Amazon is Bad for Authors’ Wealth

By James M. Jackson

I have a love/hate relationship with Amazon. They sell more of my books than all other retailers combined. Through KDP (Kindle Direct Publishing), they make it easy to upload and change files. And for that, they never charge a fee. That’s the love.

What they pay me, and their arbitrary rules and the hoops they employ, trigger a strong hate response.

Amazon Prime Pricing

What does Amazon Prime have to do with my writing business? It sets the stage for my argument about pricing. Amazon introduced Prime in February 2005 at $79 for the year. Adjust that price with inflation[i], that would now be about $126. The actual cost is $139. For that 10% real-dollar increase, Amazon added Prime Video (initially without ads, but now I have to pay more to avoid them). Their initial guaranteed delivery of Prime-eligible merchandise is a thing of the past. Although shipping remains free, if the delivery date slips—well that’s life. To summarize: for the 10% increase I now have ad-supported Amazon Video, and less attractive shipping. Let’s call that a fair deal and move on to things that are not fair.

Kindle Unlimited Pricing

Kindle Unlimited is the subscription service that allows members to read unlimited amounts of the content they make available. It began in 2014 at $9.99 a month. Inflation adjusted to the present, that’s equivalent to about $12.85. The price is now $11.99, so Amazon has taken an inflation-adjusted 7% hit.

How Amazon Pays Authors for books read in Kindle Unlimited

For authors’ books to be available to Kindle Unlimited readers, the book must be exclusive to Amazon under a ninety-day contract (called “Kindle Select”) with Amazon’s Kindle Direct Press (KDP). KDP pays authors based on the number of pages of their works KU members read each month. In July 2015 (the first date included in the data published by Written Word Media[ii]), the payment rate was $.005779 per page. KDP counts pages in a way that makes sense only to them. My ~90,000-word novels average 450-500 pages the way they count for KU payments. (The actual paperbacks have far fewer pages.) We’ll be generous and use 500 pages. That means if someone read my book cover to cover in July 2015, KDP would have paid me $2.89. Adjusting that with inflation to today, it becomes $3.72.

The reimbursement rate per page has steadily declined over the years. For December 2023, it sat at $.00437. That same book would now earn only $2.19. In real dollars, they are paying less than 60% of what they were nine years ago.

Amazon will point out that their total payments have increased considerably. Obviously from the math, pages read have increased even more. I assume the growth has been driven largely by the growth in KU membership rather than in the average number of books read per user. Amazon keeps those statistics to themselves, and they alone determine the payout rates. There are no independent auditors making sure things are fair.

They’ve taken a 7% hit; authors have taken a 40% hit. Explain to any author how that is fair.

The 35%/70% royalty payment rate disaster.

Let’s move to how KDP pays authors for eBooks they sell. In the middle of 2010, Amazon unilaterally decided to pay 70% royalties on ebooks, BUT ONLY those priced between $2.99 and $9.99 inclusive. The number of pages in the book doesn’t matter, only the list price. Whether the book has illustrations is irrelevant. I’ve blogged in the past why there is no economic justification for this prejudice against lower and higher priced books. But even if there were, nearly fourteen years have passed. In inflation-adjusted dollars, the range should now be $3.85 to $12.89, but the range has not changed.

Even worse, the range for the US and Canadian markets is the same $2.99 to $9.99. The problem is C$9.99 is worth only US$7.45. And it’s not like Amazon can’t create different ranges for different currencies. For books sold in the Australia Amazon market, the top of the range to receive 70% is AU$11.99 (which converts to US$7.89). Picky? Yes. Frustrating that they don’t even consistently apply their insane rules? You betcha.

How KDP handles free books

KDP won’t allow authors to list free books. (As a “perk” of joining Kindle Select, they allow you to list them for free for five days out of the 90-day commitment.) What Amazon will do is allow anyone (including the author) to report lower prices on other markets. They’ll confirm the price is lower and then match. This is a labor-intensive task.

I have listed for free the first book in my Seamus McCree series, Ant Farm, on Google, Kobo, etc. Every Wednesday I check to see if Amazon still lists Ant Farm for free on each of their country-specific stores. I’d guess four out of five weeks at least one market has stopped price matching and returned to posting the list price. I write KDP an email, give them the Google and Kobo links to the affected markets to demonstrate they are free elsewhere. They always revert the price to $0.00.

My suggestion for a better way

When I sell a book on Amazon, they reduce my 70% royalty by a small delivery charge. For my novels that runs $0.06 to $0.08. For my three-book boxed sets, it runs $0.13 or $0.14. Why don’t they allow authors to list their books for free and invoice them with the delivery charge? They can set up payment systems the same as they do when an author places ads in the Amazon marketplace. Amazon makes more money. It doesn’t have to expand staff to check competitor prices and manually adjust the sales price, and I don’t have to spend five minutes every Wednesday determining which books I have to rattle their cages about.

Alrighty, then. I feel better now that I have expressed my dissatisfaction. I’ll crawl back into my cave and prepare for the launch of my next book (Hijacked Legacy—Seamus McCree #8, releasing 4/22/24).

What do you think? Are my complaints legit or . . . well, you can complete that sentence in the comments.

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James M. Jackson authors the Seamus McCree series. Full of mystery and suspense, these thrillers explore financial crimes, family relationships, and what happens when they mix. To learn more information about Jim and his books, check out his website, https://jamesmjackson.com. You can sign up for his newsletter (and get to read a free Seamus McCree short story).

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[i] I used CPI-all urban consumers, but any index would work

[ii] https://www.writtenwordmedia.com/kdp-global-fund-payouts/