In the comics world, most of the digital conversation is about comic books as apps for tablets and smart phones, with the iPad and iPhone getting the most attention.
However, while there is a nascent market for comics on e-book readers like the Kindle and B&N’s color device, the Nook, Amazon’s recently introduced digital “delivery fee,” charging publishers 15 cents per megabyte to transfer a book’s file to the Kindle, has forced some comics publishers to rethink using the Kindle platform.
While novels are text-based and unlikely to run up a delivery charge much over $0.02, graphic novels have a much higher bandwidth, and could be forced into a lower payment/royalty rate and higher list price because of their file size, directly because of these Amazon fees. In addition, Amazon also has a recommended file size which affects graphic novel pricing. While these charges apply only to publishers participating in the Kindle Direct Publishing platform, and not those who have direct wholesale or agency distribution arrangements, it can still add up.
An Amazon spokesperson explains that the $0.15/MB charge applies to the wireless charges associated with the Kindle and that the charge “roughly covers [Amazon’s] costs of delivery.”
The provider for the wireless Internet 3G connection for the Kindle is AT&T and consumers are not charged for their Kindle’s wireless connection. As listed on their website, AT&T’s consumer data packages come in two flavors, depending anticipated usage. Additional bandwidth for the first package is at $15 for 200MB ($0.075/MB). The second is a GB for $10 ($0.01/MB). While Amazon did not volunteer the terms of their agreement with AT&T, at face value, this would seem to be a healthy mark-up on a per MB basis.
Both Amazon and Barnes and Noble agree that the price of an eBook should be between $2.99 and $9.99. They prod publishers (and independent authors) towards that price range by offering a more favorable percentage of the list price. Neither company lets publishers sell an eBook for less than $0.99.
Amazon’s payment policy has two tiers based on the list price. When the list price is between $2.99 - $9.99, the publisher receives 70% of the list price, minus the above mentioned delivery fee. When it is under under $2.99 or over $9.99, the publisher receives 35% of the list price and the delivery fee does not come into play.
Barnes and Noble has a similar payment policy: two tiers with the percentage of list price paid out tied to the amount of the list price. The biggest difference being that Barnes and Noble does not charge a delivery fee. When the list price is between $2.99 - $9.99, the publisher receives 65% of list price.
How can a publisher cope with these data charges?
- Kindle’s AMZ file format does offer some compression of file size
- Images can be smaller than the recommended full screen size
- Publishers can keep the 35% payment rate and not pay the delivery fee and try and make up for the lower payment rate by raising the price (or just not discounting it from the print price)
But there’s another sticky wicket. Amazon also has a list (perhaps not very well enforced yet) of minimum price vs. size of file.
To even be eligible for the 35% payment, a $0.99 list price eBook can be no larger than 3M. A $1.99 file must be larger than 3M, but less than 10M. A $2.99 file must be 10M or greater. If it’s priced at $2.99 and you pay the delivery fee, they don’t seem to care what the file size is.
“[The digital delivery fee] does directly effect our pricing strategies,” explains Fred Lui, editor-in-chief and v-p of production at Digital Manga. “Sometimes, depending on the size of the book, it’s best to choose the 35% rate for the Kindle.”
Lui says Digital Manga Publishing has had luck getting the size of the files down, by preparing material for upload in a .PRC format, rather than the .PDFs formats more prevalent when the Kindle first launched, and also by reducing the resolution of the material.
“There’s a little bit of give and take, and a little bit of sacrifice on the quality, but there aren’t too many complaints,” Lui offered, adding that comics were not the primary purpose of Kindle and that part of the process is to “force our comics into their technology.”
Amazon’s 35% payment is actually the same as what a publisher would receive splitting revenue with a service like Comixology for an iPad/iPod sale after Apple took their 30%.
Pricing in that 70%/65% sweet spot is a little tricky, as graphic novels haven’t been a point of emphasis and this is all a bit new. On top of that different page counts, page sizes and color printing all make a huge difference with the delivery cost.
The varying prices levels mean graphic novel publishers must make many choices. For instance, IDW’s Star Trek: Mirror Images #5 is available at a digital list price of $1.99 for the Kindle. This is just a single issue, but even after compression is 12,884K ($1.89 delivery fee). Per Amazon’s chart of price vs. file size, this is supposed to be $2.99.
Jeff Webber, director, ePublishing for IDW, declined to comment on how IDW was looking at Kindle’s two royalty options, saying only “We’re experimenting with it.” He did, however, say that sales had been picking up on the Kindle and they were looking at adding material there on a regular basis.
While IDW does not currently have material on the Nook, Webber says he is currently working with Amazon, Barnes & Noble and Apple’s iBooks, and that “All groups are expressly interested in getting comics on their platforms.”
The price tiers also affect books from mainstream publishers, such as Chosen from Thomas Nelson, which is available for both Kindle and Nook. Chosen keeps its digital price the same as its print price: $15.99. Amazon then heavily discounts it to $9.35, meaning Chosen is in the 35% category with the $15.99 list price for a payment of $5.60 per copy.
On the Nook, Chosen still lists the $15.99 price, but Nook discounts it to $9.99 and publisher Thomas Nelson walks away with 40% of the list, for $6.40, gaining $0.80 per book over the Kindle fee.
A Thomas Nelson spokesman had not commented on their pricing strategies at press time
Not all publishers are enamored of eReaders. Stephen Christy, director of development at Archaia, was around when Archaia’s Tumor was one of the very first comics on the Kindle.
“We had a lot of success with Tumor on the Kindle, but I don’t believe the Kindle as it exists now is the right format for comics and graphic novels,” Christy says, citing the amount of file formatting specific to the Kindle, the black & white display and the “pretty intense fees.”
In what is something of a universal theme with comics publishers working with eReader platforms, Webber adds “Even though its taking a while for them to work it, all three ebook [platforms] are trying to work it out with comic books. They’re all working on it, but it’s not their number one priority.”
[Todd Allen is a technology consultant and former adjunct professor with Columbia College Chicago's Arts, Entertainment & Media Management department. Allen's book, The Economics of Web Comics, is taught at the college level. He also writes the Division & Rush webcomic. The opinions expressed here are not necessarily those of PW Comics Week.]