Will Indie Authors Benefit From Amazon’s New Buy Button Policy?

When publishers collectively noticed a couple weeks back that Amazon was now giving its coveted buy button to whichever third-party seller offered the best deal on a title (as opposed to using it to sell the copy Amazon bought from publishers), they lost their s***.

Will Indie Authors Benefit From Amazon's New Buy Button Policy? Self-Pub

Publishers, their trade group, and their puppet variously accused Amazon of depriving authors of royalties, decimate publisher and author earnings, and "attempting to drive down the value of books" (never mind that the publishers themselves had sold the books cheaply in the first place, making this a problem they had created for themselves).

Now one publisher is trying to come up with a reason indie authors should be concerned, only she has inadvertently demonstrated that indie authors might actually benefit from Amazon's new policy.

Writing over at PW, Brooke Warner spends several thousand words rehashing the events so far without actually clearly stating how indie authors could be helped or harmed by the change in policy. (Or at least that is my impression; Warner doesn't clearly state her conclusion.)

Many in the industry speculate that Amazon’s ultimate motive with the Buy Box policy relates to the company's plans to expand its POD offerings. Amazon’s guidelines for how to win the Buy Box states that vendors must excel in pricing, availability, fulfillment, and customer service. For authors using CreateSpace for POD titles, the only one of these areas Amazon will not directly control is pricing. It should also be noted that Amazon is very effective at controlling pricing across its own platforms, incentivizing low pricing on Kindle Direct Publishing titles, for instance, by offering 70% royalty to authors who price their e-books between $2.99 and $9.99 and only 35% to authors at any other price point.

For those authors who continue to be smitten with Amazon, this kind of relationship may work out well, and they may have a long and successful career as a POD author who wins the Buy Box every time.

The rest of us need to be vigilant. ...

While Warner's piece is mostly true, it overlooks several nuances in how POD book are distributed.

The thing that Warner missed is that authors who distribute their POD books through Createspace can choose an option called expanded distribution. The authors agree to take a smaller royalty (40% vs 60%) in order for the book to be listed with third-party retailers like Barnes & Noble's website and Walmart's website.

(Other POD providers have different names for similar services, but for the moment we will skip them and focus on Createspace.)

The thing about expanded distribution is that those third-party retailers can price the book however they like. They can discount the book if they so choose, and they can sell the book at twice the list price.

What's more, those third-party sellers can also list the book on Amazon's marketplace.

Do you see where I am going here?

Authors who choose expanded distribution could now see the buy button going to third-party sellers that offer the authors' books at a discount.

Given that most indie authors have anemic print sales because POD books are so expensive, any discount is bound to result in an increase in print sales and a net benefit for authors.

But they will also be getting a smaller royalty on the list price, meaning they're earning less per title.

Publishers may view this development with alarm, but honestly authors could be coming out ahead here.

Thoughts?

About Nate Hoffelder (10017 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

11 Comments on Will Indie Authors Benefit From Amazon’s New Buy Button Policy?

  1. As far as I understood it, expanded distribution sells to Ingram at a standard wholesaler discount and, if retailers try to purchase from CS, the books are sold at a standard retail discount. I don’t think that you’ll see many retailers giving up much of that discount to under-cut the retail price you set online.

    If you do see discounting, you’d have to increase your sales units by a hefty number in order to make up that loss in revenue, compared to the revenue you’d see if the book was sold through the CS-Amazon pipeline.

    I’m dubious about the likelihood that any book’s demand curve is that steep.

  2. Wait.

    As I understand it, PoD (at least at CreateSpace and Ingram) pays out based on the cover price that I list, not the sales price (the way KDP pays out). Who cares what discount anyone wants to run? I get the same royalty, and (hopefully) a sales increase. Win-win.

    • If Amazon sells your book on its site, you get 60% of the list price.

      If a third-party sells the book you only get 40% of list.

    • If you are in normal distribution at CS, you’re selling directly to and through Amazon. If you are in expanded distribution, they sell through Ingram and will sell to other retailers. Those sales are at a different discount rate. Hence the issue that is discussed above.

      Of course, if you print through LSI, you do better on those other sales.

  3. There’s a cost to the print books you aren’t factoring in–the print cost is taken off the top before any percentage is calculated so no one is making 60 percent of the list price (or even 40. It’s closer to about 20 to 25 percent).

    There is no way that I can see that indies will benefit from the new buy button rules. The only time another retailer orders a POD book is if a customer requests it. They don’t carry them in stores or offer them on their site (or any other site.) They may order some for a book signing, but most require that the author buy any extras (with the exception of maybe one or two that they may agree to carry for a couple of weeks.)

    • There are hundreds (possibly thousands) of booksellers who “scrape” the listings of books they can buy from CS and LSI so that they can sell them and then buy a copy to drop-ship.

  4. The bottom-line is that Amazon is in business to serve those who give them money, not those who give them products to sell.

    If publishers don’t like that, they don’t have to sell through Amazon and if authors don’t like that, they can sell directly through Amazon/APub and avoid the extra middle-man; giving them the Buy Button AND the largest profit.

    Fact is, the publisher model makes no sense in today’s world and everything we’re seeing is the death spasm of an outdated industry. The death of those leeches can’t come soon enough.

    • Yes, Amazon is in business to make money, and their customers are consumers.

      Amazon no longer needs to have books at all, so there’s no reason on Earth that it will fail to extract all possible profit from all transactions, including those with self-publishing authors, leaving no margin upon which those authors can survive.

      Writing can easily become a purely amateur affair. While there’s a certain appeal to that idea on the surface, I am certain that the reality would be far less appealing.

      As for the usefulness of the traditional publishing model: there are types of publishing and sets of circumstances where you’re absolutely right.

      There are also sets of circumstances where it would be foolish to self-publish instead of going with a traditional house, if you had the choice.

      Remember how big the book business is, and how varied. The only rule that applies across the board is “It depends.”

      • “Amazon no longer needs to have books at all, so there’s no reason on Earth that it will fail to extract all possible profit from all transactions”

        it’s not about extracting profit as it is eliminating the profit margin in order to drive down the price. Amazon has always, _always_ gone for volume. They sell as much as they can as cheaply as they can. this latest change is just more of the same.

        • Amazon is getting profit margin from the sales. And they’re pumping up the volume (to increase their total margin) by dropping the price.

          They’ll keep it up until they’ve moved every drop from our column into theirs, by forcing the share of the prices offered to (self-)publishers down, and manipulating the demand and supply curves until they’ve got all the available margin possible.

          Given that Amazon is a publicly traded company, and a near-monopsony, they have no other ethical option.

  5. If you distribute through IngramSpark and offer the short discount of 40%, then you will always get 60% regardless of downstream discounts. (Net of print costs, but that applies everywhere.)

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