Amazon.com Raises Royalty Rates for Publishers and Authors Who Use Kindle Platform

Posted on January 20, 2010

CNET reports that Amazon.com is increasing the royalty amount it pays to publisher and authors who use the Kindle Digital Text Platform (DTP) to 70 percent of the list price of their e-books. Analysts say the move is an attempt to head off competitor Apple which is rumored to be launching its new tablet computer on January 27. The price jump is equal to what Apple pays developers for apps sold in its app store.

Starting on June 30, Amazon says that for each Kindle book sold, authors and publishers who select the new 70 percent royalty option will receive 70 percent of the list price, minus delivery costs. This new option will be in addition to and will not replace the existing DTP standard royalty option, which is set at a 65-35 split, with 65 percent going to Amazon.
Amazon didn't have any comment about whether the new pricing was a response to Apple's royalty program for its App Store, which offers thousands of e-books as self-contained apps along with e-reader apps from Amazon (Kindle Reader, Stanza), Barnes & Noble, and other e-book stores. But it did say that delivery costs will be based on file size and pricing will be 15 cents per megabyte.
"At today's median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold," the news release notes. "This new program can thus enable authors and publishers to make more money on every sale. For example, on an $8.99 book an author would make $3.15 with the standard option, and $6.25 with the new 70 percent option."

The rumored Apple tablet has quite a few competitors worried. There is an app that allows customers to use the Kindle reader software on their iphones. A larger tablet could easily compete with the Kindle.