I for one don't believe this. I think there needs to be change, and I'm confident that there are smart people working at these organizations that will figure their way through this new world order. If I were to give them one word of advice as to what to fix...it would be ebook royalty rate.
For those that don't know, the industry standard is 25% of net sales to the author and 75% to the publisher. When you consider that print rights range from 6%-15% (depending on volume and format) this sounds pretty good. But it’s incredibly unfair and I predict will be the number one determinant to authors signing with a traditional publisher.
At those rates the breakdown of an ebook priced at $6.99 goes something like this:
- 30% to Amazon - $2.10
- 52.5% to Publisher - $3.6
- 14.9% to Author - $1.04
- 2.6% to Author’s Agent - $0.18
If the author were to e-publish themselves their income would be:
- $2.10 – if priced at $2.99
- $2.73 – if priced at $3.99
- $3.49 – if priced at $4.99
- But wait you’ll say…the marketing engine of the big publishers will sell more books at $6.99 then the self-published author can at $2.99 or $4.99, so you’ll make up the difference in volume.
As someone who studies the Top Rankings on Amazon I can tell you this is not true. Many self published authors are selling as good or better than their traditional counterparts. Let’s look at indie names on the Epic Fantasy (where Michael sells) :
- #2 – Amber Magic (B.V. Larson) $0.99
- #5 - The Chosen Soul (Heather Killough-Walden) $1.00
- #6 – Sky Magic (B.V. Larson) $2.99
- #7 – Shadow Magic (B.V. Larson) $2.99
- #8 – Dragon Magic (B.V. Larson) $2.99
- #9 – A Dance of Cloaks (David Dalglish) $2.99
- #10 – Blood Magic (B. V. Larson) $2.99
- #11 – Elf Hunter (C.S. Marks) $0.99
- #14 – Giants (Vaughn Heppner) $0.99
- #19 – Crown Conspiracy (Michael J. Sullivan) $4.95
- #20 – Wintertide (Michael J. Sullivan) $6.95
That’s a lot of high ranked books by “indies” and not all of them at $0.99. Michael is being published by Orbit and their first book to hit the list is Joe Abercrombie’s “The Heroes” at $11.99 . Which means that Joe is making $1.79 per book whereas Michael is making $3.46 and $4.87 for the two books that he’s selling that are higher ranked than Joe's.
Now, of course Joe is making print book sales that Michael is not, so his income is probably higher, but as ebooks continue to grow in market, and print books decline, the income from ebooks is going to be the dominant portion of an author’s income. For some, I'm sure it is already.
For print, and indie author can’t compete with a big-six publisher who have the connections and co-op space in the bookstores. They also invest big dollars in large print runs to gain economies of scale. But in ebooks, the costs to an author is the same as that as a publisher (it only takes a few hours to convert a word file of the book to ebook formats and there are no production costs. Assuming the traditional publisher absorbs the costs of editing and cover design as part of the print book they have a very small “incremental” cost to put out an ebook and yet they are taking 52.5% of the profit?
My prediction is that more and more authors will turn down traditional print contracts because of one thing and one thing only --- the share of ebook royalties. Once this starts happening publishers will find they can’t keep best selling authors nor attract new talent. There is a lot that big publishing can weather – but the loss of the producers of content…that’s a hard trick to pull off. And that is why, with all the other challenges the big-six faces, the 25% ebook royalty is the one that should is of greatest concern, and 100% in their control to correct.