Should Amazon Charge Authors To Publish For Kindle?

I actually hadn't planned to post anything about this, but a number of folks have asked me about it and I figured I'd blurt out my opinion, for what little it's worth.

By way of background, this discussion stemmed from author Rob Guthrie's post, Amazon Charging For Digital Publication? and a follow-up post. And let me be clear on one thing right up front: I mean no disrespect to Rob or anyone else. This is one of those "differing opinions" things. So if you agree, great. If you don't, that's great, too! Just be nice, either way.

Anyway, the premise is that Amazon should charge authors a steep fee (Rob suggests $500 for the first book and $100 for any subsequent titles) to publish their books for Kindle. Right now, the process is entirely free. The premise of the argument has two major planks: one, it would purportedly make Amazon a guaranteed profit up front and that it's almost inevitable that Amazon will do this, anyway; and two, it would weed out a lot of the crappy books that indies publish (I'm an indie, so I can say that).

I'm sorry, but I think the cases for both of those arguments are failboats.

On the "it would be in Amazon's best interests profit-wise" to charge $$$ up front, many of the arguments on the pro side revolve around how much Amazon pays for infrastructure and support costs vs. what they might be making from book sales. Basically, are they making a net profit from KDP-published (KDP is Amazon's publishing arm for Kindle) Kindle books.

While there's no question that there are costs involved with digital book publishing, storage, and distribution via KDP, the undeniable fact is that none of us outside of Amazon's budget department have a flipping clue about what any of those numbers really are. And if I hear the old "Amazon is selling at a loss now, and has been for years!" thing again, I'm going to hurl. If that was true for as many things as I've heard, Amazon would have gone bankrupt before they moved their operations out of Jeff Bezos' garage. Or maybe that was Bill Gates and Steve Jobs. Whatever.

Yes, storage and distribution costs money, but when you take into account the byzantine rules of business operations like tax deductions (I can't imagine how many millions Amazon writes off), discounts for services like the 3G for Whispernet connectivity (i.e., I'm sure Amazon doesn't pay the telecom providers what WE pay for data transfer), etc., this whole argument becomes entirely academic because we simply don't have any data, and can't even speculate intelligently.

As far as the profit goes, charging $500 up front would certainly be nice for Amazon's coffers. But let's see how the numbers work again. Here's how many books Amazon would have to sell at different price points to gain that same $500 in terms of gross revenue, vice net profit. Sure, you can argue that there would have to be more sales to account for $500 net profit (which would be what's left after all the operations costs are subtracted out), which is true, but let's just stick with this because we actually know the numbers (and this only applies to KDP titles at regular prices, not the Big 6, freebies, etc.):

At $0.99: 777 (65% x $0.99)

At $2.98: 258 (65% x $2.98)

At $2.99: 502* (70% x $2.99 – $0.10)

At $9.99: 173* (70% x $9.99 – $0.10)

At $10.00: 77 (65% x $10.00 and higher)

* I'm assuming an arbitrary delivery cost of $0.10 that goes to Amazon for books in the $2.99-$9.99 range at the 70% royalty option. The bigger the file, the higher the delivery cost. This also means that, in the 70% royalty realm, the author is picking up at least part of the tab for getting the book to the reader.

To some authors, those may look like big numbers. But they're really not, in terms of the scale that Amazon is looking at. The books that are in the top 100 are selling well over a thousand copies a day. Let's take a specific example: John Locke sold a million of his $0.99 ebooks in five months. Amazon made $640,000 from those million book sales, and wrote off every aspect of the operating costs to store and deliver them. And yet we're supposed to believe that they didn't make a net profit? Pardon my skepticism. I haven't had my coffee yet this morning.

The most important thing is that all those books will continue making money for Amazon and the author *forever*. $500 up front is peanuts in the long game. Even books with low sales numbers, over time, are going to make some money.

As for item #2, that making authors pay a steep surcharge is going to help filter out the crap…it's just false logic. For many years, tons of authors paid lots of money, far more than $500, to have garbage printed by vanity press services. Many still do, with some folks paying thousands for the privilege of having a garage filled with boxes of horrible books. The only thing such a surcharge guarantees is that those folks who can't afford $500 won't be publishing with Amazon. That would probably account for a lot of undiscovered talent out there, people who don't have $500 to blow, plus – in Rob's hypothetical model – another $100 for every additional title.

And the assertion that "If someone's serious, they'll find a way to come up with the money" is, again, false logic. Just because you're determined doesn't mean you have any talent. In my career at NSA, I saw lots of people who were extremely determined rise through the ranks, but many of them couldn't find their way out of a paper sack with a blowtorch and a pair of scissors. By contrast, there were many incredibly talented people who, because they were focused on the job and the mission (like most authors good authors are focused on their writing) despised jumping through hoops and never rose as high as they should have in the great scheme of things.

This hypothetical model is the same. There are probably more than a few authors out there now, making money and pleasing readers, who wouldn't be if they'd been confronted with a major monetary obstacle to being published. Heck, I probably wouldn't have published had such a system been in place, and for me, writing as a career never would have happened. Or, authors might say, "Screw Amazon! I'll publish with someone else." And that is something that Amazon does not want to have happen.

Anyway, this is another one of those things that authors will argue about until the sun blows up, but the bottom line is that – pro, con, or somewhere in between – none of us really know. It's all pointless speculation, and the word count people are putting into these posts (I just blew a thousand words on this post) and comments are words that we should be putting into the chapters of our next books…

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