Amazon Digital Markup: 129,000% | Hacker News Reader

Amazon Digital Markup: 129,000%

andrewhy.de

241 pointsdfield138 comments

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-...

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.

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

Agreed.

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.

You can actually choose to just be charged 65% in the first place.

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 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).

"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."

That's what the 30% markup is for...

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.

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.

Awesome book btw, careful with this though:

"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?

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."

Did you consider Lulu.com when you were deciding where to publish?

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%.

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

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.

It seems to be the delivery fee is setup as a way to encourage publishers to keep their books to a reasonable size.

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.

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).

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.

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.

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).

The terms are plainly outlined in this table right here, which I found after 10 seconds of Googling:

https://kdp.amazon.com/self-publishing/help?topicId=A29FL26O...

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.

"kindle direct publishing calculator" and it was the first hit for me.

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.

Just to clarify, it is only 25% of this particular book. Sounded to me like the delivery charge was fairly independent of the cost of the book.

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.

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.

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.

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.

> 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?

> They are trying to run a for-profit business.

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.

But if the masses are made aware of the potential for a better deal, might not their willingness to accept such a price decrease?

In a more competitive, transparent market, I would think others could exploit such dissatisfaction.

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.

On an e-ink kindle.

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.

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.

> 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).

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

If I downloaded an 18MB email attachment over 3g on my phone, while in the US, it will cost me $315.

You pay Amazon to put it on the Kindle store, not for the storage.

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.

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.

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.

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...

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

I don't particularly approve of their pricing, but to be fair the book could be downloaded many times over 3G in the future included in that initial delivery cost.

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.

> Surely the 3G Kindle owners should be paying for it - and only then if they use whispernet.

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.

I am confused as to why the author of the book paying for the download of the end user in the first place? If the end user decides to download it via 3G it should either come out of their existing data allowance or be billed to their phone bill...

... or alternatively they can download it over Wifi and neither the end user, Amazon or the author should pay for it?

What you're missing is that the kindles' 3G is not paid for by the user. It's free and comes with international roaming, something that carriers tend to charge an arm and a leg for.

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.

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

Actually, it seems like the delivery fee reduces the effective retail price of the book, like: royalty = 70% x ($10 - delivery fee)

He just has a really big delivery fee.

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.

So the $2.85 delivery isn't so much the digital download but the digital download + the kindle subsidy.

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.

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.

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

So many commenters seem to see the $2.58 as Amazon saying "this is what it really costs us". I'd think it means something more like "this is punitively high so please make your book smaller."

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.

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.

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.

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.

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.

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

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.

and what is amazon's percentage cut of the price for?

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?

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?

>you are free to not use Amazon

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

Distribution platforms are not free, and Amazon is thought to sell the kindle at a loss.

No it is just a tiered pricing model. Either get 35% royalties and no delivery fee or get 70% and pay those very high fees. Almost all the things you include in the list apply to both pricing models.

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.

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?

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.

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.

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.

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?

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.

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.

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.

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.

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.

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

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

Sure, on paper you get 2GB for 30$, but really your paying 30$ to be part of a pool of people that use below 500MB on average and some of them pay a lot more than that in overage feels for downloading 2.01+GB.

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.

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.

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.)

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.

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

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.

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.

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.

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

At https://kdp.amazon.com/self-publishing/help?topicId=A29FL26O... 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... 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.

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.

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...

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.

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.

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.

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.

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.

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.

"... 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.

ctrl+f whispernet 0 results found

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

Over a cell phone network a user would pay about $0.27 to download a 18MB file. There is no way an author should have to pay an order of magnitude more.

What if you have a US kindle in say, the deserts of Australia? It's going to cost a LOT more than $.27. I mean a LOT.

Wrong - most deserts of Australia don't have any 3G access. But anywhere in Australia with 3G access (i.e. populated areas) all have the same data tariff, which is comparable to the US price.

>But anywhere in Australia with 3G access (i.e. populated areas) all have the same data tariff, which is comparable to the US price

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.

I would assume Amazon can negotiate with local carriers in each region, rather than paying through a US carrier for data sent to Australia.

That would require a magical sim swap while the kindle is in transit.

Where did you read that? On my reading of the terms (and being an AU resident) I'm pretty sure whisper net doesn't exist in Australia.

Which would also suggest you don't get charged a delivery fee to AU customers..?

https://kdp.amazon.com/self-publishing/help?topicId=A29FL26O...

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

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.

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.

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

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.

What does Apple typically charge in processing fees on top of their 30%? I’ve tried to find some information on this, and every source I’ve found says they only charge the 30%.

It's 30% plus the payment processing fees. It varies because Apple is clever about charging multiple purchases at once (which works to your benefit), but it's closely in line with processing PayPal, SimplePay, etc.

3g charges can be pretty hefty...

Looks like your ctrl+f isn't working.

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

Sms 150.000 times Voice 1500 times

Check how much Amazon pays to its employees

http://www.visasquare.com/visa-greencard/salary/amazon-corpo...

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.

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

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.

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

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

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