Amazon Won’t Pay Self-Published Author For Books It Mistakenly Gave Away

Amazon’s self-publishing platform, Kindle Direct Publishing, has a rule: If you use it to publish a book, and then sell that same book on another site at a lower price, KDP retains the right to drop the price of your book in the Kindle Store too. Whether that’s fair or not, it’s in the KDP Terms and Conditions that users agree to. But what happens if Amazon (NSDQ: AMZN) makes a mistake and gives away over 6,000 copies of your book for free? One self-published author found out, in a saga that is only today nearing conclusion.

James Crawford self-published his zombie novel, Blood Soaked and Contagious, this year and sold it for $5.99 in the Kindle Store and in other e-bookstores. He also posted a free, three-chapter sample of the book in the Nook Store. Amazon–rather, Amazon’s algorithm, presumably–found that free sample in the Nook store and then marked down the full-length version of the book in the Kindle Store to $0.

“They found something that is quite similar, asked no questions, and used their power to discount my novel 100%,” Crawford wrote on October 7. Crawford then began battling with KDP’s outsourced customer service, and on October 20 Amazon finally fixed the pricing error and started actually charging for the book again. By that point, it had been downloaded for free 6,116 times. And Amazon refused to pay royalties on any of the copies it gave away for free. Crawford started a little social media campaign, his story started getting picked up and yesterday, almost a month after the saga began, a Kindle Direct Publishing rep called Crawford and told him that while he won’t be getting any money, Amazon will “research the entire chain of events and will get back to you in a day or two.” Also:

They stand by the terms of the contract (ie. no compensation for their mistake)
They are grateful for my help as a test/training case for customer service
They have never seen an issue quite like this one before
My concerns were not handled promptly enough
My issue was not dealt with in an empathetic manner
Gosh, we really appreciate you talking to us about this

How much money did Crawford lose? That’s a little unclear. He sells his book for $5.99 and receives a royalty of 35 percent from Amazon on each copy sold. (Amazon also offers a 70 percent royalty option for books over $2.99, but Crawford chose the lower royalty “because you can opt out of Kindle Lending.”) If he’d sold 6,116 copies at that price, he’d net $12,822.19. But people are much more likely to download a book if it’s free, so you can’t say for sure that Crawford actually lost nearly $13,000. While some commenters suggested that Crawford take legal action against Amazon, others recommended that he simply enjoy the free publicity and use it to build up his fan base.

A couple things are clear here: 1) Amazon needs to not drop book prices by mistake, and self-published authors need to watch out for that happening; 2) Kindle Direct Publishing’s customer service should get better and faster about responding to these types of issues, especially since Amazon gets a cut of these authors’ sales (i.e., they’re not just “customers”), and judging by their response to Crawford, it sounds as if they will improve at this; 3) Giving away a book or an excerpt of a book for free is a really good promotional tactic–which is exactly why Crawford tried it in the Nook Store in the first place.

Update 11/8/2011: Amazon told Crawford that in future it will “review the language we use in dealing with these issues.”