Tuesday, May 15

Amazon's Ranking Algorithm Has Changed: what this means for indie authors


Amazon has recently changed the algorithm it uses to rank books in two major ways. First, a free download no longer counts the same as a paid one and, second, all things being equal, higher priced books have a higher rank than lower priced ones.

These changes are important because rank is highly correlated with how well a book is seflling which is, in turn, largely dependent upon where it shows up in Amazon's various bestseller lists. In other words, these changes can make a significant difference in how much money an independent author earns through Amazon.

First change: A free download no longer counts the same as a paid one
Authors often do promotions where they make their book free for three or four days with the result that it skyrockets in rank. Of course the author doesn't make any money from this directly because the book is free, but soon after the book reaches the top ten position the author begins charging for the book. Due to high visibility on various lists the book continues to sell well for a few days and the author makes a few hundred dollars. Not bad.

The change in Amazon's ranking algorithm means that the kind of promotion I've just described won't be as effective. If you're giving your book away for free one download won't equal one sale, as it used to, and so your book won't rank as high as quickly. A free download does still count toward building your book's rank, but now it's more like for every 10 free books downloaded you'll get credit for between 1 to 4 sales. The numbers are estimations, based on observation (for references, see Other Reading, below).

To recap, unlike before, if you make your book free for three or four days, rather than it rocketing to the top of the bestseller lists it will more likely limp toward the top but peter out before it reaches the choice positions in the top 10, or perhaps even the top 50.

Second change: All things being equal, a higher priced book will rank higher than a lower priced book
In the words of Ed Robertson:
... all things being even in terms of sales, not only did a lower price indicate a worse position on the popularity lists, but a higher price indicated a better one.
- Ed Robertson, Amazon's Ever-Changing Algorithms, Part 3
What does this mean for indie authors? 

Pricing. For a long time I've been an advocate of the 99 cent price point for independently published books, but no more. To my mind, the big advantage of publishing ones book for 99 cents was that an author could use it for marketing, to help find an audience for her work. Until I know more about the changes in Amazon's ranking algorithm I won't be making any recommendations, either way.

Overall, these changes certainly haven't helped the independent author, though I agree with Ed Robertson that Amazon isn't targeting independent authors with these changes, it just wants to make more money.

I'm going to keep my eyes open for more information about these changes, and I'll be sure to pass on what I learn.

Stay tuned.


Other Reading:
- Amazon's Ever-Changing Algorithms, Part 3: Why Lower Prices Might Give You Lesser Sales
- April Sales Voyeur + A Hint Of Things To Come

Photo credit: Business 2 Community

5 comments:

  1. Thank you -- I've just noticed the same thing happening on my ebook, A Compromising Situation. Higher price and a higher ranking with it.

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  2. Ah! Thanks for the feedback, much appreciated.

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  3. The 99c price point completely depends upon the author who you talk to. Many state that 99c is the best price, many state that 2.99 is the best price. At the present time Amazon has 2 2.99 books in the top 20 books of "fiction" the rest are of a higher price. Now whether that is to do with main stream publishers promoting their books at a higher price to recoup the costs is anyones guess, but likely. The lower priced books tend to be the "indi authors" who have done it by themselves, so it tends to skew the results a bit.

    Amazon makes its money from the Kindle hardware on the ebooks. That is well known. But what tends to happen is that Amazon needs cash, but it also can not skew the results too harshly in favor of higher priced books. But if on one side indi authors are publishing for 99/2.99 and publishers are sending out 4.99+ then there is going to be an issue for Amazon not to hinder lower priced books too much.

    Also you have to ask yourself if too many indi authors sell for a lower price it does kinda reduce the professionalism of their work a bit. Then everyone in time has to lower their book prices because the public gets used to the lower price. raising the price then becomes difficult.

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    Replies
    1. Halvaras, thanks for your comment.

      I agree, there can be the perception that lower priced books aren't as good as higher priced ones.

      It's amazing how quickly things change. I'd say now that $2.99 is the minimum an indie author should sell their book for. Sure, lower it to free or 99 cents for a promotion, but bring it back up to (at least) $2.99.

      About your statement that Amazon makes money from its sale of hardware, Jeff Bezos has said Amazon makes no money from the sale of Kindles.
      http://blog.karenwoodward.org/2012/10/jeff-bezos-amazon-makes-no-money-on.html

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