Amazon Reports E-Books Outselling Hardcovers

According to the Wall Street Journal, statements from Amazon indicate that e-book sales are now significantly higher than traditional hardcover books in terms of units sold. TechCrunch.com reports that these figures do not include downloads of free e-books, should you be thinking that might have significantly skewed those numbers — though neither report indicates the relative numbers in terms of dollars, whether retail or actual profit. Interestingly, Amazon also reported a slight increase in hardcover book sales, so it does not appear that the e-books are directly taking away from paper sales, at least not to a high degree yet.

Perhaps most striking are indications of the rate of growth, both in terms of e-book and e-reader sales. Jeff Bezos, Amazon.com CEO, is quoted as saying, “We’ve reached a tipping point with the new price of Kindle—the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189.” Additionally, Amazon claims that e-book sales over the first half of 2010 tripled the sales over the same period in 2009.

And lest you think all these e-book sales are $0.99 “indie” bargain books, as stated by the Los Angles Times:

It’s impressive that Charlaine Harris (author of the Sookie Stackhouse mysteries, the basis of the television series “True Blood”), Stephenie “Twilight” Meyer, James Patterson (author of the Alex Cross series and others), romance maven Nora Roberts and Stieg “The Girl With the Dragon Tattoo” Larsson have each sold 500,000 books for the Kindle.

I doubt that any of this is particularly surprising to any of my readers who are happy Kindle users, but it does help to confirm my suspicions that the e-book is not only here to stay, but is well on the road to becoming the dominant book medium before the end of this decade. (That’s right, you heard it first here.)

[View the original Amazon.com press release.]

We’ve reached a tipping point with the new price of Kindle—the growth rate of Kindle device unit sales has tripled since we lowered the price from $259 to $189,

70% Royalties for Many Kindle Books

The Seventy Percent Solution book cover

Along with the celebration of the USA’s independence, July also brings the new 70% royalty program from Amazon on many Kindle books. As I understand it (and I am not a lawyer, so don’t hold me to any of this!), a book can qualify for this rate only for sales within the US, while sales elsewhere will be at the 35% rate. Additionally, to qualify it must:

  • be priced between $2.99 and $9.99,
  • be priced at least 20% below the list price of any physical print version being sold,
  • not consist mostly of public domain material, and
  • a number of other requirements and limitations described on Amazon’s DTP pricing page.

While most of the talk I’ve seen about this has been how it may benefit independent authors (which I am all for), I see nothing which limits it only to indies. It could also be seen as an incentive for publishers currently using the so-called “agency model” to once again bring their e-book prices back to that magical $9.99 which Amazon so energetically pursued from the beginning. It will therefore be interesting to see if the big publishing houses continue to sell new-release e-books at $12.99 to $14.99 at royalties of about $4.50 to about $5.20 or “settle” for that lousy $9.99 price with almost $7.50 going to them per sale.

Kindle Books via Agency Model = Sales Tax

Today I discovered that in addition to largely eliminating the $9.99 major-publisher best-seller, it appears that the “agency model” of selling e-books means you may be paying sales tax now on many books that before were untaxed. (OK, technically, you may still have been theoretically on the hook to pay your state’s “use tax” on your own — but I’ll bet 99.99% of you don’t.)

For any who are not aware, this so-called agency model has the publishers who chose to use it effectively selling directly to the consumer, using Amazon as its agent to perform the transaction. This was brought about by the publishers due to various pressures — including from Apple — allowing them to effectively dictate the price their e-books sell for at retail, instead of the standard retail practice of selling at wholesale price to the retailer (e.g. Amazon) and then the retailer is free to sell at whatever profit margin (or even loss) which they choose.

Anyway, this apparently means that now instead of Amazon’s sales tax policies being in effect when you purchase an e-book from one of these publishers, it is instead the publisher’s policies/obligations which determine whether Amazon will add a sales tax to those purchases. To quote from Amazon’s help pages (my highlighting):

The following is a partial list of merchants selling items at Amazon.com which may be included in your order, and the states in which they charge sales tax.

  • Amazon.com LLC: KS, KY, ND, NY and WA
  • Amazon Digital Services, Inc.: KY, ND, NY and WA (Kindle content, MP3s, and digital videos are only taxable in KY and WA)
  • Magazine Express, Inc.: AL and WA
  • Synapse Services, Inc.: WA only
  • Target.com/ITC: All states other than AK and VT
  • Hachette Digital, Inc.: AL, AZ, CO, CT, DC, HI, ID, IN, KY, LA, ME, MS, NC, NE, NJ, NM, SD, TN, TX, UT, VT, WA, WI and WY*
  • Harper Collins Publishers, LLC: All states other than AK, AL, AZ, DE, HI, MT, NH, NV, OK, OR, SD, VT and WY*
  • Penguin Group (USA) Inc: All States*
  • Simon & Schuster Digital Sales, Inc.: All states other than AK, DE, MT, NH, and OR*
  • Macmillan: AZ, CO, CT, DC, HI, IN, KY, ME, MS, NC, NE, NJ, NM, SD, TN, TX, UT, VT, WA, WI and WY*
  • Zondervan Corporation LLC: CA, CO, FL, GA, IA, IL, IN, LA, MA, MD, MI, MO, NC, NV, OH, PA, SC, TX and WA*

* Kindle books sold by various publishers are subject to sales tax based on the publisher’s state tax reporting obligations and the taxability of digital books in those states. As a result, sales tax for Kindle books sold by the publisher may differ from the sales tax to which you’ve been accustomed for Kindle books.

So now when you buy a NYT best-seller for you Kindle, don’t be surprised if not only does it cost $14.99, but you’ll like end up paying even more to your state for the opportunity to read it.