In the Ring: Author Royalties vs Publisher Royalties

Posted on October 1, 2010 by Melita M. Pereira

At a recent Publishers Weekly panel, Paul Aiken, Executive Director for the Authors Guild, was asked to calculate just how much profit publishers make on the sale of e-books. He obliged, took the audience through a tobaggan ride of math and came up with some interesting figures.

• A hardcover title priced at $26 will earn a publisher approximately $5.10 and the author $3.90
• An e-book sold through the wholesale model (eg. Amazon) will earn a publisher $9.25 and the author $3.25
• An e-book is sold through the agency model (eg. Apple) will bring a publisher $6.38 and the author $2.28

This is an interesting set of numbers and one which allegedly sparked an interesting debate among the panellists. While Neil DeYoung, director for digital media for Hachette, contended that profitability ought to be measured in the context of all publishing formats, Aiken commented that the present state of digital royalty rates cannot (and perhaps will not) last.

Aiken argues that format should not be the deciding factor for the royalties authors can expect. However, DeYoung argues that costs are just as prevalent in digital formats – albeit less blatant – as they are in digital format. In the case of digital formats, DeYoung alleges that these costs arise for publishers in the form of converting the books to digital formats, maintaining servers and tracking sales. Accordingly, conversion, maintenance and sale-tracking is to digital what manufacturing and distribution is to your humble hardcover.

A very nice infographic can be found at the Huffington Post (6 August 2010), although the figures vary, it’s important to note that the graphic also considers the contribution, and therefore cost, of marketing, design, editing, typesetters and retailers.

While it’s clear that a solid standard for determining author royalties is yet to be determined, it is impossible to ignore the contributory effort that bringing a book from manuscript to finished product requires. Most of those contributions are non-negotiable and indispensable, but yet one cannot help but wonder about the often-cited statements in the media, on blogs and at panels that authors could be getting fairer (increased) royalties for their work.
(Source: Publishers Weekly, Huffington Post)