Bloggers: Amazon will eat your lunch

Eoin Purcell

Quiet moves
Lost amid the launch of Amazon Encore which I spoke of a little earlier in the week, was the announcement that Amazon are offering sign up to the Kindle platform for any blogger who wants the opportunity.

At first glance this seems a pretty genius option for the blogger, access to a new platform and one that is growing nicely. But I can’t help but wonder about it’s real value.

The nature of the relationship
Firstly as a blogger you are a publisher. Oh sure you might be the author/creator of the content too, but you are responsible for publishing content to your audience. Anything you publish is published by your choice at your expense and by your decision. That has pluses and minuses of course, not the least of which is the exposure to liable laws that many bloggers pay little attention to.

This is relevant because by signing up the Kindle you are agreeing to give your content to Amazon to re-publish on their closed system for only 30% of the subscription price they receive. For the retailing, formatting, selling and processing they get to set the price and they keep 70%. The full terms and conditions can be read in full here. That may seem generous on Amazon’s part when you think of the royalty an author receives from a book publisher.

Now even allowing for the fact that the price setting is probably something that Amazon can gauge better than the individual blogger/publisher, even book publishers set a recommended retail price and allow booksellers and other retailers to set their price based on that.

Now Amazon’s costs for this program must be lower than 70% by a very, very long way. After all blogs will be delivered by RSS Feed an easily usable format and one that could be automated for Kindle ready files. That means that they are demanding this 70% for the right to sell your content. A commission really as much as anything else. Remember this is not an author/publisher contract we are discussing, it is a publisher/retailer contract. 70% is the kind of discount very few retailers get for anything other than huge orders and special reasons, just look at what Harper Studio agreed for non-returnable books with Borders. Why should Amazon be treated any differently by bloggers who are freely publishing content already?

The kicker is that because of the price settings being in Amazon’s hands they also get to set how much you make, they decide that $1.99 is fair and you get a solid $0.60 a month, but if they choose $0.99 then you only $0.30. For the kind of return a blogger is likely to get on this, I suspect that the blogger would be better running their own subscription system or some kind of value added plan rather than going through Amazon.

Wider distribution?
Amazon also reserve the right to distribute your content further afield than Amazon’s Kindle too:

7. Rights Granted. You grant to us, throughout the term of this Agreement, a nonexclusive, irrevocable, worldwide right and license to distribute Publications as described in this Agreement, such right to include, without limitation, the right to: (a) reproduce and store Publications on one or more computer facilities, and reformat, convert and encode Publications; (b) display, market, transmit, distribute, and otherwise digitally make available all or any portion of Publications through Amazon Properties (as defined below), for customers and prospective customers to download, access, copy and paste, print, annotate and/or view, including on any Portable Device (as defined below)

Amazon’s definition of portable devices is very broad too:

Portable Device” means any device that is capable of supporting the electronic purchase, display and/or management of digital text, graphics, audio, video and/or other content via wireless telecommunications service, Wi-Fi, USB, or otherwise.

To what purpose? Are they intending to usurp your primary distribution system via the web? There are other fears here too. As Kat Meyer just tweeted:

KatMeyertheoretically, signing w/Kindle would preclude creating your own iphone blog app (ala: if u signed w/ Kindle blog pub

Right now, that is not possible because the license is nonexclusive but if they succeed in dominating the mobile reading market in the future they might try and change that!

Locking in revenue splits
One of my major concern is that if bloggers agree to this completely uneven deal from Amazon now, it will persist. This will give Amazon an enviable position and allowing even their competitors to take hefty slices of the distribution chain value even while offering better terms than Amazon itself.

What is more, this kind of deal is running in the face of an emerging trend in revenue splits. Even Google isn’t proposing to keep this much revenue from content or associated ads on content in the heavily resisted Google Book Settlement. The proposed settlement would see them keep 37% of revenues from any sales or advertising. That fee even includes the running costs for the Book Rights Registry, something the 70% Amazon is discussing doesn’t need to finance.

Ian Paul at PC World has a nice article that sums up some other areas that charge much less for deal that have a similar relationship.

As far as the business arrangement goes, Amazon says it will take 70 percent of all subscription sales and deliver 30 percent of the revenue to the blog publisher. That seems like an awfully small margin going to the creator, especially when you consider that smart phone application developers entering into similar relationships with companies like Apple, Google, and Microsoft get the majority of the revenue with a small portion going to the distributor.

To recap
There is no power relationship to justify the disparity in the royalty split. Bloggers are not unpublished authors desperate to see their work published in print as in a book publisher/author relationship. In fact a blogger has no need of Amazon to publish, Amazon needs content for its closed platform and so if anything the split should be the other way. I can see no over arching reason to support this deal or to sign up for it except short-termist avarice.

Feeling fired up tonight! Sorry if you are offended by that stance!