Indie science fiction author and business book writer Rick Chapman has unleashed a long diatribe against Amazon’s pricing model for Kindle Direct Publishing, which does make some valid points – although they’re buried among a screed against Amazon’s defenders (who he charmingly refers to as the Aggregated Amazon Ankle Grabbers, or AAAGs), and also somewhat obscured when he lets the invective get in the way of clear presentation of his argument. Which basically, stripped of all the name-calling and rhetoric, is this: Kindle Direct Publishing’s pricing policy of taking 65 percent of authors’ and small publishers’ revenues when they price their ebooks under $2.99 or over $9.99 is distorting the market and is an attempt at price manipulation, when in fact there should be no such pricing structure at all.
In his piece, “Escape from Stalag $7: Why Amazon’s Pricing Box Is Bad for Indies,” Chapman asks:
Why has Amazon placed indies in a $7 dollar pricing box? Why does it grab 65% of your revenue (not counting its transmission fees, which it charges on every transfer and which vary based on book size) if you price under $2.99 and the same if you charge over $9.99? This is an issue of critical importance to indies because it is not financially feasible to hand over that level of margin to a reseller for a download service.
As to why Amazon does this, Chapman complains that: “The most coherent answer I ever received from AAAG acolytes was ‘because they can’.” As it happens, others have advanced more sophisticated arguments for why Amazon fixed things this way – but that doesn’t mean you have to agree with them. In 2012, for instance, author and publishing authority Kristen Eckstein put it like this:
KDP users can choose if they want to make 70% “royalty” (aka: profit per eBook sale) or 35% royalty. The catch is, to make 70% users must price their eBooks competitively—between $2.99 and $9.99. The lowest price of $2.99 keeps the content from being devalued, while keeping it at a no-brainer investment for consumers. Anything lower than $2.99 and many consumers begin to wonder if the content inside is worth it.
Now does that hold water? Given the number of freebies, sales, and special discounts that you see online, I doubt that anyone would see a price point below $2.99 as a sign of poor quality nowadays. That doesn’t mean, however, that I see Hachette as any kind of white knight in this, and on current form, I’d feel more comfortable in the Amazon camp than the Big Five camp. But a lot of Chapman’s statements do seem to make sense, not least when he itemizes the various disadvantages to indies and self-publishers of the KDP pricing structure. His conclusion? “Amazon should lift all restrictions on book pricing and establish a uniform service fee for the use of its downloading infrastructure. Within this framework, the authors will quickly learn what works for them and their books. Amazon’s ‘assistance’ is not needed.”
I’d be interested to hear what everyone else thinks, not least because the pricing relationship between an independent author and Amazon is radically different from that between a major publisher and Amazon. You can’t call the book pricing issue a “restriction” when Amazon is effectively your publisher and your distributor. I’d also be hugely wary of Big Publishing’s enthusiasm for taking the market for as much as it can get. But that $2.99/$9.99 bracket doesn’t seem to make a whole lot of sense in terms of anything else but Amazon’s own business model.