How Amazon Cut Your Royalties Under Your Nose

Under Your Nose

Since the dawn of KDP, indie authors have been questing for the newpub holy grail: that magic formula for earning a living on Amazon.

If we rendered KDP in visual terms, it would look like the Valley of the Kings or the Dakota Badlands, with hopeful authors digging away like ants.

All that's really changed over the years is the preferred digging tool. Some scratch away with dental picks. Others use shovels. Lately, better-bankrolled operations have been bringing in backhoes.

In the old days, the first authors to strike it rich on Amazon used impulse buy pricing and social media networking to break out. When KDP Select debuted, the optimal strategy switched to limited-time giveaways in the hope that ranking hard on the free charts would bounce back to the paid list.

That ride ended when Amazon, in their infinite wisdom, nerfed the free-to-paid rank bounceback. Enter the era of rapid-release, mailing list trade-driven neo-pulp. Some prominent folks made a mint off this strategy and declared they'd cracked the code.

But trouble reared its ugly head in paradise again. This time, Amazon nerfed mailing lists, messed with also-boughts, and nixed authors' ability to see if their books had been ghettoized.

Somewhere around this time, Amazon's search feature became near-useless for finding books users wanted. Unscrupulous authors--looking at you, wordsmut peddlers--who deliberately miscategorized their books justly got much of the blame.

Yet all the while another, more serious, problem multiplied right under our noses.

With mailing list trades defanged and organic book discovery reduced to a lottery, groups like 20 Books to 50K came to the rescue. They, too, touted rapid release and a replicable sales strategy based on data science.

They also swore by paid ads--particularly Amazon Marketing Services.

AMS is rather complicated, and bugmen may inquire further of Amazon itself if so inclined. In layman's terms, AMS lets authors place ads for their books which Amazon will show based on keywords chosen by the author. Each keyword is assigned a click bid, which is the price cap in the micro-auctions Amazon's algorithm holds to decide which ad associated with a given keyword it will show the user.

In even shorter terms, AMS manipulates Amazon's search engine, and it costs authors money.

How much money? That depends. Gone are the days of paying a per-word rate for a classified ad. AMS charges you whenever someone clicks on one of your ads. The amount they charge you depends on the click bid you set for that word.

Different AMS gurus preach different click bid sweet spots. The prevailing wisdom is 51 cents. Others insist on 35, or even 25 cents.

That's all academic. The point is that, whatever click bid you set, you'll be charged up to that amount anytime someone clicks your ad.

To keep you from losing your shirt, AMS does let you set a daily spending cap. Those click bids add up fast, though, especially if you heed the word passed down from the marketing whiz kids.

How many keywords to marketing oracles say you need to crush it on KDP?

Are you sitting down? Good.

Because the answer is 75,000 keywords distributed across 500 ads with 150 keywords each.

Per book.

Now, not all of your keywords will get clicks every day. In my experience, you'll have one or two hot terms that dominate each add.

But say you've got one keyword getting one click per day at 25 cents per click.

That's $125 in ad spend per day, folks.

And if shoveling money into AMS is the only reliable way to get your book noticed, that's also Amazon going full pay-to-play.

Which would be fine if they didn't already charge everybody 30% just to sell on their platform.

Publishing house apologists who've been predicting newpub's doom for years have long warned that Amazon would take a bigger slice of the royalty pie. But the royalty squeeze never came.

Except it did, and I just showed you how Amazon cut your royalties under your nose.

Your AMS ad spend may as well be an additional cut Amazon takes out of your earnings.

To end on a bright note, my own experiment with AMS recently concluded. I followed the ad gurus' advice as best I could--even going so far as to buy special software that helps pick keywords.

Long story short, none of my ads turned a profit. I shut them down.

The first day after I terminated my ads, my book sales rose by 30%, and they've stayed at the higher sales volume.

That tells me AMS isn't the silver bullet the eggheads say it is; nor is it the only way to drive sales.

What's driving my sales is you, the reader. Which is just how I like it. Thank you!

Keep supporting small businessmen who want to entertain and inform you, and someday soon, we'll find a viable alternative to the megacorps. My new best seller lays out how.

Till then, do what you can where you are with what you have.

Read it now!


  1. I am very familiar with the mis-tagging debacle.

    *eyeballs all the crap IKEA romances*

    The pulps had real fun along with some romance sprinkles. I don't want Anita Blake knock off shit. Into the garbage chute it goes.

    1. "Romance sprinkles" is a delightful word. Thank you for that.

  2. I can see the logic behind Amazon's change. If it costs authors money for each keyword, then they're given incentive to not miscategorize their books, because every bad keyword increases the likelihood that someone will click on your book page and not buy it. If you advertise your harlequin romance novel to Sci Fi readers, most of them aren't gonna buy your book, and you're just flushing money down the toilet. And the few that do end up buying won't make up for the lost revenue.

    Problem is, this doesn't just punish miscategorizers. It punishes everyone, readers included. Good luck finding anything good to read on Amazon's site now.

    1. It would be great if AMS helped mitigate the miscategorizing problem, but I don't think it does.

      AMS keywords are separated from book category keywords in the algorithm, and both have different rules. All that determines whether your ad shows for a keyword is if it wins the bid and if it's proven successful before. Customers don't even see the book's category, just the ad copy and the cover.

      Losing money is the main drawback to picking irrelevant keywords, but there's no discernible logic to which keywords are relevant. The conventional wisdom is to take a shotgun approach. Hence the 75,000 keywords per book.

    2. Brian

      Thanks. Sounds like a United Artists venture is in the making as one alternative.
      The other one is patronage.

      Finally small publishers and authours will need to sell their books directly to the customer via a website.


  3. But what AMS does offer is metrics. It's simple math to see if sale price - (ad cost + Amazon royalty) > $0. All paid advertising is this game, but you can't always directly track to see if the ads you pay for worked. At least with AMS I can. I've been running the same ads for about a year. my magazine ads break even, and my nonfiction ads turn an acceptable profit. End of day, I'm not losing money, so i let them run.

    You have to pay somehow to get your work in front of eyeballs. That can be ppc ads from Amazon or Google or pay per views on bookbub, or it can be the hours you spend to engage on social media.

    1. Which would be fine if Amazon didn't also charge 30% for access to their platform. It's the double dipping that's unethical.

      Apple has announced they'll be offering unpaid eBook ads. It'll be interesting to see how many authors take them up on it.

    2. I'm not sure I buy that argument, for several reasons. In my mind, it's simply another available service from the same company. Like if I got a booth at a con, and also paid for a full page ad in the program. Except Amazon gives the booth to an author for a portion of sales, rather than having authors take financial risk upfront.

      Also, Amazon has been giving free advertising to Authors this whole time by way of also-bought displays, allowing customers to follow authors so they new book announcements via email, those listopia lists, etc.

      If Apple is offering free ads, it is either to gather data to then implement paid ads, or it is just a giant A/B test for themselves to see which book will sell better. Some authors will benefit, sure, but not everybody will have unpaid access to good ad spots forever.

    3. That analogy fails when readers can't find the books they want via Amazon's search engine. I've heard from readers who've resorted to using Google to find books on KDP. Amazon's failure to curate was plunging the eBook market into a contraction, which was only paused due to Corona-chan's intervention.

      AMS has rigged the game so that only high rollers who can afford to drop four figures per month on ads have a chance of breaking out. The big argument for KDP back in the day was that starving artists could use it to make an end run around the gatekeepers and earn a living from their books. Now it's a supplemental income stream for programmers and engineers who already pull down six figures.

      This is why I'm focusing more and more in Indiegogo these days. Their algorithm actually works to generate organic discovery.