Are authors being cheated by publishers on ebook royalties?

boozysassmouth

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I don't know if anyone follows Writer Unboxed, but they had an interesting article this week about HarperCollins plans for ebooks and increased drive to go that route. They were pulling from an article by Brian DeFiore at AARdvark, which was covered by a few other blogs, including Galley Cat.

Basically, if I followed it, HarperCollins is planning to encourage epubbing more, because they get a bigger profit, though it's at a loss to writers.

Some salient quotes:

From the original DeFiore article:

Look at Harper’s own numbers:
$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author
$14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.
Quoted in the Writer Unboxed article (original source unclear):

Every time a hardcover sale is replaced by an ebook sale, the publisher makes $2.20 more per copy and the author makes $1.58 less.
I was hoping the collective experience in both traditional and self-publishing would lead to a more thorough discussion of this. So, anyone have thoughts?
 

Old Hack

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I've not read the entire articles: all I've done is look at the little GIF that's right near the top of the Aardvark piece.

Look at Harper’s own numbers:
$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author

That works out to a royalty of 15% on cover price, which is a bit high but not unknown.

$14.99 agency priced e-book generates $7.87 profit to publisher and $2.62 royalty to author.

And that works out to about 25% royalty on net, which is normal.

If those are the only figures we look at then nope, it doesn't look fair. It does look as though publishers make more and pay out less on those books.

However, if you look again at the GIF you'll see that the figure given for the publisher's revenue for the hardback copy then has amounts subtracted to cover the costs of manufacturing, returns, distribution and freight, while the figures given for e-books do not include any such costs.

While it's true that there's no freight or printing required for e-books there are costs involved in their production and sale which don't apply to print books such as maintaining software compliance, server maintenance, and all sorts of other stuff.

Until those numbers are factored in the comparison is meaningless.

That doesn't mean there's not an element of truth in the claims that are made: I don't know, because as I already said, I haven't read the articles. But the figures given don't prove what seems to have been argued, because they're not a fair comparison.
 

veinglory

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I think the royalties for digital imprints of trade presses are noticeably lower than for epublishers where 25% of net would be considered low. I am not sure what economic and/or cultural reasons there may be for that. Maybe they have more overhead, or it just isn't their main profit centre.
 

boozysassmouth

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I think the point of the articles was the combination of your posts. Since they don't have the same overhead costs for ebooks, they should be paying writers higher royalties, ones commensurate with epublishers. At least, that's how I interpreted it. Admittedly, I know woefully little about royalties.

I do like a lot of the points you made Old Hack, especially about the possible production costs associated with epublishing. I've never seen anyone bring that up, and I think it's definitely worth examining.
 

thothguard51

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Overhead cost; like editing, cover design, marketing, getting a book into very reputable reviewers hands, servers and tech people to keep them up and running, and about a dozen other things that the writer does not have to pay for up front? And lets not forget lawyers that help to protect the author? That kind of overhead?

Besides, I think a lot of self published and indie writers are a little upset that the big trade publishers are venturing into what they consider their domain, full steam ahead. I would also note that if you combine the link with what Publishers Weekly reports you get a bit of a different view. Ebook sales we only up double digits in 2012 compared to the triple digits they had enjoyed for the past several years. Print books were up double digits for the first time since 2009 and higher than ebooks.
 

shelleyo

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Overhead cost; like editing, cover design, marketing, getting a book into very reputable reviewers hands, servers and tech people to keep them up and running, and about a dozen other things that the writer does not have to pay for up front? And lets not forget lawyers that help to protect the author? That kind of overhead?

I don't think the publisher's lawyers are in the business of protecting authors, really. They wouldn't be very good lawyers for publishers if they were.
 

Ann_Mayburn

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In some cases, absolutely. 100% getting fucked up the ass...sometimes for the 'honor' of being published with a Big 6'er, other times because they are desperate to get published and will go with anyone, and yet other times because they just don't know any better. All publishers a business(in theory), and they want to get as much as possible for as little as possible. It's not personal, but it's for sure not in your favor if you take that lowball of a %.

PS- 25%=getting f'd in the a
 

thothguard51

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I don't think the publisher's lawyers are in the business of protecting authors, really. They wouldn't be very good lawyers for publishers if they were.

Ask Dan Brown how he feels about his publishers lawyers defending him against a copyright case.

The thing is, a publishers lawyers will often times defend the author on behalf of the publisher who has a vested interest in the author winning. Not many small indies or self published writers could afford this arrangement...

That is part of the overhead...
 

shelleyo

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Random House had little choice but to dispatch lawyers. They were sued.
 

Old Hack

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I think the point of the articles was the combination of your posts. Since they don't have the same overhead costs for ebooks, they should be paying writers higher royalties, ones commensurate with epublishers. At least, that's how I interpreted it. Admittedly, I know woefully little about royalties.

The cost of bringing a book to market is the same regardless of its format, up to the point that you go to print or e-book. Editing, design, typesetting... all these have to be done, and the cost of acquisition is often a significant amount too.

Once you get to printing or e-book stage the costs are different but often comparable. The main difference that I see is how the book is sold, rather than how the book is produced.

I do like a lot of the points you made Old Hack, especially about the possible production costs associated with epublishing. I've never seen anyone bring that up, and I think it's definitely worth examining.
There are quite a few threads here which discuss it: you might like to do a bit of reading around.

Besides, I think a lot of self published and indie writers are a little upset that the big trade publishers are venturing into what they consider their domain, full steam ahead.

Self published writers might feel that trade publishers are muscling in on their act by producing e-books but the truth is that the Big Six have been working with e-books for nearly two decades now. Their sales have only picked up relatively recently: but were it not for the Big Six's involvement in developing the various e-formats, self-publishers wouldn't have those formats available to them. (Not that the big trade publishers developed them alone, of course, but we can't ignore their participation in the process.)

I would also note that if you combine the link with what Publishers Weekly reports you get a bit of a different view. Ebook sales we only up double digits in 2012 compared to the triple digits they had enjoyed for the past several years. Print books were up double digits for the first time since 2009 and higher than ebooks.
Also, it's worth looking at the volume of sales per format, and the market penetration of each format.

When one particular format only represents 2% of the market any increase in its sales is likely to look significant: a 100% increase in that format's sales would still only take it to 4% of the market, for example. When the formats which dominate the market show a significant increase in sales, that's important.

Random House had little choice but to dispatch lawyers. They were sued.

That might be so in this instance, but that doesn't mean that publishers' lawyers won't step in and protect the books and the writers they publish. I've been involved in several plagiarism cases now (my work was copied, I wasn't the plagiariser!), and in every single case either my agent's lawyers or my publishers' lawyers dealt with the litigation at no cost to me. We won every case.

These were significant cases for me, and for the books I'd written. I couldn't have afforded the excellent legal cover I was given, and I am very grateful for the help I received.
 

shelleyo

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That might be so in this instance, but that doesn't mean that publishers' lawyers won't step in and protect the books and the writers they publish. I've been involved in several plagiarism cases now (my work was copied, I wasn't the plagiariser!), and in every single case either my agent's lawyers or my publishers' lawyers dealt with the litigation at no cost to me. We won every case.

These were significant cases for me, and for the books I'd written. I couldn't have afforded the excellent legal cover I was given, and I am very grateful for the help I received.

It's wonderful that you had that representation, but I stand by my original point that publishers' lawyers are in the business of protecting publishers' interests. Suing for copyright infringement of books they've published is protecting their financial interests. If authors also benefit financially from this, as I'm assuming they do, that's a side-effect rather than a primary goal.
 

suki

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I will second Torgo's pointed comment -- it's only "cheating" if they don't follow the contract.

Every writer needs to engage in their own risk-rewards analysis when considering publishing opportunities. That includes the terms of the contract, and the risks and rewards that are inherent in the relationship.

I try not to belittle those who make other choices than I have made. But I guess not everyone is so open-minded about respecting their fellow author's ability to make their own choices. ;)

And, as an aside, equating agreeing to such precentages as rape strikes me as pretty much the opposite of respecting your fellow writer. ;)

~suki
 

veinglory

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It is definitely not cheating, but it is an interesting juxtaposition. And the assumption that imprints of large presses will sell better to make up for it is not always true.
 

suki

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It is definitely not cheating, but it is an interesting juxtaposition. And the assumption that imprints of large presses will sell better to make up for it is not always true.

Sure. It's part of the risk-reward assessment every writer should do when considering their options. For example, if it were an e-only deal, the comparison is strikingly more direct than if the e-component is only part of the deal. ;)

~suki
 

Old Hack

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It's wonderful that you had that representation, but I stand by my original point that publishers' lawyers are in the business of protecting publishers' interests. Suing for copyright infringement of books they've published is protecting their financial interests. If authors also benefit financially from this, as I'm assuming they do, that's a side-effect rather than a primary goal.

Ah, I see. I entirely missed your point, Shelley. Sorry about that!

Yep.

It is in a publisher's interests to look after its authors and so on, but they don't necessarily (!) do it out of the goodness of their hearts.

In some cases, absolutely. 100% getting fucked up the ass...sometimes for the 'honor' of being published with a Big 6'er, other times because they are desperate to get published and will go with anyone, and yet other times because they just don't know any better. All publishers a business(in theory), and they want to get as much as possible for as little as possible. It's not personal, but it's for sure not in your favor if you take that lowball of a %.

PS- 25%=getting f'd in the a

Ann.

Don't sneer at writers who choose to work with the Big Six publishers. It's disrespectful, narrow-minded, and churlish.

As for your attempt to add shock-value to your sneering? It just makes you look vulgar.

If you can't express yourself clearly and effectively without stooping to such levels don't express yourself at all. At least, not in the rooms I mod.

I hope that's clear.

And now I've dealt with how you expressed yourself, I'll take a look at what you said.

As Torgo has already pointed out,

'Cheating' would imply not paying the contractually agreed royalties.

No one is forced to sign a contract with a publisher. No one is forced to accept royalties they think are too low. If writers don't like the contracts they're offered, they're free to walk away.
 

veinglory

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And it would be good if there was more available online to help authors work out how to calculate their risks and benefits. Because first impressions can be very deceptive.
 

Katie Elle

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Getting a print run and getting those books placed in bookstores is huge, so you need to include that under the equation of whether a mixed print/ebook contract is worthwhile. If you have people seeing your book when they're at Stop and Shop, you can be sure that counts as marketing even if they buy it as an ebook on Amazon.

The ebook only imprints from the Big Five I'm extremely skeptical of. Ebooks put everyone on a far more even even footing and I can't imagine that the editing, cover, and general imprint PR is really going to be worth handing a publisher 75% of net when a small press would give you 50% and you could have 100% if you just hired your own editor and cover artist.

Whether that reaches the subject category of "cheated" rather than "crappy contract" I don't know, but it is possible to live up to the terms of a contract and still be cheating your authors. I would say that Author Solutions certainly fits in the category of cheating authors. I'd say that Harlequin's ebook scam does as well.
 

veinglory

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I was thinking more of the now-very-common digital-only imprints of large presses. Which continue to offer the lower-end royalties. For something like romance, brand can still very very important, and it does assure you the press is not a guy in a basement somewhere who is completely sans clue. But e-[big name] is not always going to sell any better than an epublisher that has always been an epublisher. I think people can be overly swayed by the big name.
 

gingerwoman

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Getting a print run and getting those books placed in bookstores is huge, so you need to include that under the equation of whether a mixed print/ebook contract is worthwhile. If you have people seeing your book when they're at Stop and Shop, you can be sure that counts as marketing even if they buy it as an ebook on Amazon.

The ebook only imprints from the Big Five I'm extremely skeptical of. Ebooks put everyone on a far more even even footing and I can't imagine that the editing, cover, and general imprint PR is really going to be worth handing a publisher 75% of net when a small press would give you 50% and you could have 100% if you just hired your own editor and cover artist.

Whether that reaches the subject category of "cheated" rather than "crappy contract" I don't know, but it is possible to live up to the terms of a contract and still be cheating your authors. I would say that Author Solutions certainly fits in the category of cheating authors. I'd say that Harlequin's ebook scam does as well.
I agree with some of what you are saying but I'm not sure about your numbers, very few small publishers I know of offer 50% (in fact the only one I know of that offers 50% from the first sale only publishes spanking stories) more likely 40% (sometimes cover, sometimes net) from books bought on their own website and 30% from third party sales and those are good small press or ebook press rates I think.
Smashwords and Amazon are the only decent self pub places I know of, and they do not offer 100% more like 70% or 65% isn't it? ( I don't self pub) I think authors need to be somewhat suspicious of Lulu now because they recently got in bed with Author Solutions. Plus you have to have significant upfront cash for decent editing and to get cover art for a quality self pub book. The royalties are not 100% not sure where you get that from? Booktango is part of Author Solutions and claiming they give 100% but unfortunately that is yet another Author Solutions brand and when you look into it is really not 100% at all, or anything close. (link here-) http://accrispin.blogspot.co.nz/2012/02/booktango-author-solutions-new-ebook.html

If you know of any small presses offering 50% I'd be interested to know who they were although my guess is that that is 50% of net from their website alone (not third party sales), and maybe the 40% of cover (list) at another place would equate to more actual money. Or it's 50% of net only after you sell 10,000 copies.
 
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Old Hack

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Getting a print run and getting those books placed in bookstores is huge, so you need to include that under the equation of whether a mixed print/ebook contract is worthwhile. If you have people seeing your book when they're at Stop and Shop, you can be sure that counts as marketing even if they buy it as an ebook on Amazon.

The impact of having print books on real shelves is often underrated. It's a huge sales tool.

The most recent study I've seen showed that around 40% of online sales were made as a direct result of finding a book in a physical bookshop. Which has huge implications, I think.

I'd like to second Gingerwoman's questions about royalty rates.
 

Terie

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I'd like to second Gingerwoman's questions about royalty rates.

My e-only publisher pays me a royalty of 50% of cover price for sales made through the publisher's site, and 50% of net for sales made through other sites. 'Net' is clearly defined in the contract as being the amount the publisher gets from the retail outlet. So if, for example, an online retailer gets a 50% discount from the publisher, then I get 50% of the 50% that the publisher gets. The publisher does not deduct anything else in calculating 'net'.
 

Lurosa

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Sorry to go off the topic, is there a thread discussing publishing in the sense of: I want to self-pub an ebook yet still send query letters to traditional publishers? Can I?
 

Torgo

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The cost of bringing a book to market is the same regardless of its format, up to the point that you go to print or e-book. Editing, design, typesetting... all these have to be done, and the cost of acquisition is often a significant amount too.

Once you get to printing or e-book stage the costs are different but often comparable. The main difference that I see is how the book is sold, rather than how the book is produced.

The thing is, during their life books have multiple formats, each sold at multiple prices. All of these formats and prices produce different revenues for publisher and author, because they're sold to different people in different ways.

You can easily pull out two different editions and put them in two different scenarios and make a comparison like this one between ebooks and hardbacks. But that's taking stuff out of context and putting it in another context (the HarperCollins slide is, essentially, executives making a pitch for investment capital by claiming the shift to digital is making loads of money for them. Thanks a *bunch*, you jerks.)

If I published our list as ebook only, I would either lose money or I wouldn't be able to afford to pay nearly the advances we do, because the revenue simply wouldn't be there. Maybe I'd do better on per-book revenues, but the volume across the list wouldn't support what we pay up front. In YA, ebook sales run at about, ooh, 20% of print, tops? More like 5-10% usually.

Show me a book that can earn out its advance, even at 25% royalty, purely from the ebook edition, and I'll show you a huge outlier.
 

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Sorry to go off the topic, is there a thread discussing publishing in the sense of: I want to self-pub an ebook yet still send query letters to traditional publishers? Can I?

For the same book? No. But the good news is that if you self-pub it and sell millions, the trad publishers will come running back to you.