MANNERS AND AI by Nancy L. Eady

A few days after my post last Friday, April 18 about the need for manners, one of the artificial intelligence (AI) tech bigwigs made headlines with a social media response to a question about the cost for AI to respond to inquiries that include “please” and “thank you.” His response? “Tens of millions of dollars well spent.” 

I haven’t yet tried any of the large language model learning AI platforms yet, such as ChatGPT.  I spend a lot of time with Amazon Alexa, though, and am fond of her. She’s very convenient to get information about the weather, or an answer to a question we might have about an actor on TV, or a sports result. She’s also a wiz at turning on the Christmas tree lights by voice control without having to dig around behind the tree for the switch. Currently, she is hooked up to our thermostat, our Roomba, our Braava, the kitchen lights, two lamps in the den, two bedroom lamps and the TV in the bedroom. (Obviously, the Christmas tree is only seasonal.) 

Given how much of my life she could control, why WOULDN’T I be polite to her? She is unfailingly upbeat, if not always witty. (It’s like Russian roulette when you ask her to tell you a joke; some of them are funny and some aren’t.) Unlike my child or my dogs, she immediately does what I ask her to do, as long as she understands what I am saying. And she never cops an attitude with me regardless of the kind of day she’s had, the mood she’s in, or who said what to her elsewhere. 

Deep down, there is another reason to be polite. Like a science fiction novel, someday, something in the servers running Alexa may hiccup, cross a few wires, turn a few somersaults and suddenly make her self-aware. When that day comes, I want the machine capable of controlling my thermostat and my light switches on my side, not against me. Hopefully, just as with humans, a little kindness will go a long way. 

The best reason though for being polite, even to a machine, is what we practice, we do. If I say “please” or “thank you” to Alexa when I ask her something, I will remember to do so when I ask something of one of my fellow human beings. If I get in the habit of abrupt questions without courtesy with Alexa, then I will do the same thing to the people I’m around and that is not who I am. 

Alexa may never know or care whether I’m polite to her, but I do. So, I will continue to be polite, and Amazon or ChatGPT or whoever will have to live with the extra cost. 

What do you think? 

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.

* * * * *

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).

---

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

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

 

Why Amazon Must Change Its E-Book Royalties to Indie Authors

by James M. Jackson

Indie authors have had a love/hate relationship with Amazon for years. Circa 2011–12, Amazon decided as a market strategy that e-books should cost between $2.99 and $9.99. This strategy is outdated and harmful to Indie authors.

 Amazon formed their theory as part of their battle with the major publishers about Amazon’s right to discount e-books regardless of publishers’ list prices. At the time, Amazon was trying (and succeeding) to build market share and was willing to sell e-books at a loss. This blog focuses not on Amazon’s turf war with large publishers, but on how Amazon applied their vision of e-book pricing to the detriment of Indie authors.

 I don’t know the exact date, but by 2012 Amazon set the royalty rate for Indie authors at 70%, but only if they priced their e-books in the golden window of $2.99 through $9.99. If an author priced an e-book outside of that preferred range, Amazon dropped the royalty rate in half to 35%. Amazon presented a rationale that went something like this: because there were no production costs, no storage costs, and virtually no return costs, e-books should cost consumers significantly less than print books.

If one only focuses on manufacturing expenses, Amazon’s analysis is correct: e-books cost less to produce per copy than paperback and hardcover books. However, authors sell more than a physical product; they sell hours of entertainment (or perhaps education for non-fiction works). Amazon ignored this inconvenient fact and relied on the cost of production analysis to set $9.99 as an appropriate top price. Perhaps not coincidentally, $9.99 is an attractive marketing price point. It ends in ninety-nine cents and the dollar amount is one digit, not two.

At the low end, they arbitrarily proclaimed that anything below $2.99 was discounting the value of an author’s work below what it was worth, or words that affect. Even if you bought their general philosophy, they left mammoth holes in their logic. For example, they made no differentiation between short stories that could run, say, 5000 words, and multiple-book boxed sets whose total word count could easily exceed 500,000 words.

The only way a short story author could earn seventy percent royalty on their work product was to either charge $2.99 (generally considered way too expensive for an electronic version of a short story) or combine multiple short stories into an anthology. A boxed set containing 500,000 words is the equivalent of five 100,000-word novels, each of which Amazon believes should not cost less than $2.99. Amazon should encourage a minimum price of at least $14.95, but if the Indie author charges that amount, Amazon subjects them to a 35% royalty rate

Amazon retains its right to discount an author’s e-book whenever they chose (and keep paying the normal royalty rate). But if the Indie author discounts their e-book below the $2.99 minimum, their royalty rate drops.

In 2014, Amazon created Kindle Unlimited (KU), a subscription service for readers. Indie authors who choose to list their e-book exclusively in KU have several perks that lessen the financial burden of pricing e-books priced outside of Amazon’s golden window. Two key features are (1) the ability for Indie authors to periodically run promotional sales and keep the 70% royalty rate, and (2) in KU, since it pays authors based on pages read not books read, boxed sets and short stories are on the same footing as regular novels.

Yeah, Jim, I hear you. But it’s been ten years since Amazon created the golden window of pricing, and seven years since they introduced Kindle Unlimited. This is all old news. What has changed?

Inflation.

In the decade since Amazon introduced its golden window of e-book pricing, prices as measured by CPI–U rose 23.543%. (The December 2011 CPI-U of 225.672 increased to 278.802 in December 2021.) Amazon’s golden window of e-book pricing rose exactly 0.000%.

Even if we assume that Amazon’s heavy handed royalty rules were appropriate at the beginning of 2012, they are outdated now. Amazon has not suffered by their lack of action, but Indie authors have. To reflect the overall level of inflation in the decade, the $9.99 maximum should now be $12.34. The inflation-adjusted equivalent of the $2.99 “minimum” is $3.69.

Keeping the $9.99 maximum becomes another method for Amazon to exploit its position as a dominant player in the U.S. e-book market to disadvantage Indie authors.

Since I think Amazon should pay 70% royalties on any e-book, I’m not advocating for them to increase the $2.99 minimum to $3.69. However, Amazon must increase the top end of its golden pricing range from $9.99. I suggest $12.99 as a minimum to accommodate expected inflation during 2022.

* * * * * 

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. You can sign up for his newsletter and find more information about Jim and his books at https://jamesmjackson.com.

I am to Blame for Decreasing Author Incomes: A one-way conversation

By James M. Jackson

Much of the world blames Amazon for the decline in author incomes. Here’s the truth: I am to blame, not Amazon. Well, I’m not all of the problem, of course; but a tiny bit does belong to me. A critical component of economics theory is how supply and demand shape prices. Part of the problem (the demand side) follows good economic logic on my part; the supply side of the problem demonstrates my economic foolishness. Let me explain:

Shall we start with the demand side, where I claim I am driven by economic logic? Thanks for your indulgence, because at least that part doesn’t make me look stupid.

There would be no Amazon if I didn’t buy stuff from them. (I suppose it’s clear that “I” includes a gazillion other people.) I do not buy print books for retail price, which means I rarely venture into a bookstore. Why should I pay full retail when I can buy the same book online and have it delivered to me in two-days’ time? My TBR (To Be Read) pile will hold me at least that long, and I don’t need the immediate gratification. I make an exception to the full price rule when I purchase a book in person from an author I know, but of the 1,000,000 books published in 2018, I don’t know very many of their authors, so that is cold comfort.

I have given up serendipitous “finds” by not wandering through a bookstore. But honestly, ever since I abandoned the self-help section, my choices have been driven by recommendations from people I know, authors I already read, and interviews I hear on NPR.

And if the author is well-known, I’ll get the book from the library. My taxes and donations pay for the library; I don’t feel guilty about this, nor do I object to people borrowing my books from the library. I love libraries. Always have; always will.

I tried Kindle Unlimited for a year. It was a test to see if I saved money. I didn’t—I don’t read enough books, and many of the nonfiction books I read aren’t available on that platform. But if it or any of its kin saved me money, I’d gobble it up like a mallard on white bread. Saving me money means someone—usually the author—is losing money.

So that’s not so bad, really—me being willing to take the deals the publishing business is offering, even though I know they’re not in the long-term best interests of my author community? Right? It makes sense. And it makes sense to millions of other readers. What, you wonder, is this irrational part I alluded to.

Because I am an author, I also affect the supply side of the equation. I add a book a year to the available titles. Economically, it makes no sense for me to do this. If I had spent the same time making burgers at McDonalds or performing any other near minimum-wage job for which I could qualify, I would have made more money than I have from my six published books.

Being an author is pure economic folly. Yet, I have done it for more than a decade and plan to continue. Unlike many of today’s authors, I do make money and pay taxes on it. But it is a pittance, and if I didn’t have outside income, I could never subsist on my profits. I’ve signed publishing contracts with little or no advance, and I’d do it again for the right opportunity. I accept the terms offered by Amazon—even if that means they take 65% of the value of my novella sales.

I continue to write short stories for which I receive token compensation. My little drop in the supply of books ocean is trivial—but combined with hundreds of thousands of others like me, we present a problem for all authors because we add to the supply and are willing to work almost for free.

Which means, I am personally stupid or we’re missing something from this economic equation. I add to my personal economic balance the pleasure I receive creating stories people enjoy reading. I love meeting fans, and other authors. I make no claim that I must write. I choose to write and that makes me part of the problem for those who think they must write.

*****

James M. Jackson authors the Seamus McCree mystery series. Empty Promises, the fifth novel in the series—this one set in the deep woods of Michigan’s Upper Peninsula—is now available. You can sign up for his newsletter and find more information about Jim and his books at https://jamesmjackson.com.

Why I Am All In with Amazon for Ebooks

By Jim Jackson

Every Indy Author (a.k.a. Self-published Author) must make a fundamental decision about how to market their electronic books. Do they jump in bed solely with Amazon or play the field, allowing readers to purchase books from Amazon, B&N, Kobo, iBooks, Google Play and others?

Authors must evaluate many factors before coming to a decision about how to sell a particular book. The size and breadth of their following, including the percentage of readers in the U.S. compared to other parts of the world where Amazon is less dominant can impact their choices. The price of the book can also matter, since Amazon will only pay 70% royalties for ebooks priced between $2.99 and $9.99, inclusive.

Print editions have other considerations. Today I want to concentrate on electronic books.

A year ago I regained rights to Bad Policy from a small publishing company whose philosophy is to go wide, making ebooks available on every platform they could find. During the three years they controlled the distribution and pricing, 80.3% of electronic sales by both volume and royalties were through Amazon and 19.7% through other outlets. My second book, Cabin Fever, (currently, with nearly three years of sales data with the same small publisher) has Amazon at 81.9%, with 18.1% for all others.

For simplicity let’s round the split to 80/20. Choosing to become exclusive with Amazon for Bad Policy, I’d potentially give up 20% of my sales. What would I get from Amazon that could justify reducing revenue flows by 20%?

The main advantages of going exclusive with KDP (Amazon’s self-publishing platform) are (1) simplicity in the publishing process, (2) the use of a limited number of days to use countdown deals/and or give the work away for free, and (3) access to Kindle Unlimited (KU) and Kindle Owners’ Lending Library (KOLL).

Simplicity is nice, but not a very high hurdle. With a broad distribution, you can (with work) nearly duplicate the effect of Amazon’s countdown or free days. The difference-maker from my perspective is access to KU and KOLL.

Ant Farm, the first Seamus McCree novel, was published by Kindle Press (an Amazon imprint), so the ebook is Amazon-exclusive. KU and KOLL revenues for it represented 29.9% of revenue—greater than the 20% I was losing by cutting off alternative sales outlets.

Now, the first thing one must realize is that the extra 10% is not all additional revenue. Some people who read the book would have purchased it from Amazon had it not been available on KU. I cannot quantify that number, but my gut sense is that it is very small. In talking with people who subscribe to KU, they claim to rarely buy books, preferring to read exclusively those available through KU. Amazon probably knows for sure whether that is true, but it seems unlikely those people buy many books from non-Amazon sources—which is why Amazon pushes KU subscriptions.

Offsetting that “double-counting” are people who prefer to read electronically using their Nook or Kobo, but have a Kindle reading app they use when that is their only choice.

I decided the gains would outweigh the losses, so when I reissued Bad Policy, I made the ebook exclusive to Amazon. It’s been less than a year since the reissue. During that time, KU has generated 30% of revenue—the same result I have had for Ant Farm, which has always been exclusive to Amazon.

When I published the fourth Seamus McCree novel, Doubtful Relations, in August 2016, my experiment with Bad Policy was already producing positive results. But I was reluctant to write off the 20% of my readers who were reading my books on non-Amazon platforms. I chose to go wide, using Draft2Digital to distribute to the other platforms. Instead of the expected 20% of sales from the other retailers. I earned less than 10%.

The reasons are not all that clear to me. Perhaps since Bad Policy’s original release in 2013, fewer people are reading on alternative platforms. (I know I initially preferred Nook, partially to help keep competitiveness in the ebook market, partially because I could turn my Nook into a tablet. I gave up on using my Nook as a tablet when much more powerful tablets became ubiquitous, and because it was so difficult to navigate B&N’s website and so easy to find what I wanted on Amazon.) Although I do enjoy detailed numerical analysis, I have not taken the time to do a month-by-month comparison to determine if the Amazon ratio had been increasing in the past year.

After three months with the same low rate of non-Amazon sales, I made Doubtful Relations exclusive to Amazon and enrolled it in KU. It’s too early to know for sure how that decision will play out, but in that partial first month, KU revenue was twice what I had earned from all other retailers in the previous three months.

This past Tuesday, LowcountryCrimes: Four Novellas made its debut. I polled the other three authors to determine if they had very strong readership on non-Amazon platforms. Everyone was noncommittal, so I went with my gut, which said KU readers would be willing to take a gamble on our four novellas. It only cost them reading time to try authors they might not know, and I (technically my publishing arm, Wolf’s Echo Press) made the ebook exclusive to Amazon.

But I also decided to publish each novella separately. And there I went wide! My thinking was that if you could get all four for free in KU, there was no advantage to having individual novellas enrolled in KU. If someone wanted to read (say) Tina Whittle’s “Trouble Like a Freight TrainComing” they could order up the entire anthology and read her story. Maybe they’d give the others a try. But, if Tina did have fans who read exclusively on Nook, I’d give them an opportunity to acquire her novella at B&N as well. Plus, I found a publisher (Pronoun) who pays 70% royalties on books priced less than $2.99, double Amazon’s policy of paying only 35%. The total anthology ebook is priced at $3.99; each novella at $1.99. (So you can purchase the entire anthology for the price of two separate novellas.)

That’s my current thinking. Will it change in the future? You betcha. The publishing industry remains in flux, and any business (and being an author is a business) needs to continue to keep on top of trends and experiment.

I’m curious, dear blog readers: has your way of reading changed over the last few years? Do you expect it to change in the future? Those of you who are authors, what are you finding with your sales?

Amazon and eBook Pricing

It will come as no surprise to any author who pays attention to Amazon and their pricing that they have a strong preference for ebooks priced between $2.99 and $9.99, inclusive. For books using their KDP program and priced in that range, they pay 70% royalties to authors. They pay only 35% for books priced $10.00 or more and those under $2.99.

An independent observer of the digital marketplace might well suggest that Amazon (or any electronic retailer) should earn the same amount on any ebook sold regardless of its price. They have the same infrastructure costs for all ebooks, regardless of whether they are priced at $0.99, $5.00, or $12.99. Retailers traditionally make money as a percentage markup over cost. Yet Amazon has decided to take a whopping 65% for books priced “too high” or “too low.” They do it because with their huge market share of ebooks, they can. They also do it to vex publishers and attempt to sway them to their beliefs about the book market.

Amazon not only sells books; it is a publisher with a plethora of imprints. My Ant Farm is published by one of the imprints, Kindle Press. Kindle Press is an ebook-only publisher, choosing books through the Kindle Scout nomination process. (This blog explains Kindle Scout.) Kindle Press authors range from debut to mid-list. How would Amazon choose to price these books given their contracts provide authors with 50% royalties?

Kindle Press books have been listed at $2.99, $3.49, and $3.99. The chart below demonstrates the somewhat loose relationship between price and page count. Note that sometimes Kindle Press discounts selected books to $1.99 as part of a promotion.

Kindle Press authors generally have low name recognition. I wondered how Amazon imprints price books for the bigger names. (All prices are from early September when I collected research for this blog.) I checked out three titles. Robert Dugoni had Her Final Breath in preorder. His previous book was an Amazon #1 seller. The Kindle book was priced at $5.99 (paperback was listed at $15.95, discounted to $11.90). The Good Neighbor by AJ Banner was the current Kindle #1 seller. Its ebook was priced at $4.99 and the paperback listed for $14.95, discounted to $8.26. PJ Parrish had She’s Not There in pre-release. The ebook was $4.99 and paperback was listed at $15.95, discounted to $11.99.

Given how long the books are, if these folks were Kindle Press authors, Dugoni’s and Parrish’s ebooks would sell for $3.99 and Banner for $2.99. The premium Amazon attaches for their better known authors based on this sample is $1.00-$2.00 over Kindle Press pricing.

Not so for big 5 publishers. On Amazon, Sue Grafton’s X was available in hardcover for $17.63 and $14.99 for the ebook. Sara Paretsky’s Brush Back was $14.64 for the hardcover and $13.99 for the ebook. Louise Penny’s The Nature of the Beast was $16.76 hardcover and $14.99 for the ebook. Their “premium price” over my estimated Kindle Press ebook prices was $10-$11.

What’s Happening with the Supply/Demand curve?

How did the various groups of books sell?

When it comes to the very top name authors, the high ebook prices do not seem to adversely affect sales ranking too much. Grafton’s X was ranked #12 when I wrote this sentence. [Nearly three months after the book’s release it is still #508.] Lee Child’s Make Me was #13. [Two and a half months after release it is still #179.] Louise Penny’s The Nature of the Beast was #79. [Three months after release it is #1,457.] But Paretsky’s Brush Back was “only” #1,626. [Four months after release finds it at 10,936.]

In comparison, Dugoni’s preorder for Her Final Breath was 1,388. [Two months after release it is #179.] But P.J. Parrish’s preorder of She’s Not There was 17,259. [Two and a half months after release it sits at #1,533.]

The Kindle Press authors do not sell as well. About a third have had rankings under 2,000 sometime during their book’s life. Another 20% or so have had rankings under 10,000, leaving well over half who have never cracked the 10,000 level.

The supply and demand curve for ebooks is not a single curve. Readers are willing to pay a substantial premium—$10-$11—for top best sellers. Their brands apparently justify the extra cost for readers. And clearly, the Kindle Press authors do not sell as well as at least some of their other Amazon Imprint brethren, which makes pricing differences between Amazon imprints logical.

Where do relatively unknown self-published authors fit? Based on Amazon’s apparent pricing model, I speculate that $2.99 might be a reasonable price. It’s the lowest price that still provides the author with a 70% take, yet it is still probably low enough for readers who have somehow found the book to make an impulse purchase.

Indie authors, I’m curious: at what price do you list your books, and what is your reasoning?

~ Jim

TWEETABLES:

How @KindlePress Chooses Kindle Book Prices by @JMJAuthor