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Amazon Tweaks Kindle Store Royalty Program Ahead of Apple Tablet Launch

Amazon today announced a revised royalty program for its e-book Kindle Store, significantly increasing the potential return to authors and publishers in exchange for commitments to meet certain feature requirements. The move, which takes effect on June 30th, essentially bumps the royalty payments to 70% of an e-book's list price, up from the existing 35% rate that will remain in effect for publishers who do not wish to meet the requirements of the new program.

For each Kindle book sold, authors and publishers who choose the new 70 percent royalty option will receive 70 percent of list price, net of delivery costs. This new option will be in addition to and will not replace the existing DTP standard royalty option. This new 70 percent royalty option will become available on June 30, 2010.

Delivery costs will be based on file size and pricing will be $0.15/MB. At today's median DTP file size of 368KB, delivery costs would be less than $0.06 per unit sold. This new program can thus enable authors and publishers to make more money on every sale. For example, on an $8.99 book an author would make $3.15 with the standard option, and $6.25 with the new 70 percent option.

Amazon will require that works offered under the new increased royalty program meet certain standards, including list prices of between $2.99 and $9.99 and at least 20% under physical book prices, as well as support for Kindle features such as text-to-speech.

The announcement comes just one week before Apple's media event where it is expected to introduce its long-awaited tablet device. e-Book functionality is expected to be included on the new device, with Apple reportedly in talks with book publishers to offer their content on the tablet. Apple currently offers developers whose applications appear in the company's App Store for the iPhone and iPod touch 70% of revenues, sparking speculation that Amazon's e-book pricing change is an effort to match what it expects Apple could offer publishers for distribution through the iTunes Store.