walkitout (walkitout) wrote,

Should the Audible Royalty Cut Cause Fear of Amazon by Indie Publishers?

Earlier this year, Audible/ACX (the self published audio book platform) changed their royalty structure.


"Up until now, Amazon was offering an escalating rate of 50%-90% on ACX titles sold exclusively; now it is dropping the rate to a non-escalating 40%. (ACX audbiobooks distributed non-exclusively are dropping to a non-escalating rate of 25%.)" Amazon paired this rate change with an increase in their "bounty" program. At the time, this change was met with a lot of negative response, which honestly confused the hell out of me because as near as I could tell, this was a relatively new service (started 2011) not just for Audible/Amazon, but for audiobooks anywhere. Even more fab, ACX titles show up on iTunes, not just Amazon.

When something is new, like _really_ new, it is often not at all obvious how to price it. And even if you do know how you want to price it, you might have a teaser for the first while in order to reach critical mass of participation, and then raise prices. That royalty change was a big shrug to me, however, I have no pony in that.

What is more interesting to me is the way this royalty change has entered the Amazon is Evil discussion, in much the same way that the clawback of the illegal edition of _1984_ did. In both cases, people use these solitary incidents and all their In Real Life details -- but they scrub off the details, act like there are a Ton of Examples Just Like This and Everyone Knows It and then try to convince people it's a trend, and they should fear Amazon, who will take their books away because they don't really own them, or will drastically reduce royalty rates for self-pubbers, or whatever.

Anyone who digs around in the _1984_ incident knows that this was NOT a pattern, the book should never have been for sale in the first place, and people who lost their highlights and notes had them restored. We may have to wait a while to find out whether the current ACX royalty structure is stable or not.

It would be nice if someone else offered a platform like ACX to people who want to publish audiobooks. The fact that we see few entrants in this field suggests that probably at existing royalties, no one who might want to enter the field thinks they can make money at it. That, in turn, suggests that if ACX were to drop the royalties still further, at least some of those people might decide that this thing could make them some money, and they might enter the field. Amazon has a history of reducing margin whenever new entrants appear (c.f. AWS -- every time people in the cloud field get excited and think they can beat AWS on service and cost, AWS rates get dropped and the rest of the cloud field cries. Because that's what clouds do. Rain), to reduce the attractiveness of the business activity in question.

So, no, you shouldn't worry too much about ACX royalty rates. If they get too appalling, someone will show up to provide an alternative platform at more competitive rates. The fact that no one else is doing that is an indication that the margin is Too Damn Low.

When the Rocket Ebook was first created, there was a bunch of discussion by the Authors Guild and others about who was gonna get that juicy margin that was no longer going to be expended on shipping pallet loads of paper around. Because no way in hell were B&N, TradPub, etc. going to pass the savings along to the customer. A decade slid by, and the next thing you know, Amazon showed up and passed the savings along. "Your margin is my opportunity." When you think about how much of the German ebook pie should go to authors, publishers, distributors and retailers, remember that German publishers have everything that Traditional Publishers here in the US got slapped with a 2 year judgment for trying to get. And they are using that power in exactly the way the Price Fix 5/6 wanted to.
Tags: economics
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