Amazon To Introduce New 70% Royalty Option For Kindle Digital Text Platform

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Right off the heels of announcing an expansion of its Kindle Digital Text Platform to authors and publishers around the world, Amazon has announced that it will soon introduce a new 70 percent royalty option in the program that will allow them to to earn a larger share of revenue from each Kindle book they sell.

For each Kindle book sold, authors and publishers who choose the new royalty option – will will not replace the existing DTP standard royalty option – will receive 70 percent of list price, net of delivery costs.

Amazon says the new 70 percent royalty option will become available on June 30, 2010 and be restricted to books sold in the United States at launch.

From the press release:

Delivery costs will be based on file size and pricing will be $0.15/MB. At today’s median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold. 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.

Russ Grandinetti, Vice President of Kindle Content at Amazon.com says authors today often receive royalties in the range of 7% to 15% of the list price that publishers set for their physical books, or 25% of the net that publishers receive from retailers for their digital books.

The new royalty option aims to increase the revenue earned from book sales for publishers and authors, but there are certain requirements they have to meet in order to qualify, on top of the requirements books receiving the standard royalty rate have today:

- The author or publisher-supplied list price must be between $2.99 and $9.99
- This list price must be at least 20 percent below the lowest price for the physical book
- The title is made available for sale in all regions for which the author or publisher has rights
- The title will be included in a set of features in the Kindle Store, such as text-to-speech
- Under this royalty option, books must be offered at or below price parity with competition, including physical book prices

For the latter requirement, Amazon says it will provide tools to automate the process, and that the 70 percent royalty will be calculated off the sales price.

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