Amazon Holds Back The Growth Of E-Books Around The World

Writers often wonder why the growth of e-books is so much slower in the rest of the world.

There are a number of reasons for that, but one big factor is the $2 surcharge that Amazon levies on all e-books in most international countries.

This charge is levied by Amazon, and kept by Amazon, and has nothing to do with taxes.

This charge is applied whether the user downloads e-books through their Kindle or not, and whether the user even owns a Kindle or not.

I wrote about this issue back in May when this blog was getting less than 1,000 views a week.

Talking with some writers over the weekend, I realized that there is still very little awareness of this matter, and as I am approaching 5,000 views a week, I thought it would be a good time to highlight it again.

I was first made aware of the “Amazon Surcharge” by a reader in Hungary who wanted to know why my 4,000 word, 99c e-book was costing him $3.44. He also wanted to know whether I was receiving any of the extra money he was being charged.

I wasn’t, and I didn’t know what he was talking about. However, after a little investigation, I discovered that Amazon were applying a $2 surcharge on all e-books in most international countries.

If you live in USA, Canada, UK, Ireland, Australia, New Zealand, or the “Amazon Germany” countries (Germany, Austria, Switzerland, Luxembourg, and Liechtenstein), you escape this surcharge.

However, if you live anywhere else that Amazon sell e-books, you will get hit with this $2 surcharge. In fact, the surcharge used to be applied much more extensively.

It was removed from the Amazon Germany countries after the Kindle was officially launched there. It used to be applied in Ireland, Australia, New Zealand, and Canada, but was dropped some time last year, even though the Kindle hasn’t officially launched there.

If you read e-books, and live in the affected countries (which is most of the world), this drastically affects how much you pay. If you are a writer, and are selling internationally (and you should be, this is a global $80bn business), this is harming your sales right now.

If you don’t think this is a big deal, you are missing the point. There are millions of readers around the world who enjoy reading English books. Indeed, in some countries such as Denmark, the original English versions outsell the translated versions.

Also, many emerging economies, such as Brazil, lack a bookstore infrastructure, and publishers have to resort to methods such as selling books door-to-door. These countries should be ripe for e-books, but Amazon is suffocating growth.

When you go to Amazon.com and search for my e-book, you will see a price of $0.99, $1.16 or $3.44, depending on which country you live in. Whichever price you pay, I still get $0.35. Aside from around 15 percent in sales taxes, Amazon keep the rest.

Let me be clear. This is nothing to do with sales tax or VAT. Sales tax (VAT) is levied on top of this surcharge.

My e-books cost $0.99 in the US, as no sales tax is currently levied by Amazon.

My e-books cost $1.16 in Ireland (not one of the Surcharge countries, because Amazon are obliged to add 15% VAT (sales tax), and they seem to add a couple of cents more for “delivery costs” (despite being advertised as “free” to readers).

However, in most of the rest of the world, my e-books cost $3.44.

This breaks down as follows. $0.99 + Amazon Surcharge of $2 = $2.99. 15% VAT (sales tax) is then added on top of that, giving a total price charged to the reader of $3.44.

If you want to verify what I am saying all you need to do is log out of your Amazon account, fake your IP to, say, a Spanish address, then look at the prices in the Kindle Store.

(Some books seem to escape the net, for examples of that, see my earlier article in May, just note that I hadn’t discovered the full extent of the Amazon Surcharge at that point).

Why A Surcharge?

Now that we have clearly established that this surcharge is nothing to do with taxes, and none of it is going to the author, what is it for?

First off, there is no point asking Amazon. I have emailed them several times about this issue, and they have never responded.

Some of my readers have done the same, and got fobbed off with bogus excuses about higher operating costs in certain countries.

This is patently untrue. There is no cost difference to Amazon in selling my e-book to a customer in France rather than Kentucky, especially when that customer is using the Amazon.com site, downloading the book through their own computer, and on their own internet connection.

At first I thought this surcharge was something that only affected Kindle owners, that it was a surcharge for downloading books wirelessly because they bought their Kindle in the UK or the US and are using it in another country.

Amazon might have had some justification for that.

However, this is not the case. It affects all purchasers of e-books in those countries whether they own a Kindle or not.

My guess – and this can only be speculation as Amazon refuse to answer my enquiries – is that this $2 surcharge is bankrolling the free 3G access that certain Kindle owners enjoy.

If this is the case, it’s completely unfair to levy this charge on all the other users who don’t have a 3G Kindle, and indeed, only international readers.

Indie Writers

This is clearly an issue which affects all writers (and publishers), but it affects indie writers disproportionately. One of the key advantages that indie writers have is the ability to be flexible on price.

We can sell books for $0.99 or $2.99 and survive. And while trade publishers can do that for select titles for a limited time, they can’t do it with their entire list; they simply have too many overheads.

Adding $2 to the price of a $12.99 e-book will have some effect on sales, for sure, but adding it to a $0.99 or $2.99 book, and then adding 15% VAT, just kills them.

Since I discovered this issue, I have been directing all affected readers to purchase through Smashwords or iTunes instead (where there is no such surcharge).

Smashwords has gone from an insignificant portion of my sales to almost 10% (and even more in revenue because they pay me $0.56 per copy sold instead of $0.35).

And that’s just the readers I am reaching with this message. How many readers are we all losing because they think our books are overpriced?

Why This Charge Is So Dumb

Of course, there is a much larger issue here than my immediate bottom line. This charge is slowing the growth of e-books all across the world.

One of the big drivers of e-reader adoption is lower priced e-books. However, cheap e-books largely don’t exist in these countries.

Because indies and small e-publishers can’t exert the same downward price pressure, local publishers in the affected countries charge even more for e-books than they do in the US and the UK.

Amazon’s Surcharge plays right into their hands. They are able to shore up print sales by discouraging e-reader adoption with high e-book prices.

What’s particularly dumb about this, is that it runs counter to Amazon’s strategy in the more developed markets where they are straining at the leash to drive prices down to encourage growth.

If Amazon dropped the surcharge, e-book sales would rise across the board. More people would purchase e-readers (including, you know, the Kindle), and the market could expand dramatically.

In other words, Amazon’s Surcharge is hurting Amazon more than it hurts us. That’s why it’s so dumb.

If you want to do something about it, make some noise. Tweet this article, link to it from your blog, post it on Facebook. Best of all, email Amazon at kdp-support@amazon.com – and please feel free to quote from this as much as you like.

Today’s blog post is a modified version of an appendix from my forthcoming book Let’s Get Digital. It will be out mid-July.

David Gaughran

Born in Ireland, he now lives in a little fishing village in Portugal, although this hasn’t increased the time he spends outside. He writes fiction under another name, has helped thousands of authors build a readership, and has created marketing campaigns for some of the biggest self-publishers on the planet. Friend to all dogs.