More on ebooks and royalties

Well, hi, kids!

Hope everyone had a groovy weekend. I was thinking about that link I posted last week in which author Graham Swift noted that authors are in danger of getting screwed with regard to ebook royalties.

And today, thanks to one of my writers’ associations (that would be Sisters in Crime), I was apprised of this story at BookBaby.

It’s an article titled “Do Publishers Pay a Fair Royalty Rate for ebooks under the Agency Model?”

Here’s what I found kind of interesting:

But despite these costs which publishers incur [read the piece to see what those are; it’s short]…they’re saving buckets full of money on not having to print or ship books – savings which range from the production department to the warehouse – and the authors simply are not being credited for those savings.

And while the price of ebooks generally is lower than hardcover, the publisher’s contribution on every sale of an ebook has remained equivalent to that of a hardcover, whereas the author’s share has dropped by about 1/3.
source: BookBaby

So I then followed the suggested link to THIS blog, with an article titled “How Ebook Royalties are Cheating Authors.” The blog includes figures, which look pretty crappy for authors.


E-book royalty rates for major trade publishers have coalesced, for the moment, at 25% of the publisher’s receipts. As we’ve pointed out previously, this is contrary to longstanding tradition in trade book publishing, in which authors and publishers effectively split the net proceeds of book sales (that’s how the industry arrived at the standard hardcover royalty rate of 15% of list price). Among the ills of this radical pay cut is the distorting effect it has on publishers’ incentives: publishers generally do significantly better on e-book sales than they do on hardcover sales. Authors, on the other hand, always do worse.
So, everything else being equal, publishers will naturally have a strong bias toward e-book sales. It certainly does wonders for cash flow: not only does the publisher net more, but the reduced royalty means that every time an e-book purchase displaces a hardcover purchase, the odds that the author’s advance will earn out — and the publisher will have to cut a check for royalties — diminishes. In more ways than one, the author’s e-loss is the publisher’s e-gain.
source: Ask the Agent (emphasis mine)

Go to the link for the specific examples that’ll show you just how bad authors do on ebooks.

Anyway, I’m not going on a rampage against ebooks. I’m an author, after all, and I like that my stuff is available in multiple formats. However, I am concerned about ebook royalties, and about the invalidation of an electronic format as “work,” thus allowing publishers to contract a lower royalty rate. Or just because they like the greater profit they make from ebooks, and sadly that doesn’t seem to be trickling down. Just some stuff to think about.

Happy reading!

10 thoughts on “More on ebooks and royalties

    • That’s probably standard for an academic house, which traditionally pays lower royalty rates on all formats. And sure you could negotiate. You could ask for higher royalties on your ebook and if a house doesn’t want to give them to you, then retain your ebook rights and arrange selling your book yourself via ebook or through another outlet. Depending on the book, you might be able to hook it up through another house or venue. The hard academic books, however, are only just starting to become available as ebooks, so you’d probably be better off negotiating higher royalty rates for yourself, especially if you can make a good argument that the book has a good ebook market.

      Lots of factors involved. It’s important, thus, to make sure you understand your contracts and royalties and what’s a fair rate. The jury’s still out on ebook royalties, though I am seeing a trend that seems to indicate authors are getting short shrift. Sigh.

  1. I think a lot depends on the publisher. I know that eBooks have helped me a lot, so I’m feeling ok with it 🙂

    • Hi, Carrie! Thanks for stopping by. I do make a higher rate (percentage-wise) off ebooks than print, but ebooks also lend themselves very easily to piracy. And, as noted in the links I provided, publishers are saving lots of money with regard to ebooks, and authors are not getting any of that extra money. It’s all going to the publisher. The author’s share has actually dropped. For example, if you look at the figures provided for a book by author David Baldacci (he writes thrillers), here’s the breakdown:

      “Hell’s Corner,” by David Baldacci
      Author’s Standard Royalty: $4.20 hardcover; $2.63 e-book. Author’s E-Loss = -37%
      Publisher’s Margin: $5.80 hardcover; $7.37 e-book. Publisher’s E-Gain = +27%

      See? The author actually LOSES on ebooks in some circumstances. Granted, this is a larger house, but one would think at a large, mainstream house, the house could afford higher royalty rates for authors. What many authors don’t understand about ebooks is that the front-end costs are the same (editing, design, typesetting), but the back-end costs are basically nixed. That is, the cost of printing and shipping. So given that savings, the publisher should be able to afford to raise royalty rates on ebooks for authors, right? Wrong. That’s not what we’re seeing. The publisher seems to pocket all of that savings, and offers none to the author. So yes, different publishers have different rates, and you can negotiate what you want. But I think it’s important for authors to find out just how much their publishers pay to produce an ebook, and how much they’re actually pocketing. In most cases, the publisher could probably pay authors more royalties on ebooks.

    • Hi, Bett! Thanks for stopping by. It seems publishers are making quite a killing off ebooks, and authors once again are getting screwed. Not by all publishers, certainly, but I worry about the trend.

  2. Have to keep this simple because I’m on a phone, but the whole royalties thing is why I decided to go indie rather than sign a contract that had been offered. There’s no reason publishers shouldn’t go at least 50/50. I have a post on detailing the royalties breakdown. I encourage more authors to seriously consider indie. Then maybe publishers will realize they can’t take authors for granted.

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