Evaluation Process
We only select book collections distributed on Amazon and/or Audible that have already demonstrated consistent net royalty generation and show strong potential for future performance. Each collection is then evaluated using our valuation framework, developed through years of hands-on experience in digital publishing across Amazon KDP and Audible ACX.
This framework ensures that collections are not valued arbitrarily, but assessed based on net profits, profitability, and long-term growth prospects. At launch, each collection offers a 20% annual net royalty-to-price ratio, based on historical performance data.
Our evaluation process is based on five key factors.
01. Timeframe
Each collection is evaluated using historical royalty data over a selected number of months. The timeframe may vary depending on the collection’s format, maturity, publishing history, historical revenues, market dynamics, and other factors specific to the collection. This allows for a more accurate and context-aware evaluation.
Example:
A collection consisting of 2 KDP books and 2 Audible audiobooks, evaluated over the last 12 months.
02. Net Royalties
Our evaluation is based on net royalties, meaning royalties earned minus typical Amazon advertising expenses (where applicable). In an Amazon self-publishing business, Amazon ad spend is essential to sustain visibility and sales, so we apply a fixed, standardized deduction when calculating net royalties. This impacts both initial valuation and the net royalty base used for future distributions. Net royalty calculations are applied as follows:
- Audible ACX (Audiobooks): 100% of royalties (no Amazon Ads are available for audiobooks).
- Amazon KDP (eBooks, Paperbacks, and Hardcovers): 60% of royalties, reflecting standard industry practices where successful publishers typically allocate around 40% of gross royalties generated to Amazon Ads on a monthly basis.
Example:
- 2 Audible audiobooks: €12,000 in gross royalties generated over the last 12 months
- 2 KDP books: €12,000 in gross royalties generated over the last 12 months
Net royalties used for valuation:
- 2 Audible Audiobooks: €12,000 × 100% = €12,000
- 2 KDP books: €12,000 × 60% = €7,200
- Total net royalties over the selected timeframe: €12,000 + €7,200 = €19,200
03. Average Monthly Net Royalties and Available Net Royalties
The next step in the evaluation process is to calculate the average monthly net royalties over the selected timeframe, and then determine the portion of royalties available for participation (49% of total royalties), assuming stable performance over time. Using the previous example:
Example:
- Total net royalties over the selected timeframe: €19,200
- Average monthly net royalties: €19,200 ÷ 12 = €1,600
- Available monthly net royalties (49%): €1,600 × 49% = €784
- Available annual net royalties: €784 × 12 = €9,408
04. 20% Annual Net Royalty-to-Price Ratio at Launch, Total Collection Value and Maximum Allocation
Our valuation framework is designed so that the available annual net royalties correspond to 20% of the maximum amount allocated for participation units at launch. This structure is designed so that, if average performance remains stable compared to the selected timeframe, the royalty distributions associated with your participation would correspond to 20% per year of the amount you allocate to participation units. If performance improves, royalty distributions will be higher; if performance declines, they will be lower.
In addition, each collection is assigned a total value based on a standardized multiple of total net royalties (60 months of average monthly net royalties). This allows us to determine both the maximum allocation amount, which is capped at 49% of the total value of the book collection, and the percentage of future available net royalties associated with the participation units purchased by participants.
Example:
- Total book collection value: €1,600 × 60 = €96,000
- Maximum allocation amount: €96,000 × 49% = €47,040 (rounded to €47,000 for simplicity)
- Participants can acquire one or more participation units until the maximum allocation amount (€47,000) is reached. Royalty distributions are paid quarterly, based on actual royalties earned. Payments follow standard Amazon timelines, with royalties received approximately 60 days after they are generated. In that case, an allocation of €1,000 corresponds to 2.13% of rights of future available net royalties (€1,000 / €47,000).
For example, if you allocate €10,000 to this collection, the estimated annual net royalties would be €10,000 × 20% = €2,000, distributed quarterly in installments of €500. This estimate is based on historical performance. Actual royalty distributions depend on future sales and may be higher or lower depending on how the books perform relative to the selected timeframe. At the same time, a €10,000 allocation corresponds to 21.28% of future available net royalties of the collection (€10,000 / €47,000). You can list your participation rights for transfer on the platform at any time, at a price you choose. A transfer is completed only if the proposed terms are accepted by the founder or another verified user.
05. Ongoing Monitoring and Reporting
The evaluation process does not stop once participation units have been allocated. Each collection remains subject to continuous monthly monitoring, with updated data, documentation, and supporting materials.
These monthly reports show the royalties actually earned and form the basis for quarterly royalty distributions. This data may also influence the pricing of secondary transfers over time.