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Publishers Weekly reports that a panel it hosted on e-book publishing rights revisited the issue of e-book pricing and royalties in light of recent developments in the publishing industry.
One of the major issues raised was that of fairness in royalties across different formats. Neil DeYoung, director of digital media for Hachette, repeated in his opening remarks the standard publisher “company line” that most e-book production prices are just as high as print book prices—the only difference is the costs that are there are less visible.
However, Paul Aiken, executive director for the Authors Guild, refuted these claims with some interesting math:
With his math, which he walked the audience through, a publisher, on a title with a $26 list price, makes roughly $5.10 on the hardcover while the author makes $3.90. On the e-book sold through the wholesale model, the publisher brings in $9.25 while the author gets $3.25. On the e-book sold through the agency model, the publisher gets $6.38 and the author gets $2.28.
Why, then, Aiken wonders, should authors earn more on one version of a book than another?
Attorney Lloyd Jassin brought up another point, which I mentioned a couple of days ago: the 35-year copyright termination deadline that is fast approaching could mean more authors and their estates beginning to reclaim backlist title rights from publishers and publishing them elsewhere.
The question of e-royalties is one that publishers are going to have to address sooner or later. The elephant in the room is Amazon’s amazing 70% royalty offer, giving writers the incentive to self-publish backlist titles and potentially earn much more than traditional publishers are willing to give them.
You need to be careful when you start hyping Amazon’s royalty rate as this is 70% of the sale price not the retail price. As such in realty most authors through this program are getting more like 50% of retail.
It’s easy to argue that an author’s royalties should be the same, whatever the format. His labor and investment in creating the book is the same whatever form the book takes.
It’s also easy to argue that the publisher’s slice should go down. With digital books, the publisher isn’t investing in printing, filling warehouses with books, or losing money with returns. The cost of creating a digital book is a fixed and easily predicted amount. The cost of distribution is mere pennies. Given that ebooks should cost less, most of that price reduction should come out of the pockets of publishers.
Much of the fuss is about that. Publishers are realizing that a digital market means less gross revenue and confusing that with less profit. Run properly a mostly digital publisher could make as much money from $10 ebooks as it now does with $20 hardbacks and without shorting the author. Amazon realizes that. That’s why they’re publishing their own Kindle publishing scheme.
And it’s easy to suspect that, by the time the rest of the industry wakes up, Amazon will dominate digital publishing.
As someone coming from commercial financial management I find the whole traditional royalty rate calculation to be appallingly out of date and badly set.
I am not sure what existing writers who signed contracts many years ago can do about it – though I suspect they could do more about it than is happening.
Bt definitely current writers signing contacts for publishing need to wake up from the slumber that writers have traditionally been in when signing contracts. They need to be aware of the fragmentation of the market delivery and the variety of ways their works may be sold. I have no sympathy for those who have signed in the last five years or in the future. This whole process was eminently foreseeable.
It also seems to me that an author should receive a fixed royalty per sale. Not a percentage. The author is the producer of the work and the work has a fixed value. The eRetailer should then have the right to sell that work at whatever price he choses. If the eRetailer can get a higher price by investing in marketing, then it has a right to keep the spoils. If it does not make the effort, and cannot sell then so be it. This current percentage system is a blight on writers and on retailers imho.