The Battle for eBook Supremacy: Amazon versus everybody else

KindleWarWhile self-publishing my novel, Baby Jane, to Amazon’s Kindle was relatively easy, publishing to the other devices is proving more challenging. Sony, who own the eReader, Apple, who own the iBookstore, Kobo, which is mostly owned by Indigo Books and Music Inc., and Barnes & Noble, who own the Nook, have all adopted business policies that exclude small publishers and self-publishing authors or, as in the Nook and iBookstore, have installed barriers that make it difficult for non-Americans (or non Mac users) to sell on the their sites.

Sony and Kobo won’t deal with publishers with fewer than ten titles to sell, forcing small publishers and writers to sell through a digital aggregate such as Smashwords or Fast Pencil, who will not only swallow up a good portion of your royalties — anywhere from 15 to 50% — but may also charge the writer an upfront “insertion” fee. Moreover, forcing writers and small publishers to use an aggregate also forces them into suffering the risk that the aggregate might not pay its authors (or massage the sales figures — there’s been grumblings online). And most of these aggregates are not following the rules of the International ISBN Agency, with a showdown likely on the horizon. (More on that later.)

Apple won’t talk to you unless you use a Mac (despite having adopted the cross-platform ePub format). And Barnes & Noble will not allow a writer or publisher to open an account unless the writer/publisher has a US bank account, a US credit card, and a US tax number. While it’s possible for non-Americans to acquire a tax number, the process is tedious, expensive, and time-consuming; and even if you do you can still forget about B&N: they don’t want to hear from foreigners at all.

What this all means is that Amazon has a significant market advantage over all other digital bookstores: more titles, global distribution, and a open-door policy to individuals and small publishers. Moreover, Amazon has adopted a shared-platform policy, offering free apps for iPads, mobile phones, and personal computers so consumers don’t actually need a Kindle to buy from the robustly stocked Kindle store.

What Amazon does not have is a clear technological advantage in its device. Amazon’s Kindle uses a proprietary digital book format, while all the other devices make use of the open source ePub format. What this means is that, except for the Kindle, regardless of which reading device you own you can purchase books from multiple retail channels and read them on your device. Kindle books can be converted using third party software but only if the book is not rights-managed. (Rights-managed books are secured to prevent unlawful copying. Adobe Digital Editions controls the conversion of rights-managed ePub books by forcing the reader to register the book with Adobe prior to conversion.)

The result is that we’re seeing another Beta-versus-VHS-style challenge between a large player with a proprietary format and a host of smaller players who have formed a united open-format front. Who will win? As with VHS, I predict the open and easily adopted ePub format will win on the technology front, but if Amazon adopts a conversion process similar to Adobe Digital Editions, the result will be much more like the current Sony Blu-Ray players that can also play the lower-quality DVDs, giving consumers the best of both worlds.

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10 thoughts on “The Battle for eBook Supremacy: Amazon versus everybody else”

  1. Nice tip, thanks. I assumed that the I stood for Intenational of course – rather than the current usage of ‘anyone who isn’t murkin’. I did discover later that Bowkers will do batch of ten for $400 which brings it down a bit but I’ll go local. I just hope that the small staff here is not one overworked librarian with a massive backlog and a Conan the Librarian attitude! I do have a couple of company names that I can use as an imprint – looks a bit more professional I think.
    My prime annoyance is with payment – Amazon won’t pay me into Paypal so I have a long wait for a cheque which is then expensive to bank. And they withhold 30% for tax, I understand.

  2. It should also be noted that Bowker is only licensed to sell ISBNs to American publishers. LAC can only sell to Canadian publishers and so on. (When you register with LAC, for example, they confirm your legitimacy before they approve your application.) So you have to go local if you want your own ISBN.

    The staff here in Canada is small but wonderful. The women there are so helpful and kind and supportive; can’t say enough good things about them. And they were very patient with this newbie.

    Amazon is required to withhold 30% tax for foreign authors; that’s the rules of the IRS. But to avoid double taxation, Australia will have a tax treaty with the US. So you have to apply for a US Individual Tax Number, then supply Amazon with a form W-8 BEN that identifies the treaty between your two countries, and then Amazon is only required to withhold the tax as specified by the treaty (the Canada-US treaty reduces royalty payments down to 0% withholding tax). The UK does not withhold tax, so you’re okay with your UK sales. Don’t know about Germany. I need to look into that.

  3. Yup, it can hurt! But at least it’s still more than I get from Amazon. 🙂 And an interesting thing is that if someone buys multiple books in one go at Smashwords (thanks to the checkout system, this is fairly common), the payment charge is spread over all the books, often lowering it to 6c or so. Much less painful. I try to buy in bulk from Smashwords for that reason.

    I’m not sure where reliable data for ebooks (would probably be compiled from Big-6 publisher sales, so not 100% accurate) is found – maybe it’s Publishers Weekly that provides it? I’ve seen people on KB providing numbers from a reputable source now and then.

    Re: free ebooks – yes, I saw that thread! I didn’t respond, though, because they’re talking about limited-time coupon offers. My first ebook has always been free everywhere but Amazon – it’s a longterm strategy.

  4. Was trying to find reliable data last evening about market share of ebooks, and what came up was that each of the big resellers — Amazon, B&N, and Apple — are all claiming a share of the market that, when combined, exceeds 100%. And none are willing to release actual figures to support their claims. The national association of booksellers publishes aggregate numbers of ebook sales, but doesn’t (can’t) break it down by individual sellers.

    There was one interesting editorial on Apple, how Jobs had deliberately misrepresented data to make it appear as if Apple now has 22% of the ebook market! Which is an absolute joke because if there is one constant among authors, it is that their sales on iBookstore amount to less than 1 in 15 or 20. Yet “journalists” were spreading Apple’s claims as if they were supported by facts.

    So all I could gather from the criticism is that current estimates (and they are all estimates) are Amazon 70%, B&N 20-25%, and the remainder split among the rest.

  5. Hi Michelle,

    My ebooks have a list price of $0.99. Amazon pay 35% on that price point, B&N pay 40%, Smashwords – through their own separately-negotiated contract with their retailers – pay 60%. Yes, if I sell a book for 0.99 on B&N, I get 0.60, or maybe 0.59. And considering that my ebooks sell better on B&N right now than on Amazon – possibly largely thanks to a free ebook strategy made possible by Smashwords’ distribution – I really like that extra! 🙂

    You’re absolutely correct on Smashwords taking payment processing fees out of all ebook sales where they are the retailer. However, it should be noted that Amazon take download fees out of all sales under the 70% agreement.

    I’d also agree that retail sales on Smashwords are rather thin on the ground – I sell around 1 ebook a week via their retail store. However, I’d much prefer to sell at both Smashwords and Amazon, and all the others, too. The figures you have are probably a little out of date, now – both B&N and Apple have grabbed a decent amount of market share. I’d guess 60% Amazon, 25% B&N, 10% Apple and the rest spread over the other players.

  6. Hi Naomi:

    True, Amazon takes a download fee, but it’s, in my case anyway, only $.08 instead of $.35. And 35 cents taken out of every 99 cent book you sell: OUCH!

    You may be right about my numbers being out of date. Is there a reliable site that has up-to-date numbers?

    You might be interested in this forum thread about giving away free books on Smashwords:
    http://www.kindleboards.com/index.php/topic,65188.0.html

    Cheers,
    Michelle

  7. Last time I looked, ISBNs were $80 for 10 in Australia.

    I would argue, based on personal experience and careful research, your assertion that Smashwords will ‘swallow up a good portion of your royalties’. I’ve only researched Smashwords and Bookbaby in depth, but I can tell you that distributing via Smashwords, I get 60% of the sale price for any book sold by an external retailer. For the price I sell my (short) ebooks, that’s more than I’d get going direct to B&N or Amazon.

  8. As an Australian and sometimes UK resident, Barnes and Noble is a bit arrogantly insular for my taste (they have heard that there are people out here, haven’t they?)
    But I am a Mac user so I considered uploading my iNovel to the iBookstore. Until I discovered that they won’t take anything without an ISBN (iISBN?) for every iItem. And that would cost me $125 for each one! That’s a major discouragement.
    Kindle is looking better, although they are rather rare down here.

  9. Hi Naomi:

    If you use Smashwords to sell through B&N, you will always earn less than if you sold directly through them because Smashwords takes roughly 15% of your royalties earned from distribution, regardless of the sales channel; so how is it that you earn more than if you deal directly with a retailer like B&N? (Smashwords doesn’t distribute to Amazon’s Kindle.) For example, B&N pays 65% of list price directly to the author; if you sell it on B&N via Smashwords, you get 60%.

    If you sell through Smashwords’ own site, they pay 85% (more than Amazon’s 70%) BUT you need to read the fine print because 85% of net is not 85% of the list price. As the contract specifies:

    “Net proceeds” shall mean sales price paid and received less payment processing fees, affiliate fees, retailer discounts, costs due to erroneous or fraudulent transactions, credit card charge-backs and associated fees. Therefore, 85% of “net proceeds” does not equal 85% of the book’s sales price. Payment processing fees, for example, may account for a sizable percentage of the List Price for lower cost books because they include a nominal minimum per-transaction fee ranging charged to Smashwords by our payment processing service PayPal. For example, if the per-transaction fee charged by our payment processor is $.35….

    Amazon will also deduct returns and fraudulent sales from your net royalties but they don’t charge you bank charges or a payment processing fee.

    And sales on Smashwords are anemic compared to Amazon or B&N: Amazon has about 85% of the market, B&N ~13%, and the final ~2% is divided among the rest of the players. So a book sold for $2.99 will net you $2.04 on Amazon and $2.24 on Smashwords; but which is better, $2.04 on 85 books or $2.24 on 1 book?

    Michelle

  10. iBookstore’s sales are positively anemic compared to Amazon’s and B&N.

    If you’re in Australia, have you checked with your national ISBN agency? The $125 fee is for a US ISBN from Bowker, the US agency. But here in Canada, for example, a self-publishing author can register with Library and Archives Canada (who have a wonderfully helpful small staff of women) and have their own ISBNs assigned for FREE. My Kindle book is published under Egghead Books, which I own and registered with LAC, and has an Egghead Books ISBN; but one can register with just your name. The trade paperback, soon to be published, has its own ISBN, of course; and the upcoming ePub (for B&N) has its own number too; all assigned from Eggheads Books’ account at LAC.

    If you use a foreign ISBN, the book is not listed under Bowkers’ Books in Print database but their International Books in Print database.

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