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  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?
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.
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.
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.
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.
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 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.
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.")
If you are willing to pay, saying they are charging too much is just wishful thinking.
In a more competitive, transparent market, I would think others could exploit such dissatisfaction.
If I downloaded an 18MB email attachment over 3g on my phone, while in the US, it will cost me $315.
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.
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.
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.
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.
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!
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.
Otherwise you could have lazy publishers using high resolution images out of sheer laziness and not caring since it wouldn't cost them anything extra.
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).
Edit: also, amazon grants themselves MFN status  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.
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.
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.
Amazon charge $0.15/MB and the book was approximately 18MB in size.
IMO a fair alternative would be an option for the author to disable Whispernet delivery in exchange for a much lower delivery fee. The system is already set up to do that for audio books.
... or alternatively they can download it over Wifi and neither the end user, Amazon or the author should pay for it?
He just has a really big delivery fee.
The cost might be a little high but if you don't like it, you have the choice to take your business elsewhere.
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.
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.
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.
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.
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.
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.
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?
Much like I am also free to call bullshit when I see it.
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.
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 $5 and they could call the fee whatever the fuck they wanted.
Does anyone here know if this is indeed the case?
However, authors who publish heir work through a publisher also don't make 55% royalty, so the author of this blog post is still better off than he would have been.
FWIW, I have heard from a second-hand source that one well-known author is receiving net royalties from Kindle sales that are greater than the Kindle price of his books. I don't know if this is really true, but it rings true; hence my question to the HN community.
A more realistic number might be 15$ for 200 MB with the risk of overage fees = 1.35$ for 18.1MB. Amazon may pay more per MB than you do because of that lack of subscription good for life of the device thing or less, but they also have overhead to track that etc.
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.
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.
That rate is actually pretty good. According to this page,
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.
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.
1 - http://www.thepassivevoice.com/06/2012/amazons-markup-of-dig...
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.
I agree the tone of the article is a little over-victimized though.
That's a new startup idea right there.
He's forgetting about the cost of delivering over a cell phone network.
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.
How do you know the details of AT&T's roaming agreements with Australian carriers?
I know you don't, because your statement is 1000% incorrect.
Which would also suggest you don't get charged a delivery fee to AU customers..?
(updated with direct link to Amazon's royalty page)