Amazon Prime Video Direct Slashes Royalties for Creators in U.S., UK, Germany and Japan

Producers are on the receiving end of another rate card reduction from Amazon Prime Video Direct.

  • The online retail behemoth is cutting U.S. royalties from the present range of 6 to 15 cents per-hour-viewed.
  • The new rate is between 4 and 10 cents per-hour-viewed.
  • A similar 33% rate reduction is being introduced in UK, Germany and Japan.
  • Amazon enjoys a market valuation of around $875 billion.

A New ‘Black Box’ Ranker

According to Sahil Patel‘s very useful report in Digiday (March 14, 2019):

  • “Amazon is also introducing a new sliding scale on how it determines payments in the U.S.”
  • “Instead of a flat fee based on aggregate hours viewed, the company is introducing a new metric, called “Customer Engagement Ranking,” which will score video titles based on a variety of factors including unique viewers, hours streamed and the popularity of the title in terms of talent, IMDb rating or even box-office performance.”

Takeaways

  • The Amazon Prime Direct platform particularly suited producers of long-running series.
  • Even at a few cents / hour viewed, a substantial archive could throw off attractive revenue streams.
  • However, this latest rate card cut demonstrates Amazon’s lack of commitment to the long tail.
  • It also shows its willingness to use its leverage against producers who have few other digital options.
  • Several producers have told me that they have dropped Prime Direct and shifted to a DTO (Download-to-Own) model.
  • Amazon’s CER ranking further excludes producers and distributors from access to the data that helps them analyze their sales efforts and plan for future projects.

What It Says About the New Digital Video Economy

  • Meanwhile, Amazon is adding commissioners and resources to its Originals teams in U.S., UK and Europe.
  • These two developments characterize the digital video economy:  Boosting opportunities for A-List creators of signature Originals, while cutting back on the rewards for the pipeline (and archive) for all other programs.