Scott Marlowe, fantasy author

Scott Marlowe

Author of the Alchemancer and Assassin Without a Name fantasy series

Amazon Kindle: Now, is the price right?

Amazon cut the price on their Kindle digital e-book reader again. This marks the second price cut of the year so far (the previous cut was $60). With Christmas rapidly approaching, and more digital readers hitting the market all the time (now, Barnes & Noble is going to sell one), one wonders if we won't see another price cut—or possible holiday price reductions—before the year is out.

As it stands now, here's the current breakdown of Kindle models and prices:

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The $259 and $279 Kindle differ only in that the latter allows one to download e-books when traveling abroad (outside the United States). The Kindle DX is the deluxe, super-sized Kindle, with a larger reading screen and more memory. Scott Hanselman, a technologist whom I follow on Twitter and whose blog and podcast I read and listen to regularly, has a nice post up about the differences between the Kindle and the Kindle DX if you'd like to read more on that.

Given this most recent price reduction, I'd like to dig up an older post of mine, How much does the Kindle 2 really cost?, where I cited an article where the author ran through a cost-justification of the Kindle 2. The author makes a comparison between buying a Kindle and accompanying e-books (at a rate of 2 per month) vs... buying the same number of traditional paperbacks.

So, buying paperbacks:

I could get free shipping if I ordered two paperbacks at a time and didn't mind waiting five to nine business days for them to ship. If I chose standard shipping (three business days) instead, I'd pay about $4.88 for two paperbacks mailed together. I wouldn't be charged tax. (I live in San Francisco. How much you pay in shipping or taxes depends on where you live.) The $4.88 shipping for two books a month would equal $58.56 a year. That brings my two-paperback-a-month habit (books + shipping) to $447.12 per year.

Versus buying the Kindle (remember, the cited price of the reader does not include the recent price cut, nor does it include the price cut of $60 from three months ago):

My Kindle 2 order totaled $365.98, which includes $359 for the e-book reader and $6.98 for three-business-day shipping. The average price of the top 10 Amazon Kindle nonfiction bestsellers is $9.78. If I bought two e-books per month, I'd spend $19.56 per month or $234.72 a year (shipping isn't necessary). My grand total for the year: $600.70, which includes the Kindle 2 and 24 e-books.

That gives us $447 vs.. $600. A $153 difference. If you extrapolate this out to 2 years as the author of the article does (excluding the cost of the Kindle on the second year, of course), those figures go to $894 and $835. By buying the Kindle (at yesterday's prices) you wind up saving $59.

Now, let's look at that in light of the recent Kindle price reduction.

The first scenario obviously doesn't change, so our annual price of buying 2 paperbacks/month remains at $447.

The first year Kindle price plus e-books, however, goes down to $500 (Kindle: $259; s/h: $6.98; e-books: $234.72) from $600.

That makes for a 1 year difference of $53 in favor of buying traditional books (much better than the initial figure of $153). Over 2 years, however, we have $894 for traditional books and $734, a difference in favor of the Kindle of $160. Before the price reduction, that savings for 2 years of Kindle ownership was $59.

Given all of that, the question is this: Is now the time to buy a Kindle?

I think not.

While I think the long term cost savings begin to warrant the cost of the device, I'm willing to wait just a little bit longer to see what holiday price reductions Amazon institutes. Competition in the digital reader space is increasing, driving prices down. I'd like to see how much further they fall before I pull the trigger.

2009-10-09 Update: No sooner do I publish this post when word gets around Twitter that Barnes & Noble is planning a color e-book reader, to be released next year. A reason to put off buying a monochrome reader, or does this have further potential to drive prices of existing readers down? Guess we'll wait and see.

Is this the last word on Kindlegate?

Amazon-kindle-booksAmazon's Kindle digital e-book reader has had its share of controversy. The latest, and perhaps biggest misstep, came when they remotely deleted e-books legally purchased by consumers, but which had been illegally made available for sale by an unscrupulous vendor who ignored certain copyright laws.

Ever since Amazon performed that act of deletion, removing such works as 1984 and Animal Farm right from under readers' noses, they have been playing make-up with consumers who, in some cases, have resorted to lawsuits to "ease their pain". Jeff Bezos, CEO of Amazon, even issued an apology.

Now, we've come full circle. Amazon has offered to replace copies of 1984 and Animal Farm at no charge to Kindle consumers. The message was sent in an email, and reads (source here):

"As you were one of the customers impacted by the removal of "Nineteen Eighty-Four" from your Kindle device in July of this year, we would like to offer you the option to have us re-deliver this book to your Kindle along with any annotations you made. You will not be charged for the book."

"This is an apology for the way we previously handled illegally sold copies of 1984 and other novels on Kindle. Our "solution" to the problem was stupid, thoughtless and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we've received. We will use the scar tissue from this painful mistake to help make better decisions going forward, ones that match our mission."

Also,

Amazon said in an e-mail message to those customers that if they chose to have their digital copies restored, they would be able to see any digital annotations they had made. Those who do not want the books are eligible for an Amazon gift certificate or a check for $30, the company said.

It would seem they're pulling out all the stops, giving consumers enough options that how could anyone not wind up satisfied?

If only it were that simple…

Amazon violated a fundamental right of people who live in a free society when they deleted those e-books. Yobie Benjamin says it best:

In most cases, it would require a government subpoena, grand jury summons or court order to require you to reveal the contents of your device, turn over the contents of your device and/or to delete the contents in the device.

Yet Amazon did so without any of those things. Clearly, they overstepped their bounds. Their attempts to make amends is proof enough of that. But did they go so far as to make the act unredeemable? Have they single-handedly crushed any potential for mass adoption of their Kindle and other similar devices that make use of DRM?

I think if anything good is to come of this it will be the shortening of the lifespan of digital rights management technology. We've already seen this in the music industry, where Amazon—and even Apple now—sell DRM-free MP3's. Amazon has laid bare the true evil of DRM for all to see. 'All', in this case, is the wider audience they are still trying to sell their device to. Sure, the Kindle is doing well, but there's a lot more people without the device than with it. If the device—and e-books as a whole—is to succeed, it needs this mass adoption.

Amazon, I'm afraid, may have cooked this goose a bit too long. It's past done.

As an aside, this post marks my 200th on this blog. It's not my 200th post overall, because I was blogging on another platform before I made the switch to scottmarlowe.com, but I did move over the "best of the best" of those posts onto here, so maybe we can call it my 200th 'good' post. Anyway, thought it was worth mentioning.

How much do you make selling through Amazon's Kindle store?

If you're interested in this topic you might also want to read Half of self-published authors earn less than $500.

I recently uploaded my first fantasy novel to Amazon's Kindle Store. The idea behind making it available on Amazon is (1) to hopefully gain more exposure and (2) maybe make a buck or two in the process. I'd like to take a moment to look at the latter of those reasons by asking the following question: How much, really, can one make selling an e-book in the Kindle store?

First, there's what Amazon calls the "Suggested Retail Price", or SRP. This is set by the author at the time the e-book is uploaded:

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The price you charge can range from a minimum of $0.99 to a max only Bill Gates, Warren Buffett, or Bernie Madoff (before he admitted to his Ponzi scheme and was locked up for 150 years) could hope to afford. Amazon, however, discourages price points above $9.99; you'll find many bestsellers featured prominently on the Kindle store-front selling at this price due to discounts Amazon has applied.

That brings us to our next point of discussion: Amazon's discount. We've all seen it, where Amazon takes a product that normally retails for $129.99 and discounts it to $69.99. The same principle applies here, though the discount in no way impacts an author's royalty. From my extensive research (which consisted of reading through a handful of posts on the Amazon DTP Forums until I found this one), I discovered this statement from Customer Service:

"...please know that as per our terms and conditions, our decision to discount products is based on a number of considerations which can vary over time. You will continue to receive the set percentage of the list price you set for every sale, even if Amazon changes the retail price for your content."

What this basically means is that while there may not be a method to their madness concerning what gets discounted and by how much, if and when they do discount your e-book, it will not negatively affect your royalties.

So now we come to the royalty itself, or how much we actually make per sale. The simple answer is 35% of the SRP. For a longer answer one can look to Amazon's DIGITAL PUBLICATION DISTRIBUTION AGREEMENT:

5. Royalties. Provided you are not in breach of your obligations under this Agreement, we will pay you, for each Digital Book we sell, a royalty equal to thirty-five percent (35%) of the applicable Suggested Retail Price for such Digital Book, net of refunds, bad debt, and any taxes charged to a customer (including without limitation sales taxes) (a “Royalty”).

That means for every e-copy of The Hall of the Wood sold, currently priced at $0.99, I'll make $0.35. Amazon gets the remaining $0.64. As above, should Amazon choose to discount my e-book, I'll still make the 35% royalty on the original SRP, so still $0.35. I can adjust my price point up a bit and make a little more per unit sold, but of course can't drop it below the minimum $0.99 threshold.

So, that might be more information than you cared to know, but there it is.

Sell Your E-books in the Amazon Kindle Store

I've been interested in Amazon's Kindle digital book reader since its inception (though, admittedly, I didn't start blogging about it until the second version came out). I haven't bought one yet because I'm waiting for the inevitable price reduction, but that doesn't mean I haven't been exploring its features and some of the content for the device.

The biggest source of content for the Kindle is, of course, Amazon's Kindle Store. The store features a lot of e-books. A quick run down of some of the categories:

Fantasy 5,267 e-books
Science Fiction 7,299 e-books
Mystery & Thrillers 13,570 e-books

Total, there's over 300,000 titles available for download to your Kindle. That's a lot of books.

I recently discovered one of the best things about the Kindle store: anyone can post products there. JA Konrath clued me into the possibility, and he does a nice job of breaking down some of his own sales numbers. You can see that he's had no small success at it thus far. Granted, Konrath is a published author, so his name is out there via other, more traditional channels, but he also puts forth a lot of effort online as well. Nonetheless, is the possibility of an unpublished writer posting his or her work to the Kindle store gold waiting to be mined? I plan to find out.

As of a couple of days ago, my novel, The Hall of the Wood, is available for purchase via the Kindle store:

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I wanted to make the price $0.25, but $0.99 is the minimum allowed price. The one catch is that, of course, you must have a Kindle to which to download the e-book to. So, if you've already spent $300 for the device, what's another $0.99? ;-)

The concept of an unpublished author finding success in this channel is a challenge. As noted above, there are over 5,000 fantasy titles available for purchase in the Kindle store. How to make my novel stand out amongst those? For one, I created a book cover. Nothing fancy, but it gives the potential buyer something to look at other than "No image available". Second, I gave it a product description, which is the standard blurb taken from my web site:

Jed's wife and unborn child are dead, killed by a legacy he dare share with no one. Seeking a reprieve from his guilt, he sets out for his former home, the Ranger Hall of the Wood. Along the way, he discovers all is not well. Aliah Starbough, a friend from Jed's past, sends him a chilling warning: the rangers are dead, the Simarron Forest, thrown into peril. Nearby Homewood has issued a plea for help, a summonings which Kayra Weslin, knight errant, and her chronicler, Holly, answer. Along with Murik Alon Rin'kres, an Eslar sorcerer who harbors a secret purpose all his own, the four attempt to unravel the mystery of the missing rangers. They soon find tales of their disappearance frighteningly untrue.

The third way to gain attention is through customer reviews. This one is huge, and the one that in my mind will allow us as writers to break free of the traditional agent/publisher dependency. It's a stamp of approval, a guarantee of quality, a statement saying that your book is not crap. Customer reviews, to a point, validate a book's worth. In general, low reviews indicate a lack of quality. High reviews, the opposite. This is not to say that every review should be taken as gospel. But given enough reviews and a trend should emerge.

I often read of the struggle authors undergo in finding an agent or publisher. There's really no rhyme or reason to it: the decision-making is subjective, and how often have you come across a published novel that, to be frank, sucks? I've begun to doubt the vindication that supposedly comes with having your work blessed by a "real" publisher, and let's face it: business models change. We might be witnessing the beginning of the end for traditional publishers here. If not that, certainly a sea change in the way we purchase and read books.

The Hall of the Wood has been available as a free pdf download for a long time now. As Konrath points out, Amazon's web site gets a lot more traffic than his own. That volume has a lot of potential to increase sales. Selling on the Kindle store seems like a real no-brainer to me.

How much does the Kindle 2 really cost?

iSuppli, which makes a business out of tearing down electronics products to see what's inside and then publishing their cost findings, released a report stating that Amazon's Kindle 2 costs $185.49 in components. The Kindle 2 retails for $359. That's a difference of $173.51.

Engadget shows the component breakdown:

I don't mind Amazon making a profit, but I'm still not sold enough on the Kindle to fork over $359 for it. James Martin of PC World did a cost-justification analysis comparing the purchase of a Kindle 2 and associated e-books vs. going the traditional route and it didn't work out so well:

"...my number crunching reveals that even a loyal reader of paperbacks would only have saved $58.82 by the end of the second year of Kindle 2 ownership."

That's a whopping savings of $60 after two years. In his analysis, he assumes 2 paperbacks per month; that's a lot of reading. I know I couldn't maintain that pace for 2 years.

He goes on to say:

"Amazon is sure to introduce a third-generation Kindle during that period, which you may decide you can't live without. There goes your $58.82 savings, and then some." 

Therein lies the crux of technology, my friends. There's always something bigger and better right around the corner. However, I'd love to own a Kindle 2, and maybe that "next gen" version will help drive down the price of the current model.

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