Why you can't afford to take your eye off your Amazon sales

"Author James Crawford reported that he lost royalties for 5,104 downloads of his book when Amazon slashed his book's price without his permission." — GalleyCat

[image error]

Keep an eye on the KDP

The mistake happened, Crawford explains on his blog, because of Amazon's price matching algorithm. Price matching happens when Amazon scans the web for books selling at a lower price elsewhere and adjusts its own prices downward accordingly.

If you're a self-publishing author who has opted for the 70% royalty, Amazon will lower the price at which it's selling your book to match the cheaper price.

I wrote about this (to some opprobrium from upright readers) that the price matching algorithm could be used to earn a 70% royalty on a 99-cent Kindle ebook. We also touched on it in our interview with a successful self-publishing travel writer because Brian Lawrenson (the subject of the interview) had fallen foul of it.

What happened

In Brian and James Crawford's cases the same thing happened:

Both opted for the 70% Amazon royalty
Amazon found their books being offered for free elsewhere
Amazon lowered the price of their Kindle books to zero

The difference is that Brian was indeed giving away his ebook elsewhere. Crawford was not. The free book that Amazon price-matched was in fact "a free teaser of the first three chapters of the full novel".
In short Amazon made a mistake with real consequences for this author.
For Crawford, it was an expensive one because Amazon pays no royalties when it sets your price to zero on the basis that your book is also free elsewhere. (This is different from when the company decides to promote a book by setting the price to zero. In that case it will continue to pay royalties, which is fair as the decision to price the book at nothing is theirs alone.)
You can read the full story on Crawford's blog.
Keep your eye on the KDP
The moral of Brian and Crawford's stories is that they were both alerted to what was going on at the earliest opportunity because they make a point of checking the KDP daily. So should you.
Self-publishing is a business and, like any businessperson, you should be keeping an eye on the money.
An alternative view
As an aside, you might also be interested in Kristine Kathryn Rusch's commentary on the story. She argues (correctly, I would say) that Crawford has not lost the royalties on sales of 5,104 books, as he wouldn't have sold that many in the same period at the list price.
She goes on to conclude (incorrectly, I would say) that he's not owed anything. This is an extraordinary conclusion to emerge from a tightly reasoned blog post.
Rusch sees the test for damages as a legal one — "harm" — but she can't seem to see any harm, despite outlining two valid claims in her post:


The loss of royalties from the books Crawford would have sold in the period (easily extrapolated from his pre-error figures)
The time he spent getting the error corrected

Neither of these would amount to much but it is wrong they don't exist is wrong.[/box]