Pub Rants

eBook Royalties

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STATUS: Finished up a contract today. Oh man, that always feels so good to get the final draft out to the author to sign. Contracts are by far the most time-consuming part of an agent’s job.

What’s playing on the iPod right now? PROUD MARY by Tina Turner

As agents, we are constantly learning. Even old veterans had to learn the ins and outs of eBook royalties over the last decade.

And even still they are tricky. Every publisher has their own structure (which is a bit annoying) but there you have it. Also, there are two basic ways to pay e-royalties.

Some publishers do a straight percentage of retail price of the work (standard is 15%). But some publishers do the royalty based on net amount received. Not quite the same thing. Standard for net amount is 25%.

So you have to check the language. You might look at a contract and see 15% and think it’s all groovy. But 15% of net amount received is not the industry standard.

See what I mean?

Then there are some publishers who refuse to do “standard.” You have to know who they are and take it into consideration before granting a book. Sure, the percentage of
e-royalties is miniscule compared to overall sales of a book in print formats but who knows what the future might bring so you have to at least think about it.

Some publishers allow language that if the industry e-royalty rates go up in the coming years, you can go back and re-negotiate it in the contract. I’m all about that and get it in my contracts whenever I can.

Right now, after looking at my incoming royalty statements, it’s very clear to me that the best sales for eBooks are still in SF&F. No surprise there as SF&F readers tend to be tech savvy and early adapters.

It will be very interesting to see how this sales percentage grows over the next decade when tech savvy young’uns start becoming book buyers (or so we hope they do!).

23 Responses

  1. Kasie West said:

    This is why authors need agents. None of that made any sense to me. My ears (or I guess I should say, my eyes) perked up when I read SF&F, however, because the second ‘F’ is the genre I’m working on. That’s interesting to note that eBooks are more popular for Science Fiction and Fantasy readers. I never knew that.

    I’m glad I discovered your site, you’re making my life so much easier. It’s like one stop shopping. A Super WalMart of information. Now if you could just take care of my grocery list I’d never have to leave my computer. 🙂
    Thanks again,

  2. Jessica said:

    Cool post. One of the main reasons I’d like to have an agent is because the line I’m targeting has a contract that I’ve heard is not quite up-to-date on e-book royalties. They’re a huge publisher, respectable in every way, but a little slow in this area (I’ve heard).
    So an agent definitely comes in handy. I was wondering what the percentages were. Thanks!

  3. spyscribbler said:

    Holy crap. That sounds low to me. I get more than that, and I thought Ellora’s Cave was at least at 30 or so percent. Am I wrong?

    E-book royalties should be more than that. The distribution costs are next to nothing!

  4. nomadshan said:

    I’ve been wondering about this. I buy new books exclusively as eBooks. It’s been gratifying to watch the availability of books increase across genres. I think eBooks are on the brink of exploding (in a good way!) with readers built for iPhones. I’d like to see an industry platform standard, similar to mp3 for music.

  5. doortoriver said:

    Yet another reason why agents are so, so needed! Thank you for posting things like this. It’s frightening how tricky these contracts can be.

  6. spyscribbler said:

    You mean for traditional publishers, don’t you? Sorry, LOL. I thought the Sky Was Falling for the Future of Authors Everywhere.

    I’m praying higher e-royalty rates become a trend with higher ebook sales over the coming year!

  7. charlene said:

    This made me wonder… how many of the books you sell have ebooks made of them, and who gets to decide what format? (I have an ulterior motive; I desperately want Demon’s Lexicon to come out for the Kindle…)

  8. Kathleen Dante said:

    Hi, Kristin! Just wondering, could you give an example of language that allows renegotiation of e-royalty rates should industry standard go up? How would the clause be phrased?

    To spyscribbler, I don’t think agents handle contracts with EC since (as far as I know) EC doesn’t pay advances, so this post probably doesn’t apply to EC contracts.

  9. JES said:

    While most writers don’t seem to know about this (I sure didn’t), there’s a subset of e-books which covers tech-reference books: the subscription model.

    Because technology passes by in an eye-blink, it gets real hard, real fast, to find a physical copy of a book on a retail shelf. And you don’t really need the physical copy; typically you’re after one fact — one solution, one way to accomplish a particular “something.”

    O’Reilly, for example, calls their e-subscription library Safari. The subscription gets you access to all the books they’ve e-pubbed (which is all, I think, for the last maybe 10 years?).

    My royalties statements from my tech books’ publishers almost never see a bump in physical copies sold. But even 6-10 years later, they still bring in a little of money from e-subscriptions.

  10. jwhit said:

    I sent the following questions to two other agents with a suggestion they comment on their blogs. So far, nothing has been said. Here they are:

    This [reduced royalties on Kindle books specifically] raised a question in my mind about how you are thinking now regarding your own income effect as well as your clients’ interests when Kindle books are sold for less [royalties are still based on percentage, therefore less]. Do you truly believe volume will make up the difference? Will there be diminishing returns to writers so that the quality suffers because writers withdraw their work or will it be a counter balance to the number of titles and therefore increase quality? Will writers refuse to sell their ebook rights unless royalties are lifted on ebook formats [share the wealth of the reduced overheads]? What do your crystal balls foretell?

  11. Angie said:

    Right, I was boggling with Spyscribbler. o_O My publisher’s standard royalty rate is 35% for e-books sold through their site, and 25% for books sold through third parties like Amazon or Fictionwise. I’d turn down a 15% royalty on an e-book contract flat. If you’re talking about NY publishers, though, they’ve always had lower royalties (although of course they make it up on volume.)

    NY-only also explains why F&SF is the biggest selling e-book genre. If you count all the small presses, romance and erotica blows everyone else away. I imagine Tor’s freebies have racked up some impressive numbers, but, well, they’re freebies. 🙂 Who’s actually selling bazillions of e-books on the NY side?


  12. Kristin said:

    I think I’d have to argue that the best ebook sales are probably in erotic romance. Unless you are talking about straight NY print pubs with ebook releases?

    So then we’d have to say that *romance* readers are the ones who really started the trend and adapted to new technologies. Go romance!

  13. AC said:

    “Sure, the percentage of
    e-royalties is miniscule compared to overall sales of a book in print formats but who knows what the future might bring so you have to at least think about it.”

    Wow, so true. And something I wouldn’t have thought about. Bring it on, ebooks.

  14. December/Stacia said:

    Yes, industry standard for ebook publishers (like Ellora’s Cave. Samhain, Liquid Silver, etc.) are around 37.5%. But no advance (except Samhain.)

    I thought it seemed awfully low too, lol!

  15. Haste yee back ;-) said:

    I’m talkin’ out of my pea brain here, so correct me if I’m wrong.

    In my experience, Net of ANYTHING, is tantamount to ZERO to the author.
    If possible, always negotiate for GROSS. And that’s GROSS on your project, (book/whatever), considered alone. Negotiate not to mix your book/whatever in with the rest of the company’s business.
    Because, if you’ve negotiated for NET and the company shows an overall loss – believe me, the accountants are looking for every loss so the company can write off all it’s expenses against taxes – (but your project book/whatever made money), you get NET of a loss-which is NOTHING. I think, this is how JAMES GARNER got ZERO residuals from the very successful ROCKFORD FILES. And how Forest Gump made $600 plus dollars, yet the studio showed a net loss for the year.
    If you’ve negotiated for your royalties to be based on GROSS and for you book/whatever to show all it’s accounting, (expenses, sales, profit and loss, etc), on it’s own sheet… Guess what, it’s harder for the company to hide $$$ that’s accrued to your book/whatever. Your project may still show a loss, hence no royalties, but the accounting is much more straight forward.

    Perhaps my pea brain is toodling down an imaginary road here?

    Haste yee back 😉

  16. Marilynn Byerly said:

    Epublishers have to pay for the cost of editing, covers, Internet infrastructure, etc., which the major publishers have already paid for for the paper books. Epublisher royalties run between 35 to 50 percent, and the big publishers give 15 percent as well as using the ebook as “in print” to hold on to the rights for the paper book forever.

    Is there anything wrong with this picture?

    When ebook publishers started becoming successful, the traditionally published authors screamed like virgins at an orgy because they thought epublishing would harm their careers and incomes. What a joke. By accepting 15% as “standard,” they may be harming the epublished.

  17. Anonymous said:

    LOL! If you want to know who the early adopters are, try talking with people who have been in the epub business for 10 or more years. SF&F is not where the big sales have been coming from.

  18. Anonymous said:

    There’s a lot of misinformation in this comment thread.

    1. “Net” in this case means “net” of what the publisher receives for the sale of the book. Say cover price is $10. that’s what Barnes & Noble (or Amazon, or Fictionwise, or corner drug store, etc.) gets for sale of book. But they bought it off the publisher for $5 (or less, but let’s make math easy). If you are paid on cover price @ 15% royalties, you get $1.50. If you are paid in net 25%, you get $1.25. NOT as good a deal.

    That’s why it behooves authors NOT to sign “% of net” contracts, especially with the way distributors are pushing against publishers to get lower prices.

    2. I’m with two of the biggest publishing houses in the world — the kind with the big buildings in Manhattan — and I’ve never signed a contract with 15% e book royalties. This “standard” is one I’m not familiar with. Mine are much higher (though not as high as epublishers offer — the trade off is the advances and the tens of thousands of sales through distribution)

    3. I don’t know any traditionally print published authors who whined at what epublishers had accomplished. Most didn’t even see it as the same business (the way a steakhouse doesn’t really care if a smoothie shop opens next door), and those who did were excited about the prospect of viable epublishing. I, for one, applauded the GOOD epublishers business model and the way it helped push ebooks into the mainstream.

    4. What is this rumor about Kindle royalties being lower? My kindle royalties are the exact same as my ebook royalties in ANY format. My publisher does not split hairs as to which electronic format my book is sold in.

    5. The agent here is very obviously discussing HER experience with the electronic versions of the books sold by HER clients at primarily print publishers. What does she sell? Romance, sci-fi, chick lit, and YA. Of these, which has the highest ebook sales? Sci fi. Everyone knows that the *epublishers* making bank are doing so in erotica. I don’t think this agent even handles erotica.

  19. AstonWest said:

    My guess is also that erotica sells far more than SF&F in the e-book arena.

    Kindle royalties, depending on your contract, may be calculated on the “net” payment to the publisher (as discussed earlier). I don’t know for sure, but does Amazon take out a hefty chunk for a publisher to sell via Kindle? For contracts based on “gross”, there would be no difference to the author.

    Was discussing the future of bookstores on a SF&F magazine forum recently. Will be interesting to see if any of those thoughts (downloadable e-books in the store while you suck down a latte in the lounge, for example) come to light.

  20. ebookroyalties said:

    I am inclined to agree with “Haste ye back” that, regardless of countless arguments from the major publishers in favour of royalties that are based on net sales, the alert author should always try to select royalties that are based on gross retail prices.

    Otherwise, even though the “idea” is that the publishing company roughly “should” get approximately 50% of the total retail price as its net income, and the author subsequently get his net royalty percentage from that, there is, to my knowledge, usually no contractual statement that the 50% figure is guaranteed. So it is thus entirely possible that the publisher says that “our net income after paying all the bills is 10 pounds sterling.”

    One alternative to authors demanding royalty arrangements based on retail price instead of net proceeds is to ask for a special formulation of the net proceeds contract. One could, for example, state that under no circumstance will the publishing company be able to pay LESS than X% per copy for a certain list price, regardless of how much expenses they have.

    So, if the publisher wants to have different prices on the internet, it is very easy to specify those retail prices ahead of time, and, at the same time, also specify those particular minumum royalty limits that are to be paid to the authors for each of those retail prices.

    Just a suggestion,
    Bo, Editor