Why Publishers Should Pay a 50-Percent Royalty of Net Income on E-Books

by John Soares on February 7, 2011

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
  • Marketing
  • 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!

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{ 70 comments… read them below or add one }

1 Anne Waymn February 7, 2011 at 10:24 AM

Oh yeah, 50% on ebooks to the author for sure. One of the things that’s annoyed me has been the attempt of at least some trade publishers to exploit ebooks at the author’s expense. For example, the ability to sell an ebook does NOT imo mean the book is out of print… out of print applies to printed, hard copy books.

Thanks for this.

A
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2 John Soares February 7, 2011 at 2:57 PM

Anne, I had some dealings in the 1990s with a large mainstream publisher regarding a series of trade paperbacks they wanted me to write that involved some underhanded tactics on their part. I’ll write about that in a future post.

I can say that The Mountaineers Books has overall been a good publisher. They’ve been honest with me and they try hard to put out quality products and are generally quite successful at doing that.
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3 Dave Doolin February 7, 2011 at 10:53 AM

I’d go further, 50% gross, that is, 50% of listed purchase price to author. Otherwise, publishers will just game the system.

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4 John Soares February 7, 2011 at 2:52 PM

Dave, the electronic platforms such as Amazon also take a cut, so I think 50% of net would allow the publisher to make a reasonable profit. And keep in mind, that if the publisher sells the ebook from its own site, the net amount would equal the gross.
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5 Victor Volkman February 27, 2011 at 8:35 AM

So running the numbers, Amazon strongarms publishers into the $9.99 price points. Amazon then further marks down the book to $7.99 (yes this happens to me). Amazon pays the publisher 65% of the $7.99 which comes to $5.19.

According to your math, the author gets 50% of the list price of $9.99 which comes to $4.98. This leaves the publisher with a profit of 21 cents ($5.19 minus $4.98). Now who’s being treated fairly???

The 50% you propose cannot possibly work in the sub $10 market where list prices are subject to market price reductions by Amazon and other etailers, period.
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6 John Soares February 27, 2011 at 9:27 AM

Hello Victor. I’m talking about 50% of the publisher’s net receipts. So in your example, that would mean $2.60 for the publisher and $2.60 for the writer.
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7 Victor Volkman February 27, 2011 at 9:48 AM

Thanks John! This is pretty close to what I’m paying authors on eBooks right now. Because I use List Price based royalties, the authors make the same amount no matter how deep the Amazon discounts go on the eBooks. They are just starting to experiment with discounted eBooks and I think they will go much further. Unlike the old days when Amazon Net was locked in it is now *variable* in the new world order, unless I wanted to forgo the 65% payout in favor of the meager 30%.

I realize most publishers pay on net receipts but I formulate author payments only on List Price because (A) it is something they can understand and (B) our Net varies by sales channel. This has scared off more than a few authors who assume I’m a monster because I quote them a 10% royalty based on List Price which is closer to 22% of Net price. I actually have to show them a pie chart which shows that the bookstore is collecting 40% to 55% of the List Price etc. etc.

Would the average author understand what “50% of Net” amounts to? I guess that’s an open question.
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8 John Soares February 27, 2011 at 11:53 AM

Victor, I’m glad you pay a set % of cover price. That’s something that is very easy for authors to understand.

I think most authors can understand the basic concept of 50% (or whatever %) of net, but what’s confusing is trying to understand the publisher’s net from the different discounts, formats, etc.

When my first hiking guidebook came out in 1992, the discount on trade paperbacks was 40% in most cases, and only occasionally went a bit deeper for big accounts. Now most print books seem to be discounted at 50% or more.
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9 John Soares February 27, 2011 at 11:56 AM

And it’s interesting that this discussion comes up today. I just got my semiannual royalty check and statement from The Mountaineers Books.
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10 Eric Soares February 8, 2011 at 9:57 AM

I’m NOT a big fan of publishing houses, especially the big dogs. I’ve had bad dealings with them. I don’t like their arrogant attitudes and their insistence that they make more money off your work than you do.

I think authors getting 50% of the gross on e-books of any type is fair, assuming the publisher did a lot of work to earn their cut (e.g., layout, editing, marketing, etc.). I recommend that authors find ways to cut publishing houses completely out of the loop. It’s time for the publishing dinosaurs to go extinct, in my opinion.

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11 John Soares February 8, 2011 at 10:55 AM

Eric, I know you’ve published books through three routes: trade paperback, academic, and self-publishing. We’ve also discussed your experiences in detail in conversation, and I know you know a lot about the publishing field.

That said, I agree that many authors should consider the self-publishing route. For many others, the potential audience is widely dispersed and hard to reach, and thus a mainstream publisher’s ability to put a book in hundreds of bookstores becomes a big factor.

There’s also the question of authority. Anybody with a credit card can self-publish a book, so many people give much less credence to a self-published book versus one that has been vetted and edited by a publishing company that put its own money on the line.
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12 rick perry May 2, 2011 at 9:44 AM

I’m a bit late onto the topic, but I’ve been studying ebook publishing for many weeks now. As you (John) point out, anyone with a credit card can self-publish a book. A publisher screens titles for quality content, signs the author and then take the book through the publishing process. Good publishers produce good books most times, so there’s typically little concern about quality (content, editing, or otherwise).

However, a writer can self-publish an ebook very effectively (with quality/profitably) by seeking good editors to edit, proofread and copywrite. As a consumer, the best way to tell the difference between a good versus a shabby self-published ebook may boil down to how the ebook is presented on the author’s site.

A quality author’s book site likely means a quality book. In other words, if the site looks like it was thrown together, the same may likely said about the book.

Websites are the future of direct-to-author ebook success. Creating an environment that welcomes readers on a personal level is social marketing 101. Done right, traffic will come and so will 100% of the proceeds.
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13 John Soares May 2, 2011 at 5:27 PM

Rick, you make a very good observation about judging the quality of an e-book by the quality of the author’s site. I would focus primarily on how well the site content is written and less on the site design since some people may be an expert in a subject and write a good e-book about it, but not do a good job on how it all looks visually on the Internet.
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14 Thomas W Sharkey June 19, 2011 at 2:15 AM

Eric, I agree with your comment on arrogant publishers, but e-book publishers are no different – Beware!

I sent a short story to eirelander e-book publishing (so sue me), they offer 40% royalties.
They sent a polite reject letter. I asked the “rejector” if it was because of my location (Germany) or any other reason she would care to name.

She sent me a self-opinionated comment about “showing and not telling” with her own silly ideas on how to apply it.

I looked up her name on the ame website. She was an author who wrote sub-pornography (not very well and extremely crude) in a rambling, vague style which made me wonder where she learned her grammar.

I still have the e-mail.

Yes, arrogant was another quality I found. A query letter, a synopsis and the full manuscript was demanded.

On recollection, I felt that she had read the synopsis and not the manuscript.

Amazon ask for you to upload etc.

Amazon offers 70% from the price of your book, but their method of selling leaves a lot to be desired.
I suggested (three times) a way of increasing author’s sales by promoting the authors and their books and not Amazon’s vast collection of books in their genres or categories.

Anybody who has been round the block more than once knows there are less authors than books on Amazon, so work it out…or as the Americans say- go figure.

Thomas.
P.S. Okay, so I’m a “published author” – big deal.
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15 The Trout Underground February 8, 2011 at 1:34 PM

A lot of publishers are attempting to seal 75/25 deals with current fiction authors, many of whom are pretty unhappy, and ditching big publishers altogether.

Lee Goldberg has covered a lot of these issues on his “Writer’s Life” blog. He’s a fairly successful midlist fiction writer with a lot of out-of-print titles he’s now marketing as ebooks (and doing pretty well).

Interestingly, you can see the transformation on his blog from a largely anti-self-publishing perspective to one suggesting authors should look very, very carefully at publishing deals – and consider saying “no.”

In one post, he goes over the numbers, and reveals why a 75/25 ebook split is basically highway robbery for publishers.

Given how easy it is for publishers to cover ebook outlets, I wonder if even a 50/50 split is fair to the writer….
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16 John Soares February 8, 2011 at 4:02 PM

Tom, thanks for chiming in with this excellent info. I strongly urge everyone to follow Tom’s recommendation and read Lee Goldberg’s post (via the Author’s Guild) about recent developments on the issue of ebook royalties. Here’s the link again:

Publishers Screwing Authors out of E-Book Royalties
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17 Delena Silverfox@YouLoveCoupons February 9, 2011 at 4:16 PM

In Randy Ingermanson’s December edition of his Advanced Fiction Writing Newsletter, he had an interview with Bob Mayer, co-creator of Who Dares Wins Publishing, and they spoke at length about electronic publishing and rights. In a nutshell, they spoke of 50% royalties being good but upwards of 70% being what authors could and should expect, especially since there were so many more opportunities for them to publish on their own or find a publishing house that was entirely electronic.

With a lot of the big boys now saying similar things, I’m re-thinking my desire to find a brick-and-mortar publishing house.

Delena
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18 John Soares February 9, 2011 at 5:19 PM

Delena, I’ve also seen some authors pushing for 70%, but that seems to be more common with books issued by self-publishing companies and companies that only sell e-books.
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19 Erik Asorson February 10, 2011 at 1:08 PM

The two things that publisher’s traditionally brought to the table (which entitled them to a larger percentage of the revenue generated by a book) were printing/distribution and marketing. With the advent of ebooks printing is eliminated and distribution is simplified, but marketing becomes more important than ever.

Digital publishing has lowered the barrier for entry to the marketplace. Authors who could not get published before are now able to publish ebooks (and physical books with short run and print on demand) and offer them for sale on the internet. This results in more competition, so you have to work twice as hard in order to distinguish yourself and your books from the crowd.

An author who is also a good marketer and self promoter, who has a unique perspective, hook, angle or celebrity appeal would be entitled to a percentage of royalties commensurate with their contribution to the commercial success of the book (which goes beyond researching and writing the content).

On the other hand, writers who are not good marketers still must depend on publishers to sell their books. Although they may have invested a lot of time and work into creating the product, that does not always have a direct correlation to sales. Many good books have been written which were not commercially successful and many bad ones which were.

In this era of digital publishing and direct to consumer distribution writing a good book is half the battle, but figuring out how to sell it is the other half.
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20 John Soares February 10, 2011 at 4:50 PM

Erik, thanks for sharing your perspective as both an author and a publisher. (Folks, see Erik’s hiking guidebooks here.)

A key point in the digital age is marketing online. A motivated author with a strong online presence can do a lot to move both printed books and e-books. Most book publishers have a website with information about all of their books, but they are not able to put in the detailed and personalized attention to promote most of the books on the Internet.
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21 The Trout Underground February 10, 2011 at 4:57 PM

Erik:

Midlist authors are abandoning publishers in droves precisely because they don’t receive any real marketing support, most of which is pointed directly at their handful of best-selling/big dollar authors.

I’m seeing a lot of group blogs started by genre writers, who feel even a moderate presence on the Internet offers more hope of sales than letting the publisher do it.

Increasingly, what publishers have to offer revolves around editing instead of distribution and marketing (though admittedly, we’re not there yet).
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22 John Soares February 11, 2011 at 9:44 AM

Important points Tom.

Good writers don’t need much editing, and can they can set up networks with other writers so they can edit each other. I recently edited my brother’s self-published book on his sea kayaking adventures, and a couple of years ago I edited my tai chi teacher’s self-published book on tai chi: Tai Chi For Geniuses.

And it’s also much easier now for writers to hire competent people to do layout/design.
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23 John Soares February 10, 2011 at 4:54 PM

A quick thought on selling e-books. An e-mail from Paypal just popped into my inbox. I just sold a copy of my e-book Writing College Textbook Supplements.

It was all handled electronically. The buyer has the e-book and I have $27 more in my Paypal account. To make that amount from the sale of my printed hiking guidebooks, about 20 or so copies would have to be sold.
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24 Eric Soares February 11, 2011 at 10:00 AM

John,

Thanks for editing my self-published book, CONFESSIONS OF A WAVE WARRIOR. I had a friend (Laura Nixon) do the layout, and I hired a person to do the cover (Christy Collins).

When I sell it through my website (http://www.tsunamirangers.com) I get 100% of the profit, minus paying off my friends who helped me. That’s a good deal. I also sell through other dealers, and I get 50% if they buy 28 books or more, and I get 65% if they buy less. Everyone’s happy.

When John posts on publisher rip offs and bad deals, I’ll share my stories of same.

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25 John Soares February 11, 2011 at 10:42 AM

Eric, you’re doing a good job of using a Wordpress blog to connect with other sea kayakers and get traffic through search engine optimization. That’s a smart way for people who self-publish to get customers, especially when they are well known in a specialized niche, as you are for sea kayaking.
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26 Ramona Iftode February 15, 2011 at 7:22 AM

I would also consider it a good idea to get 50% at least from books published in an electronic format. To be honest, if I was to write a book myself, I’d do my own promotion and publishing. Let’s face it, a pdf is not rocket science. This way I’d get all the money myself. I never knew the royalties in print were so small either … It’s true the publisher has a lot of costs, but, without the author, there would be no books.

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27 John Soares February 15, 2011 at 9:35 AM

“It’s true the publisher has a lot of costs, but, without the author, there would be no books.”

Ramona, this is a crucial point. Usually it’s the author that comes up with the idea for a book, and then he or she does the research and the writing.
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28 Vio February 26, 2011 at 9:08 AM

Good writing is about ideas not about grammar – editors exist for a reason. I speak several languages and would need an editor in any and all of them. However, editors are not perfect either – in fact, some writers hire two ore more of them.
That being said, editing own text, alone, seems to be a bad idea.
However, the idea that after all the expenses and the time lost give up 50% to someone, who may or may not know what they’re doing, is not appealing to me.
Perhaps a 70/30 would be fair – books are not perishables that could expire if not sold within 5 days. Besides, there are some many publishers out there yet only few books sell in any noticeable volume – the rest do not.

The quality of the book is almost never correlated with its sells.
Kevin Trudeau’s sells useless information (in my opinion) yet his marketing is to be envied.

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29 John Soares February 26, 2011 at 1:45 PM

“Kevin Trudeau’s sells useless information (in my opinion) yet his marketing is to be envied.”

I think Kevin Trudeau’s information is beyond useless — it’s actually harmful. But he is very good at making sales.
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30 moishe May 19, 2011 at 3:34 PM

Hmm. I’m a little surprised to read about your Amazon Kindle experience.

I read that you said you were asked to “accept 10%” from Amazon for the Kindle version of your book.

Amazon’s offers 35%-70% royalties on books published to Kindle. In certain instances they subtract the download fee, but it is negligible, and doesn’t drop the royalty to 10%.

So, was it a third-party that was offering to format and publish your book to Kindle, and then pay you 10%? Help me to understand what happened to you in that situation.

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31 John Soares May 19, 2011 at 8:09 PM

Moishe, it was the publisher of my trade paperbacks, The Mountaineers Books, that offered me 10% of net receipts from Kindle sales of my books. That’s what I declined.
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32 Edwin Fager May 29, 2011 at 9:21 PM

From my experience, for most publishers a royalty rate of 50% would mean bankruptcy. Why? They have large fixed cost; marketing, editorial, sales, promotion and production expenses. That said, there marketing efforts are not allocated evenly across all titles. A publisher will usually focus they marketing efforts on 10% to 20% of their list, and let the remaining books sell themselves.

That said, I know a few eBook only publishers that pay a 50% royalty. How do they do it? Their overhead expenses are low, they do not pay royalty advances, they do minimal marketing, minimal promotion, produce only eBooks (no print books) and rely on low paid freelance staff. This allows them to pay higher royalties, but does not create a book that will sell 10K, 50K or 100K+ copies.

In my view, if you realistically think that you book could be a blockbuster go with a traditional publisher that will market it and accept a lower royalty rate. If the market for your title is only a few hundred copies, an eBook only publisher that pays 50% royalty might be the better choice.

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33 Publishers? Yuck. (just kidding) August 4, 2011 at 8:58 AM

“She sent me a self-opinionated comment about “showing and not telling” with her own silly ideas on how to apply it.”
Thomas Sharkey 6/2/11

Thomas, you should’ve been happy the “rejector” took the time to even GIVE you some advice and it’s not ‘silly’ either. A reader telling you to ‘show’ and not ‘tell’ is serious and you need to listen. No offense; I know you’re a grown man, but learn how to listen. Maybe take a writing course or 2. Read other books. I mean, I dpon’t know your background so I’m just going by what you said here. But calling her silly was just…silly.

As for the article on Ebook royalties. Well, the richest writer in the wolrd
(JK Rowlings) – a BILLIONAIRE- is self publishing HER Ebooks, so you know there must be something in it. She doesn’t need the $$$ so why not go through the publisher? Something to think about as far as Ebooks are concerned.

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34 Thomas Sharkey November 1, 2011 at 2:04 AM

Thank you for your concern, I’m 67 years of age.
If you are a writer, you should know that if you are commenting on somebody’s prose you should be in a position to back up what you say.
I was unimpressed by her work and as I said, I believe she read the synopsis first, as I had inadvertantly sent it second in line after the query letter instead of after the first three chapters. Also, her punctuation left a lot to be desired.
As for taking advice, when it is asked for I accept it gratefully, but not from someone who can’t even spell honestly (honnistly) correctly.
As for showing and telling, they are just words, we use words all the time and it is ludicrous to suggest to another writer that he should show all the time and never tell. I do both, if it works, it works.

So, what do you think of Amazon.com etc? Are they on the ball? I’ve got 16 publications there and they are ones amongst tens of thousands. Where does the reader start his/her search? Will he/she ever find YOUR book (#1,235 out of 23,000)?
The question is: Is Amazon/Kindle doing enough to promote its clients books and e-books?

My books sell at $2.99 minimum price @ 70% royalties, one of them, “Anthologies” sells at $0.99 @ 30%.

You may notice I have not given you my author name. Try and find the book without it.

I would like your view on this.

The first thing somebody told me about starting out as an author was: Don’t write for the money, if you do, it will never be enough, write for the love of writing.

I love writing.

Thanks again,

Thomas.
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35 Casey Kerwitz August 24, 2011 at 9:53 PM

I agree, 50% is quite good. Seeing that a lot of publishers think that 10-25% is fair, I am happy with the publisher I would like to use for my current work in progress. They offer 40%; not quite there, but a lot better than most, from the looks of it. Thank you for posting this; I’ve just started researching for a fair amount, and this has helped quite a bit!
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36 John Soares August 25, 2011 at 7:00 AM

40% is quite good Casey. Not 50%, but definitely better than what most other publishers offer.
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37 West October 28, 2011 at 6:09 PM

Until recently I was a small publisher. Most of the books we published were e-books, and all e-book authors were given a minimum of 50% net royalty (50% of everything paid to us from retailers). It seemed like the most fair percentage since once we got the e-book uploaded there would be almost no other labor involved other than keeping track of who sold what.

Due to Mobipocket/Kindle/Amazon no longer paying royalties to some publishers, I finally gave up and closed the business (eight years building the business, two weeks to tear it back down). To my knowledge there are four of us that Amazon is not paying, and there may be others. It is not merely a matter of slow pay (some checks did not arrive for over two years), but rather royalty payments from Amazon have now stopped completely.

Being a publisher involves a lot more work than simply receiving and writing checks; it can sometimes be a full time ordeal just to stay on top of ever-changing retailers. :-)

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38 John Soares October 29, 2011 at 7:11 AM

Thanks for sharing your story. I have no information about Amazon’s policies regarding the payment of royalties. I hope you continue to seek what’s truly owed to you.
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39 Alan October 31, 2011 at 10:45 AM

Frankly I feel that 25% is a quite fair for all.

When a product goes to the market, do you know that a large chunk actually goes to the actually seller?

The publisher is NOT THE SELLER.

Try ClickBank… sellers get as much as 70% of the sale value because the hardest part is to sell not to publish. That leaves the publisher with 30% to be divided with the author. So how much do you think the authour is entitled? 10% is the fair value. So if a publisher is to give 25% ..grab it. Dont dream of 70% or whatsnot.

Companies like Amazon gives high..why? You are just making the volume and lost among the many books. They do not care two hoots it yours sells ..so long as they sell something.

Now if the author is NOT selling … 25% to me is way too much because the publisher actually gets 30% of the retail value.

Go figure.

A publisher is not a seller/retailer ..Remember that. Dont be greedy ..now talking about 85%!!!

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40 John Soares October 31, 2011 at 11:20 AM

Alan, my take is that publishers should pay authors 50% of net receipts.
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41 Alan October 31, 2011 at 5:06 PM

Yes, that may be right because you use the word “net” not on retail value of the book. This means if the publisher is to get 30% of the retail value after cost of selling , the net to author at 50% is only 15% which is quite fair.

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42 Jonah Hall July 30, 2012 at 7:56 AM

Alan, which publishing house do you work for? Are you on the chopping block, or have you already been fired?

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43 West October 31, 2011 at 8:03 PM

Thanks John, we’ll keep plugging away at it and hope that everything eventually gets made right.

Alan, I just had to smile wide at the idea of selling being the hardest part. :D I am also an author who had a book that was ranked #1 in its genre as an e-book for over two years. A decent book may take the author two years of full-time work to write, and the work might be based on over twenty years of education and research. I am chuckling with the thought of what my authors would tell me if I told them that selling books was the hardest part. Selling books is usually pretty easy; the hard part can be finding a topic that the public wants to pay money for: now that’s hard! ;)

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44 Alan October 31, 2011 at 11:09 PM

West, lucky you to have a best seller and be known. You must have done something right like find a niche where demand is there. As for the majority, most form the bottom majority trying to sell and reach out to the market.

Take the Android Apps for example, there are millions of Apps out there and most are unable to sell simply because of the mass of offerings and difficulty to get known or to get eyeballs.

Similarly there are millions of web sites and who are the the ones getting top ranking in Google search? Anyone can create a book (whether it is “Gone with the Wind” or a simple academic book for kindergratens ) but most would find it hard to sell.

Try the local store for example and put them into a CD to get a distributor to stock and sell your CD. The likely event is they want huge margins and one over here in my country wanted as much as 70% on consignment (not even sale).

Moreover the IP lasts for many years beyond the life of the author for a one time effort of writing a book but selling costs are constant and continous . To find a good site to sell and get noticed is really a big challenge…the biggest. You may have a site to sell, the problem is nobody knows how to find you unless you spend huge amount of money on SEO. Even that it is not assured. Meanwhile the author sits at home waiting for his due for the rest of his life while the marketers have to fight hard to sell.

Believe me, I create lots of acadamic ebooks and the hardest is NOT producing it… the hardest is to find the right channel or partners to sell them.

There are many Apple Apps now … how many “Angry Birds” do you think there are? Only one of the millions. MOst do not even get a single sale. :>) but there are lots of con training guys out there telling how profitable making Apple Apps are. At the end of the day , you book or App is just one of many trying to find a buyer.

Alan

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45 Aspiring Author November 30, 2011 at 10:21 PM

I just recently accepted a deal with a new and fairly small publishing company. They offer 35% on ebook downloads 1-10,000 and 40% on 10,001 and beyond. Eager to become “published”, I signed the contract and agreed. I think if you are writing for money, you will be disappointed. Writing for me, is a passion and the dream of being published is just for the small bit of recognition I may receive for something I enjoy doing. Certainly not the money. But I am just a nobody writer trying to build my audience and leave something behind for my children. Though, I still wonder if I am being taken advantage of…?

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46 John Soares December 1, 2011 at 6:30 AM

Those royalty rates are actually better than a lot of authors are getting, including some that are well known and sell a lot of books.

And I agree that most people who write books expecting to make good money are disappointed. However, I and many other people do make a good living as freelance writers.
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47 Aspiring Author November 30, 2011 at 10:25 PM

P.S… Even if I found the royalties to be “unfair”, I would still publish. Gotta get your foot in the door somehow…and that may be why some authors accept the lesser royalties through smaller companies; for the excitement of seeing their name in print. :)

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48 John Soares December 1, 2011 at 6:31 AM

Often you have to take the best deal you can get and then go with it.

The alternative is to self-publish.
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49 Saurabh Gupta December 1, 2011 at 10:45 AM

I am reviewing few publisher deals before getting into my first technical publication. One of the publisher is offering me 16% on all books and ebooks irrespective of the discounts. But since the publisher has a big name in its credibility, name and reachability, I am making up my mind. Reaching out other publishers for a new author is not so easy and a long agile process.

I am not able to take up the call whether to go with the publisher or to knock out other publishers too.

Can you help me John?

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50 John Soares December 1, 2011 at 5:06 PM

Saurabh, I don’t know if that 16% is on the full price or the net proceeds to the publisher. And have you asked for a higher % on the e-books? It would help if you can find data for royalty rates from similar titles, perhaps inside a forum or by asking other authors.
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51 Jake December 19, 2011 at 6:13 PM

Ya’ll have no idea what you are speaking of. (And before someone points it out, The Chicago Manual of Style affirms that using a preposition to end a sentence is grammatically correct.)

I’ve been in professional publishing for many years. Most writers couldn’t edit their way out of the proverbial paperback. And most of the books that are referenced on John Soares’ site, not to demean, But…are books that require the barest ability to write. Compendiums of nature walks are short bursts of writing, as well, most of the non-fiction mentioned here. Too, it’s always good to remember that the large publishing houses are not in need of authors; they have plenty who want their support and backing. The arrogance and rudeness of these post is just astounding. Fifty percent royalties? Surely you jest?! After all, given the arrogance exhibited here, there is no reason to Ever approach a real publisher. Except that they have a lot of experience, knowledge, wisdom, and oh yah, that talent thing that turns mediocre into so-much-better. Kinda like that “editing” thing that ya’ll apparently feel anyone can do. Most of self-publishing is: crummy covers, terrible writing, topics that have been done too often and rarely add any originality, and, of course, those who believe that their lack of accomplishment nonetheless allows them a “claim to fame and fortune.” Gufaw. Maybe the posts here are a great indicator of why publisher’s aren’t bowing down before you? Go ahead, self-publish, sell to your mom and dad and call yourself a “writer”.

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52 John Soares January 13, 2012 at 8:07 AM

Jake, it’s clear you’re upset that so many people are self-publishing. I agree that much of the work that’s self-published is not very good, but that doesn’t mean it’s all crap.

Anyway, the blog post is about why mainstream publishers should pay a 50% royalty on net receipts. Author agents and some publishers are moving toward 35%, and I’m not the only author pushing for rates higher than that.
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53 jake January 13, 2012 at 3:48 PM

Regarding the fifty percent royalty rate; a fifty-percent royalty rate makes absolutely no sense. The publishers have to support all the infrastructure and tracking, no small job…as usual “writers”, using the term loosely for those who believe that throwing a few—usually small and usually misspelled—words onto a pdf, allows them a superior standing. After all, if the writer believes in their own book, why give up any of it? Do your own marketing, tracking, bookkeeping, and promoting…don’t even give up one-percent.

I’ve “edited” at a number of the self-publishing companies, and the cr@p that I was asked to “edit” had no right to be in the market.

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54 West January 20, 2012 at 9:24 PM

The months have flown by since I last replied. Good news: Amazon finally paid, about six months late, but at least my authors got their royalties.

Alan, yes, my book’s unintentional niche was sensationalism mixed with slightly bent science. ;) Despite the good rankings, the profit margin was next to nothing: I would have been better off to throw fifty bucks in the street and side-step the book entirely. On search engine rankings, I have done my own SEO for over ten years, and my sites are all in the top ten for their keywords (some are #1). Nevertheless, even having a #1 site does not guarantee sales. One book sells around one copy per 10,000 visitors: it just isn’t worth it. I think that the general opinion of many Internet users is that everything should be free, and the behavior has caused a lot of good ideas and products to sit idle. I believe you that some apps do not make even one sale; a very large percentage of e-books never sell one copy either, and I also very much agree that the biggest profits online are usually those of people selling the dream of making money online.

John, you have my accolades; I would very much like to earn a living writing. Although, in a way, since I code websites for an income, and I write a lot of articles for SEO purposes, then in a twisted kind of way maybe I am making a living writing in the different languages of English, HTML, and CSS. ;)

Jake, I have read a ton of submissions from hopeful authors, and I agree that many of the manuscripts were a wee bit lacking in experience. I cringe when I reread my earliest writings; I don’t blame publishers for not having replied to my queries.

Saurabh, just my thoughts, but if the publishing company has a well respected name, I would say to accept whatever they offer if it is your first book. Having a title published by a well established publishing company is worth more than the royalties. I would gladly give Penguin all of my books for free if Penguin would dare publish the books. ;)

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55 heather dune macadam March 6, 2012 at 4:13 AM

Like you John, our book came out in 1995. I tried to get the publisher to release a new edition 2 years ago and they declined and suggested we keep the old edition and release it as an ebook. I decided to release a new edition on my own, as we own the digital rights.

Here’s the question: The ebook has done VERY well. Now they want to release a new print edition and take over the digital rights and take 20% (so we are getting 50%, I guess). However, I did all of the work. Hired an editor, did the lay out, do the marketing, got the book to go viral over xmas, and have now paid for two new editions in different formats to come out. It has taken them 3 months to say they want to release the new edition in print.
Do you think their taking 20% is fair to me? I would like the new edition to be released in print, but if we give them digital rights we could lose quite a bit of revenue. (the ebook currently sells at 9.99). Thanks for your feedback! Cheers, hdm

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56 John Soares March 6, 2012 at 8:58 AM

Heather, it looks like your book Rena’s Promise is an excellent one.

Now to your questions. Is the publisher saying they want to take 20% of the net and you get the other 80% of the net?

Can you just keep all the digital rights and let the publisher deal with the print version only? Or can the publisher significantly increase e-book sales, and if so, is it worth the 20% cut?
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57 TC/The Writer Underground March 6, 2012 at 9:46 AM

HDM:

I’m not really sure what the publisher would be getting 20% for; you’ve already done all the heavy lifting, and unless they can show a compelling plan for boosting your ebook sales (and by a hefty margin), then why relinquish rights?

I mean, what online distribution channel are they going to access that you can’t?

Who knows what is next, but in five years, it’s possible those digital rights will be far more valuable than the print rights — and you’ll be shoveling 20% of your revenue to someone who didn’t edit, layout, or even back you financially when you wrote the 2nd edition.

Also, be careful — a friend was approached by a new publisher to craft a how-to book, and the contract offered the author 20% of net on ebook sales.

That’s a pretty dismal number, so make sure your publisher isn’t actually offering you 20% instead of the other way around.
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58 John Soares March 6, 2012 at 10:54 AM

Excellent advice Tom. Publishing is moving more toward digital, and authors who get a low rate on e-book and other electronic sales will eventually be kicking themselves.

And I was offered a contract a couple of years back to write another hiking guidebook. The e-book royalty was 10% of net. I said no for that reason and some others, but wow, only 10%.
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59 heather dune macadam March 6, 2012 at 1:00 PM

This is exactly what I just told the publisher! You snooze you lose:P I have to say I would love a new print edition, but they don’t seem interested unless they get digital rights and I just don’t know that it’s worth it. Thanks SO much for the feedback. It always helps to get an outsider’s perspective. PS Our agent didn’t have digital in her contract and when we contacted her 2 years ago wasn’t interested in what we were doing. We had to hire a separate accountant to deal with the financials, as the book is now owned by myself and the Rena’s heirs, so we have formed a LLC and use part of our income from the ebook to develop more digital texts… why indeed should we share in that? All Best, hdm

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60 John Soares March 7, 2012 at 8:37 AM

Glad Tom and I were able to help Heather! I’d also look into self-publishing the print version.
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61 heather dune macadam March 6, 2012 at 4:17 AM

PS what is the agent’s cut of all this?

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62 John Soares March 6, 2012 at 8:58 AM

If you have an agent, you likely already have a contract with percentages in it, right?
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63 Renee July 5, 2012 at 1:36 PM

I understand Author “Advance” and “Royalties”, but what’s the rule on “Buybacks”?

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64 Orson February 16, 2013 at 12:41 AM

1) I make about the same money on a $15 POD paperback and a $7 ebook using amazon services for everything.

2) Readers perceive the ebook as something that should cost a lot less than the retail price of a paperback, so $7 also makes sense from their point of view.

3) Publishers do not have the high POD production cost, but they do have overhead and other expenses I do not have. They also do more that what I do when I drop my book on amazon to put it into retail. I would say the publisher costs just about match the POD cost.

So there we are, everybody is making the same money on ebooks and trade paperbacks.

Now, since the ebook is half price, the author should get 2x percentage of retail or 4-5x of wholesale. This is about 40-50% on wholesale so the 50% you propose sounds fair. The author still makes what he would make on 8-10% on a trade paperback deal. 50% only sounds better.

Also, ebooks with the quality of a traditionally published paperback cannot possibly loss less than half the paper back cost. And I’m talking about half the retail. Adding in discounts that come from the retailer in the paperback business, the ebook cost could easily get very close to the true price the customer pays for a paperback. I can imagine a difference of $1,00-$1,50 for printing and distribution costs.

So, nothing changed. Authors do the same job and get the same money for it. The same applies to publishers. It’s just that a lot of people in printing and order handling will be unemployed now, bookstores will close and amazon will control the entire book business through its aggressive monopoly.

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65 John Soares February 23, 2013 at 6:36 AM

Orson, I think we agree on the need for high royalty rates for ebook authors. We also agree that Amazon has the lion’s share of the market, which is troubling in many ways.
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66 Orson February 16, 2013 at 12:57 AM

Btw, I do make more per sale with my POD and ebook titles, since I’m also the publisher, but I cannot really get the sales a publisher could get. 4 times more money but 1/4 the sales (if not 1/10)? Still the same money for me.

If I want to match the sales, I have to be a real publisher. But that would increase my cost to traditional publishing levels. Nothing is free.

There is no real money in the publishing business and there is no real greed on the publisher side. That’s easy to tell. Ask one of their accountants or check their profit %.

I don’t understand why authors are hostile to publishers. It all comes down to misinformation and limited knowledge in the subject I guess. Or it could be a psychological think, publishers being the gatekeepers who judge our art and all.

Publishers invest their money in publishing my book and they get what is technically a 50% share of the true profit. It’s compensation for their knowledge, capital, and time, and my knowledge, talent, and time. Talent=Capital in this equation. We make 8% or 10% of retail each. or 50% of ebook wholesale. Or whatever. It’s a still a 50/50 deal for a good publisher that knows the market. It’s much worse for the publishers that are not big enough to handle the statistical risks involved in picking art out of the slush pile, or those who do not know enough about the market, or those who invest in very bad authors

It makes me sad when authors think Amazon is their friend and publishers are their enemy. Amazon just wants pieces of a pie they do not deserve to have, because they do actually not the job of those who have those pieces traditionally.

Sorry about the rant. It’s just that nothing really changed with ebooks. It’s still the same business.

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67 Samantha Martin March 10, 2013 at 3:57 AM

Hi John,
I am a first time author who is in the first stages of negotiation. Could you please guide me if the follow deal is fair or are they taking the mickey??

I’ve looked at some costs based on the following specs for your book:

format of 185mm x 125mm, paperback
200 pages
initial print run of 5000 copies
RRP of $19.95
RRP of $9.95 for e-book version.

Based on these specs, we can offer you the following:

A royalty of 9% of RRP, rising to 10% of RRP for any reprints, for units sold up to and including a discount of 52.5%.
Our standard rate of 10% of net receipts for books sold at a discount of over 52.5%.
A total advance against royalties of $4000 + GST to be paid in four instalments ($1000 + GST on signature of contract, $1000 + GST on submission of half of the final manuscript, $1000 + GST on submission of the second half of the final manuscript and all images, $1000 + GST on publication).
A royalty of 25% of net receipts on e-book versions sold.
This arrangement is based on you supplying most of the images (whether you’ve taken the photos yourself or got permission to use them from other sources), but we are happy to assist with some pic research, particularly for more travel-related images.

I’ve looked at the dates and we’d like to publish your book in April 2014, meaning that your manuscript and all images would need to be submitted by Monday 22 July 2013. You would work with our editor while writing the manuscript, and also for the next four months after that (August–December 2013) as we put together the book.

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68 John Soares March 10, 2013 at 7:28 PM

Ask for a higher percentage of e-book net receipts. Ask for 50% and see if they’ll come up to 35%.

I’d also ask what percentage of print books are typically discounted more than 52.5%.
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69 Tom Scheurer March 18, 2013 at 8:30 PM

John

Can you define “net receipts”?

Tom

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70 John Soares March 20, 2013 at 5:03 PM

Tom, by “net receipts” I mean the actual amount publishers receive from all distributors of a given book.
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