Does Amazon Control Your E-Book Price?

In the microcosm that is e-book self-publishing, there’s a lot of passionate discussion about the companies that provide marketing and distribution tools. That discussion centers around Amazon, of course, because Amazon’s set the lowest barriers to entry for its storefront–a few clicks, and you’re “published”.

Yesterday, a post on the SFWA website by sci-fi author Jim C. Hines caught my attention. I can’t recommend it highly enough to authors who use Amazon (and he’s posted more thoughts here). Hines describes his recent experience with Amazon e-book pricing, starting with this:

A certain champion of self-publishing recently decried all of the “whiny bitches” complaining about Amazon, and argued how Amazon treats authors so much better than commercial publishers.

While there are certainly advantages to Amazon’s program, anyone who thinks Amazon is in this to help authors is a fool. Amazon, like pretty much any other business, is in this to make money.

That champion, of course, is the effervescent Joe Konrath, described by Paul Jessup as the “Fox News” of the publishing industry.

So what happened? In short, Amazon repeatedly reduced the prices of Hines’ self-published e-books. When he pointed out they’d made a mistake?

I’ll give Amazon credit – the Kindle Direct Publishing (KDP) team responded to me fairly quickly, and restored the price to $2.99 by Valentine’s Day. But they also pointed to section 5.3.2 of the current Amazon/KDP Terms and Conditions, which gives them:

…sole and complete discretion to set the retail price at which your Digital Books are sold through the Program.

I think that’s worth repeating: Amazon has sole and complete discretion to set the retail price of your self-published Kindle e-book. That’s right: just like your local supermarket, the price you set for your product is a suggested price, not a fixed one.

Hines had an increasingly common experience: he got caught in the confluence of Amazon’s terms and conditions, its price-matching scheme, and the difficulties of getting support from a large corporation.

But it gets worse, illustrating a key difference between “traditional” and “self” publishing:

Amazon can calculate royalties based on the sale price, not your list price.

With my DAW books, if a bookstore offers a sale, I still get my royalties based on the cover price. Amazon is selling Libriomancer for pre-order at almost half-off, but I’ll get paid my full amount for every copy sold. Not so with self-published titles. Looking at my reports for last week, my royalties were slashed by 2/3 for every copy sold, because Amazon paid me 70% of the $.99 sale price, not my list price.

If a retailer pulled a stunt like this with one of my commercially published books, DAW/Penguin would stomp them. If DAW tried something funny in my royalty statements, my agent would be all over that crap.

But self-publishing puts you in charge of every aspect of your career. Meaning when Amazon messed with one of my books, it was on me to challenge them and get it fixed. They did restore the price, as I said, but what exactly would I do if they said “Deal with it.” Sue them? That’s theoretically an option, sure … but I still remember how much it cost, in time and money and energy, the last time I had to fight a court battle.

People in large-scale variety retail will instantly recognize this arrangement: Amazon uses every product it carries to help sell other products. Your book’s price isn’t necessarily changed because of poor sales or a lower competing price; it’s chiefly done to help promote and sell other retail products–like the Kindle.

In supermarket terms, Amazon might decide to either (a) use your book as the end cap loss leader, or (b) mark it down and put it next to a product they really *do* want to move. And like supermarkets, Amazon typically does this with slow-moving, low-volume, inexpensive products–which is the majority of self-published e-books.

When I recently self-published my own book, I read the KDP Terms and Conditions carefully, several times. If you self-publish, you’ve got to read and become familiar with these terms today.

Update: It appears that the Science Fiction & Fantasy Writers of America are getting fed up with Amazon and its treatment of IPG, and are redirecting their sales links elsewhere.

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