Photo: iStockphoto
The e-book explosion is for real, and growing. What’s interesting is that most of the complaining you may have read in recent months is from the publisher side — that it will be ever harder for them to stay solvent in an e-book world. But the latest edition of the Authors Guild bulletin, reprinting a recent e-mail alert to Guild members, shows that under current royalty configurations, the real losers aren’t the publishers; it’s the authors.
This is plainly an opportunity for literary agents to exercise whatever muscle they can muster, as they have in past decades when formats changed. Here’s how the Guild (hardly a disinterested party) puts it:
Among the ills of this radical pay cut [lower prices for e-books than for hardcovers] 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.
How much better for the publisher and how much worse for the author? Here are examples of author’s royalties compared to publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:
The Help, by Kathryn Stockett
Author’s Standard Royalty:
$3.75 hardcover; $2.28 e-book.
Author’s E-Loss = -39%Publisher’s Margin:
$4.75 hardcover; $6.32 e-book.
Publisher’s E-Gain = +33%
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%
Unbroken, by Laura Hillenbrand
Author’s Standard Royalty:
$4.05 hardcover; $3.38 e-book.
Author’s E-Loss = -17%Publisher’s Margin:
$5.45 hardcover; $9.62 e-book.
Publisher’s E-Gain = +77%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.
What’s tricky here in the publishing world is that an awful lot of writers do not write for the money. But I can guarantee you that the agents of the books listed above — and the authors themselves — aren’t happy knowing that they earn a little bit less money every time they sell a copy of a book that nets the publisher a little bit more money.
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It would seem that authors need to negotiate better deals. As I see it, the main function of publishers is to be venture capitalist who finance the printing of promising books. With ebooks, the capital needed to publish a book is basically zero compared to paper books so the need for the publishers is diminishing. Bit sad but totally expected that ebook prices are pretty much at level with paper books and publishers just pocket the cost savings. However I believe that prices will fall fairly sharply as more and more authors will either self-publish or move to publishers who embrace the ebooks with lower prices and margins and don’t try to prop up the paper business.
The only difference in production costs between an ebook and a print book are the cost of printing.
‘Capital’ is still required to pay editors, cover designers, and whomever formats the book. Those production expenses don’t change just because the final format is digital, instead of physical.
Barry Eisler and Joe Konrath discuss the issues around eBooks amusingly and at length here
http://jakonrath.blogspot.com/2011/03/ebooks-and-self-publishing-dialog.html
As a photographer, I find it humorous that a post about the financial pains inflicted on the writer uses content from a micro stock photo agency.
The biggest loser in e-books?
Dunder-Mifflin
I believe that the authors are going to win more in the long term. With paper books, the publishers are necessary especially to ensure appropriate distribution of the books, both because they have access to more distribution points than the authors and because they have capital to print and ship thousands or millions of copies. With ebooks, distribution is much easier and it is not hard to imagine that anyone would be able to sell its ebooks on Amazon (reviewing, editing, formating etc. are services that could be provided by third parties). If this is the case, the publishing industry would basically cease existing.
Just another excuse for me to delay purchasing an e-reader device a little while longer. Writers are getting ripped off. The content is the same, no matter the format.
As others are pointing out, other things are not equal in more important ways. I’d wager authors are better off financially due to increase in the number of units sold.
It’s sad that people write about things they don’t understand. If you understood the eBook world you’d know that authors are telling publishers to take a hike because they can make sooo much more money selling their eBooks independently that it makes no sense for them to sign away their rights for the miserable royalties traditional publishers pay. By contrast, the big six publishers are doing everything in their power to slow consumer movement to eBooks.
Go read about bestselling author, Barry Eisler turning down a half a million $$$ St Martin’s book contract to publish it independently. This is just one example where authors are feeling liberated by the eBook phenomenon, not as losers.
Cheers — Larry