[21 January 2010]
SAN FRANCISCO — Amazon.com Inc. said Wednesday that it has raised the royalty rate for authors and publishers on books published for its Kindle e-reader, which is coming under fresh competition from rival devices and possibly a forthcoming tablet device from Apple Inc.
In a statement, Amazon said it will now give authors and publishers an option of a 70 percent royalty rate on each Kindle book sold, net of delivery costs. This is well above the current 35 percent royalty rate offered to most publishers for the device.
The option is available for those who use the company’s Digital Text Platform. To qualify, the price on the Kindle version of the book must fall between $2.99 and $9.99 and be at least 20 percent below the lowest price for the physical book. Publishers also must allow the Kindle version to make use of features such as text-to-speech.
“Today, authors often receive royalties in the range of 7 percent to 15 percent of the list price that publishers set for their physical books, or 25 percent of the net that publishers receive from retailers for their digital books,” said Russ Grandinetti, vice president of Kindle Content, in the statement. “We’re excited that the new 70 percent royalty option for the Kindle Digital Text Platform will help us pay authors higher royalties when readers choose their books.”
Analysts say the move is clearly designed to make the Kindle more attractive to publishers, as the device faces more competition in the growing e-book market.
“We believe Amazon’s top priority for e-books is to maintain low prices, which help to drive consumer adoption of Kindle readers and fortify Amazon’s leadership position in a nascent digital market,” wrote Colin Sebastian of Lazard Capital Markets in a report.
Sebastian also said the move may be a “shot across the bow” on publishers by Amazon, which is trying to lure authors to consider more “self-publishing” options that can bypass publishers entirely for e-books.
The Kindle has the leading market share in the digital-book market, followed by Sony Corp., according to an analysis by Forrester Research.
But the device is facing a growing list of competitors. At the Consumer Electronics Show earlier this month, several companies introduced new e-reader devices, including electronics giant Samsung.
Also, the Kindle may face pressure from the anticipated tablet device expected to be announced next week by Apple Inc. Apple reportedly has been in discussions with publishers over content for the device, which is expected to play media files such as music and video, as well as serve as a platform for reading books and magazines.am