Amazon Responds to Competition and Pressure from Publishers

by Brian Rathbone

Standards are often set by industry leaders, and Amazon has certainly set the pace for ebook pricing and distribution in the past, but pressure from publishers and competition in the marketplace seem to have the online retail giant reconsidering its policies.

Amazon and MobiPocket, a property of Amazon, have long paid a 35% royalty on ebooks sold on their platforms. Publishers and authors have often said that the 65% take for the platform was audacious at best.

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With the recent release and success of the Barnes and Noble Nook, along with the realization that a large percentage of Kindle sales are coming from iPhone and iPod touch users, it is no wonder that Amazon would see the iPad and iBookstore as threats to its Kindle sales base. Amazon’s announcement that it will begin paying 70% royalties on qualifying Kindle titles is a sign of the changing times. To qualify, titles must be priced between $2.99 and $9.99, and that price must be at least 20 percent lower than the print book price. There is also some fine print regarding pricing on other platforms, which must be considered. Even with these restrictions, Amazon has made publishing on Kindle far more attractive to independent authors and publishers.

This move could prompt other platforms to raise their royalties as well, since Amazon’s royalty rates are often viewed as the industry standard.

All this competition could result in higher ebook prices for the consumer, but the current trends should put more money in the pockets of independent authors and publishers.

I find myself wondering if the people will not soon demand, by virtue of their spending, DRM-free content. With DRM-free publishing models like that of Smashwords and Podiobooks thriving, might we next see the demise of DRM?

See more about Amazon’s announcement.