Wednesday, January 20, 2010

Amazon's 70% royalty

Sounds pretty good -- but note that Tor (well, its parent corporation, but Tor has to toe the line) recently cut ebook royalties paid to author to 20% of net proceeds. Which frankly sucks.

So, for a $9.99 eBook sold on the Kindle under this new scheme:

Tor's share: $5.60
Amazon's share: $3.00
Author's share: $1.40

Other publishers are offering 25% of net as royalties, so:

Publisher's share: $5.25
Amazon's share: $3.00
Author's share: $1.75

Of course, those figures ignore Amazon's deduction for "electronic delivery costs," whatever that amount might be. You think Whispernet is free? It isn't; it's paid for by the publisher and author when you buy a Kindle eBook.

And the above assumes that the publisher doesn't farm out its ebook-making to third parties (Tor does), further reducing the claimed net proceeds, and thus further cutting the author's income.

As we transition ultimately to ebooks, is it really true in a world of no shipping to bookstores, no warehousing, no physical product at all, that the lion's share should still go to the print publisher? Yes, it's probably fair now, but it won't be forever.

Ah, but the publishers cry, we pay advances to authors! True, true, but many publishers have cut their average advances, and I have friends -- names you'd all know, Hugo winners included -- who have not seen their advances rise in over a decade, despite always earning them out.

Okay, many authors need advances to write books. But it'd be interesting to see for authors with a track record (those who could actually get a bank loan), how the numbers would crunch comparing simply getting a bank loan equal in size to the advance they're now receiving, using a portion of that to hire a freelance editor for the novel (going rate is roughly $3,000, give or take), and then pay back the loan with interest from the proceeds of the sale of the ebooks? How much further ahead would an already established author come out?

(And, of course, if you didn't need the advance up front, just cut out all that stuff about the loan.)

And, no, I'm not advocating self-publishing, and especially not for beginning authors (although imagine how well an ad hoc collective of Hugo and Nebula winners and nominees could do with their own electronic imprint); the best way to sell your new book is to have an established audience from your previous ones. But we do live in interesting times.

Visit The Robert J. Sawyer Web Site
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23 Comments:

At January 20, 2010 1:53 PM , Blogger Jonathan Ball said...

If only we could all be Stephen King, who at one point was getting 55% royalties AND a $2-million advance AND was locked into that scheme for multi-book deals.

In seriousness, a guy like King is basically doing what you describe -- he's a little industry who in effect "hires" a publisher (for a relatively small cut of a very large pie) to put out books, and effectively has utter control over how things go (whether or not he chooses to exercise this), and can set/issue incredible demands.

I would be curious to know if you would ever seriously consider the kind of route you describe -- say, if you wrote another Terminal Experiment, a book that publishers initially didn't want to take on due to its potential to raise controversy. (Although, to my mind, this is the perfect reason to take on such a book, in a world where publicity is prized.)

 
At January 20, 2010 2:03 PM , Blogger RobertJSawyer said...

I'm considering all possibilities, of course; my job is thinking about possible futures. :)

 
At January 20, 2010 3:24 PM , Blogger Alex said...

Sometimes it's tempting to set up a genuinely virtual e-publishing outfit to eliminate the bricks and mortar and stop paying all the meatnet overhead.

 
At January 20, 2010 3:28 PM , Blogger RobertJSawyer said...

True, true, Alex. Although as I said to my wife this morning, almost every person we socialize with here in Toronto is an avid reader, but, out of that crew, I can think of exactly one person beside myself who has a dedicated ebook reader, and one other who routinely reads ebooks on a nondedicated device. The vast majority of readers still have never even seen an ebook-reading device.

But the tipping point is coming ...

 
At January 20, 2010 3:49 PM , Blogger Clive Chan said...

It's definitely an interesting shift that is taking place right now. If it weren't for my love for a nicely typeset book, I'd probably have an eReader right now. I just find current e-books to be poorly displayed on screen, but that's more of a software hurdle.

With the slew of new devices being shown at CES this year, I think the electronic print movement may finally hit its stride this year. I saw Sony's Reader displayed at a local Best Buy recently, and it drew a small crowd.

 
At January 20, 2010 4:13 PM , Blogger Ken Breadner said...

I think authors are going to have to look at new models of remuneration. There are lots out there that can be mixed and matched. Your readers might wish to pay a subscription fee, either monthly or as a sort of advance deposit on your works. You could have advertising sponsors, although I think that's distasteful...how long before they'd be seeking influence beyond the "cover screen"? There's Creative Commons; there's "pay what you feel like", with those who pay well getting perks like signed copies or advance reader copies. Doubtless there are lots more. I believe that even in this culture, people are willing to pay for quality.

 
At January 20, 2010 4:46 PM , Blogger Jonathan Ball said...

The problem is that we "live in interesting times" as authors, and although there is unprecedented opportunity (in terms of getting the words published) these opportunities are not clearly fleshed out in definitive, we-know-this-works kinds of ways. As a general trend, it seems that authors are going to have to become more business-conscious, which may be empowering for some but likely confusing/frustrating for most. Most of the authors I know have zero interest in dealing with the business end of things and just want to get money to write.

I like to say that in writing it is easy to make a little bit of money and very difficult to make a lot of money, but impossible to make a normal, average wage. While not strictly true, this seems generally true. My hope is that these emerging technologies and business models will finally allow working writers to earn a working wage. My fear is that instead it will become easier to make a small amount of money and increasingly difficult to make a large amount of money, and the near-impossible middle will widen.

 
At January 20, 2010 4:56 PM , Blogger RobertJSawyer said...

That's very well said, Jonathan. Thank you.

 
At January 20, 2010 6:15 PM , Blogger Ian H. said...

The tech blogs seem to think this is Amazon's pre-emptive strike against Apple's soon-to-be-announced tablet. If Apple adds books and a decent ereader to a moderately-priced tablet device, Amazon is going to have some serious competition for market share. This looks alot like Apple's iTunes model: decent percentages, but with a cap on prices.

The cost of Whispernet to publishers is supposed to be about 15¢/MB, so a typical ebook will be about 6¢ to deliver.

As for the cost to the publisher for ebooks, it has to be marginal compared to the cost of paper-and-ink copies. Once it's typeset and file format converted, that's about it - no presses to run, no deliveries to schedule, etc. Is their percentage less or more than paper books?

 
At January 20, 2010 6:25 PM , Blogger RobertJSawyer said...

On paperbooks, the physical bookstore gets 60% or so of cover price (depending on how much business they do with the publisher), and the publisher gets the remaining 40% -- from which they pay the author's share, which is normally 8% OF COVER PRICE for mass-market paperbacks and 10% of cover price for hardcovers.

So on a hypothetical $10 mass-market paperback:

Bookstore: $6.00
Publisher $3.20
Author $0.80

 
At January 20, 2010 6:34 PM , Blogger Jonathan Ball said...

It should be added that paperback (non-mass market PB) is a little different. For example, I get 10% of cover price for a paperback, not 8%. But in my case there are not and will never be hardcover or MMPB editions, only a trade paperback. I understand this is fairly typical in such situations, though maybe Robert can correct me.

 
At January 20, 2010 6:49 PM , Blogger RobertJSawyer said...

Hi, Jonathan. No, you're doing better than average. For most authors, on mass-market paperbacks, the big six US commercial publishers pay 8% of cover price on the first 100,000 copies sold, and 10% thereafter; for beginners, the deal is often just 6% of cover price, and 8% thereafter -- regardless of whether a hardcover is contemplated.

That said, individual authors (or agents working on their behalf) may be able to squeeze better royalty rates out of publishers. ;)

 
At January 20, 2010 6:58 PM , Blogger Jonathan Ball said...

I'm shocked to hear that, since I am basically nobody and publishing poetry to boot. Unless for poetry things are different since the stakes are so low and the presses are all government-subsidized (in Canada) anyway.

 
At January 20, 2010 7:01 PM , Blogger Jonathan Ball said...

I am also talking about trade paperbacks, not mass-market paperbacks, with very small print runs. I would be lucky to sell 500 copies, never mind 100,000.

 
At January 20, 2010 7:05 PM , Blogger RobertJSawyer said...

Yeah, small press can be different. The line I edit, Robert J. Sawyer Books, pays 10% of retail on the trade paperbacks it publishes -- whereas Tor pays 7.5% for trade paperbacks).

 
At January 20, 2010 7:08 PM , Blogger Jonathan Ball said...

I think the 10% is pretty standard for small presses. But I don't really know. I'm just basing this on hearsay and my contracts with two publishers (both for 10%). One press (Coach House) just started doing e-books and my contract says 20% of net for e-books.

 
At January 20, 2010 7:35 PM , Blogger Farrell J. McGovern said...

I've been saying for years that both Publishers and the Music Industry are obsolete as they now operate...dead men walking.

Both work on a model that they "loan" artists money, then recoup that money through sales. Couple with the fact that they were the primary gateway to the market (ie, fans), they pretty much held a monopoly.

Today, though, they have lost that monopoly as a gateway to the market. In the music industry, we have seen groups bypass all the record labels and go directly to retailers like Walmart...it will only be a matter of time until some big name author does the same thing with ebooks. This is just an intermediate phase.

Ultimately, every artist will have to be an entrepreneur for themselves, marketing directly to the consumer. Tools like the Internet, digital publishing, and print-on-demand will enable the writer or musician to market their works to their fans directly.

So, what can publishers do?

They can become the "arbitrators of cool".

When everyone and their dog is marketing music or novels directly to the public, how will the public find out about what is good, and what meets their individual tastes?

The Internet is a Tower of Babel for information. Without an arbitrator, it just a lot of noise. If you are plugged into a good network of people with similar likes and tastes, then word of mouth will help a person find books and music they like. But most people are not. Publishers and Record Companies can re-invent themselves as the "Grade A" quality stamp. For example, if you go and buy a TOR, or Penguin, or Baen ebook, you will know that it has been well edited, and that the writing is of a certain quality. Each publishing house can also specialize in the type of work they put out. Baen has done this successfully, for example. If you want military SF or Fantasy, Baen is most likely the place you will find what you like.

If the publishers don't do this quickly, someone else will step in to this slot. It might be a retailer, or it could be a website. For example, a SF & F Review website could become a place where people find out what is good, and what isn't. This would give such a website tremendous power in the field. They could offer artists a fee to allow them to offer an early version of their work through the site, and charge a premium to fans to get an early look at their favorite artists work, or an exclusive period where the work is only available through that site before it is generally available.

Be it a Publisher, Retailer, Review website, or some other vehicle, currently out there or not invented yet, it will be those who tell people about what's good and what isn't that will drive the industry, not the former gatekeepers.

IMOHO, of course. :-)

 
At January 20, 2010 8:07 PM , Blogger Jonathan Ball said...

Farrell, I sympathize with the spirit of your post, but this is basically what publishers already do. You could argue that some of them don't do it well, but what you're describing is essentially the branding, marketing, and editorial process of any currently existing publisher.

 
At January 20, 2010 8:41 PM , Blogger K. W. Ramsey said...

Personally, I like the idea of an "author collective" that was put forth. It's similar to what is seen in webcomics, when a group of creators band together and cross promote their works making it more likely that all will succeed as the fans for one comic are exposed to others they may find interesting and may not have found on their own.

The way I see something working is as thus:

1. Gather a group of like-minded and well read authors, Say R.J.S. and others who write similar fiction and have a certain cachet within the market and a decent fanbase.

2. Those authors pool their resources and hire a small editorial staff that exists separate from any one author so that an individual author's work can be freely critiqued without the editors having to worry about losing their jobs. This staff would also include the technical people necessary to create and control an e-publishing website.

3. The collective offers it's works online for sale. The collective retains say 30% for administrative costs and to pay the editorial staff while the remaining 70% goes directly to the author. Adjust percentages as needed to keep the thing afloat but always try to ensure the lion's share is going to the people actually creating the product.

4. Offer the works in as many formats as possible, both digital and print. Utilize an On Demand printing service for those clients that must have a printed copy, that way you don't have to worry about holding onto stock or having books relegated to the "bargain bin". Since one service is being used for the entire collective it is likely a deal can be made to keep costs down, and the hardcopies can be priced accordingly to make sure they are offered at a competitive price.

5. Once the funds are in place expand the product offering. Webcomic artists not only sell books, but t-shirts, mugs, and various other memorabilia. Special Edition signed copies, that have something exclusive that is only available in them, can be offered for a higher price point. Again, the majority of the revenue from these items should go directly to the author.

6. Expand the author list by recruiting new and upcoming authors that write fiction that would appeal to the collective's audience. The entire collective should have a say on who gets added, perhaps through some kind of voting system. Recruitment should be done for two reasons. First, on the practical side the more authors that are in the collective the more money that will come in and the lower the percentage needed to actually keep the collective afloat, therefore leading each individual author to receive a higher percentage of his or her sales. Second, giving new authors a chance is a way of paying forward and gives a ready pool of replacements when older authors stop producing new works.

Of course everything I've written above is just me gassing off the top of my head, but it is one way I can see authors taking greater control in the new media era. Also, this is dependent upon a group of already established authors working together to create and sustain the collective in the beginning, and then those authors would need to be willing, nay enthusiastic, to get newer authors in front of an audience. Also, I have no idea of all the legal ramifications in regards to rights and what not, but then authors do have agents and/or lawyers to work these things out.

 
At January 20, 2010 8:45 PM , Blogger RobertJSawyer said...

Fascinating, K.W. Very interesting indeed.

 
At January 21, 2010 1:06 PM , Blogger Ron Friedman said...

Can you keep the electronic rights for yourself, and release the Kindle version as self published?

(Hence- the publisher will have only the dead trees rights.)

 
At January 21, 2010 1:22 PM , Blogger RobertJSawyer said...

Hi, Ron. Every large print publisher insists on getting ebook rights along with print rights (and has for several years now).

One of the key reasons I let Canada's little Red Deer Press have print rights to my STARPLEX, a 1996 novel they are reissuing in March 2010, is that they let me keep the ebook rights, so I'll be selling that one directly on the Kindle and through Fictionwise, etc.

Rob

 
At January 22, 2010 5:30 AM , Blogger Matt Moylan said...

It doesn't seem right to that any publisher bases the author's royalty on 'net proceeds' or 'profit'. Authors shouldn't have to worry about things you mentioned like added fees or outsourcing costs.

I myself am managing editor of a small publisher here in Toronto. While much of our creative work is done as work for hire at a page rate(mostly artwork), royalties are involved in some projects. Royalties are always set as a percentage of the cover price. It's a fixed amount per copy, and the author/artist doesn't need to worry about how efficiently the book makes profit.

 

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