Wednesday, December 16, 2009

Ebooks wars ramp up: Authors/publishers finally push back

Authors have been getting screwed on ebook royalties, and it's likely to get much worse. Publishers fear they are going to get screwed by Amazon once it has a choke hold.

Finally, they are both pushing back. A flurry of activity in the last week:
The Authors Guild released a statement fighting Random House specifically on rights to older ebooks, but  also on the royalty rate for all of us. It wrote:

It should also start offering a fair royalty for those rights.  Authors and publishers have traditionally split the proceeds from book sales.  Most sublicenses, for example, provide for a 50/50 split of proceeds, and the standard trade book royalty of 15% of the hardcover retail price, back in the days that industry standard was established, represented about 50% of the net proceeds of the sale of the book.  We're confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail.  Savvy agents are well aware of this.  The only reason e-book royalty rates are so low right now is that so little attention has been paid to them:  sales were simply too low to scrap over.  That's beginning to change.

It's very tough to fight the publishers one deal at a time, but we may get some traction from owners of older books (not covered by the 25% deal) getting higher rates. Several high profile authors and estates have announced plans to do just that in the last two weeks. The latest, Steven Covey. His “The 7 Habits of Highly Effective People,” is still selling about 200,000 copies a year (based on Bookscan numbers, grossing up for the 30% they miss). That's better than most bestsellers on their initial big run.
NY Times summary of some of it all here.

Meanwhile, the publishers are finally pushing back with Amazon. Many are now delaying ebook release of their big and medium books by four months (or so).

Good for them. They don't like that cheap eboos at $10 are canibalizing the sales of hardcovers priced at $27, and often selling as low as around $16.

Writers need the publishers to fight and win, because ultimately, authors can't get paid a decent wage without money coming in to the publishers. If they get squeezed, we all do.
Though the delayed release makes some sense--comparable to movies coming out four months later on DVD--I doubt that is the long-term solution. Eventually, publishers will want to capitalize on all readers simultaneously. The problem is Amazon (followed by the others) undercutting the value of their product by selling it so cheaply. No industry can survive something like that. Authors probably can't survive it.

What I think the publishers are doing is playing for leverage. They need some--since they can't control the retail price. Amazon is selling every one of those $10 ebooks at a big loss. They can control handing over the ebooks, and that's what they are doing. Hopefully an equitable solution can be worked out.

I am all for relatively cheap books, and for instant access to ebooks. And in the long run, the much cheaper production/distribution should allow for everyone to benefit: authors, publishers, online retailers and readers. But not if the whole system gets skewed so badly that any one of those parties gets screwed. We are all in this together, and need a solution that works for everyone.


  1. This is totally unrelated to your post, but I just saw your comment on Nathan Bransford's blog and popped over. I just finished Columbine. You did an amazing, amazing job with it. Kudos. Hope your years of hard work pay off in a huge way.

  2. Sorry but have not read your book 'Columbine'.

    I found you by random really and in reading your post here just felt I had to say, as a reader, that I find the current trend of valuing books {online} at purely cash value {amazon for instance} just doesn't do justice or give reparation for the creative process when that process results in something so worthwhile or so tangible.

    I mourn the loss of each bookshop and resent the ability to buy a book online for a couple of pence as a second hand object, as this just doesn't reflect the effort that has gone into production. Bookshops are special places where I, the unititiated in many ways, can walk through and touch the end product of so many intellects and so much experience. The loss of this, and the reality that payment/reward for such creativity is vastly reduced by on line retailing is a sad situation. It would break my heart to see something that had taken weeks and months to create valued at a few pence.

    I hope we never lose the opportunity to browse through a bookshop and to pick up and touch a living book and to adequately reward that creativity.

    {although book marketing needs a good kick up the arse too as it increasingly desperately tries to fight for a sale}

    Good luck sir.


    and curmudgeonly yours,


  3. As big as ebooks get, I don't think they have the capability to really reduce the sales of paperback books. This epidemic is something like Itunes and Ipods when they first came out, although less popular. And nothing electronic can overcome the paper backed book, certainly not in my generation. When ebooks and Kindle grows in popularity I think the demand by readers for certain books will cause Amazon to start paying more, perhaps 50%. You just really need big publishers and authors to hop on board and make the change. And can Amazon really hold a monopoly over ebooks? I haven't heard of any other carriers.

  4. It seems to me you have a case of misplaced anger against the ebook industry. According to what you've written above, you're making less on ebooks because the deal with the publishers is poor. That's not Amazon's fault. The problem lies with the publishers.

    Right now publishers sell hardcover books to Amazon at a fixed price and Amazon determines what they want to charge for them. The profit margin for the publisher is approx (price charged Amazon)-(shipping and storage)-(production costs). The profit on an ebook is the price charged to Amazon, as the production costs are almost nonexistent and there's no cost to ship or store. Therefore, if the publisher subtracts the cost of shipping, storage and production from what it charges Amazon for the ebook, the profit margin on the ebook and the hardcover would be the same. AND if they paid Authors the same cut on ebooks and hardcovers, what you would make would be the same for both formats.

    So while I get that the current situation with ebooks is bad for authors, the blame for that does not lie with Amazon or other ebook retailers. It lies where it usually does, with the publishers.