This is confusing. Here is someone with a FANTASTIC first outing of a book and he's whinging about it?
The author raises $8K on Kickstarter, sells his book for $10, and is complaining that the 'gorilla' is taking a bigger percentage of the take?
Using his numbers: of 73%/11%/12%/1% his money was $1117/$231/$333/$20 respectively. So he made three times as much money selling through Amazon as he did on the next closest service (PDF).
So what is his complaint? That he didn't read the contract completely? Would he have forgone selling his book on Amazon if he had? Assuming he was trying to get $7/book out of them would he have raised his book price to $15 to pump that price up? And what would that have done to his volume?
Its all well and good to posit that you could store your book on an FTP server at Hurricane electric but how would people find it? How would they read it?
And then why all this angst over the first few months? The kickerstarter [1] only funded in April, here it is June he has his book out, most travel magazines have like a 3 month lead time on their content, plus folks need to review it etc. What was he expecting? And more importantly since this reads like he is hugely disillusioned by the experience exactly why was he expecting what he was expecting? Didn't he 'get' that he could not have published this book at this level of success at all prior to Amazon?
He is making an entirely justified complaint that Amazon charges unreasonable fees. The idea that any and all corporate behavior is fine simply because "it says so in the contract" is ridiculous.
You aren't actually paying attention to what the author wrote - he even specifically talked about how Amazon's Kindle platform provides a good experience for readers and has accounted for the majority of his sales. His post doesn't display any ignorance of the points you are making - instead, he acknowledges them but makes the entirely valid point that charging several dollars for a "delivery fee" of a digital book is OBVIOUS BS!
There is a huge disconnect between the attitude of "any price that people will pay is a fair price" and the fact that economic systems require that parties engage in transactions in good faith. To me, it seems blatantly obvious that Amazon is engaging in the bad-faith practice of trying to conceal the true costs of their service by loading a lot of the price into a "delivery charge" that is absurd.
This kind of thing is a very old game in business, but that doesn't make it ok. Just because something is common and legal doesn't make it appropriate. A large amount of standard business practices are deliberate, but legal, rip-offs - and calling a rip-off a rip-off is a good thing.
> charging several dollars for a "delivery fee" of a digital book is OBVIOUS BS!
Do you think that the largest file sharing service (S3) and the largest public cloud computing infrastructure (EC2) in the world just operate for free? Digital delivery fees help pay for the millions in hardware, software, infrastructure and maintenance costs for these services, which Kindle uses extensively.
Did you read the blog post? The author specifically was comparing the cost of delivery via the Kindle service to using Amazon S3/EC2 to deliver the content. His specific comparison was that the price that he would pay to host and deliver the content using Amazon's own services, would be orders of magnitude smaller! In other words, the comparison you are making is the exact basis for his entirely justified claim that Amazon's delivery fee is complete ripoff.
Hosting a static file in S3 you have to point people to manually find and download themselves is much cheaper because you don't have the built in captive audience, WhisperNet and everything else which comes with the Kindle ecosystem, so comparing the two only via a flat dollar cost is naive.
It's ridiculous to include the cost of the entire "Kindle ecosystem" with a fee called "delivery fee" - as other posts have mentioned, this is what commission is for. WhisperNet is another story - this is legitimately a part of the delivery - however, it's just 3G service that they leased from AT&T, and to assume it costs them even close to $2.58 per delivery is just ignorant. If I downloaded an 18MB e-mail attachment over 3g on my phone, essentially the same thing, I would be absolutely livid if I was charged $2.58.
Amazon's "delivery fee" is 15 cents/megabyte. By comparison, AT&T's most expensive pay-as-you-go data plan is $15 for 250MB, or 6 c/MB, less than half the price. Their cheapest plan is 1 cent/MB.
Amazon is known for having very reasonable data storage/transfer fees in their other services, so it's very clear to me that they're just taking a huge margin here.
What they're doing is charging one fee based on price and an additional fee based on file size. This separates the incentives for the publisher, which makes sense.
It's also worth noting that his book is large compared to your average novel. He clocks in around 17.6 megabytes, whereas even a giant novel like Game Of Thrones is only 3.3 megabytes. Hunger Games is a paltry 0.5 megabytes.
Probably Amazon is charging more to offset the cost of their unlimited free 3G usage. Before I had a 3G phone, I purchased a 3G Kindle partially to take advantage of this incredible offer. With a 3G Kindle in the US I could freely browse the web anywhere with no limit.
> If I downloaded an 18MB e-mail attachment over 3g on my phone, essentially the same thing, I would be absolutely livid if I was charged $2.58.
Then be very careful you never accidentally do that when on international roaming (which 3G Kindles do have). You could easily end up being charged $250. And no, that is not an exaggeration (there have been much worse cases).
Amazon probably isn't paying 15 cents/megabyte in the US. But they're probably paying significantly more outside the US. They've figured out the average cost per megabyte and probably added on a few cents. This way the author is getting charged something in the neighborhood of $2.70 to deliver each book rather than being charged $0.50 for some and $15 for others depending on where the purchaser happens to be. Also keep in mind that Amazon lets you download purchases again at a later time via 3G, so they're probably factoring variable delivery costs based on the number of times people are normally downloading the books.
Amazon also has a pretty good track record at lowering costs when their costs go down (at least when looking at AWS), so it wouldn't surprise me to see the delivery fees dropping over time as they negotiate better deals with AT&T or if they start working directly with other mobile operators in other countries.
> Amazon is known for having very reasonable data storage/transfer fees in their other services, so it's very clear to me that they're just taking a huge margin here.
Exactly. They are trying to run a for-profit business. The T&C for data charges is clearly laid out in a simple table I found within 30 seconds of Googling. I'm not sure where the expectation of charity comes from that they shouldn't be making a profit, you don't have to use Amazon or Kindle if you don't want to. Do you think the new Macbook Pro costs Apple $2200 to make?
So... are we morally barred from complaining, or is it merely to be considered gauche?
(This reminds me of the people whose entire conception of "Free Speech" is "I can say anything and if you criticize that's an infringement of my rights.")
Complaining that a business is charging too much money for its product is silly, if everyone is willing to pay that price. The central insight here is that there is no morally correct price for something, there is only the market price. Goods and services don't have "correct" prices, there is only what people will pay.
If you are willing to pay, saying they are charging too much is just wishful thinking.
You are completely missing the point. They do charge a commission. The problematic part here is that this $2.58 is called "delivery fee". Im sure all the ecosystem costs a lot of money, and they are free to charge whatever they think the ecosystem is worth, but calling it "Delivery fee" seems disingenuous.
I don't believe it is disingenuous at all. It could have been lumped in with the other charges, but they are explicity stating this is how much it costs you as the publisher if you wish to use their infrastructure to publish your content digitally.
I think it is disingenuous to assume that $2.58 is some number pulled out of the air to rip the author off. The current meme right now is to assume all digital content delivery is essentially 'free', but this is untrue.
Someone else said AT&T is the whispernet provider. AT&T's smallest data plan is $15 per 250MB (overages are the same rate). The author says they are being charged $2.58 per 18.1MB, which is $35.63 for 250MB.
So Amazon is charging 237% of the ridiculous rate AT&T uses to try to force people to upgrade to a higher plan.
And that's despite the cost that most Kindle users (I'm guessing over 90%) get their books through their computer or WiFi, and don't accrue any cellular charges.
Plus... this is Amazon. I'm pretty sure that given the amount of data Kindles may use they would have been able to get a better deal out of AT&T than your average individual consumer.
And again, this is all on top of the 30% they take that should already cover all of this.
Do yourself a favor and don't investigate the actual cost of things you buy on a regular basis, because you will be absolutely livid when you find out some of the margins being made off of you.
Fair point, but don't you think It'd be nice if they advertised the price for said fee, or at least provided a chart for fees/mb? It seems like it is a "hidden cost", not outlined in detail, leaving the client in the dark, which appears to be the problem here.
It helps to know what you're googling to find. Amazon's documentation is a mess (IMO) with half of it in PDF or other inaccessible format (.mobi) so that it's easy to get confused and lost in the process, especially for a first time author doing this on the side.
While I think his claims of high delivery charges are fair, I don't think it's right to call it hidden. When pricing your book in Amazon's self publishing (I am assuming here he went through KDP), it calculates in real time the delivery charge and estimated royalty based on the price you input. There is also a blurb on the right side of the same page explaining the delivery charge, and how it applies to the 70% royalty plan (and now there is no delivery charge for 35% royalty).
Also remember that Amazon either takes a loss or is barely above breakeven for the Kindle hardware including the Fire. It is like the game console model. Go independent and make money on the PC, but if you want access to the millions of willing buyers and predictable hardware requirements, you either charge your customers more or make it up in volume.
But isn't that factored into the 30% cut they take before the delivery charges?
I love my Kindle and I really like Amazon, but this is the first I've heard of the delivery charge part. Considering that it's around 25% of the price of the book... it really does seem like a rip off on their part.
I think you're right, and that actually worries me more. Amazon likes to sell books for under $10, many ebooks I've bought are $5 or $7.
Maybe it has something to do with the book it's self (i.e. they charge $0.07 per image), but do they mention how this is calculated anywhere?
If I sell an ebook for $2, they take $0.60 in general, and then they decide that it costs $0.80 to deliver... that means they're taking 70% of the cost of the book. So if I'm successful and have to pay taxes, I may be making like $0.12 per book.
I don't remember every seeing this cost mentioned before in the few articles I've seen about selling Kindle books. I'd love to know how it's calculated.
Having a great time with the book, sorry if I came off as whining.
A few notes. A high % of the KS money went into rewards (books printed averaged $20 shipped).
I did make 3x though Amazon, but if I had gone through gumroad, I would have done double the revenue.
Biggest tl;dr complaint is that as an avid reader of about a book a week I had no idea that authors paid both 30% of the total price plus the delivery fee. The other main competitors don't do this... just found it odd and wrote about it.
"I did make 3x though Amazon, but if I had gone through gumroad, I would have done double the revenue."
Not nearly as many people know about Gumroad or use it, so for any given marketplace, some percentage of the buyers in that marketplace are potential customers but they are stubbornly proportional. If Gumroad has 10% of the customers that Amazon has and you get 2x the revenue per book sold, you will only see an increase proportional to 10% of the sales at Amazon. As a worked example
219 Amazon customers $5.10 per book -> $1117 in revenue
22 Gumroad customers $9.25 per book -> $209 in revenue
It's the area under the curve that is important. In a traditional publishing arrangement you would give a bigger 'discount' to a big seller (say Barnes and Noble) vs a boutique seller like 'World Books'. One has 10,000 stores, the other 4 stores. Because while you get less per book, you sell more books and make more overall (price * volume, not just price).
So I seriously doubt you would even have matched the Amazon revenue, if you had gone through Gumroad and precluded Amazon.
So when you look at it you need to sum all of the sales, and all of the margins, and you will get your 'average selling price' or ASP. This will help you understand how much you can profitably 'invest' in putting together a book. As your reputation grows, if you garner an audience, then you can 'count' on more total revenue per book and take some of the guesswork out of the planning.
The other part of the equation is time, since it takes a while for people to get the book and recommend it, there can be several months of 'growth' before you really know what the market for your book is.
I totally understand that you were surprised had the additional charges that Amazon specified but didn't make clear (and that Apple does a better job of this I think is a good thing since they are the competition). Unfortunately PDF is a horrible book format as it pre-computes for a given render and that means that it looks like crap on readers that don't fit the mold. Epub is much better, as is mobi. For what its worth the last time I was looking through the Writers Guide (one of my daughters is looking to creative writing as a career) selling 1500 travel books if you weren't Michelen or Fodor's was a 'big' title, so selling 300 pretty much right off the bat is huge. I wish you great success!
But if you had gone through gumroad, you wouldn't have done the same volume. If they renamed the "delivery fee" as "hosting and market placement" would you feel okay about it?
from my personal experience I have never used Gumroad before, so if it was $9.95 from Amazon and $9.95 from Gumroad then i would have bought from Amazon.
I think you may have made the same profit but your readership would have been much lower if you hadn't used Amazon, which is an important consideration if you want extra exposure.
You assume all of the Amazon traffic was organic. He directed all of his marketing efforts to the book on amazon.com; presumably he could have captured a good number of those purchases elsewhere.
I think the real issue is less about costs and more about how Amazon hides big revenues behind "delivery fees." Most platforms (Apple, Google, PayPal, even Amazon in the AWS world) that take a percentage cut + special fees separate the special fees to mirror actual costs (e.g. credit card processing). In this case Amazon just used it as another place to add significant markup, presumably in a way that was not expected.
Should he have read the contract more closely? Yeah, no question. But it still strikes me as sleazy on Amazon's part, even though I agree with you that a lot of what he did was only possible because of what Amazon's done.
They charge him $.15/MB to delivery the book[1]. Cell carriers charge you ~$15/200MB = $.075/MB for data. Certainly a markup, and it gets better as more people use WiFi, but not 129000%.
But remember, they're charging that $0.15/MB even for people who don't own a 3G-capable Kindle. In those cases it really is roughly a 120,000% markup over an already profitable service.
And those cell users can download the book multiple times at no additional cost, in perpetuity. So sometimes they may be taking a loss. It's really not all that simple, and I think calling it a 120,000% markup is dubious at best.
"What is the marketplace doing to earn this percentage of my sales?" seems to be a common question asked by sellers. The last thing on their minds it would seem is the fact that the marketplace is selling their item for them and providing the infrastructure so that they don't have to handle all that PITA interaction. This is especially true of Amazon. You get a lot of value by selling on their marketplace. The high number of sales, delivered to a device that many people own and enjoy using to consume content, the trust associated with the Amazon brand and the reviews by "real people."
Exactly. His surprise seems surprising. That the company with the clear majority in the e-book market would charge more for the service of being published within that market does not seem like earth shattering news.
The only problem I could see would be if Amazon sales were cannibalizing other avenues, leading to a lower overall profit. But I'm sure even if this is the case, Amazon's volume more than makes up for it.
So yes, this rant is pretty pointless. This is the way every marketplace works nowadays: iTunes or Themeforest are the same. They take a big cut and reinvest the profits in marketing and advertising to grow the marketplace larger (and thus generate more profits for you in the long run).
Exactly. Amazon isn't providing storage and delivery nearly as much as they're providing eyeballs. (The "hot list" is a self-fulfilling prophecy -- you don't need to be incandescent to make the list, but being on the list tends to increase sales -- as are recommendations.) If you think you can drum up the eyeballs yourself, then go for it. Just be prepared for vanity press results if you're not all over the marketing.
I don't disagree with you, but as I understood it the author is partly dismayed by the fact that the delivery fee is so large. Even if every copy were delivered via 3G (which is unlikely), $2.58 for an 18 MB file seems steep. Sure, on one level it's not his place to complain -- he still probably made a boatload by leveraging Amazon's massive sales platform -- but I also understand that pricing schemes like that can feel like a bit of a rip-off (e.g. $20 printers with $40 ink cartridges).
At a guess: the author feels ripped off in the same way I feel ripped off when I buy an airline ticket and have to pay $25 to check a bag, $12 for a sandwich, etc. If amazon's fee is $4.50 they should say so instead of burying a cost almost equal to their quoted fee in fine print.
Edit: also, amazon grants themselves MFN status [1] at the authors' expense. So they exploit their market size to make sure authors can't make up for the kindle being nearly 100% more expensive than competitors.
By "price-match" we mean where we sell the Digital Book in one
or more of the Available Sales Territories at a price (net of
taxes) that is below the List Price to match a third party's sales
price for any digital or physical edition of the Digital Book, or
to match our sales price for any physical edition of the Digital
Book, in any one of the Available Sales Territories.
Amazon charging 30%, then another $2.50 is sketchy, why not just charge 50%, or at least avertise the price as a fixed $2.50 plus 30%? Questionable on Amazons part, without a doubt.
an even closer psychological analogy would be the ticketmaster fees layered atop the face price of a concert ticket. (how it actually works, apparently, is that ticketmaster provides the service of being the "bad guy" so that venues/artists can hike their prices without alienating their customers, but they invent a bunch of crappy itemisations of their fee, leaving people feeling even more ripped off because the charges are transparent bullshit)
The author raises $8K on Kickstarter, sells his book for $10, and is complaining that the 'gorilla' is taking a bigger percentage of the take?
Using his numbers: of 73%/11%/12%/1% his money was $1117/$231/$333/$20 respectively. So he made three times as much money selling through Amazon as he did on the next closest service (PDF).
So what is his complaint? That he didn't read the contract completely? Would he have forgone selling his book on Amazon if he had? Assuming he was trying to get $7/book out of them would he have raised his book price to $15 to pump that price up? And what would that have done to his volume?
Its all well and good to posit that you could store your book on an FTP server at Hurricane electric but how would people find it? How would they read it?
And then why all this angst over the first few months? The kickerstarter [1] only funded in April, here it is June he has his book out, most travel magazines have like a 3 month lead time on their content, plus folks need to review it etc. What was he expecting? And more importantly since this reads like he is hugely disillusioned by the experience exactly why was he expecting what he was expecting? Didn't he 'get' that he could not have published this book at this level of success at all prior to Amazon?
[1] http://www.kickstarter.com/projects/andrewhyde/this-book-is-...