Amazon's New Royalty Plan All Because of Apple?

Amazon has unveiled a new royalty plan that will allow book publishers and authors to make more money off of e-books sold for the Kindle e-reader. But Amazon's motives for playing nice with publishers are likely due to one key factor: the impending launch of the Apple Tablet, a device that's expected to provide some formidable competition in the e-reader market.

In the not-so-distant past, Amazon frustrated many publishers by fixing e-book download prices for the Kindle, but because the Kindle was the go-to e-reader, most publishers had no choice but to accept the deal. But now Amazon is sweetening royalties for low-cost e-books. Amazon's new royalty plan has more financial incentive for authors and publishers, and makes Amazon look like the good guy. If e-books meet "certain criteria," authors and publishers have the option of nabbing "70 percent of the book's list price as royalty, net of delivery costs, which average about six cents a book," reports the Wall Street Journal.

The report says, "for authors to choose the new plan, the book must have a list price between $2.99 and $9.99; the list price must be at least 20 percent below the lowest physical list price for the book; the book must be made available for sale in all geographies in which the author or publisher has rights; the title will be included in a set of Kindle features, such as text-to-speech; and books must be 'offered at or below price parity with competition, including physical book prices.'"

In keeping prices low -- and, most importantly, authors and publishers happy -- Amazon has a chance of stealing business away from Apple's distribution model (iTunes?). It's just awfully coincidental that Amazon chooses the little guy's side exactly one week before Apple's tablet will supposedly be announced.

Whether or not Amazon actually has anything to fear is uncertain. Unless Apple has designed a device that has a decent battery life (or plans on using technology similar to Pixel Qi's low power consumption screen) Amazon still has the edge in the eInk market -- for as long as the eInk market lasts. Also, Apple has been known to make its competitors practically obsolete, so Amazon had better shake hands with more organizations -- and perhaps stop its objections to the Google Book settlement and kill off its DRM -- in order to stay afloat.

Subscribe to the Now Playing Newsletter

Comments