Many freelance writers and entrepreneurs/business people are very interested in writing a book for a mainstream publisher that will appear in bookstores across the country and help build the author’s authority, reputation, and bank account.
Today we focus on the bank account part, specifically determining a fair royalty rate on mainstream hardback and trade paperback ebooks.
My Experience with E-Book Royalty Rates on Trade Paperbacks
My path as a nonfiction writer has been different than most. I’m primarily a freelance writer for college textbook publishers now, but I actually began my career by writing a hiking guidebook for The Mountaineers Books, a mainstream publisher, complete with an advance and royalty payments.
I went on to write two other hiking guidebooks for The Mountaineers Books in the mid-1990s (both still in print and earning me royalties), including 100 Classic Hikes in Northern California, now in its 3rd edition (cover in the sidebar to your right). Back then few people talked about e-books, although publishers, including The Mountaineers, were beginning to address electronic rights.
I was fortunate that I negotiated 50% of all money made from electronic versions 100 Classic Hikes in Northern California. For several years online sites have used content from the book, which has earned me a substantial portion of my royalties.
A couple of years ago, I was asked to accept a 10% royalty on digital version of my books to be sold for the Amazon Kindle. I declined.
And last summer I was offered the opportunity to write an outdoors book for another mainstream publisher, complete with a substantial advance. I decided not to do it for several reasons, but a key one was the 10% royalty on electronic editions.
Many mainstream book publishers are struggling financially, so they are vigilant about keeping as much money in their coffers as possible, and this includes paying authors less. Let’s look at this issue from the publisher’s point of view…
What Mainstream Publishers Do to Create and Market Books
A lot of time, resources, and money goes into creating a physical hardback or trade paperback book, including:
- Editing the manuscript
- Preparing the book for publication (permissions, artwork, layout, cover design)
- Printing several thousand copies
- Shipping and storage costs
- Overhead (salaries, buildings, supplies, utilities, website, etc.)
These costs are the main reason why book authors typically get a 10-15% royalty on the publisher’s net receipts. Even so, many publishers are losing money, and some have gone out of business.
And now the writer’s perspective…
Why E-Book Royalties Should Be High
Here’s why I think e-book royalty rates should be high:
1. Most importantly, publishing is shifting to electronic formats. We all know about Amazon’s Kindle and other e-book readers, and it’s obvious that the future of publishing is digital. This means the publishers’ printing, shipping, and storage costs will only apply to the far fewer physical books that are actually printed.
2. Marketing costs could go way down for publishers. The companies that have the best websites and do the most effective outreach to potential customers online through social media and other channels will have a strong advantage. This could be far cheaper than hiring salespeople and book representatives to visit bookstores and other brick-and-mortar sales outlets.
3. There may come a time — and it could be within 3-5 years or less — when almost all books are digital, with only a few produced physically through print-on-demand.
4. In the digital world, a savvy author can do as much or more to drive book sales than the publisher will.
Overall: We will soon have a situation in which publishers will spend much less money on a title, so the author who actually wrote the book should get a much greater percentage of the proceeds.
So What Should E-Book Royalty Rates Be?
Let’s first look at the results of a poll of 130 book agents discussed in a recent article at PublishersWeekly.com:
Shatzkin noted that ¾ of agents believe an author should have one publisher for both electronic and print; that most agents, unsurprisingly, believe a 50% e-book royalty rate is “fair,” and that most publishers thought that the 25% royalty, the generally accepted rate today, was fair. Shatzkin pointed out that older houses with big legacy print backlists were much more reluctant to want to go above 25% rate.
I agree with the book agents on the 50% e-book royalty rate on net receipts.
What’s Your View?
What’s a fair royalty rate for e-books from mainstream publishers? Any important factors I left out of this discussion? Tell us in the comments below!