effects here ... more content providers/publishers would have signed up with a 70% royalty rate. This would have ensured that content providers would be a bit more locked-in to the Kindle platform. Now Apple is about to change the game and you're surely gonna see a migration to Apple's tablet platform.
From a consumer's perspective a color screen and overall better user experience will put a significant dent in the Kindle on the other side of the platform. A double whammy to the Kindle.
Sorry Jeff, you should have changed your royalty rate a long time ago. Not the week before Apple announces the product/platform.
This is almost like, "Hey, sure we've been ripping off you authors all this time, but now that we've gotten word about Apple's planned royalty reimbursement rates from some of our publishers, we're going to cut you in on a great deal!"
Competition is always a good thing...