I put my novella, The  Death Trip up on Smashwords for free in November 2009 as my self-publishing “beta.”  I put it up separately on Kindle for 99 cents.  Since this was an experiment and I was simply hoping to attract readers, not make money, I would have happily put it on Kindle for free as well.   It was important to get it on Kindle as Amazon holds the biggest share of the e-book market and even though Smashwords theoretically “ships” its “premium catalog” books to the Kindle Store, they don’t actually seem to wind up there.

Many months later, I noticed that my novella had been made “free” on Kindle.  No e-mail to warn me. I just happened to check the sales reports and suddenly saw a big surge.  Through a Google search I found out about 50 books that had been free on Smashwords were now free on Amazon.  One blogger implied we were “caught” as though we were criminals.  It turns out that selling a physical or e-book version in any digital format at a lower price is a violation of the fine print of the Amazon contract. Like any “agreement” that one clicks on the web, this probably isn’t read carefully by most.

Meantime, sales started to boom for all the  recently liberated books as word of their status leaked into the blogoverse. Even though they had all been available at no cost in other venues including in the mobi format used on Kindle,  sales took off once the books became available on Amazon.   I “sold” more free Kindle versions in a few days then I had in a year of Smashwords downloads.  Meantime, when I checked my sales reports on the Amazon website, it looked like I was still getting paid for the free books.  Suddenly, my little novella is a best seller.  And then just as suddenly — within 6 days, it’s ninety-nine cents again, and the sales slip back down.   Despite seeing the sales reports, I didn’t quite believe Amazon would pay me for book sales on which they weren’t making a penny, but they did.   I got my 35 cents (35% royalty) on each freebie downloaded.   I made around $900 on the deal.  Other books remained free weeks longer and  topped the best seller lists on Kindle. It was a short-lived gold mine for some lucky authors.

But the question is: was it a mistake? A computer generated blip that cost Amazon money?  Or a plot by Amazon to create its own bestsellers and take over publishing?

In any case, it will happen no more.  I was just perusing the updated Amazon digital platform contract and they’ve closed the loophole.  Effective in February, they can (and probably will) lower the price to zero if they find out about a lower price elsewhere including free promotions and they will no longer pay royalties on the giveaways.  Oh, and there’s no appeal if they decide to free you book because somewhere on the web someone was giving it away.

I get Amazon’s not wanting to pay authors to give away books, but I don’t like their controlling self-published authors’ efforts to market themselves.  Giving away copies is a great way to attract readers, maybe even to get some reviews or buzz in various forums that discuss e0books.  Independent authors often offer  short-term promotions or give away PDF’s on their websites. These giveaways might be intended to reach a specific audience or the author may have a target number he or she wants to see in circulation.  But once the price is “free” on Amazon, they may not change it when it goes up elsewhere.  If a writer participates in a program like Operation E-book Drop which sends free downloads to deploying soldiers via the Smashwords “coupon” system, this too could be seen as a violation, especially if a coupon leaks out and winds up on a “free e-book” listing somewhere on the web.  If a writer tries to promote his/her book by making it free on Smashwords for a week or even a week-end, he/she may find that Kindle keeps it free for months.  The updated contract makes it very clear that there is no appeal when the price is dropped by Amazon because of matching.  Make no mistake, this isn’t simply about Amazon’s not wanting to pay royalties on free books, it’s about Amazon’s trying to control how writers sell their books elsewhere.  While one alternative  would simply be to not sell on Amazon,  micro-publishers are discovering like the small presses and big houses, that Amazon’s near monopoly on e-books makes that a not very feasible option.  The end result may be fewer free e-books for consumers and fewer promotions by authors.

So writers, beware.  Kindle has proved to be a boon to writers looking for a more even playing field.  It absolutely offers a chance to compete with the big boys and many “kindle authors” have done quite well.  But make no mistake about it, Amazon is a business.  It is not your friend.

Here’s an excerpt from the contract.  Anyone with a book on Kindle should go to their digital platform account and read all the fine print for themselves:

a. 35% Royalty Option.
i. The Royalty for the Digital Book will be 35% of the applicable List Price for the Digital Book.
ii. If you select the 35% Royalty Option for your Digital Book, you must set and adjust from time-to-time as necessary the Digital Book’s List Price so that the List Price, plus 15% (the statutory Luxembourg VAT rate) for sales to UK customers, is no higher than any of the following:
• the list price (i.e., the suggested or recommended retail price) for any digital or physical edition of the Digital Book in any sales channel; or
• if you sell a digital or physical edition of the Digital Book directly to end users, the price at which you sell that edition to end users.
iii. From time to time your Digital Book may be made available through other sales channels as part of a free promotion. It is important that Digital Books made available through the Program have promotions that are on par with free promotions of the same book in another sales channel. Therefore, if your Digital Book is available through another sales channel for free, we may also make it available for free. If we match a free promotion of your Digital Book somewhere else, your royalty during that promotion will be zero.

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