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Amazon lures authors with 70% royalty deal, and HTML5

June 30, 2010 |  2:21 pm

When money talks, people tend to listen. In a bid to lure authors, Amazon.com on Wednesday said it would give writers 70% of the revenue, minus expenses, from their digital books sales on Amazon's Kindle store.

In addition, Amazon said it is giving authors the ability to sell their Kindle digital books on their own websites, using an Internet standard called HMTL5.

The two announcements are designed to attract authors who have not yet found a traditional publisher. In this case, Amazon would play the role of the publisher for the digital editions of the books. Writers could still contract separately with a print publisher.

But it's also a play for established authors who have not yet published electronic versions of their books. Many of those authors are haggling with their publishers over the royalty terms for digital books. That's because book contracts generally have clauses that touch on digital rights, but most don't specify royalty rates. Amazon is throwing down the gauntlet by promising to give authors 70% of the sale.

There's one other company that is attempting to jump into the void created by these contractual holes: Open Road Integrated Media, a digital publisher co-founded by Jane Friedman, former chief executive of HarperCollins Publishers. Among Open Road's authors are William Styron and Jack Higgins.

Amazon's proposal has a number of notable caveats. The first is that the 70% split occurs after Amazon subtracts a few pennies per copy for the cost of distributing the book over cellular wireless networks to devices that run Amazon's Kindle software. Second, authors must price the book between $2.99 and $9.99. Third, those prices must represent at least a 20% discount over the suggested price for any print edition. Finally, authors must agree to give Amazon terms that are as favorable or better than any other publisher for the same title.

So while Amazon's offer technically also extends to traditional book publishers such as Random House or Simon & Schuster, few are likely to bite. Au contraire, publishers are likely to see it as an attempt to nab authors in their stables who have not yet committed to a digital royalty rate. In that sense, publishers would view Amazon as a competitor, even as the mammoth online retailer is one of the industry's biggest seller of their books.

-- Alex Pham
twitter.com/alexpham

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