Over the past two months Amazon has been supporting their very public and very rough book contract negotiations with a subtle media campaign which has kept indies on the sideline. By saying little and letting the publishers leak details, Amazon has avoided giving indies a reason to join sides with the major publishers that Amazon is fighting.
That was a smart move, but yesterday everything changed. Amazon released a statement which inadvertently confirmed that indie authors and publishers have a horse in this race.
Amazon responded to the news that a German trade group had filed an antitrust complaint, and the statement said in part:
It’s widely understood that e-books should cost customers less than the corresponding print edition – in digital there is no printing, freight, warehousing, or returns. We believe this should also be reflected in the terms under which booksellers buy their books from publishers, and this is the case in our terms with most publishers around the world, including in Germany. For the vast majority of the books we sell from Bonnier (a division of the 3 billion Euro international media conglomerate, Bonnier Media Group AB), they are asking us to pay them significantly more when we sell a digital edition than when we sell a print edition of the same title.
In short, Amazon has confirmed the rumors that the Bonnier negotiations include a fight over ebook payments. This is also a strong indicator that the similar rumors coming out of the UK are also true.
As a result, Amazon has told us that indies have a dog in this fight.
Indie authors might not care whether Amazon is extracting increased and specific co-op service fees from Hachette (they might actually want to pay for the services – if they boost sales), but now that Amazon is pushing major publishers to accept a smaller cut of ebook sales it is time to be concerned.
Tell me, if Amazon manages to force the major publishers to accept a smaller cut of ebook sales, how long do you think Amazon will continue to offer the 70% option in KDP?
I think it would last about 15 minutes.
As I have argued in the past, I see the 70% royalty option in KDP as one of Amazon’s carrots. Amazon offers the high royalty in order to encourage authors and small publishers to deal directly with Amazon. It also encourages authors to stay independent and to get their rights back and republish their backlist.
I think Amazon is using the high royalty rate to keep the publishing industry fragmented. By offering better terms, Amazon keeps power from concentrating into fewer hands. But if Amazon manages to force publishers to accept a lower rate, it won’t need to offer such a high rate via KDP any more.
Amazon can cut it, and I would expect them to do so once they think they have the advantage.
Edited to Add: Remember, Amazon has already arbitrarily cut royalties on one occasion. Earlier this year they lowered the rates they paid on Audible audiobooks. They have no effective competition for audiobooks so they decided to use their monopoly power to grab a larger share of sales.
With that in mind, I think it’s time for indies to hold our noses and side with publishers. This bothers me, but we are potentially in a situation where indie revenues are at stake.
Or am I wrong?
P.S. If anyone cares to suggest an effective course of action, the comments are open.