Wednesday, October 13, 2010

Are publishers making lots of money? How come authors are paid so little?

An author e-mailed me yesterday with a link to a blog that asked those questions and purported to have answers. I'm not providing the link, as I think the answers were in error. Certainly, I know they do not apply to myself as your publisher. As an author myself, I can tell you that few authors make much money selling e-books, and as a publisher, I have tried to answer those very questions myself more than once. Sometimes successfully. Sometimes not.

Yes, I am going to try again. Skip this if you are bored by the issues of authors' contracts, e-book sales, or royalty payments.

Whoever wrote that blog seems to be blaming the publishers for the low prices authors are paid and seems to feel authors are being regularly and roundly cheated by their publishers. They claim that some publishers have published work without the authors' permission, though e-book rights have been part of the "standard contract" since the Author's Guild won that lawsuit about whether they were already covered under "electronic rights" sometime around 2004. If they signed a contract with a large publisher for a paper book after that, they also signed the e-rights away, perhaps without really noticing, and shouldn't be surprised to find their title for sale as an e-book.

They seem surprised that e-books are selling well, or selling at all, for they can't imagine why anyone would read them. They don't seem to realize that e-books are just beginning to take off and that sales of them will continue to grow over the next few years. All those TV ads for Kindle are working. I kid you not. And prices for readers are coming down.

From this publisher's viewpoint the blog did seem to "get it wrong" on many counts, and their observations seem to be designed to scare the pants off authors who will be afraid to trust their publishers, afraid to copyright their work, and afraid, or completely convinced, they will be cheated and every publisher is only is out to get them whatever they do. But there are a lot of publishers and those things may be true of some, though I don't know anyone like that in any of the publisher's lists to which I belong.

Still, in this essay I can only speak for my own small company. So here goes.

Basically, at my company we make far more from our e-book sales than from paper book sales. We do paper books because our authors want them, and as an author, I want them for myself, and certainly understand why other authors do, too. This is something we choose to do, despite the fact that paper books do not sell well and are three times the work, for less than half the income. Yes, that means we get less than half what you make on paper book sales to retail markets.

In fact, we make far more on our sales of classic e-books than on sales by the living e-book authors we publish -- all those college kids downloading their reading lists, yunno. And we price them at less than $5 so we make about the same on a sale for one of them as on a sale for an e-book by a living author, where we share in the income. Without the classics we publish from the public domain, we could not afford to stay in business. So we are not making a lot of money on what we publish for living e-book authors, either, but we believe in the merit of what we publish, in the merit of what you write, and are pleased to be able to represent your work.

I know there are publishers out there who don't pay their authors very well, sometimes as little as 15% (same percentage as for a paperback) for an e-book sale, while e-book prices are MUCH lower. And 15% of 6.50 (our e-book list price) would be very little. With us you make 40% on a Write Words web site sale, or $2.60 per book (and we no longer discount that price) and you get 50% of what we get from any distributor for a book that is sold from other distributor sites. Remember, the distributor usually keeps most of the money from the sale, paying us only a percentage which we split evenly with you.

A paper sale from us earns you 15% of the list price, or $2.54 for a book priced at $16.95, even though the publisher doesn't get to keep that much since paper costs went up. I am required to pay you 15% by our contract and will do so unless I lose money, in which case the book will go out of print. Don't panic. I don't expect that to happen to anyone's book any time soon, though I am now making quite a bit less than $2.54 per book, we still have plenty of margin before we lose anything.

With e-books, the prices and percentages vary for EACH sales site. We sell on; Amazon Kindle; Mobipocket; Fictionwise; Barnes & Noble; All Romance; Omnilit; and Coffee Time. For that you get the e-books prepared and submitted for sale in whatever format the sales sites require (each has it's own file preparation requirements and cover size specifications that must be met and preparing all those different electronic data files is time-consuming), we track sales, and pay our authors every cent every quarter in the quarter AFTER we receive the funds.

Having said that, it's perfectly true that some sites sell and pay better than others. Coffee Time sells very little for us (1 book in the last three months) and doesn't pay a lot, either, though they are scrupulously honest in reporting sales and scrupulously on time with payment. Each site/store sets it's own pay schedule and if we don't like what they pay we are free not to sell our books there.

I have heard publishers on some of the publishers' lists say, "I'm not dealing with X site anymore. It's too much work to do their files and they don't pay enough." It never seems to occur to them they are costing their authors sales. I am an author. I want my books "out there." Where customers can find them. Not that we can do them all. We tend to pick the larger sites, and sites that redistribute, reaching still more sales venues.

If one of your e-books sells from the Write Words web site the customer pays $6.50, and you make $2.60. If it sells on Omnilit, they pay us 70% of what they collect at that site, but they offer discounts on some titles and their book club members get even further discounts. Now the sales site SETS the discount price. I just give them my List price and they each decide how much discount to give their customers. So much off because it's new. So much again, for book club, or for for repeat customers, etc. So the customer may get your book from Omni for $4.40 instead of $6.50 and we may receive 70% of that, or $3.08 of which you get 50% or $ 1.54 instead of the 2.60 you'd get if it sold from us. Customers like the big sites. Most customers have a favorite site and only buy from that one place. If we don't sell on all of them, we don't sell well. That's a simple fact of life.

Many sites have "affiliates" that list books for sale, while the sales page surfs over to the larger distributor site where the money is collected and you and we are eventually paid. The affiliate gets a small payment too, from the distributor site, based on surf-in sales.

Other sites have special plans like library lending of e-books. If some "library" customer downloads your book at Barnes & Noble, you will be lucky to get $ 0.69 cents. Each store has a kiosk that lets customers download a library title for a very low price into their e-machines. The staff person does it for you while you wait, so you don't have to learn how to download the stuff yourself, and the "borrowed" title disappears from your reader after two weeks, so the customers have to read it in that time, or pay full price to get it back.

You have no idea how frustrating and complicated it is for a publisher to track 300 plus authors and all their works and sales on eight different major distribution sites and then try to explain why they received $2.60 for one sale and 69 cents for another sale of the very same book! Why Two books that sold on Kindle, sold for two ENTIRELY different prices (one went to a book club member who paid less). After all they both were sold by the very same store! How come pays $2.27 for a sale and Barnes & Noble only paid .69 cents for the same book? Both list it for the same price of $6.50, so shouldn't they pay the same? Even I have to admit, that to an author that looks funny.

Logic like the above has no place in the accounting practices of the e-books industry -- it all depends on what discounts they are giving at the sales site in the week of the book's sale, while publishers are paid three to six months after that. The whole thing looks as if it makes no sense at all. I am the first to agree with that. But the alternative is, again, not to participate in the various sales sites. No participation equals No Sales. No income at all. For either of us. That's the bottom line. Do we list everywhere and take whatever they send us? Or do we not sell at all? Because sales at my own site are very limited indeed.

Trust me, I know none of you are getting rich. Neither am I. I do this for love, not for money, though some days I wonder why I do it at all. It's only on days when I'm trying to get folks paid and the computer is in the shop for a week that the frustration factor really kicks in.

Anyway, the computer is back now, and they recovered my M through Z author files. So we can all breathe a big sigh of relief and get back to doing payroll now.

Checks for everyone by next week.



  1. Thanks Arline, that's an explanation that works for me. Like many I suppose, I've often wondered what goes on behind the scenes. So far I've got no complaints. I don't think many writers go into this thinking they're going to get rich. They just have to write.

  2. Arline, I am so thankful to have you as my publisher. I know I can trust you, and not many writers/authors can say the same thing about who they work with. I'm very lucky, indeed.

    All my best, all the time,