The Shatzkin Files


The other comparison: ebook royalties versus ebook self-publishing


My last post tried to lay out a comparison of royalties paid by big publishers to agented authors on ebooks against what they pay on print books. What it showed is that the authors suffer a bit on ebook sales that substitute for hardcover print sales, but that they do pretty well selling an ebook instead of a paperback. And the numbers also showed that a publisher selling ebooks under a wholesale arrangement pays the author a higher royalty than an agency publisher when the print is in its hardcover life, but that the agency publisher is actually paying more royalties if the printed edition is a mass-market paperback.

But this comparison has its limits. It helps an author or agent compare their economic prospects with an agency publisher as opposed to a wholesale one. But it doesn’t help an author understand the next comparison she’ll want to make, between doing her book with a publisher and doing it herself without a publisher at all

Fortunately for authors and agents, the benchmark for self-publishing revenue is clearly established by the ebook platform Smashwords, which I first wrote about at the end of a post 16 months ago. There are certainly alternatives to Smashwords: web-based solutions like Scribd, full-service offerings like our clients at Bookmasters, and things in between like Author Solutions. But Smashwords is the most automated, least expensive, and, at this point, most heavily used self-publishing solution for ebooks.

Smashwords pays authors 85% of the sales price for ebooks sold on its own site, and about 85% of the receipts for sales made through iBooks (Apple), Sony, B&N, Kobo, and the Diesel eBook Store. In other words, an author would get more than three times the “old” standard 25% ebook royalty offered by the big publishers and double the “new” possible 40% royalty implied as the new ceiling by the Random-Wylie agreement announced last week.

It is worth noting that Mark Coker of Smashwords says that all their deals will be agency going forward because control of the retail price is very important to their authors and publishers. The net to the author or publisher through their existing deals is 42.5% for sales made through Sony or B&N, 46.75% for sales made through Kobo, and 60% on their agency deals with Apple and the Diesel eBook Store.

And although Smashwords does not (yet) have an agreement to distribute through Kindle (though they’re working on it), the authors and publishers that use Smashwords would be free to make a separate deal with Kindle, giving them a possible 70% of their retail price if they can keep the potential discounters in line (that would be B&N, Kobo, and Sony.)

One thing very much in Smashwords’ favor is that the barriers to use them are very low. All you need is a doc file and a bright person to pay attention to quality control as you work through your conversion. They make metadata management simple.

What might give big authors pause about using Smashwords is that they distribute DRM-free (although the retailers listed above will be adding their own unless the publisher tells them not to) and that they depend on trust. Each retailer selling Smashwords titles has the content file and the metadata file in their possession and the sales reporting cannot effectively be audited.

But whether or not Smashwords is everybody’s solution, they certainly are establishing that pure automated ebook conversion and distribution services are worth 15% of what is collected from the consumer or from the intermediary selling to the consumer.

Smashwords is already pretty big and growing fast. They have 18,000 titles on offer from 8,000 different authors and publishers at the moment and Coker says they’ve added 2,500 titles in the past 30 days!

And I can personally attest to the fact that Smashwords has some books people will want. I found a title on iBooks called “A Year in Mudville” about the Mets first season — baseball history being a subject I know well and read broadly — which is terrific. It is well-researched, well-written, and well-edited. I found some presentation glitches (type fonts changing for no apparent reason) and pointed them out to Coker. He showed them to the author who then corrected the file. (The glitches didn’t interfere with reading the book at all.) And that book was priced at $8.99 on iBooks, which means the author was getting $5.40 from the sale! Look at that against the chart in my prior post! On a $9 list-price ebook, the author would be getting $1.125 from a wholesale publisher and $1.575 from an agency publisher at 25% royalty; $1.80 and $2.52 at 40%. (And, assuming they did an Amazon deal separately and could meet the restrictions required for the 70% royalty, that author would be getting $6.30 for each sale on Kindle!)

At per-unit revenues from ebook sales anywhere from 2.5-to-6 times what they could get from a publisher, and ebook sales rising inexorably as a percentage of total sales, authors and their agents are ultimately going to be doing their math against this option for each new book they have to offer. Some may be doing it already.

There are a few things publishers can tell authors to try to keep them from jumping.

1. “Don’t forget: we give you an advance!” That is the first, and for many authors the most powerful, argument. Agents like advances too, so they’re likely to be sympathetic to the publishers’ point here. But, of course, with that advance comes the publisher’s claim to more than half of what would otherwise be the author’s ebook profits.

2. “Don’t forget: print books are still 90% of your market!” This is really the reason established authors will be reluctant to jump to Smashwords. And as long as print is 90%, or even 80% (and it is falling to that level on many immersive reading books now), getting a multiple on the ebook sales still leaves a shortfall of revenue to the author unless they figure out how to also have the book available in print. The big publishers won’t be doing print-only deals for quite a while, but smaller publishers will certainly be available to work with brand-name authors on that basis. And when the print share falls to 50% of the total sales, which many of us believe it will over the next few years, this argument won’t be effective anymore. (There are many ways for the author to self-publish print too, but only the print-on-demand solutions don’t require big investment or risk, and you aren’t going to get what a publisher would deliver with POD alone.)

3. “You’ll have to do your own publicity and marketing.” This is true, but it is also true that publishers have wanted authors to do a lot of their own publicity and marketing already. From here, it would seem that the author’s marketing efforts will be critical either way. If the author is already big and branded (likely due at least in part to the prior efforts of a publisher, but that’s not necessarily relevant here), it’s less of a barrier than if they’re not. It might be no barrier at all. This is an uncomfortable point for publishers because the authors who need the least help are the ones they want to publish the most.

4. “If we publish you, you’re legitimatized.” I think this point carries almost no weight with any author who has had a bestseller already or has already had more than a couple of books published by established houses. I think it will carry less and less weight with everybody else. I just found my first great book by an unknown author on Smashwords. Sooner or later, you will too.

5. “We’ve built email lists and other direct contact with the consumers you want to sell to, plus we have relationships with the book retailers to get you more attractive placement and promotion through them than you can get without us.” Now, that would be attractive. Can any big publisher justify that claim?

6. “We will pay you 70% of receipts on ebooks to keep you in our stable. It isn’t the 85% you get from Smashwords, but with our advance, our print book sales, and taking all the admin and management off your hands, it’s a better deal for you.” That will probably work, but no publisher wants to let it get to that point.

Publishers better work on number five.

  Back to blog

  • http://www.graybookspublishers.com Ed Gray

    As others have said, Mike, this is the revolution. As you note, all of the big publishers' best arguments for an author to continue working with them are either (a) a short term advantage until the market swings to 50% ebook, or (b) arguably already invalid (Haven't we all noted what's happening to advances and promotional budgets?). Maybe it's time to take a revisited look at the Harper Studio model. Bob Miller made it pretty clear that his prime reason for abandoning it was the brick-and-mortar resistance to the no-returns feature, not the net profit sharing feature at its core. As the bookstore percentage declines and the ebook percentage increases, that profit sharing model will begin to beat the royalty model across the board, both in ease of administration and in actual compensation to authors.

    • /blog Mike Shatzkin

      Ed, I don't think the division of the revenue gets to the heart of the trade
      publishers' problem. The key is that it is *marketing* capability that
      people can get paid for, not *distribution* capability. The way I see it,
      the only way to get the marketing edge and to apply scale is to be vertical:
      focused on niches. The general trade publishers are trying to figure out
      ways to build marketing at scale for a general list. I think it is a tough
      row to hoe but, either way, the problem is diminishing margin to share much
      more than how they share it. The trade publishers are trying to hold onto
      the margin they've got because they think they need it to survive. And
      they're right, even though it is ultimately probably not possible to do so
      (for most of them.)

      Mike

      • http://www.bookviewcafe.com Jennifer Stevenson

        Mike, your reply to Ed is fascinating, and I wish I could translate it into English. I've been hanging around publishing (and RWA-trained to understand much of its lingo) for a long time, but you lost me here.

        Can you translate please? I'm sure it's something I need to know!

      • /blog Mike Shatzkin

        Ed thought the publishers could attack the problem of authors and leaving
        them and publishers' commercial viability by redividing the pie to give the
        authors more revenue. I said I don't think the division of revenues is the
        key problem: the ability of authors to offer real marketing help is. And I
        don't think that publishers can offer meaningful marketing help at scale
        (which means: “being big is helpful”) unless they become vertical (which
        means: “subject-focused rather than all over the place”.)

        I hope that helps.

        Mike

      • http://www.graybookspublishers.com Ed Gray

        A good clarification for Jennifer, Mike, but I think you misstated my point: Net profit sharing may or may not result in publishers giving more revenue to authors. That depends on how well the publisher handles pricing, especially in ebooks given their near-zero marginal cost and dynamic pricing option. But the sharing model also shares the costs, since net profits are after costs, and those costs obviously include marketing. In the royalty model, those marketing costs fall solely on the publisher, resulting in the all-too-familiar complaint of midlist authors that their publisher isn't doing anything to promote their book. But in the sharing model, half (or whatever the arrangement is) of those costs are borne by the author, who can then insist on and participate in the marketing, which as you so correctly point out, is the key to every book's success.

      • /blog Mike Shatzkin

        Ed, thanks for the clarification and I see the logic. (And pardon me for
        failing to represent your view accurately.) But I still think it won't make
        much difference. The problem for trade publishers can't be solved except by
        figuring out how marketing can *scale*. I know explicitly that smart people
        at Random House and HarperCollins are thinking about the problem exactly
        that way; I suspect they are at the other Big Six houses too. But the
        HarperStudio formula (and, it would appear to me, the recent reorganization
        at Simon & Schuster creating marketing clusters around the editors) seems to
        take things in exactly the other direction, making marketing more
        customized, more specialized, and less scaled. Marketing one book at a time
        is a losing game, and it won't matter how the expense or revenue is divided.
        It will fail the vast majority of the time. And it will just get harder and
        harder as more and more books enter the marketplace.

        Mike

      • http://www.graybookspublishers.com Ed Gray

        Agreed wholeheartedly, Mike. I'm looking ahead to a combination of vertical focus and marketing scale in the publishing house combined with good ol' one-book-at-a-time effort by the author using all the social networking tools. That's a partnership. That also bodes well for us down at the boutique level, which more and more looks like playing field of the (near?) future.

        Ed

      • /blog Mike Shatzkin

        Boutiques will definitely be benefiting in the near future from the
        difficulties of the giants.

        Mike

  • http://twitter.com/ftapon Francis Tapon

    Excellent post. It should be required reading for all publishers/agents (and a few authors).

    As you imply, all six reasons agents/publishers give are feeble and unconvincing.

    The are only two ways agents/publishers can stay viable this decade:

    1) Bundle marketing and PR services with their advances.

    2) Raise their eBook royalties to 50-60%. They won't need to reach 70% (as in your point #6 scenario) because the author will benefit from a print run (prestige and any lackluster marketing that might go with it). Besides, if they go to 70%, it will be a money-losing operation for publishers.

    I'm not sure point #5 is what publishers need to work on. Any author can pay Smashwords for premium placement on their webstore. So I'd put that under the marketing dept.

    Point #4 (about being legitimized) will help publishers more than you imply. Just like agents are the filter for publishers, publishers are the filter for A-list reviewers.

    For example, the only people who cared who published my self-published book were the reviewers and professional media. The average guy doesn't care or think about it. However, in the future eBook world, the major media/reviewers will use publishers as a way to filter through the deluge of eBooks to consider. That prestige will still hold some currency in the future.

    However, thanks to social networking and bloggers, an author can get his eBook widely reviewed and talked about without involving the A-List media. If it gains enough traction, the A-Listers will eventually notice and cover the phenomenon.

    And of course, the prestige/legitimate point is only valid for non-A-List authors. If Britney Spears wants to self-publish her eBook, the A-List media will certainly cover it and review it.

    Francis

    • /blog Mike Shatzkin

      I'm not sure how much the “A-list reviewers” matter for most authors, or for
      most author-publisher relationships. They don't often review books by
      unknown authors wherever they come from and I can't believe the author brand
      wouldn't be more important than the publisher brand for them for authors
      that have been published before.

      And ebooks aren't “unprofitable” at a 70-30 split, although I think you
      could well be right that 60% would stop a lot of the bleeding.

      Whether the bundling of marketing and pr services would help depends on how
      effective those services will be. My hunch is that, absent verticalization,
      the answer is “not very…”

      But our quibbles are minor compared to our agreements. Thanks for the
      endorsement of the post.

      Mike

      • http://twitter.com/ftapon Francis Tapon

        I must be misunderstanding you: how can you say that A-List reviewers don't matter a lot to authors and publishers?

        Who wouldn't want the NY Times, Kirkus or Oprah to review their book?

        You're right that they rarely review unknown authors even if they come from Random House. However, with some effort, authors have a tiny chance. For example, Timothy Ferriss came out of nowhere to get high profile reviews and TV appearances. He would have had basically no chance of that happening if he had self-published. The Random House brand legitimized him in front of A-List Reviewers.

        Hence, that status/prestige symbol will still have value in Book 2.0.

        Francis

        P.S., The subscribe by email function doesn't work for me. You write these great replies, but I'm not sure if people are getting notified by email even when they hit “subscribe” to replies to the comments. Maybe it's just me, but you should double-check that it's working for others.

      • /blog Mike Shatzkin

        Francis, the key word was for “*most* publishers and authors.” The vast
        majority of books are not even candidates to be reviewed by A-list
        reviewers. Of those that are, only a fraction get reviewed. Sure, they're
        important to the very small minority of books they cover. But it is a very
        small minority of books. That's what I meant. I didn't mean you wouldn't
        want it when you can get it.

        Thank you for alerting me to the failure of the reply function to work.
        We'll look into it.

        Mike

      • http://twitter.com/ftapon Francis Tapon

        Mike, perhaps you're right. However, smart publishers would dangle that A-list review possibility (even B-list!) in front of prospective authors to entice them to sign their crappy contract.

        Get into the mind of an author: we all think we've written the best book since Tolstoy. “Of course the NYT will want to review it! They just need Random House to send them a copy and once they read my fabulous work, they'll definitely review it!”

        Authors overestimate how great their work is and can fall prey to the seductions of a big publisher who will wave its prestige in front of the author to get him to sign on.

        I'm simply saying that that aura will still exist throughout this decade and that it is one of the few remaining strengths that publishers can leverage.

        Francis

        P.S. email replies still not updating me – a pity if some of your commenters never check back to see your thoughtful replies. (I have to come back “manually” to find them.)

    • http://www.smashwords.com MarkCoker

      Hi Francis. Just to clarify, authors can't pay us for premium placement on our retail site. Placement is fully automated and democratic, and determined by reader purchases, downloads and clicks.

      Further to Mike's point on #5, I think he's spot on about the opportunity for publishers to create targeted opt-in lists of their readers. Every print book (while print books are still around) should contain links to a publisher-operated opt-in honeypot, because these customer lists will be a strategic asset few others are in position to create.

      • http://twitter.com/ftapon Francis Tapon

        Mark, premium placement is not always democratic.

        For example, I paid Amazon $1,000 (I think it was that much) so that for one month my book (http://francistapon.com/hyoh) would be offered along with Stephen Covey's “7 Habits of Highly Effective People” in Amazon's “If you buy these 2 books together, you save xx%” offer.

        Yeah, and you thought there was an intelligent algorithm behind that recommendation system. ;)

        There is, but only when nobody is paying for that premium placement.

        I wouldn't be surprised if on other sites “featured” placement is sometimes paid for by authors/publishers.

      • /blog Mike Shatzkin

        Thank you, Francis, for that. The truth about the book and ebook business is

        told in the comments on The Shatzkin Files!

        Mike

  • http://www.dreamwords.com/ Paul Story

    I understand the emphasis on percentages. I am a self-published author benefiting from high Amazon rates (or at least I will be when my book jumps from 2 sales to a million ;-)).

    That said, it is important that we are not caught in the headlights illuminating these numbers. The truth is that if a publisher can sell more than twice the number I can sell, can go so at a premium price, magnify my marketing efforts and take the admin burden from my shoulders, I will probably produce twice the output. That is worth at least 50%.

    I'm not sticking up for publishers, just wary of authors losing sight of the figures that really matter.

    Publishers should be trawling eBooks in the wild. They will quickly spot potential. Any independent rising above the slush and selling moderately is a candidate. A deal should be offered. There will be little input needed on the publisher's part regarding the content (that was all paid for by the author). The scatter-gun approach to publishing will die, but instead of relying solely on celebrity platforms to guarantee sales, publishers can zero in on great content that shows it can sell.

    On signing a deal, money and marketing expertise should be put behind the title, its price raised from (say) $2.99 to $7.99 and the author should be freed to write another and another.

    There were many possible Harry Potters or Twilights in the slush pile and a lot of luck went into these books becoming the chosen ones. Publishers are now in a position to change the game for themselves by forming real partnerships with authors who demonstrate early on which books have a better chance of making it – and then making it happen by design. If a mega-hit can be manufactured from dross, think how much a publisher can do with a handful of gems, good faith and real muscle.

    • /blog Mike Shatzkin

      There is little doubt that as self-publishing increases, it will become a
      “farm system” for publishers to find projects and authors. So there will
      ultimately be two-way traffic between self-publishing and publishers.

      Mike

    • http://www.facebook.com/hauntedcomputer Scott Nicholson

      As I go into in my post below, NY is NOT going to trawl for quality. It is going to trawl for proven success. And proven success is a little more wary about sharing.

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  • Marylynn

    Thanks for this. Most edifying.

    • /blog Mike Shatzkin

      You're welcome. Thanks for saying so.

      Mike

  • stephengoldin

    One advantage traditional publishers have with readers is that their editors have pre-filtered out a lot of the crap, guaranteeing at least a minimal quality to their product. For readers who don't have a lot of time to experiment with an unknown writer, this may be somewhat persuasive. But given the amount of crap that slips past editors and makes its way into print anyway–and the fact that most ebooks allow free sampling–I think this argument will fade with time.

    • /blog Mike Shatzkin

      And you really don't depend on the publisher to filter the crap. The
      retailer depends on the publisher to do that. You depend on retailers and
      friends and reviewers, etc. As you will continue to.

      Mike

  • DMccunney

    Mike, the last couple of posts have been fascinating, but they leave me with some questions.

    First, your last post comparing royalties was enlightening, but for most authors, I wonder how much it really matters?

    Trade publishers contract with the writer for the right to issue a book, and pay the author an advance against royalties to get the rights. The question is whether the book will actually earn out – that is, sell enough to cover the costs of publishing it, and the advance paid to the author, and generate *additional* royalties the author will see in quarterly statements. The last I knew, *most* books did *not* earn out. The advance was the sole payment the author would see. (And the agent's incentive was to try to negotiate an advance high enough that the book would no earn out.) For those cases, how much will the differing royalty rates matter to the authors involved? A more interesting question might be “What will electronic publication do to advances offered?”

    Second, self-publishing is certainly *technically* viable. The tools are there to release your manuscript as a book, in paper and electronic form. But then what? The fundamental challenge still remains: how do let the audience that might want to read your book know that you and it exist? Issuing the book is one thing. Selling it is quite another.

    I know folks who are authors published by trade houses, and folks going the self-published route. The question I ask of any would-be writer looking at self-publishing vs tradition publishing options is “Do you hope to make your *living*, or any significant fraction of it, from writing? If so, self-publishing is not the route to try unless you have already exhausted all attempts at traditional publication.”

    There are some folks who have become successful as self-published authors, but I suspect that they are all people who already had an audience built by traditional means. They didn't *start* self-published.
    _____
    Dennis

    • /blog Mike Shatzkin

      Last point first: absolutely right. Most of the successful self-pub stories
      are from authors who got their fame developed by publishers.

      First point next: right that most books don't earn out. But the agents
      figure out what advance to look for based on the royalties for various kinds
      of sales.

      Overall: it is important to think about the near-future world, not just the
      present one. Trade publishing, as we have known it, is dying. The bookstores
      that are critical to it are going away. The advances from publishers are
      going down and the value a publisher can deliver is diminishing. Some
      authors today can do better self-publishing; that number will grow, not
      shrink.

      And I have to say that your “do you plan to make a living writing?” question
      is pretty much as bleak for an author with a book contract as it is for
      self-published. Fewer and fewer people do, compared to 10, 20, 30, 40, or 50
      years ago.

      Mike

  • http://takebackthebook.typepad.com Gay Courter

    I am precisely the author you wrote about today. I have a strong backlist of bestselling books and in recent years my publishers have declined to publish my fiction because having 3 million or more books in print doesn't give me a platform.
    I am an early adopter type. Well, I wrote my first novel on an IBM System 6 ($18,000!) in the late 1970s and wrote the first article about writing on these new-fangled gadgets for PW. I have had every major computer variation since and bought a Kindle three years ago for a trip to Europe. I was annoyed that my books “could never be available” in e-form because even all had been written on some form
    of computer, I had no current .DOC file that had been properly edited and formatted.
    Then I started getting calls from people wanting to make me deals (like iUniverse that has my Authors Guild back-in-print books)…but they too wanted electronic versions. The barriers dropped when Amazon offered a 70% royalty and although math is not my field, I could figure this out right quick!
    It took less than three hours to find out how to get my books converted rather seamlessly (and inexpensively) and I am in the process of getting them up on all the e-readers.
    I have started a blog to lead the way for other authors. I will also turn this into a guidebook (e-book of course). Maybe I am burning my bridges with publishers (I have been published by Penguin, Random House, Simon and Schuster, Houghton Mifflin), but they haven't exactly been supportive of my work lately.
    YOUR information is GOLD. I plan to quote you in my blog. I've found out much of the same, but you write it succinctly, brilliantly, and have the bully pulpit to say what a lone author cannot.
    The lovely part is that authors will prevail. Everybody needs us–maybe now more than ever. I am searching for a word to replace the pejorative “self-publishing.” Right now I am expropriating “iPublishing.”
    Yea, “metadata” and “ipub” and “isbn” are stumbling blocks–for about 15 minutes. I've already opened accounts and uploaded one book to both Kindle and iPad (with the other formats in the works) and am in the process of preparing 7 more.
    Keep your insights flowing.
    Gay Courter, Author of “The Midwife” etc.
    http://www.gaycourter.com http://takebackthebook.typepad.com

    • /blog Mike Shatzkin

      Thanks so much for this note, Gay. The thing that will change the pejorative
      connotation of “self-publishing” the fastest will be the appearance of more
      and more books of high quality, particularly from previously published
      authors like yourself, through self-publishing channels. I have commented on
      “A Year in Mudville”, which was by an unknown but which is great. Adding
      known authors such as yourself (and Konrath and Godin, etc.) will make it
      harder and harder to make negative generalizations to stick.

      Mike

  • http://takebackthebook.typepad.com Gay Courter

    Note to agents: New contracts should give the authors an electronic file of the published book. Previously it was expensive to buy plates, this has no cost and potential great value once rights are reverted.

    • /blog Mike Shatzkin

      Now, *that *is a useful suggestion and a good companion to negotiating a
      reversion clause that doesn't get invalidated by four ebook and six POD
      sales!

      Mike

  • desgreene

    The great debate continues but amidst it all it is sometimes forgotten that the ebook revolution is targeted at a different physical paradigm than traditional paper publishing.
    The great expansion of technology with ereaders, iPads, iPhones etc. has created a new demand for reading material – one that can only be satisfied by eBooks and ePublished material.
    The debate over self-publishing versus traditional publishing is a side show of relevance to the old paradigm of reaching an audience.
    Certainly those who seek a traditional readership are perhaps better served by an established publishing house.
    Those seeking the new readership of the modern ereading technology are better served by the 'Smashwords' of this world.

    • /blog Mike Shatzkin

      My own guess is that the amount of really different stuff the ereading

      audience will want will prove to be pretty limited in the short run. I think

      the market of print readers moving to e and expecting a similar (but

      improved) experience is going to be much larger than any other ebook market

      for a long time.

      Mike

  • http://www.facebook.com/hauntedcomputer Scott Nicholson

    Mike, great analysis as always but from Self-Pub Ground Zero I can verify agents are certainly using the Kindle lists as a farm system. I know of several (Amanda Hocking, JR Rain, and a few others) who got contacted AFTER they were successful. The obvious danger for the industry? These types of writers already know what they are worth and it's hard for NY to match it. When you exceed four figures in a day, or making more than you ever had before, then you ask yourself, “What else can they possibly offer me?” It's not an automatic no-brainer to go with an agent now and I know bestsellers who have turned down agents to stick with their own way. The “legitimacy” argument only works for insecure people who aren't very good at math.

    Now, I agree, NY can offer you plenty–for five years, maybe. But when a company like Leisure can bail out, holding tons of erights and stopping paper publishing, and authors are stuck making only a fraction of what they could have, that is a signal flare. And NY has hurt the other offering, to “build your audience,” because clearly they almost always expect you to bring it yourself or expand your own platform. An author's own email list is more valuable to that author than the publisher's email list is.

    The farm system proves that nothing succeeds like success–because these are the same Boyd Morrison-type stories of books that made the rounds but “weren't good enough” until they'd already sold tons as indies. It also points out that agents and editors don't necessarily know how to pick winners. It's more like they are pretty good at making winners of a lot of the stuff they pick and why , in classic supply and demand, 99 out of 100 books of similar quality will be rejected.

    I've been NY published and I would do so again under the right circumstances, but no way would I take as little as 25 percent for digital rights under clauses that basically last forever. Then again, I have an imaginary bar already set by previous print sales numbers, and if I were a publisher, I'd rather take a risk on an unproven commodity, even if I created a resurgence in ebooks.

    One last point–Kobo's, B&N, and the iBookstore account for 5 percent or fewer of most authors' indie ebook sales, and more are like me and are going to opt out of those outlets that seriously discount the price and mess up the 70 percent royalty Amazon offers. Because the additional income at Amazon is almost certain to offset the income from ALL those additional markets.

    here in the trenches, Amazon is clearly winning. But they could decide to go a 25 percent royal;ty tomorrow, or in two years when more established authors have defected. Thanks for your astute observations, always trustworthy.

    Scott Nicholson
    http://www.hauntedcomputer.com

    • /blog Mike Shatzkin

      Scott, thanks very much for a very useful point of view.

      I recently checked with some big publishers about the distribution of ebook

      sales by vendor. For the ones who have books at iBooks, it broke down to be

      about 53-55% Kindle, 15-18% each for B&N and iBooks, with half the balance

      at Sony and half the balance distributed among Kobo and others. You're quite

      right that Amazon's insistence that they not be undercut on price (which is

      matched by a similar insistence by Apple in their agency contracts) combined

      with their huge market share and current sky-high royalty rate, make it a

      perfectly sensible choice for an independent author to just do Amazon and

      skip everything else. Mark Coker of Smashwords is insisting on agency deals

      going forward to protect his authors from the problem of having their Amazon

      revenues undercut.

      Mike

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