

Amazon Digital Markup: 129,000% - dfield
http://andrewhy.de/amazons-markup-of-digital-delivery-to-indie-authors-is-129000/

======
ChuckMcM
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?

[1] [http://www.kickstarter.com/projects/andrewhyde/this-book-
is-...](http://www.kickstarter.com/projects/andrewhyde/this-book-is-about-
travel?ref=live)

~~~
andrewhyde
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.

~~~
zevyoura
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?

~~~
smackfu
Or even "oversize book surcharge". If you saw that on your bill, you'd
probably say "oh gee, I have to make my book smaller to avoid this."

------
droithomme
OK, so for a $10 book, Amazon collects 30% for themselves, which is $3.

For a 19MB download delivered via 3G to a Kindle, Sprint, the wireless
carrier, charges .15/MB, or $2.85/19MB. This is paid to Sprint, not
Amazon.com. The article errors by comparing this fee to the cost for server
bandwidth using S3 to come up with his markup value, but S3 bandwidth covers
the internet only and does not include fees involved with passing through any
sort of cellular network.

~~~
teamonkey
If I were to buy the author's book and download it to my non-3G Kindle over my
own wi-fi connection, the author would still be charged $2.85 for it.

Surely the 3G Kindle owners should be paying for it - and only then if they
use whispernet. Or rather, I always thought they _were_ because the 3G Kindle
touch is $50 more expensive. A cellular radio only costs a dollar or two, I
always figured that most of the $50 price difference represented average
download costs over the expected lifetime.

~~~
mdiep
The article does _not_ say that downloading it over your wi-fi connection will
result in $2.58 in delivery fees. It says that the average delivery fee for
the book was $2.58.

~~~
teamonkey
Amazon apply the fee regardless of delivery method. Check out the link posted
by kennethcwilbur elsewhere in this thread.

[https://kdp.amazon.com/self-
publishing/help?topicId=A29FL26O...](https://kdp.amazon.com/self-
publishing/help?topicId=A29FL26OKE7R7B)

Amazon charge $0.15/MB and the book was approximately 18MB in size.

~~~
sjwright
And that fee would be more reasonable if Amazon allowed authors to provide
optimised versions of their book suitable for e-readers that don't have high
resolution colour screens.

------
fennecfoxen
Personally, I'd be more depressed by something that says "Amazon charges
authors $2.58 to deliver an e-book ( _after_ 30% cut)" than some big fancy
number like that 129,000%. It's more meaningful.

~~~
MBCook
I agree. "Amazon's takes 55% of my ebook sales" or "Amazon's hidden 25% ebook
fee" would have meant quite a bit more.

------
sjtgraham
This is naive as it fails to consider that Amazon has probably made a
considerable loss on the Kindle hardware business to create this market the OP
is lucky enough to participate in. This investment alongside the investment in
their own AWS infrastructure is why there is a reasonably sized market for
ebooks right now. Also how about the cost of cellular data?

The cost might be a little high but if you don't like it, you have the choice
to take your business elsewhere.

~~~
veyron
I think the complaint focused on other costs that were pushed onto the author.
If amazon presented a larger cost structure (increase their per-unit charge)
but covered costs like content delivery, I don't think the author would have
as much of a problem.

------
tylerneylon
Some commenters say the post is wrong to complain when the author is making
money through amazon's distribution, or when amazon takes a loss on selling
kindles.

I disagree with both sentiments.

Main point: It does not cost amazon an average of $2.58 to deliver the
author's pdf. Amazon is being dishonest by calling this a delivery cost. I
consider it unethical to name a fee something that it is not.

"Be grateful for what you do get" is not a valid argument against dishonesty.
If Amazon makes a business decision to take a loss on kindles, this also does
not justify dishonesty.

~~~
nandemo
It's called "delivery fee", not "delivery cost". It makes no sense to require
a business to charge fees solely based on variable costs.

------
stickfigure
Consumer here. What I don't like about this absurd per-megabyte price is that
it discourages authors from including quality pictures in their books.

This finally explains why the Kindle version of some books I've bought were
garbage. In particular, I was enormously disappointed with Lonely Planet books
- the maps are poor quality and split out among several pages so it's almost
impossible to find anything. It was a terrible mistake not to buy the PDF.

Between the awful maps in Lonely Planet and the absurd number of OCR glitches
in _Modern Times_ , I've spent my last Kindle dollar.

~~~
danmaz74
Completely agree on this. Moreover, the price of a Kindle book is often HIGHER
than for the printed version, which is outrageous, especially because of the
poor quality of the layout of many kindle books layouts.

------
gfodor
The separation of "service fee" and "delivery fee" is disingenuous, you are
basically paying amazon 50% for the use of the marketplace. If you think it's
an unfair price, don't put your book in the marketplace. If you think it's
fair but deceptive, say so, don't pretend like it's deceptive _and_ unfair at
the same time.

Complaining about a 50% margin for Amazon when they have basically created the
entire ecosystem for ebooks feels a bit like complaining about the large
markups on pharmaceuticals to make up for the millions are poured into R&D.

------
mark_l_watson
I don't get his complaint. I have written books for Springer-Verlag, McGraw-
Hill, J. Reilly, Apress, etc., etc., and I am used to seeing 10% to 15%
royalty.

About 50% royalty from Amazon seems pretty good, but regular publishers
provide a lot of help producing a book.

Publishing books with Apple's AppStore also looks pretty good.

It is all good(!), one just has to appreciate having multiple markets
available and choose which ones you like.

------
balloot
This post is ridiculous. Amazon has spent billions upon billions of dollars
building and maintaining a ridiculously efficient delivery system for
electronic content. THAT is what the markup is paying for.

And from a common sense standpoint, if Amazon were really charging the crazy
markup this guy claims, then some other company would mark up a mere 1000% or
whatever and massively undercut Amazon's offering. Given that this hasn't
happened, it is pretty safe to assume that the true costs are much higher than
his math suggests. Either that or other companies have just ceded massive
eBook profits to Amazon out of the goodness of their hearts. I'm going to
guess it's the former.

~~~
Karunamon
$3 to transmit 15 megabytes is fucking absurd, regardless of the delivery
medium. Full stop, end of story.

~~~
balloot
It's not $3 to transmit a file. It's $3 to:

Design a great UX

Handle Credit Cards safely

Give you access to a robust infrastructure that won't crash

Market the site

Build and research a top quality e-Reader

Build data centers all around the world

etc etc etc

Bottom line is the guy made WAY more selling with Kindle/Amazon than with any
other format, even given their large cut. That didn't just happen by magic. He
is free to sell only with other vendors and make less money if Amazon's fees
upset him so much.

~~~
Karunamon
No, it is indeed $3 to transmit a file. They even call it a "delivery fee".
Consider that the percentage cut they take should cover all of the above.

I can get a physical pizza delivered for less than Amazon charges to send me
an electronic file. That's just messed up.

Hell, I can get physical goods delivered, from Amazon, with 2 day shipping,
for less than they charge to send an electronic file! And how much do you want
to bet that the infrastructure involved in sending me physical goods is a lot
more expensive and finicky than the infrastructure required to blast a file
out over 3G?

~~~
balloot
If it bothers you so much, you are free to not use Amazon. It's not like they
have a monopoly in the eReader market. What exactly am I missing here?

~~~
Karunamon
>you are free to not use Amazon

Much like I am also free to call bullshit when I see it.

------
bradmccarty
This is a pretty huge piece of free advertising for Gumroad and its ilk. I
know Andrew, and I know he's put his heart and soul into this book. It's a
downright shame to see Amazon taking that size of a cut for self-published
works.

------
cs702
I strongly suspect Amazon is offering well-known, "must have" authors a much
better deal -- possibly even losing money on sales of some of their books --
and making it up by giving a raw deal to less-well-known, independents like
Andrew Hyde, the author of this blog post.

Does anyone here know if this is indeed the case?

~~~
notatoad
The well known must have authors don't self-publish directly on amazon, they
have publishers who handle all that sort of negotiation for them. And part of
that negotiation surely includes talking amazon down on the delivery fees.

However, authors who publish heir work through a publisher also don't make 55%
royalty, so the author of this blog post is still better off than he would
have been.

~~~
cs702
notatoad: I didn't write or even imply that well-known authors self-publish.

FWIW, I have heard from a second-hand source that one well-known author is
receiving net royalties from Kindle sales that are greater than the Kindle
price of his books. I don't know if this is really true, but it _rings true_ ;
hence my question to the HN community.

~~~
notatoad
you said that amazon is offering deals to authors. my point is that amazon
doesn't interact with well-known authors, they interact with those author's
publishers. if any author receives better royalties than the kindle price of
their books, it may be because their publisher is receiving even more money
from amazon, or it may be the publisher that is taking the loss.

------
jrockway
It's not 129,000% markup. You're paying for outgoing bandwidth (at S3 prices)
and you're paying for the Kindle's incoming bandwidth, which could be over an
internationally-roaming 3G network. Yes, it's dumb that Amazon charges authors
and not themselves, but would you prefer they take 40% instead of a fixed $2?

~~~
brazzy
Realistically, how many downloads are really done via international 3G
roaming? Much less than 1% I would suspect. And while it's true that there are
some plans with absurdly inflated roaming costs that could still drive up the
overall average to $2+, it would be beyond incompetent for Amazon to agree to
such plans for their Kindles.

One factor that nobody seems to have mentioned so far: was this massive
delivery fee in any way knowable to the author beforehand? I'd consider it a
bit disingenuous of Amazon if they hide it.

~~~
jrockway
My guess is that you're not paying a lot for each bit transferred
internationally, you're paying for the ability to be able to download content
internationally. (Authors may be subsidizing the devices, as well. It makes
sense, though; if Kindles were less ubiquitous, how much money would you make
selling e-books.)

It's kind of like complaining that your ISP charges you the same monthly fee
even if you don't download anything. The charge is for having the ability to
transfer bits, not for each bit transferred.

I guess the complaint is that Amazon transfers much of their financial risk to
authors via a $2 delivery fee. All I know is that I wrote a traditionally-
published book and saw about $5 for every $40 the publisher charged. I would
gladly take $38 instead of $5 and they could call the fee whatever the fuck
they wanted.

------
tlb
The pricing scheme may explain why so many Kindle books have crappy lo-res
images. Text is small (the whole bible is 5 MB == $0.75 delivery charge) but
quality images, like in the travel book in the article, bulk it up.

------
pilom
If you use the end user cost you can get a high end estimate for total cost of
3g service. $30 for 2GB of data makes $0.015/MB * 18.1 MB file makes for a
total cost to user of $0.27 for delivery.

~~~
cperciva
The fact that you can get 2 GB of data for $30 doesn't mean that you can get
18 MB of data for $0.27. Most people paying $30 for a 2 GB data plan are using
far less than 2 GB of data.

~~~
pilom
Very true, but the fact that the author is paying a distribution fee an order
of magnitude more than the $.27 seems pretty fishy.

~~~
robryan
Doesn't amazon promise delivery to anywhere in the world? These high prices
might be subsidising places with crazy high data rates.

------
shalmanese
Why not make it $10 on Amazon and $9.50 on all the other services. That way,
people who are indifferent will go for the service that nets you the highest
margin while people who prefer kindle won't care that much about the price
differential.

Personally, I'm pretty much indifferent to iBooks vs Kindle since both are
just apps on my iPad. If they're both $10, I choose Kindle simply because it's
a bigger brand name. If there's even a tiny price differential, I'll choose
the iBooks.

~~~
pja
You can't. Amazon reserves the right to drop the asking price on your book to
the lowest price listed anywhere else. ("Most favoured nation status" is the
term used to describe this kind of clause in a contract.)

~~~
vellum
An alternative solution might be to just sell DRM-free pdfs, mobis and epub
files on a non-Amazon service, since most people hate DRM.

------
evanprodromou
Can the market beat this? Or is the gravitational pull of the giant Kindle
market too great?

~~~
alanfalcon
Step one is to make this cost transparent to people considering selling via
Kindle (and to readers who care about this sort of thing). I'm preparing my
first novel for sale right now. It's a novel, not a travel book, so I'm
basically just delivering a cover image and text so I would expect my
"delivery fees" will be much lower, but I didn't even realize that it would be
in the realm of possibility that delivery fees would add up to any kind of
significant expense. How could I know? Amazon doesn't advertise this anywhere.
So we need blog posts like this in order to inform authors so they know that
there's strong incentive to look into the other markets.

------
tytr
This kind of thing only works when users looking for "ebooks" are channeled
through Amazon. Paid placement on Google may help them in that regard. What
happens when users learn they can download ebooks elsewhere?

It's nonsensical to pay a fee for distribution when the distribution channel
is the internet.

Project Gutenberg's and Archive.org' ebooks are better than this e-paper or
super hi-res screen nonsense. Reading books on these devices is dog slow and
awakward. It is just text. It should be searchable using Boyer-Moore
algorithm. Fast. searchable ebooks.

------
prbuckley
It seems like the telco's are the ones making out here. They charge Amazon
some ridiculous fee to deliver the content and they charge the consumer for a
data plan for the device.

~~~
dangrossman
Most Kindle purchases are coming from a Kindle, which never has a consumer
data plan. 3G Kindles' cell usage is paid by Amazon.

~~~
kennethcwilbur
At [https://kdp.amazon.com/self-
publishing/help?topicId=A29FL26O...](https://kdp.amazon.com/self-
publishing/help?topicId=A29FL26OKE7R7B) it shows that the delivery charge in
the UK for a 18.2MB book is $2.82.

That rate is actually pretty good. According to this page,
[http://www.wireless.att.com/learn/international/roaming/affo...](http://www.wireless.att.com/learn/international/roaming/affordable-
world-packages.jsp#data) AT&T sells a 120-MB international roaming data
package for $30/month. That implies an effective download charge of $4.55 for
an 18.2-MB file.

Now if Amazon's data charge is $2.82 in the UK, where they do significant
volume and the wireless market is competitive, imagine how much higher it must
be in less developed countries where the company has less pull. I got charged
approximately $800 for 40 megabytes of data usage in Lithuania last year,
where AT&T did not have a partnership with any local carrier. I talked AT&T
down to about $400 but they would not budge beyond that.

And think about the target audience for this book. Probably a lot of people
spread out all over the world. It might not take all that many downloads in
places like Lithuania to push the average delivery fee up to $2.48.

The only problem I see is that, arguably, Amazon should give authors the
ability to opt out of paying for international downloads, or let them set
different prices in different countries.

But it seems that the current delivery charge is pretty good - certainly it's
not the enormous markup the headline claimed.

~~~
pja
The author is charged the delivery cost whether the delivery happens over 3G
or Wifi.

Personally, I doubt the cost to Amazon to deliver the average e-book is
anywhere near their quoted rate. If they wanted to charge separately for 3G or
wifi delivery I'm sure they could do so: they have simply chosen not to.
Possibly it's simply inertia: the original Kindles were 3G only IIRC, so they
would have had to pay steep costs themselves for data delivery back then for
all downloads. Now they've discovered that authors are willing to eat those
charges, why change them?

The consequence of course is that it's uneconomic to sell image-heavy works
through the Kindle platform, despite the move to wifi delivery & full-colour
tablet Kindles which could exploit them to their full potential. Even books
like the OPs find a huge chunk of their profit margin swallowed up by these
delivery charges.

------
tvorryn
Most US authors pay only a few cents per delivery. [1] Books with lots of
images can become expensive but it seems like the images are likely
unnecessarily big for an ebook, and that is why his costs are so
disproportionately large.

1 - [http://www.thepassivevoice.com/06/2012/amazons-markup-of-
dig...](http://www.thepassivevoice.com/06/2012/amazons-markup-of-digital-
delivery-to-indie-authors-is-129000/)

------
benholmen
I'm curious if anyone has experimented with educating potential customers
about the fees associated with each delivery option. For example:

1\. Buy on Amazon.com for $9.99 (I earn $5.10)

2\. Buy on iBooks for $9.99 (I earn $7.00)

3\. Buy a PDF for $9.99 (I earn $9.25)

If I felt any connection or goodwill toward the author (highly likely) I would
be inclined to pick the best option for me _and_ the author.

------
xbryanx
You've gotta divide by the usability factor of a digital book, which I'd
loosely equate to a value of 3.26 times print. Still the markup is sorta
ridic.

------
mahyarm
How about re-downloading books several times over over roaming 3G for the
lifetime of the user? I don't think it's a one time delivery charge fee.

------
jchavannes
I don't like the AWS pricing either (or at least how it's communicated). I
have considered AWS but no matter how much time I spend looking at their
pricing, I can't figure out how much I should expect to be charged each month.

I agree the tone of the article is a little over-victimized though.

------
mikecane
The delivery fee is not hidden. I found it right away when I was investigating
digital comics and why so few are available via Amazon. That fee is why. We're
not bound to see comic fanzines in digital form via Amazon explode as they did
with mimeo and ditto. Bit of a shame.

------
pbreit
Two misconceptions: 1) services are properly priced at what the market will
bear, not the cost to deliver them. 2) Many Kindles get their content over a
regular cellular network which the Kindle owner does not pay a monthly fee.

------
bootload
_"... Don’t buy my book on Amazon. Or do buy it. Or don’t. I could sell the X
through Y ..."_

That's a new startup idea right there.

------
xxpor
ctrl+f whispernet 0 results found

He's forgetting about the cost of delivering over a cell phone network.

~~~
freerobby
If you actually read the article you'll see that he addresses this and that it
applies to wifi purchases.

~~~
xxpor
But there's no difference from amazon's perspective, because once you bought
the book, you can download it over 3g at any time, multiple times.

~~~
freerobby
There is no way that the average purchase costs $2.50+ to deliver, even
amortized over the lifetime of the book.

Amazon can charge whatever they want; I just think they should be transparent
about what people's net pay will be. It's disingenuous to advertise that you
take a 30% cut plus "delivery costs," and then mark up the "delivery costs" to
over 25% of the average book price. Apple uses a similar paradigm (processing
fees do not come from their 30%), but they only deduct the _actual_ processing
fees.

~~~
bemmu
Maybe kindles are manufactured at a loss and these delivery fees are then part
of the device cost?

~~~
takluyver
But that's not a "delivery fee", which makes it kind of dishonest. Amazon
already take a fixed 30% cut, which ought to include any subsidy on the
devices.

------
stevewilhelm
The author doesn't mention if the delivery fee includes the credit card
transaction fee.

------
ThomPete
Sms 150.000 times Voice 1500 times

------
h1bsearch
Check how much Amazon pays to its employees

[http://www.visasquare.com/visa-greencard/salary/amazon-
corpo...](http://www.visasquare.com/visa-greencard/salary/amazon-corporate-
llc-324660.html)

------
cheatercheater
Mathematician here. Anyone care to clarify how he came up with 129,000%? That
is, one-hundred twenty-nine _thousand_ percent? I'm not good with numbers.
Thanks in advance.

~~~
ricree
He's comparing the stated delivery fee to Amazon's S3 costs for outgoing data,
which he says costs $0.01 per 5 books.

~~~
smackfu
Of course, if he had a 50 kB book that had a $0.01 delivery fee, it would
still be the same percentage markup, but he wouldn't care. So I question
whether percentage is useful here.

------
bcl
These fees are part of the 70% royalty deal he signed up for. See
[https://kdp.amazon.com/self-
publishing/help?topicId=A29FL26O...](https://kdp.amazon.com/self-
publishing/help?topicId=A29FL26OKE7R7B)

(updated with direct link to Amazon's royalty page)

