Amazon and Affiliate Accounts

Nate Hoffelder at The Digital Reader has put together a great piece about Amazon and some of their affiliate partners. It appears that several ebook discovery sites have had their Amazon affiliate memberships revoked due to violations of the terms of service. The violations aren’t new, but the terminations are. And it all comes after Amazon has launched their own ebook email subscription service, Goodreads Deals.

Some History

A bit of history is in order here, for those who are unfamiliar with any of this. Let’s start with Amazon’s affiliate program. This is an ingenious tool Amazon uses to help drive customers to their storefront. Anyone can apply for and set up an affiliate account at no cost. When you share a link to an Amazon product, and you use your code, Amazon gives you a commission for the sale. I found out about the program when some fellow authors berated me for not using it. They noticed I was already sharing links to my books at Amazon, and pointed out that I could do the same thing but make a little money by using this code. So I started using it. The money made was not inconsequential. I try to use my affiliate code whenever I share a link to anything on Amazon, which is quite frequent when you’re blogging about books all the time.

Many websites subsist almost entirely on this affiliate program. I’m into photography, and I’ve seen reviewers at major photog sites ask that people interested in products to follow links on their page, as it helps them keep the doors open. Free forums like KBoards and their Writers’ Cafe make a profit almost entirely on Amazon’s affiliate program (which is why KBoards will not let you use your own affiliate codes in the books you put in your signatures). The Passive Voice also generates revenue through the affiliate program. There’s nothing underhanded about this. Commissions are common in the retail world.

Ebook Blasters

The next thing to know about is discount ebook blasters. Services like BookBub and websites like Pixel of Ink help drive sales through massive email lists and users who browse their sites. For BookBub, revenue is largely the huge sums that authors pay to get on one of their email blasts (it can run into the thousands of dollars, and there are quite a few blasts going out every day, which really adds up). Pixel of Ink and similar sites rely more on affiliate revenue. Authors vie for promotional slots, and these promotions are linked with affiliate codes, so the website makes a lot of money when readers follow through and purchase something. (I should add here that if the same reader goes on to by a TV during that visit, the commission for that item is also included.)

The discount ebook site Pixel of Ink has now shuttered. According to Nate (who is one of the very few people doing real journalism in the publishing biz these days), the reason for their shuttering is due to Amazon enforcing their TOS with new vigor. Terms that were previously ignored are now being rigorously enforced. Nate writes that this is to squash competing discount ebook sites now that Goodreads Deals is up and about. Other competitors have also had their affiliate memberships revoked and have shut their doors.

So what gives? My first confusion with this is that Amazon profits quite a bit from these email blasts. These blasts drive sales on Amazon.com more than any of their competitors’ websites. Why would Amazon not want to continue with a program that generates traffic and revenue? As always, when trying to puzzle through Amazon’s decisions, I placed myself in their shoes, with a focus on what serves the customer experience. Everything at Amazon is about how to improve the customer experience. So what was the thinking here?

There are a few clues that point me to what I assume were the discussions behind this decision. And make no mistake, the people at Amazon do not make these decisions lightly. They think long and hard about these things. And what I think they are interested in here has very little to do with money. I think it has a lot more to do with those book displays that greet you when you walk into a Barnes & Noble. I think it’s all about merchandising.

Planograms

I worked in a Barnes & Noble while attending college, and it was here that I learned the word “planogram.” I also learned to loathe the things. We’d get these printouts that showed precisely where every book was supposed to be shelved. Little schematics full of little books, faced out or spine-out, and we had to arrange the books just so. Which book faced the door. Which ones go on the top shelves. Which ones are easier or harder to see.

All of these spots are decided by dollars. Publishers pay merchandising fees to get their books featured on these displays. The same thing happens online. Barnes & Noble has been said to amp up the rankings on books for a fee, making it seem like a lower selling book was a bestseller. They also have been known to suppress erotica titles so they wouldn’t appear higher than rank 120 on their website. The idea was and is to curate the bestseller list to drive sales in a certain direction. For Barnes & Noble, that direction was to publishing partners. I think there was also a sense that it would just be good for business for the storefront to look as professional as possible. Rules on cover art from all the online retailers exist for a similar reason.

Free eBooks

Now for a diversion to free ebooks. Nate has done some excellent reporting here as well. A few years ago, Amazon changed their TOS to limit the percentage of free ebooks that affiliate members could drive readers toward. Amazon has always understood the allure of free ebooks for authors, but they’ve never been a fan of free ebooks. They don’t make it easy to offer ebooks for free. It’s important to understand this. The only way to make an ebook free on Amazon is to make it free elsewhere and force Amazon to match the price.

The only reason Amazon allows free ebooks is to not let a competitor undercut them. Authors take advantage of this price matching all the time. It costs Amazon money to host and deliver these files, and it drives readers away from paid content, so Amazon would rather it didn’t happen at all. As a reward for KDP Select membership, Amazon offers a mere 5 freebie days every 90 day period of enrollment. The paucity of freebie days signals not only the buying power that Amazon knows free promotions can have, but their preference for ebooks with prices. There’s also the fact that Amazon’s royalty rate is 35% for ebooks priced below $2.99, while they offer 70% for ebooks priced between $2.99 and $9.99. This demonstrates that Amazon isn’t necessarily for “cheap” ebooks, like many say. They are for what Amazon has decided is a good range of prices for ebooks. Free does not factor in.

In 2013, Amazon tried to influence the number of free ebooks that affiliate partners were driving readers toward. In 2016, Amazon is trying to influence the discounted ebooks that affiliate partners drive readers toward. What’s happening? Again, I don’t think it’s about money. I think it’s about customer experience.

The Algorithms

Amazon is in a constant battle with those who attempt to understand and maximize their use of Amazon’s rank and sales algorithms. There is a lot of money to be made by people who find chinks in Amazon’s armor. Some of these parties are outright scammers, uploading stolen ebook content in new packaging, taking advantage here of the simplicity of KDP self-publishing. A recent scam involved putting links in ebooks that drove readers to the back of the book, getting credit for an entire read in Amazon’s Kindle Unlimited program. There are much more benign side effects to Amazon’s decisions. Back when they paid the same amount for a full read of a short story and a full novel, it naturally led to the publication of more short stories and fewer novels. Amazon’s every decision has cascading effects, and so they are constantly tweaking their behavior to counter these effects. At times, it’s like watching a time travel film where the protagonists are constantly going back further and further to fix unintended consequences. Or like watching doctors medicate side effects with more medication. But really it’s just an arms race with end users who are looking for areas of weakness to exploit or reacting naturally to financial rewards built into the system.

One of the unintended consequences of Amazon’s affiliate program is how powerful these email blast discounters have become in shaping the Amazon bestseller lists. In a way, these websites have introduced Barnes & Noble style merchandising on a storefront that has prided itself on not having any merchandising dollars or effects whatsoever. Remember, Amazon is maniacally focused on the customer experience. They practically invented the reader review. They rely on also-boughts (books purchased alongside other books) and shopping/browsing histories to recommend titles to readers. The bestseller list, they hope, reflects what readers crave. Their idea is that this will maximize profits in the long run, because readers will more often than not be happy with their purchases, enjoy the read, and so come back for more.

Incidentally, this is where I think Amazon destroyed Barnes & Nobles’ attempts to sell online. Barnes & Noble neglected their reader reviews (which turned into some weird commenting game played by teens. No, really), and they tried to control their bestseller list. Which meant that more readers were finding what people were actually enjoying reading over at Amazon, leading to an erosion of reader engagement at B&N. This was greatly exacerbated by a terrible search engine at B&N.

With BookBub and sites like Pixel of Ink, Amazon was suddenly faced with an outside influence of the bestseller lists not based on actual reader preference. An email blast from BookBub can move an unranked title into the top 100 overall on Amazon. Occasionally into the top 10. I’ve used BookBub, and I’ve seen the power firsthand. Basically, I was paying BookBub merchandising dollars. I was paying my way onto the Planogram. Instead of their bestseller list being controlled by the sales algorithms that take reading, purchasing, and browsing habits into account, the Amazon bestseller lists were being controlled by dollars that came from authors’ pockets and through Amazon’s own affiliate program.

This means the user experience was being tweaked by forces beyond Amazon’s control. Amazon has probably been watching this with concern for years now. They want readers to find what other readers determine to be the best books. I think this is why the Goodreads Deals program does not allow authors to purchase slots. Contrary to rumors that Amazon doesn’t care about books, know about books, or doesn’t have a human approach to selling books, I think all of these are gross simplifications and an attempt to demonize Amazon without thinking clearly: Amazon wants to sell a lot of books. This requires knowing about them and caring about them. It also means using the bright minds at Amazon to promote books that they believe readers will like.

Just as they have editor’s picks, both monthly and yearly, Amazon also has high level meetings all the time on which books they want to promote in their Daily Deals and other promotional blasts. These conversations must generate some very heated debates, due to the power of the promotions. Team members have their own preferences — the books they want to champion due to personal tastes — and also books they had some hand in editing or publishing. Thomas and Mercer reps will vie for as many of their books to get Daily Deals as possible. The KDP team will hype up the latest self-pub book that scored impressive metrics. The teams that work with New York Publishers will try to steer promotional slots that way. This boiling of biases and preferences is no different than the debates I used to have with my boss at our independent bookstore. I would set up a display, only to have Bill alter it. And vice versa. Our sales preferences clashed and combined. As it must with Amazon’s promotional energies.

These promotions shape the bestseller lists. Those bestseller lists ARE Amazon’s storefront. They are the face of their retail efforts. Amazon wants this to be customer-focused, not author-focused. That means limiting our tools to influence their storefront. It means cracking down on the outside promotional forces that have developed huge amounts of influence on their storefront. If this is about money, it’s only in that Amazon thinks they’ll make more money in the long run to have bestseller lists that aren’t altered by those wheeling deals. Unless it’s Amazon’s deals, arrived at through their internal debates, rather than through merchandising dollars, affiliate rewards, or authors paying for promotions.

This Could Change

Of course, all of this could change. It could be that Amazon wants in on the BookBub market. Perhaps they will offer paid promotions to us soon that give us a direct line into the Amazon bestseller lists. Maybe they want to do internally what is now being offered as a service externally. If so, this is all just vertical integration. Time will tell.

A Day Later (More Thoughts)

Having slept on this, I’m more convinced than I was yesterday that this is all about curation and having control over the bestseller list rankings. But I think Amazon’s impetus might’ve been that they were losing control of their promotional abilities. With so many outside promo sources goosing ebooks up the list, it has diluted their ability to promote internally. It’s as if someone was sneaking into a Barnes & Noble and putting books up in the window displays. It goes back to those dreadful planograms.

The money angles just don’t make sense to me. Nor is the idea that you get rid of these promo sites just to get rid of them. They are all funneling sales into Amazon. So it has to be about control. And control of what? Which books are given a jolt on the lists.

 

 

COMMENTS (41)

This is a great read and thank you for taking the time to write it. It is the first time I am hearing about the crackdown of the affiliate program. I just hope they don’t start cracking down on authors doing this with their lists. It might not be Bookbub strength but there are some authors out there with sizeable lists. Also, it might only be a few bucks in terms of overall sales but everything like that can affect the bottom line.

While I would agree with that, I’m wondering why the biggest of these sites…namely Bookbub…are getting a free pass while smaller sites like Fussy Lib aren’t? In the TOS, a redirect without customer input also isn’t allowed, but that’s what a BB ad does.

If this is truly about stopping the ability of newsletter companies to manipulate the lists, then BB should have been the first one shut down. They are the largest. They alone can make a book into a 1, 2, or 10 in the entire store (I know, they’ve done for it me too!).

Because BB is still doing a redirect to the site directly from the newsletter without the customer having to click to confirm…well, they are getting away with it to the tune of how many hundreds of thousands of downloads a day?

If this was Amazon cleaning house, then they only cleaned the counter and left the hoarder piles all over the rest of the building.

We don’t know that Bookbub is getting a pass. They’re not talking.

Like Nate says, we don’t know if BookBub is still getting their affiliate money. And as I mentioned in the post, most of BookBub’s revenue is from dollars paid by authors and publishers. They will be profitable even without affiliate revenue. And what they’re doing can’t be stopped. There’s nothing Amazon can do to prevent me or anyone else for sending out email blasts about products for sale. Amazon can only elect to stop paying affiliate fees. Perhaps they have.

It’s also possible that something else was going on with Pixel of Ink. There’s a lot of speculation here. I just don’t think the current theories have much merit, if they’re simply about revenue. That doesn’t make sense to me. Curation makes a lot more sense. Because that affects the user experience.

It’s also entirely possible that BookBub has a separately negotiated affiliate agreement with Amazon. With BookBub’s size, it would likely have been in both of their best interests to work out unique terms to their situations.

We already knew that more than a few years ago – Amazon Business has a deal with em…

Thanks for this extensive overview of the affiliate links and what Amazon is doing. I’ve read a few things, and the depth in this post is extremely helpful.

The Associates TOS is long and multi-paged and for many it is easy to miss some point here and there. one of the basic requirements is “identifying yourself as an affiliate”. Just a tip/reminder to everyone linking to Amazon that this is a TOS requirement that SO many affiliates miss, thereby opening themselves to bans is the hatched were to pass. This very site is a good example. Hugh, you might want to add the disclaimer in a privacy or terms page with the detailed description found in paragraph 10 of the associates operating agreement :)

Great point.

How about Amazon’s investment in Goodreads? It makes sense that Amazon would want to leverage Goodreads, so they can promote their books on that platform for free. If Amazon (or anyone else) uses ads for authors on Goodreads, there might be fewer outside affiliates like BookBub, which means they won’t be paying out so much in the future.

So while I can see your point on store-fronting and not allowing affiliates to manipulate Amazon’s bestseller charts, I also think money is a huge incentive for their new stance on affiliates.

Many great points in this article about Amazon’s side of things. Which makes me wonder if Amazon wanted you to step up to bat for them, Hugh? :) I don’t think enough credit is given to these discounted book email lists because many readers rely on them to find books, so they do have value. Amazon would benefit from working with these services somehow, instead of cutting them off.

They don’t have to ask. I’m always trying to understand my biggest business partner. When my musing leads me some place that I don’t see a lot of discussion, I share it. I never know when I might get lucky and be right about something.

Wow. Thanks Hugh. This is well written and makes a complicated subject easy to understand.
Why is it that everything Amazon does seems to make the climb to successful, bills being paid authorship, always steeper and more challenging?

I respect this perspective, but I wanted to add that I consider BookBub a valid opportunity to improve the discoverability of books that are otherwise finding discoverability a challenge. I think this is a valid and useful thing.

I’ve had three Bookbub promos. The first two spiked book sales temporarily before seeing them gradually return to their prior levels, which suggests a lot of what you’re talking about: the promotion ultimately manipulated the sales ranking for these books temporarily and artificially. The third promo, though (for The Spaceship Next Door) was for a five-month old book that had sold well on other sites but not on Amazon. Its audience hadn’t discovered it yet. Unlike the other two promos, this one resulted in sales “sticking”. It hasn’t returned to the pre-promo level. It’s also having a downstream impact on my other books that I didn’t see with the other promos.

I don’t think of this as a manipulation of Amazon, and I don’t think they felt that way about TSND either, because one of the reasons the book is sticking is that Amazon promoted it themselves a week after the Bookbub. So adding to the value in having readers find it, the promo helped Amazon find it.

I don’t think it’s entirely true that Bookbub email blasts reflect the author’s money driving rankings over reader preference. Bookbub’s seletions are also curated. Bookbub and Amazon both have teams of people who advocate which books should be promoted. Most authors can’t get a Bookbub ad regardless of how much money they are willing to pay, so it’s hardly author-driven. That’s because Bookbub’s teams are curating, too, and that’s based on the number of reader reviews and existing rankings.

The timing is awfully convenient – as Goodreads Deals is launched, Amazon eliminates competing products. There is a precedent for this behaviour – in late 2015, Amazon announced they were not going to sell competing Apple and Google video-streaming devices.
http://www.bloomberg.com/news/articles/2015-10-01/amazon-will-ban-sale-of-apple-google-video-streaming-devices
Quote from the article: “The move, coming just before the year-end holiday shopping season, shows how Amazon is willing to sacrifice sales of popular brand name products — Apple and Google have the best-selling media streaming devices generally — to bolster its own video-streaming service. “

That is an entirely different situation.

Amazon dropped those gadgets because Amazon couldn’t get its video app on the gadgets. Note that Amazon kept other similar products, include Roku’s set top box, Apple’s iPad (a Fire tablet competitor), etc.

If Amazon were really going to drop its competitors, why didn’t they go for a clean sweep?

I’m confused by your comment that “the Goodreads Deals program does not allow authors to purchase slots.” Goodreads made it pretty clear on their ‘Authors & Advertising’ blog on May 17 that slots will be offered once the program is out of beta.

“How much does it cost to have my deal included in Goodreads Deals?
We’ll announce pricing soon. Stay tuned.”

https://www.goodreads.com/blog/show/649-goodreads-deals-a-new-way-to-promote-your-ebooks-to-millions-of-goodrea

Interesting. I was wondering about it. Appreciate the breakdown.

Goodreads flat out confuses me. It seems to be nothing but a big mess. For now I’m strictly KDP. It’s perfect for someone like me who has nothing but is trying to bring their dreams to life while hopefully making a life for my family. Love your work Hugh, would love to know who does your cover work.

Great, insightful article. You mentioned several times that Amazon is driven to delight their customers, and that can’t be overstated. I am new to KDP, but have been selling to and through Amazon for the past decade, and they are relentless in their pursuit to be front of mind for all consumers as the preferred place to buy almost anything.
They achieve this through their policies, marketing, product selection, services, etc. and their control over all of them. If you want to know where Amazon is heading, like Hugh mentioned, you have to look at it from their perspective of delighting customers first and then making money in the process.

Hi,

Why is Wool not available in an electronic form in Canada?

Thx

D

That’s odd. I tried to buy on my kobo and it said the books are not available as an ebook in Canada.

My first thought was if Goodreads Deals was going to use other retailer affiliate links like it does with ads (sponsored posts) now. Or would that be too hypocritical?
I’m wondering how they’re going to curate their newsletter if there is no application process. How will they know which books are going to go on sale, when, for how long, and at what price?
Lots of speculation (as usual) when it comes to Amazon. I guess we’ll have to wait and see.

Thanks for taking time to explain in such a thoughtful, insightful way, Hugh. This stuff makes my elderly eyes cross sometimes, so I enjoy finding clarity.

Hi,

I do think this is purely about Amazon not wanting anyone else to have a great influence on what shows up on it’s bestseller lists, but I’m not sure their motives are altruistic towards readers. I think it’s only about power. Amazon doesn’t like anyone having as much power as places like Bookbub has.

If it’s about readers — I have to think readers are happy with those deal lists, that they’ve found tons of new authors they love through those lists. I know, as a reader, I have, and as an author, places like Bookbub have made me a lot of money.

But for most of us, Bookbub is about pushing a first in series book. You get readers buying the rest of your books because readers like that first book they find through a Bookbub ad. Which is also a lot of revenue and sometimes visibility at Amazon that isn’t determined by Amazon, another loss of power I bet Amazon doesn’t like.

I just thought I’d note that in the recent past, Amazon Publishing has utilized BookBub for books published by its various imprints. I had one back in February when my CHRONOS books were part of a promo, and a quick peek at the current BookBub lineup shows a Skyscape title. So if there’s a animosity toward the general concept behind these programs, it must not have filtered down to APub. ;)

That is exactly what I was going to say. Amazon’s publishing imprints frequently use Bookbub to advertise.

Hmm, I don’t see Amazon as trying to let the reader have the control. Instead of outside influences to top 100 lists, Amazon will still influence the lists.

Already, every month they let Prime members choose from about 5 books (for free) that end up making their way to the top 20 best selling list in the store. By the time the books are released to the public, 1 month later, there are hundreds of reviews and they’re on top of the lists. Then by adding this Goodreads mailing list (that also is delivered every day) and wiping out other completion, they will have less competition for influence on lists, giving Amazon more control.

I just can’t see how it’s different because it’s Amazon’s marketing instead of outside companies’ marketing tactics. I think this makes you get into what makes Amazon more valid in choosing books to market than other companies if it’s all about the reader.

“The only way to make an ebook free on Amazon is to make it free elsewhere and force Amazon to match the price.”

Not true.

Leaving aside the obvious point that KDP Select authors get five days free every ninety days without price-matching, authors can also list at $0.00 on Amazon at any time and for any duration using StreetLib, and they will shortly be able to do so using Pronoun.

Hugh, thanks for writing this informative article. While I’m sure this change is being driven by customer experience, I met with an Amazon rep several months ago. She specifically asked me what they could do to help me as an author. I told her the ability to do BookBub-type promotions via Amazon/Goodreads would be huge for me. I have no way of knowing whether other authors have given similar feedback.

Yeeeahh, If Amazon were solely focused on “customer experience” they would either have All The Erotica out in front, or wouldn’t take it at all, depending on which customers they talked to. There are at least 13 spots on any given book page (the 4 sidebar ads + the “sponsored products” ribbon which for me is 9 books wide) that are paid advertisements for other books than the one I’m currently browsing. If Amazon cared only about giving the reader what they searched for, they would serve up what the reader searched for without inserting sponsored results in the search results, and without cluttering the book description page for books advertised through paid advertising (which, via clickthroughs and click-aways does, in fact, influence the bestseller lists).

We all know that an absolutely equitable, ad-free environment will result in a a lot fewer books being discovered at all, so we put up with ads–both buying them as authors and seeing them as readers–because they WORK. I don’t for one minute believe that Amazon isn’t motivated by control over their ecosystem’s advertising dollars. If they can make a pleasant user experience, then that’s bonus.

Amazon does a lot of good for authors by making it easy to publish, but they’re no fairy godmother. They’re a smart business organization, and sadly, that means occasionally cutting throats.

It’s the money. If it was straight up sales then you would just go by numbers sold and we know now every list is leveraged because of the power it has to influence buyers. I think it’s a horizontal integration or business plane because you want to own/control everything you can when it comes to your product. Goodreads for authors takes so much leg work in contacting readers directly because they don’t really want you to and also abuses/spam which do tick off legitimate readers on there. I’ve been using them for years. Bottom line – add a disclaimer if you’re using Amazon Affiliate Links to your website and it’s more important than ever to have your own reader email list. You’re a business too and you need it under your control.

BTW Nate is awesome. I read his newsletter every day.

Thanks!

So, are you and Hugh Howey going to have a wager on who was right?

If there were some sure way to settle it one way or the other, sure!

Are we truly sure BookBub makes more money from author & publisher fees? How much does each sale pay the affiliate? It would seem to me that if a book sold enough copies, it could make more than the fee paid to advertise it.

I wonder how long it will be before Amazon makes a play for BookBub. Maybe that’s why they’re not in Amazon’s line of fire with the affiliate fees.

I was at the eReaderIQ site on Friday and noticed they are one of the affiliate program casualties.