Something Fishy

June 11th, 2004 · No Comments
by Booksquare

We don’t know where to begin. Random House has announced it’s cutting royalty rates for ebook sales, effective May 31, 2004 (we were a bit bemused by the Author’s Guild comment “Random says it will honor its promise to pay 50 percent of net receipts on e-book sales for works under contract by May 31” as that should be a given — to do otherwise would be a breach of contract). RH previously had the highest royalty rates in the industry. As we noted previously, contrary to popular lore, there are hard costs associated with ebook distribution. However, the costs are not significant, especially when compared to those of physical media. Furthermore, RH anticpates cutting royalties even more after advances are recouped (this, frankly, puzzles us — we would expect them to retain a higher percentage until the advance is earned out) and, of course, since royalties are based on list price rather than wholesale, deeper royalty cuts are implemented for highly discounted sales.

Whew! No matter how you look at it, it’s all bad for authors. Ebook sales are rising — sure, not as fast as some predicted, but they’re increasing. Costs related to ebooks (with the exception, perhaps, advertising and promotion) are not increasing (bandwidth remains relatively cheap). The Author’s Guild advises fighting back. So do we. Have we mentioned how important it is to understand this business of writing? So much attention is paid to window dressing (the size of an advance) while less is paid to the finished product — actual earnings. We believe that RH should negotiate a royalty that is fair to their business…this isn’t it.

File Under: Publishers and Editors · Square Pegs