Amazon's New Royalty Scheme Is Causing Disquiet Among Self-Publishing Authors And Small Publishers

As per July 1, 2015, Amazon is paying one segment of their authors and small publishers per page read and no longer per e-book download. With this change of policy, the disruption that completely changed the music business is gaining momentum in the book industry – and might unfavorably affect e-book quality.

As a small indie publishing company, we at Pongü Verlag distribute our e-books via Amazon's Kindle Direct Publishing program. We have found the service to be convenient, highly reliable and just what we need at our current stage of development.

Since Amazon announced their new royalty scheme in mid-June, an emotional debate about its fairness has been going on among self-publishing authors and small publishers, stirred by articles such as "Amazon set to pay self-published authors as little as $0.006 per page read" by The Guardian.

But what exactly is causing this uproar and who is affected?

The change is only relevant for KDP Select participants

Upon publishing an e-book on Amazon, (self-)publishers are offered the option to enroll their book in the KPD Select program.

Those who decide to do so, give exclusive distribution rights for their e-book to Amazon. In return, besides a few other benefits, they get their books included in the Kindle Owner's Lending Library (KOLL) and Kindle Unlimited (KU) – both flat-fee subscription services which allow Amazon customers to read as many books as they want.

Each month, Amazon defines an amount of money to be distributed between the authors participating in KDP Select:

  • Before June 30, 2015, authors were paid per download as soon as the reader had read 10 percent of the book. The amount was the same for everybody, no matter if the book had 50 or 500 pages.
  • In the new world, authors get paid per page read. This means that the authors of short works will now earn a smaller part of the pot, compared to an author with a full-length novel.

Besides the KOLL and KU downloads, authors participating in KDP Select earn normal royalties of 35 or 70 percent of the book price whenever a customer purchases the e-book in the ordinary way. This part of the royalty scheme does not change.

For normal fiction, the new royalty deal seems fair

As a basis for every discussion on fairness, it should be remarked that Amazon offers its KDP services for free. Whether your e-book sits on the shelf or becomes the next "50 Shades of Grey", Amazon will not charge you anything for making your book available and hosting it on all of their websites world-wide. This means they can run the show any way they want.

We at Pongü think that for normal fiction, the new deal is fair and may even be beneficial:

With 160 to 200 pages, our books are moderately long. Under the old scheme, every time a customer downloaded our books via KU and KOLL, we earned about half the royalties of an ordinary sale. Now we get slightly more – if the reader finishes the book, which in our view amounts to about the same risk as the old 10 percent rule. We can live with that.

However, the new deal may be problematic with regard to comics or children's books with painted illustrations. The production of these books can require an inordinate amount of time for a comparatively low number of pages. We think that this is a discussion which will have to be pursued.

Remaining concerns

Does this mean that we are happy? Unfortunately, no.

With the new Amazon royalty scheme in place, advice on how to outsmart it is already cropping up. As one journalist wrote on Fastcompany.com: "The best option for writers at Amazon's mercy: Fill your pages will illustrations, photos, and infographics—and hope that your novel is the next Gone Girl." (quoted on July 3, 2015)

Hopefully meant as a joke, this is exactly what some self-publishing authors will try. And then the quality of the e-books on the Kindle publishing platform – already today volatile – might substantially deteriorate.

At Pongü, we strive for a very high and professional quality of our books and e-books. But even this will not help us if the overall quality of our preferred platform goes down the drain.

Simply put: Now seems the time to get our diversification strategies out of the drawer and start with their implementation.