How Much Do POD Publishers Profit from Those “Channel Distribution” Fees? Hmm… By Angela Hoy

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Xlibris was recently purchased by Author Solutions / AuthorHouse.

Here’s a letter I received last week from a disgruntled Xlibris.com author. This has nothing to do with the purchase of the company as this has been going on at Xlibris for years.

Hi Angela,

I self published a book through Xlibris, a company out of Philadelphia. I was just informed by Xlibris that I will soon have to pay a fee for my book to be available for purchase on the Internet. My book being available on the three sites (amazon.com, barnesandnoble.com, and borders.com) was supposed to be part of the service that I originally paid for.

I have pasted Xlibris’s email to me below for you to review. Thank you and I look forward to hearing from you.

“M”

I haven’t published the letter here (copyright infringement) but you can read a copy of the letter online. See the post made on March 20, 2006 here:

http://www.silverthought.com/forum/index.php?topic=162.0

It begins with this phrase:

This letter is to inform you of important adjustments

Basically, the letter says they’re informing the author of important adjustments made to the process of having their book listed in the online channels (like Amazon.com, et. al.). They then talk about how their distribution partners have always charged them a fee, that the fee used to be offset by a micro-inventory, and that this all changed in 2004 when the partners stopped running inventories. They say Xlibris will be removing books whose sales don’t offset the fees (they don’t tell you how many sales would offset those fees).

They then say that they must introduce a “channel distribution” fee of $69 to offset those changes. This is an annual fee. They then tout the “benefits” of the service (more on that later). They give the author a date by which to respond. If the author doesn’t pay the fee, the author’s book will no longer be available on Amazon.com, barnesandnoble.com, etc. It’ll only be available on Xlibris.com.

The letter emailed to “M” by Xlibris was almost identical to the one posted online two years ago. We’ve received complaints about this letter over the years. However, the fee is $69 this year (as opposed to $50 in 2006.) Basically, these authors paid Xlibris a LOT of money (over $1K in many cases) to publish their books, yet they appear to be surprised by the channel distribution fee.

At BookLocker, we, too, have our books listed with Ingram and, thus, in the online bookstores so I can tell you how this works.

We pay Ingram $12 per year, per book, to keep a title in Ingram’s “distribution channel.” It has always been $12 per year. Their fees have not gone up, nor down. Xlibris has far more books in the system than we do so, if they’re getting a deal from Ingram, you can bet they’re getting a better deal than we are.

If you do the math like we did, it appears that Xlibris is charging authors more than five times what Ingram charges them. Yes, that’s a 500% increase of the actual fee (a $57 profit based on an original fee of $12). That’s quite a profit margin!

For books distributed by Ingram (and printed by Lightning Source), publishers are not charged any fees by Amazon, BarnesandNoble.com or Borders.com. The email from Xlibis states, “our distribution affiliates have always charged Xlibris a fee for keeping a book listed on these sites.” The wording seems to imply the individual bookstores charge for the listings, but “distribution affiliates” means Ingram.

Another oddity is that they claim the “channel establishments” ceased keeping inventories in 2004 (4 whole years ago), yet they then state, “Due to this change, Xlibris will now be removing titles whose sales activity does not generate enough revenue to offset the listing fees.”

Um, why the rush to remove titles “now” when they’ve been paying this fee to Ingram/Lightning Source for years? And, since they’ve known about this fee for years, why have authors complained that they weren’t aware of the fee until they received this form email?

I particularly like the part where they say that one of the “benefits” of the fee is that “You, the author, determine how long you would like your book listed with channel distributors regardless of sales activity.”

Being required to pay $69 for a benefit you thought was included in your expensive package is a benefit? That one always makes us laugh out loud.

Whenever someone charges you for something you didn’t know you’d be charged for, either you didn’t read the fine print or it’s a hidden fee.

There is nothing about this “channel distribution” fee in the Xlibris contract. The only place on their website that mentions “channel distribution” is a page that an author might not even click on if they sign up for one of the publishing packages directly.

Oh, and if you sign up for a specific package (Black & White Package, or the Basic or Professional Full-Color Packages), channel distribution for the first two years is (cough!) $499 extra – with $69 per year charged after the second year.

Many other POD publishers charge an annual fee as well…but not quite as much as Xlibris. Here they are:

BookLocker (owned by the author of this article) – $18 per year

Outskirts – $18 for 2009; $25 for 2010

Llumina – $20 per year

AuthorHouse – $20 per year

iUniverse – $25 per year (charges for ebooks as well!)

Infinity – $149 extra to get into Ingram’s system; no annual fee