Monday, November 7, 2011

Question on Lending - Bottom line: writing tip

Question from Elizabeth Eagan-Cox: I noticed this week that on Amazon's home page, they have a notice regarding their new feature: "Kindle Owners' Lending Library". How will this impact our book sales and profits?

Elizabeth also included the text of Amazon's message to customers below:

Today we're announcing a new benefit for Kindle owners with an Amazon Prime membership: the Kindle Owners’ Lending Library.

Kindle owners can now choose from thousands of books to borrow for free, including over 100 current and former New York Times Bestsellers — as frequently as a book a month, with no due dates. No other e-reader or e-book store offers such a service.

Answer: There is currently a big brou-ha-ha about this decision on Amazon's part as if none of us ever heard of the concept before. But years ago, in a letter that went out with our authors' payment checks, I mentioned that Amazon was doubling (yes, that's right, doubling!) their current royalty fees to authors who would allow future lending of their books. If they didn't want to "lend" later, authors and publishers had to notify them immediately.

The difference between 35% and 70% being obvious, I said I planned to take advantage of the increased royalty and to let me know if they disagreed so I could opt their titles out. No one objected.

In fact I had several e-mails from authors wanting to know if I was aware of it and "on top of" getting them the increased fees. Why the increase? Several other stores were already paying 70%. Amazon decided to meet their price, because they wanted publishers to list books with them and to make certain their inventory was as wide as possible, and they weren't left out as a market in favor of stores that paid a higher royalty rate, especially as the release of the first Kindle reader was imminent.

Amazon pays 70% royalties on all Kindle books sold in the US, 35% for foreign sales, and they have been paying that for years, all the while promising Kindle owners that e-book lending was coming. Now they've posted a notice that it's here, and it's a Big Surprise?

So what's the bottom line?** Say, Amazon pays 70% royalty, on a book that costs 6.50, a total of $4.55 gets paid to you and your publisher. Publisher and author split that 50/50 and each of us gets paid $2.27.

How does this compare to an e-book sold by a mass-market publisher with hard backs on bookstore shelves?

Most mass-market Standard Publisher's Contracts pay the authors 15% of the retail price for hard cover and e-book prices. A new e-book from a mass market publisher usually sells for around $14.99. Fifteen percent authors' royalties on that is $2.25.

So at 70% payment, if they sell one copy, and lend one copy out for free -- you are still even with the original 35% payment.

**Amazon and other bookstores pay a percentage of what they COLLECT, and often discount books to special interest groups, book clubs, readers' groups and so on. So the figures given above for the list price, may not reflect your exact payment on every sale, but authors ALWAYS collect 50% of royalties paid to us from outside sales venues.

What does your publisher do for their share? I can't speak for other publishers, but this one edits the copy, prepares the files for publication and distribution, assigns an ISBN, Typesets the manuscript, does the page lay-out, and designs the cover. We also invest the salary of employees and pay any fees involved, all without cost to the authors.

We then convert the files to the needed formats sales venues' formats and upload to online bookstores for you, making your book available in digital stores in formats ready to run on the many different e-book reading devices.

We then check on each of nine sales venues to keep track of sales, extract sales data, and compute amounts due. They pay you every cent due, every quarter. They prepare W2s for you, and any other authors whose earnings mount high enough to require them, for the IRS.

Now most of the discussion I've read on the publishers', authors' and industry lists has not adequately taken into consideration that to "borrow" a book, the customer must be a member of Amazon Prime. NO ONE can borrow unless they Sign Up for Amazon Prime! Bottom line: This is a SALES GIMMICK! And that's all it is.

What is Amazon Prime? Let Amazon answer that...

"Amazon Prime is a membership program (like other buyers clubs, you pay to belong to) that gives you and your family unlimited fast shipping, such as FREE Two-Day shipping and One-day shipping for $3.99 per item on all eligible purchases for an annual membership fee of $79!"

Members who own Kindle devices can also choose from thousands of books -- including more than 100 current and former New York Times Bestsellers -- to borrow and read for free, as frequently as a book a month with no due dates, from the Kindle Owners' Lending Library.

That sounds like you're getting to borrow thousands of books, until you read the part about "one per month! "

So, bottom line, to ever "borrow" a free book, the customer must be a Member of Amazon Prime, and must be a Kindle Owner, and if they meet both criteria, they can "borrow free" ONE BOOK per month! Or Twelve in a year!

My advice, Elizabeth, is to look at all this as a free promotional opportunity. Get on Facebook and Twitter and advise any Amazon Prime customers to "borrow" a free copy of GHOST OF A CHANCE, the first in your series. If they like it, they might actually BUY the rest before the month is out.

I'm serious. As a happy Kindle owner, though Not an Amazon Prime Customer, I can tell you that the best part of my Kindle is Instant Gratification.

In the old days, BK (before Kindle), I would see a book mentioned on TV and think that's interesting. Then six months later, when I happened into a bookstore (a 68-mile drive from my home), I might see it and pick it up. Or a year or so later, when it came out in more-affordable paperback, I might buy it at Wal-Mart or the supermarket, if they had it, and if I remembered.

With my Kindle, I can see an author on a morning show, push the button, and the book downloads automatically into my Kindle, before the next commercial is over. I did this last Friday and finished the book on Saturday morning. Enjoyed every minute of it, too! Also the Kindle price is comparable with a paperback and MUCH less than the hardcover price...

So use this opportunity and don't listen to all those sour-grapes people who are shouting, "AMAZON IS OUT TO STEAL YOUR WORK AND CHEAT YOU!"

That's just not true. Amazon is in business to make money for Amazon! They don't care about you and me, they care about their customers and making money. Period. And, usually, when they make money: we make money, too.

To Amazon, we are simply product suppliers. To US, they are a door marked, "Opportunity."

1 comment:

  1. No one has yet commented here, but several people have e-mailed me privately to complain about my tone yesterday. To tell me my statements about Amazon Prime were not correct (I do stand behind them.). And to repeat mis-information they are hearing on networking sites.

    I didn't mean to sound grumpy to Elizabeth, or to sound disrespectful to any of you. Please accept my apologies.

    Simply stated, all Publishers were warned, when Kindle was first implemented, that this was coming and that to accept the 70% royalty automatically granted lending permission on any books already listed at

    I received three notifications at that time, one for, one to Write Words, Inc., and one to Cambridge Books, so I know that every publisher on their business list got one.

    Sure, some of today's publishers were not yet in business then, but all those who upload books for sale are forced to choose the royalty amount, and in order to choose the 70% royalty, you have to pass on a checked box that says:

    _x_Allow lending for this book.

    If you unmark on that box, you get 35%. If you leave it alone, you get 70%.

    So everyone has a choice whenever a title is put up for sale and anyone who says they were not notified, did not read the details.

    Yes, I can still uncheck that box at any time. So if any author contacts me by e-mail, saying seriously, "I'd like to make less money on my royalties from Amazon," I might not be happy, because I, too, would make less money, but it could still be unchecked.