e-book profitability is NOT the whole story.

09 Jun 2014 12:37 PM | Brian DeFiore (Administrator)

About a year ago I wrote a piece for this blog titled… "eBooks and profitability– What we’ve always said and publishers have always denied." It was a reaction to a comment from a Harper Collins shareholder meeting that made the point that an e-book sale is more profitable to the publisher than a hardcover sale. In great part that is true because the author’s share of e-book revenue is smaller than it is on a hardcover sale.

As anyone who knows publishing knows, the e-book royalty rate has been a point of contention between authors/agents and publishers for years now, and it seemed to me that highlighting on this blog the fact that Brian Murray of Harper made that statement was an important bit of information in the ongoing discussion for the AAR member agents for whom the blog is intended.

But a few weeks ago I noticed that several bloggers and journalists have pointed to my blog post and used it to help bolster an argument that seems to be saying, in effect, the Hachette-Amazon standoff is the publishers’ own damned fault. If they had paid authors more, the argument seems to say, then Amazon couldn’t be trying to grab that piece of the pie.

That is a naïve and absurd argument and I hate to see my name connected with anything saying it.

My feelings on the e-book royalty issues are clear; but the royalty rate on e-book sales are only part of the way authors are compensated by publishers. Depending on the many variables of each publication effort (i.e. the percentage of sales in each of the print and digital formats and the pricing of those editions) and the terms of the deal made with a publisher (most significant for determining profitability: the advance), the e-book royalty rate may be important or may have no impact at all. The publishing margin on copies sold in one format looked at in isolation tells very little about how much margin a publisher is making overall on a title. Nor does it tell anything about an author’s overall compensation for that work. And it doesn't at all factor in the many additional investments a publisher makes in publishing a book that contribute to its success.

(On a related but side note, one author recently pointed to my post as his rationale for self publishing. That may have been right for him, I don't know the details; but the decision to self or traditionally publish should be based on a whole lot more than just the e-book royalty rate. For the financial reasons mentioned above and certainly for the forms of career growth and support that an effective publication effort provides.)

The Amazon - Hachette issue and the pain it is inflicting on authors has nothing to do with the royalty publishers pay authors, except for the long-term obvious truth that the publishers' profitability directly impacts what they can pay to authors and the investment that they can make in authors' careers going forward.

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