How Traditional Publishers are Making Money on epub

[Stella_Omega]

Kristine Katharine Rusch talks the numbers.

For those of you who blithely predict that traditional publishers will go away, I suggest you click on over to the links below and look, actually look, at those earning statements. For the rest of you, here are the headlines....


...In current contract negotiations, e-books are no longer considered a subsidiary right. They’re a major point of sale, along with hardcover, trade, and mass market rights. Traditional book publishers have made e-books rights a deal-breaker in contract negotiation.

Either writers give the traditional publisher 15% of gross or 25% of net, or there is no contract. Some publishers are getting even stingier: 15% of net, not gross, and if you don’t like it, writer person, walk away.

So many writers don’t walk. Hell, I have several contracts with those numbers in them, and back when I signed them—ten and five years ago—I too thought e-books would remain a subsidiary right. I’ve signed contracts with worse e-deals in the past three years, but in a more calculating way, hoping the traditional publisher’s push on the books would have a positive impact on the sales of my indie-published titles.

It was a gamble, and honestly, the jury’s still out on whether that gamble’s paying off.

Anyway, back to the publishers’ profits. The publisher is now paying significantly less in royalties to the writers than the publisher ever paid in the past.

I’ve done this math before, but it’s worth doing again for those of you who fail to get it. This time, let’s just use a $6.99 price point as our example, and a 25% of net e-book royalty rate from the traditional publisher, and let’s ignore the problem of “net” entirely...

There are a lot of excellent comments as well. Interesting stuff. The financial issues are kinda saddening to those of us who always dreamed of being published by one of the Big Six-- but the realities often are.

 

[sr71plt]

There are a lot of excellent comments as well. Interesting stuff. Kinda saddening to those of us who always dreamed of being published by one of the Big Six-- but the realities often are.

The point, isn't it, that the Big Six are going into e-booking? So you can e-book and still be published by one of the Big Six.

 

[Stella_Omega]

The point, isn't it, that the Big Six are going into e-booking? So you can e-book and still be published by one of the Big Six.

Well, you're right, but that isn't the main point. And I'm sorry that my comment elided so much of what I was thinking. I'm going to edit so as not to send anyone else off on that tangent-- there is a lot of financial discussion that I was hoping to get opinions on.

 

[sr71plt]

Well, you're right, but that isn't the main point. And I'm sorry that my comment elided so much of what I was thinking. I'm going to edit so as not to send anyone else off on that tangent-- there is a lot of financial discussion that I was hoping to get opinions on.

On finances, there always have been only a miniscule number of authors--even of the big six--who make a pile of money. There's good money to be made from e-booking, and e-booking is more freeing to an author than print booking is: you can publish both longer and short works (e-booking has revived the novella), you can include multimedia elements, you can get to the market more quickly, and you can serve smaller niche audiences than print can accommodate. You also can make more per unit from e-booking than print.

 

[ManhattanMinx]

If traditional publishers continue to reduce royalties, Big 6 authors will eventually turn to self-publishing or seek alternate gateways. The threat of taking the work elsewhere increases an author's position during contract negotiations, so the publisher will have to compromise or risk losing a brand.

Traditional publishers, to stay relevant, need to change their model. Pubbing e-books is one thing, adopting a model that doesn't take a year-plus from contract to pub is another.

In the long run, Big 6 e-royalties will go up, not down. It's the transition that will be tough.

Manhattan Minx

 

[sr71plt]

The big mainstream publishers salivate at the thought of more authors self-publishing. They are afraid of the e-book revolution, but they've never been afraid of the self-publishing revolution. There have been a few gems in there, but certainly not enough to offset the relief of the incoming mail basket full of dross which slows them down at getting to what they consider to be the good stuff. Most of what mainstream publishers publish doesn't come from mailed queries anyway. They go find what/who they want to publish. Sorry, but that's reality.

 

[ManhattanMinx]

The big mainstream publishers salivate at the thought of more authors self-publishing. They are afraid of the e-book revolution, but they've never been afraid of the self-publishing revolution. There have been a few gems in there, but certainly not enough to offset the relief of the incoming mail basket full of dross which slows them down at getting to what they consider to be the good stuff. Most of what mainstream publishers publish doesn't come from mailed queries anyway. They go find what/who they want to publish. Sorry, but that's reality.

You're correct in writing that Big 6 publishers don't give two hoots about hacks who self-publish. Someone who can barely string words into a coherent sentence won't hurt bottom lines.

What will happen, and this is the reality that is going to change the mainstream publisher's world, is long time brands, authors like Grisham and Meyers, will bypass the middleman and take all their work straight to the reader. Via self-publishing. This won't happen until a tilting point is reached, marked by the number of e-readers on the market, but eventually Big 6 publishers are going compete with self-publishing for their authors.

You're also correct, sort of, when writing that most of what mainstream publishers publish doesn't come from emailed queries. The emailed query goes to the agent, who reads work and seines out the crap. She lunches with Big 6 editors, finds out what they need to fill out their lists, then tries to sell them on reading her repped manuscripts. Mainstream publishers rarely read anything--query or manuscript--sent over the transom.

 

[sr71plt]

What will happen, and this is the reality that is going to change the mainstream publisher's world, is long time brands, authors like Grisham and Meyers, will bypass the middleman and take all their work straight to the reader. Via self-publishing. This won't happen until a tilting point is reached, marked by the number of e-readers on the market, but eventually Big 6 publishers are going compete with self-publishing for their authors.

Ummm, no they won't. Big-time authors will never want to do their own work like that. The big mainstream publishers are already in the e-book world. The big-time authors will continue to sign contracts with them and let them do the grunt work.

 

[ManhattanMinx]

Ummm, no they won't. Big-time authors will never want to do their own work like that. The big mainstream publishers are already in the e-book world. The big-time authors will continue to sign contracts with them and let them do the grunt work.

Big time authors have enough money to hire their own editors and book cover designers. These authors are already branded, and their brands alone will sell self-pubbed books. Branded self-pubbed authors will do the same thing they have always done, write and make bucketfuls of money, just much more of it.

When comparing traditional royalties to self-publishing, the difference in money made per book is so significant these authors will start defecting within the next five years. Authors would have done this years ago, but distribution was a problem for self-pubbed authors. Kindle and the like solved that issue. Mainstream publishers are losing sleep over this coming problem. Creating a brand, then having that brand defect to self-publishing, will be very real problem for their industry. Might even be large enough to sink these publishers.

 

[sr71plt]

Big time authors have enough money to hire their own editors and book cover designers.

They haven't done it before and they won't do it now.

I was recently in John Grisham's personal offices above the CVS store on the Charlottesville, Virginia, downtown pedestrian mall, and all he's got in there are people answering his fan mail and a lawyer or two, because he enjoys suing people.

You don't just wave a wand and editors and book cover designer materialize. It takes effort to find them and manage them. And if you hired them, you've got to pay them.

Big time authors are going to continue to cut away from all of that and spend their time writing. They are going to let their agents and publishers do that--and pay for it.

As I said, mainstream publishers are already heavily into the e-book market. Authors who can get agents and good publishers aren't going to go into self-publishing e-books any more than they've gone into self-publishing print books.

 

[ManhattanMinx]

They haven't done it before and they won't do it now.

I was recently in John Grisham's personal offices above the CVS store on the Charlottesville, Virginia, downtown pedestrian mall, and all he's got in there are people answering his fan mail and a lawyer or two, because he enjoys suing people.

You don't just wave a wand and editors and book cover designer materialize. It takes effort to find them and manage them. And if you hired them, you've got to pay them.

Big time authors are going to continue to cut away from all of that and spend their time writing. They are going to let their agents and publishers do that--and pay for it.

As I said, mainstream publishers are already heavily into the e-book market. Authors who can get agents and good publishers aren't going to go into self-publishing e-books any more than they've gone into self-publishing print books.

Branded authors haven't jumped ship because there aren't enough e-readers to make the change profitable. Yes, traditional publishers are into e-books but as noted in the linked blog, the royalties aren't mind-blowing. When a branded author has the choice of making a million off a traditionally published book or seven million of a self-pubbed book, he's going to think twice about staying with his publisher.

Speaking of agents, I doubt they will exist in another decade.

 

[sr71plt]

I really don't think you get that most authors want to write--not to market--or, perhaps, how hard and time/effort consuming book marketing is no matter how popular the author is.

If they were going to be happy self-publishing, they could have just as easily done it in print as in e-booking. They didn't--for a couple of centuries, once agents/publishers took over from the self-publishing authors originally had to do. Agents and publishers have their function in the mainstream market, and experienced authors are happy to leave them to it.

 

[ManhattanMinx]

I really don't think you get that most authors want to write--not to market--or, perhaps, how hard and time/effort consuming book marketing is no matter how popular the author is.

If they were going to happy self-publishing, they could have just as easily done it in print as in e-booking. They didn't--for a couple of centuries, once agents/publishers took over from the self-publishing authors originally had to do.[/QUOT

Yes, they could have self-published at any time but distribution was a big problem. E-pubbing solves all that.

There will come a time when the huge difference in potential money made will make authors think twice about the additional headaches. Traditional publishers will be forced to up their e-royalties to stop the defections. (Agents are currently shooting for 50% royalties.)

Being forced to up the e-royalty is a huge problem for the industry. Electronic publishing is the only facet of their business that has decent growth, so, as e-books take over and print books die off, the publishers will be conceding money in their most profitable sectors. This doesn't bode well for traditional publishers.

We'll have to agree to disagree.

Thanks for the discussion.

 

[sr71plt]

Have you tried distribution of an e-book that leads to healthy sales? You don't just slap it on your own website in one format and expect people to find it and buy it. You have to submit it to a whole range of distribution websites--in multiple formats (e.g., PDF, lit Microsoft Reader, prc Mobipocket format, epub, lrf, mobi Kindle for PC, HTML, Calibre, rb Rocket Book, pdb for Palm devices, and kml Hiebook—and these are just the major ones). And, although it's easier for a buyer to go on line to an e-book store (or print one now, for that matter) than to haul down to a bricks and mortar bookstores, once there, it's only slightly easier for an e-book to get attention on line as it is for a print book to get attention in a bookstore (because on line, the cover is facing and in the book stores only the spines are seen on most books).

E-books are no different than print books in that most buyers know the book they want before they go shopping--and this happened through marketing--which is harder to get done well and successfully than writing the book.

Best-selling authors aren't a self-perpetuating group. The number who get there through self-publishing can be virtually counted on the fingers of one finger when viewed across the spectrum of published authors.

I have a print book publisher and a couple of e-book publishers. And that's how I want it--them doing the production, marketing, and distribution, and me doing the writing.

 

[PennLady]

FWIW, I'll add my experience as a newcomer to the whole publishing thing, specifically e-publishing.

I was approached by Republica Press to publish with them, and I have, for a total of five books. I'm satisfied with their attention, the royalty split, and the fact that they take care of things like acquiring the ISBN, etc. They don't do much about advertising, but then neither do I. Which gets, I think, to SR71's point.

I do not want to file for ISBNs, design marketing stuff, design ads, etc., etc. One thing about RP is that they do that for me; it's a little at this point, but it's still something I don't have to do. Because, as SR71 pointed out, I want to write and my time is limited enough as it is. In fact, it's a catch-22 -- my husband things I should expand and aim for print publishing and that's great, but then I have to find time to research, write cover letters, mail the packet (e- or paper) and on and on.

If all that is a drain on my time, just how do you think I'm going to feel about self=-publishing? I may not have to write cover letters, but I'll have to find which sites take self-published material, format it to their standards, chase down any problems myself, track the earnings and make sure I get them, etc. -- all of which takes time away from writing.

And I don't see e-books taking it all any time soon, for a few reasons.

* Plenty of older people who do not use computers so much will not want one. Some will just take the Luddite approach (I was fine with paper books all my life, I like the feel of paper, etc.). Others just won't want to bother learning. Empirical evidence of this for me is my in-laws. They are mid-70s, have no computer, they use a dial-up connection for WebTV for email -- they are not going to buy a Kindle or Nook. (Counter example: my mom, my dad (both mid-60s, both have Kindles), and my 85yo grandmother, who has a Nook.)

I'll add that I encounter the Luddite-type resistance from adults of various ages.

* My son is seven. My aunt bought him a Nook. He likes Christopher d'Lacey's dragon series. When I told him he could get it for the Nook he said no, he wanted a book with pages. So even for him, a child of the internet age or whatever, print is still his primary method of reading and his primary exposure to reading. His classroom is full of books, despite other technological advances.

* It will simply take time to adjust. I still have a DVD player, not to mention a VHS player - I'm not running out to get a Blu-ray player. People will be fine with paper books.

* Price. My hub, a tech guy, views an e-reader in part as a device you spend money on, in order to spend more money to populate it with data. And he has a point. Why spend $80-$100 or more on an e-reader, and then spend whatever on a book when you can just buy the book?

Yes, you can get free stuff. My Kindle is chock full of free and cheap stuff. But best sellers, best-selling authors, etc. -- those will not (or not often) be free or cheap. I have seen instances where the e-book was more expensive than the print version -- that's not right, not to me. There needs to be some serious readjusting there.

So I think print books are going to be here for quite some time. And I'm sure I'll be buying and reading them.

As for self-publishing, I think some people may have an incorrect idea of how easy it is, or time-consuming. Not to mention, just b/c you self-publish doesn't mean you'll sell anything. It's a HUGE pond out there and populated with ever more fish. A publisher is one who can make your fish stand out.

 

[lovecraft68]

They haven't done it before and they won't do it now.

I was recently in John Grisham's personal offices above the CVS store on the Charlottesville, Virginia, downtown pedestrian mall, and all he's got in there are people answering his fan mail and a lawyer or two, because he enjoys suing people.

You don't just wave a wand and editors and book cover designer materialize. It takes effort to find them and manage them. And if you hired them, you've got to pay them.

Big time authors are going to continue to cut away from all of that and spend their time writing. They are going to let their agents and publishers do that--and pay for it.

As I said, mainstream publishers are already heavily into the e-book market. Authors who can get agents and good publishers aren't going to go into self-publishing e-books any more than they've gone into self-publishing print books.

I think you left out how many steps led up to his office, and what color shirt Grisham was wearing. Did you copy and paste that office location off of a website? I've heard through the grapevine you have a habit of doing things like that

 

[sr71plt]

I can go and count the steps if you like. I live in the same town. He and his activities are a little hard to miss.

Alternately, you could check these things out for yourself (assuming they'll give you the time off at the warehouse. I'm sure you would be honest enough with your job not to be accessing the web on their time and nickel for your incest fixes and harrassing me, although the timing of your forum posts indicates otherwise) rather than slapping down false premises and otherwise engaging in your swiftboating activities.

Just a jealous little man from such a small world.

Do you have anything constructive to give to this discussion, or are you just interested in killing another AH discussion with an abusive post?

 

[sr71plt]

PL: My e-publishers will also put the books out in paperback--only accessible for order on line, of course, but more and more buyers are buying on line and I don't really miss not having them in brick and mortar bookstores. More and more e-publishers are using CreateSpace to add the paperback option. Yours may be doing that soon too--or you could find a publisher that will do it.

I write a lot of novellas through e-book publishers, which I can't get published in the mainstream. But anything down to 25,000 words can be put out in paperback too.

 

[PennLady]

I think you left out how many steps led up to his office, and what color shirt Grisham was wearing. Did you copy and paste that office location off of a website? I've heard through the grapevine you have a habit of doing things like that

Didn't you have a whole thread about how you weren't going to do this kind of thing anymore?

 

[PennLady]

PL: My e-publishers will also put the books out in paperback--only accessible for order on line, of course, but more and more buyers are buying on line and I don't really miss not having them in brick and mortar bookstores. More and more e-publishers are using CreateSpace to add the paperback option. Yours may be doing that soon too--or you could find a publisher that will do it.

I write a lot of novellas through e-book pubishers, which I can't get published in the mainstream. But anything down to 25,000 words can be put out in paperback too.

I'm not sure that RP will move into print. Their mission statement, as I recall (and it was a while ago) was that they wanted to make their mark in e-books, to be part of that "revolution," if you will.

I would like to find another publisher, and I may try self-publishing my last one (Numbers Game). Partly b/c Firebrain noted that some publishers won't take previously published stuff, and partly b/c it might be worth the experience of doing just to see what it's like.

Still, as I said, I have little enough time to write as it is. So I'd love a publisher who'd do all this stuff for me.

 

[sr71plt]

Does RP's contract leave you the print rights? Might want to check that out. If not, you should ask for those rights back if they aren't going to use them.

 

[PennLady]

Does RP's contract leave you the print rights? Might want to check that out. If not, you should ask for those rights back if they aren't going to use them.

It does, as far as I know. I think only the e-rights are specified, exclusive for two years. Like I said, they had no plans to go into print publishing, so having those rights wouldn't do much for them except ensure some exclusivity, I guess.

 

[sr71plt]

so having those rights wouldn't do much for them except ensure some exclusivity, I guess.

Yes, this is really something to look for. If they have the print rights tied up, even if they have no intention of using them, it means the book can only be purchased in e-book form from them for the length of the contract. No competing print sales.

 

[Selena_Kitt]

It's a whole new world in publishing. Things have changed so much since 2006 when I started e-publishing that it's like a whole new planet. I think things are going to change at least that much if not more in the next five years.

Lots of people are making predictions about what's going to happen but it's really hard to say, I think, where publishing will end up.

I agree that some (if not most) writers just want to write and not do "all that extra stuff." But there are a lot of writers who wouldn't ever get published (myself included) with the Big 6, and epublishing offers an avenue for a large audience for work that never would have seen the light of day otherwise.

The lock that the Big 6 had on distribution is gone. It's really the Wild West now.

 

[sr71plt]

I agree that some (if not most) writers just want to write and not do "all that extra stuff." But there are a lot of writers who wouldn't ever get published (myself included) with the Big 6, and epublishing offers an avenue for a large audience for work that never would have seen the light of day otherwise.

That's not really the comparison is it, Selena? Either getting published by the Big 6 or doing it yourself. There's a whole world of opportunities in between.

That would be a little ironic as an argument, seeing as how you are one of my publishers and I just write and you do the rest of the work--or arrange for someone else to do it.

Good to see you posting to the forum.