The Authors Guild has issued the opening salvo in its Fair Contract Initiative. The organization has released a lengthy report to its membership detailing the inadequate royalties authors are currently issued on e-books, Publishers Weekly reports.
The current standard e-book royalty is 25% of net—that is to say, 1/4 of the amount the publisher receives for sale of the e-book. (Assuming the standard 70% agency pricing rate, that’s 17.5% of the e-book cover price.) The Authors Guild thinks that’s not a fair rate.
The report admits that the Guild probably should have pushed back harder sooner, but prior to 2009 e-book sales were so low relative to print books that it didn’t seem worth endangering the overall contract for the sake of demanding more out of them. The Guild believed that once sales rose, the market would police itself, and authors would stop signing up with publishers that offered lower e-book royalties. However, that hasn’t happened.
The publishers, the Guild went on, unexpectedly “dug in their heels” on the digital royalty, though, using most favored nation clauses, which state that if an e-book royalty rate is changed for one author a publisher needs to renegotiate that rate for all authors. Consolidation among publishers has also put authors a the unenviable position of having to settle for, in the Guild’s wording, “take it or leave it deals.”
Some authors have gotten royalty rates as high as 50% of net, but have been required to sign non-disclosure agreements so they couldn’t tell anybody else they were getting them. This is pretty unhelpful for most authors. The report also seems to place some blame on Amazon in noting it has put the squeeze on publishers for bigger e-book discounts.
There can be little denying that many publishers, especially major publishers, have been stingy with their e-book royalty grants. This has been a bone of contention a number of times in the past, including complaints by the Authors Guild about Wiley and Random House/HarperCollins back in 2010. It looks like they’re ready to step back up to the plate again now that e-book sales have grown.
Of course, self-publishers get considerably better earnings on their books. Even those who price outside the coveted $3 to $10 range get 35% of gross—twice what traditionally-published authors get. And those who price within that range get twice that. Of course, the traditional publishers do a lot of things for their share of that money—but do they really do that much?
It will be interesting to see whether anything comes of this.
In the early days of e-publishing, anything less than 50% royalties from the e-publishers was considered an insult and the royalties could run as high as 75-80%. Then the distributors like Fictionwise and PeanutPress showed up and started taking a chunk of the profit so the top level of royalties began to fall.
When Amazon entered the picture with all the added fees and their cheaper prices, the e-publishers were forced to drop their rates even further because they were no longer making a profit.
These days, the small e-publishers may give 50% at best.
Meanwhile, agents let the big publishers take a huge chunk of the ebook profits via low royalty rates because of “the price of setting up the business,” etc. Supposedly, the royalty rates were supposed to improve, but they never have for a vast majority of authors.
Before peanut Press, there was no real ebook market, and without Peanut Press (and others) distributing the ebooks there would have been no market, just a few isolated sellers.
Also, Fictionwise was not a distributor.
By distributor, I mean the middleman between the publisher and the reader which Fictionwise was.
From the selling numbers from my publishers, Rocketbook was the first major distributor of e-books with the numbers from PeanutPress being much lower and later in the game. Both died after being sold to idiots.