…Or The Reason We Need Big Name Authors to Care about Digital Royalties.
By now, you probably know that the fabulous team of Jane Litte (Dear Author), Sara Wendell (Smart Bitches, Trashy Books), Angela James (executive editor at Samhain), Kassia Kroszer (Booksquare and Quartet Press), and authors Lauren Dane and Maya Banks will be giving a “Rogue Workshop” on Digital Publishing alongside (but separate from) the RWA National Convention in Washington DC this week. (Deets here. The Twitter hashtag for the session, which will be live-tweeted, is #rd09.)
In large part, this fine group of experts in digital publishing decided to put on this workshop because RWA’s final conference schedule include nothing on epublishing. Not, as far as anyone could tell, the barest mention of it. But in the thread at DA that I linked to above, a bit of a dustup erupted over whether the workshop they’ve put together is a) necessary or b) really addresses the needs of broader RWA membership since it’s focused primarily on digital only publishers.
Now, I happen to think that the real crime here isn’t that there isn’t a workshop on epublishing per se (not that I don’t think it would be great and worthy), but that no one’s talking about digital rights and royalty rates at traditional print publishers. Because I’m telling you, folks, this is gonna come back and bite us all in the butt in another 10-15 years (maybe less). Edited on 2/22/11 to add: Okay, I was wrong. Wrong wrong wrong. The time horizon from this post was a little less than 2 years. I posited a 90:10 print:digital ratio in my numbers below. A lot of authors are already at WAY over that ratio.)
Right now, publishers who distribute primarily in digital format offer royalty rates to authors ranging from roughly 35%-50%. (Some may be a little lower, some a little higher.) If the publisher also offers print copies of the books, they pay royalties similar to print publishers.
By contrast, publishers who distribute primarily in print (i.e., the major New York houses) tend to offer royalty rates on digital copies that are less than half what the digital publisher pay. I would have to go check my print contract to see what my royalty rate on my digital copies it, but I know it’s standard for the publisher’s contracts, it’s probably not more than 15%, and we didn’t try to negotiate a higher rate because, at the time, it didn’t occur to me that I should try.
Looking back, I wish I had tried, although I doubt my agent’s efforts on my behalf would have been successful. Because, while digital copies are likely to be a very small percentage of my overall sales, by accepting that royalty rate, I basically made it harder for other authors who follow me to ask for more.
And this is why it’s so important for the big name, bestselling authors to start pushing the royalty rate envelope on digital. Now. Before it’s too late and the paltry 10-25% rates we’re seeing now become so ingrained, they never go away. So ingrained that even the primarily digital publishers start lowering their rates to match. (Because believe me, they will. I frankly don’t wear the rose-colored glasses that say epublishers are “the good guys” who will never take advantage of their authors. Um, maybe a select few, but even they are businesspeople and they publish books to make a profit, not to make authors happy/rich.)
As worried as traditional print authors are now about the possibility that their publishers will follow suit with primarily digital publishers and stop offering advances (a concern I know is out there despite claims to the contrary), they ought to be worried that they’re setting a precedent when it comes to digital royalties which, in the future, will ultimately cost all authors a BIG chunk of money. Including themselves.
It might be hard to see this right now if you’re a bestselling author in mass-market paperback. My bud and critique partner, Amie Stuart did an informal survey about digital royalty rates a while back, and one of the respondents said her royalty rate was quite low (perhaps around 15%) but that it didn’t concern her because while on of her books sold 800,000 copies in paperback, less than 800 digital copies had been sold. In that context, the difference between 15% and 35% is pretty meaningless.
The problem is, of course, that the numbers won’t continue to be skewed that way forever. More and more people are beginning to prefer reading on a digital device, be it a dedicated reader, a smart phone, or even their computers. (My 12yo would rather read on the computer screen than read a paperback. I bet, in his generation, he’s far from unique.) And while the traditional print publishers seem determined to make every effort to keep digital from gaining a foothold in the marketplace (DRM, high prices, and withholding release of the digital book for weeks or even months after the print book is on the shelves), in the end, the revolution will come. Print books will never go away, but those 800,000 to 800 numbers are simply not going to last. And even if we never reach the point where digital sales of New York Times bestsellers outstrip print sales, when they reach even 10% of all sales, the royalty percentages will begin to matter. A lot.
Let’s make the numbers easy. Say you’re the author of a book that sells 100,000 total copies. Let’s assume 90% of those are print copies at an $8.00 cover price ($7.99 is very common, but I’m rounding for simplicity) and your royalty rate for print copies is 8% (that’s pretty standard for mass market paperback, I believe), so you make $0.64 for every copy sold. You’ll bring in a tidy $57,600. Not bad, you say (and I agree; I’d be thrilled with that, lol).
But let’s look at the 10,000 copies sold in digital format (because we’re in the world of 90/10–and believe me, that’s coming fast!). Let’s say you got a fairly standard 15% royalty rate on your digital sales. Let’s further assume that your publisher is forward-thinking enough to offer digital books at a slightly reduced cover price, so they only cost $6.50 instead of $8.00 (in part because Walmart/Target/et al. probably doesn’t charge a full $8 for your print book, even though you get paid as if it did). You still make more per ebook sale than mmpb sale–97 cents per copy, and that means an additional $9,700 in royalties for you, which is quite nice. But…if you’d held out for the kind of royalty rates digital publishers off, even at the low end of 35%, you’d be earning 2.275/copy or $22,750. So even at 90/10 split in terms of sales, your income for the 10% digital sales are nearly half your total print sales earning.
Who wouldn’t want that? Especially since the percentage of readers who’ll be buying digital is only going to increase. At the point at which it reaches even 25% of gross sales, your digital royalties will account for fully half your income.
Now, maybe there are some folks who don’t believe that authors should get a significantly higher royalty rate for digital books than for print. If anyone wants to make that argument, go ahead, although a lot of folks also claim that the only reason digital publishers offer such high royalty rates is because they don’t have to support the overhead of print costs and returns. So, you know, either the digital distribution model is cheaper or it’s not, but if it is, why shouldn’t the author get a larger percentage of the return. Why willingly give up 85% of the profit to the publisher in that scenario.
But here’s the thing: we need print authors with bestseller status to be the ones to demand better royalty rates for their digital books. Because those of us still in the shallow end of the publishing pool just don’t have the clout. If we walk away from contracts with poor digital royalty rates, the publisher will just find someone else who will take it. We’re kind of a dime a dozen to them. It’s the big name authors who regularly hit the New York Times and USA Today lists who have the ability to make publishers sit up and notice.
Please? Because even if it never makes much of a difference to you, the next generation of writers is going to thank you.
Okay, first, your figures are skewed because you’re comparing two different royalty bases. Most digi-publishers pay on net, while traditional royalty rates are based on cover price. So, in point of fact, the actual rate of return would be approximately the same.
So, on an ebook priced at $7 sold via eReader, the publisher receives $3.50 and the author receives royalty on that amount not the original $7. If the vendor discounts the sale price, some digi-pubs will still pay the $1.75 but some may choose to split the lower net.
Second, I think it will be a long hard battle, even if the major bestselling authors jump in, before traditional publisher will up the ebook royalty rate. It’s found money.
I know, I know–they insist it costs them the same to make the ebook as the print one. What they really mean is that they factor all the print production costs as equally ebook production costs. However, given that any ebook sale is likely a sale that would otherwise not have been made because those who prefer ebooks are rarely going to buy a hardcover or even a paperback, the revenue from that sale is, in fact, money the publisher would not otherwise have received.
Ergo: found money.
I’m so bummed. I wrote a long, cogent response to you, Elizabeth, and WordPress ate it
.
Anyway, I do want to say that my epublisher has never, ever paid my royalties based on net as you describe. My royalties have always been based on the actual sales price. Now, if the book is paid through a secondary retailer, the percentage paid is lower to account for the cut the distributor is taking out of my publisher’s pocket. But no, my royalties are never a percentage of net–they are always a percentage of actual sales price.
Long story short–if your publisher is paying on net, it’s even MORE of a reason to insist on a higher royalty rate for your digital books. One reason the relatively low royalty rate for print (6.5%-10% of cover is typical, I think) is fair is because we know the publisher rarely ever gets paid the actual cover price for any individual sale of the book. The publisher is more of a wholesaler than anything else, and the actual amount received for any copy book sold is obviously much less than the cover price, regardless of the price the retailer gets for it.
But in digital, the cost of creating the one copy is the same as the cost of creating 10,000 or even 1,000,000. That means, if we’re getting paid on net for those, it’s even a stronger reason to demand a higher royalty rate. 15% of net on $3.50 is far too low, IMO. 15% of gross on $7.00 (if, indeed, the publisher is actually ceding 50% of that to the distributor) isn’t so horrendous.
The devil is in the details and few people are talking about these details. And that means the found money is going to wind up almost exclusively in the pockets of the publishers. Which, right now, may not seem like such a bad thing, but when digital becomes the dominant mode of distribution (and it will…maybe not in 10 years or even 20, but in 50, I’d guess it will be), that’s going to haunt us.
Not all epublishers pay on net. Samhain, Loose-ID, Carina, etc. all calculate royalty based on the cover price.
Right, as I said in my response to that comment at the time it was made, I’ve always been paid by percentage based on the cover price by my epublishers. In fact, it’s my NY book that has the digital royalty paid on net. At 25% of net, I still earn more per copy sold on digital copies than on print copies, but it could be SO much better.