Recently, Amazon made a policy change that could create a reduction or even a complete loss of royalty for authors. This minor change has huge implications for authors and highlights the importance of providing an authorized and legitimate channel for customers to purchase from authors directly with full royalties and proceeds going to the author.
What is the New Policy?
This issue was recently brought to light through a Huffington Post Article titled, “How Amazon, Once Again, Is Driving Down the Value of Books And Undermining Authors.” The issue surrounds a change in policy that Amazon made in regards to the Buy Box. The Buy Box is the small box that customers click to purchase items from the giant retailer. An image of the Buy Box is below.
The policy change now allows 3rd party vendors to be included in the option for customers to purchase from the Buy Box for books that are described as being in “new condition.”
How it is Affecting Authors
This seemingly minor change is actually pretty significant for authors. Before the policy change, when customers clicked the Buy Box and purchased the book, it meant they were buying the book directly from Amazon itself and Amazon was purchasing it from the publisher or Amazon was the publisher if you were self-publishing through Amazon. In either scenario, the author (and the publisher) were receiving their cut or share of the book’s sale.
Now with the 3rd party policy, that may no longer be the case. It is possible for a vendor to sell books without having purchased them through legitimate channels. In other words, they may sell the book and make the profit and the author and publisher may receive nothing.
Most authors are not aware of this change and its implications, and the public likely has no idea. Most customers are unlikely to make a differentiation between purchasing from Amazon directly or from a 3rd party seller through Amazon. Since they are not aware, the lowest purchase price is likely to be key in their decision making. This means that more books at a lower price-point can be sold with no proceeds going to the author and publisher at all.
How Big is the Impact on Authors
This is a fairly new policy, so it may take some time to see the full impact of this policy change, but it’s clear that the potential for loss of income for authors and publishers could be significant. The Authors Guild recently said of the policy change, “this has the potential to decimate authors’ and publishers’ earnings.” The impact will be directly related to the extent that 3rd party sellers are in direct competition with those sold directly by Amazon.
In one example given by the Independent Book Publishers Association of American cited a case for the book Second Wind: One Woman’s Midlife Quest to Run Seven Marathons on Seven Continents, had this very scenario play out with the buy button going to a 3rd party vendor rather than the publisher or Amazon directly.
The publisher’s price for that book on Amazon was $10.62 and the 3rd party vendor had it listed for $3.23. This is already a significant reduction in royalty were the author and publisher receiving money from its sale but that cannot be guaranteed with 3rd party sales.
Here’s a graph showing the numbers represented in the case of the book Second Wind: One Woman’s Midlife Quest to Run Seven Marathons on Seven Continents. Let’s compare the difference in author earnings if this book was sold on Selz, on Amazon via the Publisher and via a third-party seller who purchased the book from an unknown source:
The Authors Guild stated in their article titled, Amazon’s Taking Another Bite of the Publishing Pie:
“One might wonder how there can be “new” copies offered by someone other than the publisher and how they can be sold for $.01 plus shipping (the high shipping costs are apparently where these sellers make their profit). The Authors Guild has spoken to several major publishers in the past year about where all these second-hand “new” copies come from, and no one seems to really know.”
Though there are various theories posited about the origin of the books from 3rd party vendors, it seems unlikely that the authors and publishers are receiving their share of the proceeds in this scenario.
Why Selling Directly is Important
This recent policy change by Amazon simply highlights the importance of providing a direct and authorized sales channel for an author where it is guaranteed that they are receiving their share of royalties and profits. As long as the sole vehicle of the sale of your book is through a company that has its own profit-sharing in mind, it is likely that these types of scenarios are going to pop up. If an author provides a sales channel in which the royalties and profit percentages are guaranteed, it is possible to direct customers there and reduce the loss of royalty and control over product sales.
By cultivating a customer list, and offering a direct selling option, you can increase profits and ensure that readers are purchasing the book through legitimate and legal means. With current technology, there are many simple and easy ways for authors to do this without a lot of technical knowledge. One solution for authors is to use a vendor like Selz to sell books directly on their website. This is a simple and safe solution that provides product delivery in whichever format a reader chooses (both epub and mobi ebooks and print). For electronic products, it is also possible to provide instant delivery via email once the purchase is made.
Since Amazon and other retailers are constantly seeking to increase profits, it seems likely that these sorts of scenarios will become more commonplace. By having a direct sales channel for their books through their website, authors can ensure they will receive income for their creative works.
For more details on why selling directly on a website for authors is beneficial, read the article 4 Reasons to Sell Books Independently.