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Digital Publishing and the Alternative Economic Model

Diane Pershing’s stance, and one that she is taking on behalf of the RWA, is that digital publishing model of high royalties v. no advances is not a legitimate business model. This post discusses why digital publishing is legitimate and offers insight (I hope) for whom digital publishing might benefit.

The digital publishing model.

The digital publishing model is characterized by a few elements:

  1. No advance
  2. High royalty (usually between 35-40%)
  3. No returns
  4. No resale market
  5. Monthly payments

The print publishing model.

  1. Some advance from $2000-$1 million or more per book which is a prepayment against royalties. These advances are usually paid in increments. Most contracts are for more than one book and therefore you get some amount of the advance when you sign the contract, some amount when you deliver the first book, some amount when your second book is accepted, some amount when you deliver the second book. (This may vary from contract to contract and author to author, but generally you do not get the entire advance in one lump sum).
  2. Low royalty. Most print authors receive 6%-10% on mass market sales, 8-12% on trades, and 15% or higher on hardcover sales.
  3. Reserves held against returns. In a royalty statement, the author’s royalties are held as reserves against future returns from the bookseller. These reserves can be held for months or even years.
  4. Quarterly or semi annual payments, if your royalties exceed your advance
  5. Agenting fees

The benefits of the print publishing model is that you are getting access to more readers. Only a small portion of readers are ebook purchasers (currently it looks like the ebook market is nearing or exceeding the audiobook market although there is no breakdown in terms of trade v. non trade books so its unknown how much digital book sales represent for the romance genre as a whole). Advances provide security and certainty, to a certain point.

Print runs can vary. For trade paperback books it’s not uncommon for books to have a 20,000 book print run v. 40,000 for a mass market. Let’s assume for the sake of this argument that we’ll take a trade paperback sexy book from Berkley Heat for which an author might get a $15,000 per book contract. The book retails for $12.99 and at a 10% royalty (assuming 75% sell through on a 20,000 book print run), the author would realize $19,485 in royalties. For a digital author to make comparable amount of money, she would need to sell 8200 copies (assuming a 40% royalty rate and a $5.99 retail price for book).

If anyone of the variables changes, then the outcome changes. For example, if the royalty rate in either scenario decreases, the unit of books sold will need to increase. An author, in debating whether to go digital or print, would need to consider all these variables in weighing for herself the best economic decision. But the determination of whether to do e or p doesn’t stop here. An author must consider genre, length, likelihood of print success, stage of the career, and the like.

Genre

The bestselling ebooks, primarily, are sexy books. Therefore if you write sweet romances, digital publishing might not be the best venue for you. If you write mysteries or thrillers, digital publishing might not be worthwhile. The online awareness of that crowd is very low. This is not to say that overtime the genres experiencing the most digital publishing success will change but today, the reality is that within the romance reader world, sexy books are most often identified with digital publishing.

Length

One area in which digital publishing excels is in publication of the shorter work. While this is a practice that often leads to reader rage, the fact is digital publishers can get away with putting out chapter like works for comparatively high prices. The Portia Da Costa story from Harlequin, Twice the Pleasure, is essentially one scene that Harlequin is selling for $2.99. Readers apparently aren’t balking because up until yesterday it was on the bestseller list for Harlequin ebooks.

Likelihood of Print Acceptance/Success

Jackie Barbosa wrote a great piece yesterday about the facts regarding print publishing that RWA doesn’t want you to know. If you’ve got a manuscript laying around gathering dust and no one in New York wants it, why allow it to gather dust? It makes sense to sell it to an epublisher and have it earn money, even a small amount, that the author wouldn’t ordinarily gain. Belgrave House has made a business out of buying up ebook rights for historical romance books, the rights for which have reverted back to the author. I even saw Hannah Howell’s historicals being re-released through E-Reads. Patricia Rice who wrote one of my favorite contemporaries, Blue Clouds, is also re-rereleasing her backlist titles digitally.

For those authors who have works that have not found homes in New York, there is an audience for your work, and the digital publishing path might be the way to find that audience.

Stage of career

For authors who have benefited a long time by the advance/low royalty model, it seems incomprehensible to move away and it likely doesn’t make financial sense. To the extent that those authors’ careers are flourishing and those authors are reaping the rewards of the current print publishing business model, a digital publishing path is likely not prudent, even as a parallel print path.

But for newer authors, a regular monthly income being paid from sales of the digital published books can provide security and a path to writing full time. (We’ll be sharing actual numbers at the Rogue Digital Conference in DC on Thursday the 16th at 10:00 am. Place tbd).

For authors who have been in the business for a while but have unpublished works that NY won’t buy, those books can be sent off to an epublisher for additional income.

Further, if you are faced with low print advances and low royalties, the question of print v. e must be taken very seriously.

Changing Market

Additionally, authors might think in advance. Contracts are being signed right now that extend 2-3 years out (and maybe longer). The digital reading market is growing and authors need to be equipped with what that will mean. In other words, if digital market is 30% then only getting 8% royalty will require a much higher advance to recoup the royalty loss. If the digital market becomes a force in 2-3 years or even just a few years beyond that, would you rather have no advance and a higher royalty?

Creative Freedom

As one author shared with me, she has much more freedom to write what she wants in digital publishing. There are fewer taboos and less stringent requirements to stick with one topic or one trope even if digital publishing is not immune to trends.

There is often greater access to the people making decisions in digital publishing and it is easier for change to occur to be responsive to the readers’ demands.

Summary

This post doesn’t address all the pros and cons, but I think it can help an author start thinking. Digital publishing is not for every one. It will not benefit everyone, not now or not even in the future when the DP model becomes entrenched in New York as I believe that it will. Similarly print publishing does not benefit everyone. Many, many authors are left without a print reading audience for their works because of publishing schedules, aversion to risk, and lack of mass market appeal. But digital publishing can be for those who are just starting out; for manuscripts that are gathering dust; for works that no one in NY wants to take a chance on.

As a reader, I’m a big proponent of digital publishing because the more quality works out there to read, the better for me. For those who are digital publishing supporters, you can join http://groups.yahoo.com/group/RWAchange/. As someone who has no dog in this fight, I’ll support the digital published authors in the manner and method they deem best. While I think RWA is not well suited for digital publishing (to say the least) if there is a movement by those who want to make a difference, I’ll be right behind that movement.

Jane Litte is the founder of Dear Author, a lawyer, and a lover of pencil skirts. She spends her downtime reading romances and writing about them. Her TBR pile is much larger than the one shown in the picture and not as pretty. You can reach Jane by email at jane @ dearauthor dot com

59 Comments

  1. Mary Winter
    Jun 21, 2009 @ 05:15:22

    That was a beautiful breakdown of the two models. Thank you!!!! I also am wondering if authors in the other genres were electronic publishing doesn’t have quite the stronghold get in on the “ground floor” now and build the awareness, if that won’t give them a much larger recognition and slice of the pie in the future. That would, however, be a risk to them, but might be a viable option in some circumstances.

    ReplyReply

  2. Portia Da Costa
    Jun 21, 2009 @ 06:06:26

    Thank you for an excellent comparison of the two publishing models.

    ReplyReply

  3. Sami
    Jun 21, 2009 @ 06:29:10

    On the whole I think the e-pubbing model is very fair to authors. I’d rather have a higher % royalty than a lower one and an advance, which is simply money paid sooner rather than later. They’re not giving it to you for nothing, you’ve got to earn over and above that amount to justify your existence. Sure, you’ll make more from a NY published paper book, but as Jackie Barbarosa’s post pointed out, that’s no guarantee of continued success, or a licence to quit your day job. The whole thing about an advance offer equalling some kind of credibility for a publishing house is fundamentally flawed, IMO. To say that a reputable e-publisher like Samhain isn’t qualified to run an RWA workshop because they don’t give their authors $1000 up front is just ridiculous. How are people going to learn more about the digital publishing world if they don’t have access to the expertise of those in the know? How are online publishers going to capture a larger portion of the market if they’re not legitimized by influential organisations like RWA?

    On the issue of creative freedom, I agree wholeheartedly that you have much more of that in e-publishing. The fact that publishers don’t have to worry about you earning back your advance, about what could turn out to be crippling returns from a large print run, means they can afford to take more chances on authors who might be considered too high risk for traditional print publishers. This translates into more variety for the reader, which–as an avid reader myself–I have to say can only be a good thing.

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  4. Angelia Sparrow
    Jun 21, 2009 @ 07:42:30

    And in regular publishing there is always the chance of paying out the million dollar advance (for a single book), spending millions on publicity (Oprah, Larry King, the View, etc etc etc) and having the book be a total non-starter.
    I’m thinking of Mary Cheney’s MY TURN. The gay community won’t buy it because she’s considered a traitor to her identity. The Right won’t buy it because she’s gay.

    All that said, my partner and I are polishing a book that we hope to send on to mass-market as opposed to small press. We like writing e-books. We like the 35-40% royalties. But print has its plusses (easier to sell at conventions!) and mass market…well, it’s the next logical step.

    There is one e-pub who does advances. Amber Quill gives a $100-200 advance as a token payment against royalties. It’s their way of saying “We believe in you.”:

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  5. Jody Wallace
    Jun 21, 2009 @ 07:54:15

    One of the important myths to dispell is that whole “book that fails to find a home in New York” assumption (and the assumption is that the book is just…not very good).

    There are so many reasons a book might fail to sell to the X number of places in NY that buy that particular type of novel. It might fail to sell because it has countless grammar and mechanical errors. It might fail to sell because its plotting is incomprehensible. It might fail to sell because a publisher/editor’s line was just cut and she couldn’t afford it. It might fail to sell because your agent hawks it to the wrong people (or you do). It might fail to sell because it contains risky subject matter, like m/m pairings or, I don’t know, something even crazier like a non-alpha hero :). It might… Well, you get the idea.

    The important thing is that the book is not clearly of lesser quality because it fails to sell to the limited NY market. Fiscal rewards can be had on many such books if you find a good small publisher, one that can turn a profit for you both selling XXXX copies of your book instead of XXX,XXX copies. But since this business model involves you contracting the book for no or a minimal advance — essentially on consignment — which is something ALL KINDS of artists do — it is not considered a professional career choice by RWA and many others at current.

    Because it’s more professional to go *nowhere* and sell *nothing* if you don’t fit into a traditional publisher’s niche. That’s the argument I want to see explained. Why is it better to do NOTHING with your hypothetical 10 years of hard work? Because you’re “too good” for those porny publishers? Because you value yourself too much to stoop to that “level”?

    Yeah. A lot of people feel that way about category romances. About the romance genre. About genre fiction, period.

    The digital press business model won’t work for every author, but many authors, because they ARE career focused, have discovered it works very well for them.

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  6. Juliana Stone
    Jun 21, 2009 @ 08:24:36

    I sold my first book to NY. It comes out next April from Avon, but I’ve also just been offered a contract with Samhain. I sought them out and why wouldn’t I? For me, it’s all about opportunity. I wasn’t any less excited about the Samhain contract than the Avon. I want to build a name for myself in both print and electronic publishing. This is my career and I am not willing to limit myself because of this ridiculous notion that epubbing is somehow secondary to print. Or that one business model is less effective than the other. They’re just different. They both have pros and cons.

    But as a writer it’s your job to educate yourself and know what you’re getting into. As for me, I’m looking forward to hopefully finding new readers who will cross over from print to electronic and vice versa. At the end of the day I want to write and I want to reach as many readers as I can.

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  7. Kelly Jamieson
    Jun 21, 2009 @ 08:31:37

    I usually prefer to keep my rejections private, but in this case I thought it might be worthwhile to bear out Jane’s point about creative freedom. Here is a rejection I got from a prominent agency:

    “I wanted to send a personal note to you, because you have given us so many
    outstanding manuscripts in the past. Once again, the manuscript sent on
    XXXX DATE was very well written. The characters were believable with
    interesting histories, the voice was on target for a romance novel, and the
    pacing was great. You have all the basic elements of a romance author that
    are so hard for most people to pin down. The reason we have decided that it isn’t quite right for us (and this is just an opinion of course) is that it tackles issues
    normally reserved for “women’s fiction” and melds it with romance. In other words, it doesn’t fit quite right in either genre. From a sales perspective, fitting comfortably into a genre is important, particularly with romance. I don’t tell you this to bash you over the head with it but so that you can keep this genre thing in
    mind for your future efforts. We look forward to hearing from you again. ”

    This book has now been contracted with a major e-publisher.

    ReplyReply

  8. Grace
    Jun 21, 2009 @ 09:34:45

    @Angelia Sparrow – Regarding AQP advances: Is this newly instituted?

    ReplyReply

  9. Digital publishing and the alternative economic model | TeleRead: Bring the E-Books Home
    Jun 21, 2009 @ 10:09:57

    [...] the beginning of a very good article on Dear Author. The rest is well worth reading. Diane Pershing's stance, and one that she is taking on behalf of [...]

  10. Allison Brennan
    Jun 21, 2009 @ 10:17:15

    Well said, Jane.

    I think it bares repeating that genre matters. Some genres do better in some formats–as e-books, as mass markets, as trade, as hardcover.

    There is some creative issues related to print publishing. I can’t just write all over the board (i.e. three, four different genres) because the mood strikes me. My publisher likes me to write in the same genre because I’m building a base. If I suddenly switched to historical romance–and I actually have one idea that I do hope to write one day in turn of the century San Francisco–I think my publisher would balk. And would it be the best thing for my career to write a completely different book? Probably not. I might write it because I want to and worry about placing it later, but I’m writing what I love to write otherwise I wouldn’t do it. As everyone here knows, writing is not sitting around eating bon-bons and brainstorming with friends over a three-martini lunch. I write 6-12 hours a day, five days a week and often 6 hours on Saturdays. I couldn’t do that for long if I didn’t enjoy what I did or felt I could explore my worlds creatively in the way I wanted to.

    @Juliana Stone: congrats on both your sales! And I want to say I complete agree with this: “At the end of the day I want to write and I want to reach as many readers as I can.”

    ReplyReply

  11. The Galaxy Express>>The Digital (Publishing) Divide
    Jun 21, 2009 @ 10:51:52

    [...]Digital publishing is a business model as valid as any other[...]

    ReplyReply

  12. Pamela Turner
    Jun 21, 2009 @ 11:06:32

    I like the opportunities that e-publishers offer. While I’ve been writing 20+ years, I’m new to the romance writing field. (My preference is paranormal romance, erotica/erotic romance and m/m.)

    And I read that if you’re a new writer in this genre, it’s a good idea to start with shorter pieces, like novellas, which can be practice for tackling that 100k novel.

    Anyway, the fact that e-publishers are willing to accept shorter works is one reason I plan to submit to them. It’ll be a way to build my portfolio, and I don’t think they’re any less legitimate than traditional publishers. Will I submit to the latter? Sure. But it depends on the particular work. And right now, I just feel that e-publishers are a better choice.

    Okay, back to work! :-)

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  13. Angelia Sparrow
    Jun 21, 2009 @ 11:27:11

    CORRECTION!

    Amber Quill does NOT provide an advance.
    I have them confused with Apex Book Company, a small speculative fiction house. As I have been dealing with both of these publishers in the last couple of weeks, I completely confused them

    IT IS APEX, NOT AMBER QUILL, OFFERING A $300-500 ADVANCE!

    My apologies to all involved.

    ReplyReply

  14. Laura Abbott
    Jun 21, 2009 @ 11:27:32

    Just a quick note to follow up on Angelia Sparrow’s post. I just chatted with her on the phone and she realized that she’d confused AQP with one of her other publishers when she talked about receiving an advance. :) For the record, Amber Quill Press does not offer its authors advances of any kind, and never has. Thanks! Laura Abbott, An Owner Of Amber Quill Press

    ReplyReply

  15. Noticias Edición Digital » Blog Archive » Digital publishing and the alternative economic model
    Jun 21, 2009 @ 11:36:20

    [...] the beginning of a very good article on Dear Author. The rest is well worth reading. Diane Pershing's stance, and one that she is taking on behalf of [...]

  16. SonomaLass
    Jun 21, 2009 @ 12:29:10

    @Kelly Jamieson: Now that sounds like a book I would really enjoy! I love books that get into complex issues, but still within the romance framework. Cross genre books are some of my very favorites. What’s yours called, and when will it be released?

    To the extent that those authors' careers are flourishing and those authors are reaping the rewards of the current print publishing business model, a digital publishing path is likely not prudent, even as a parallel print path.

    What is the usual arrangement for print books that come out in e-formats at about the same time? Are those just added in to print sales figures somehow, or is there a separate contract (or segment of the contract)? I admit I’m curious about who makes the decision about which books to Kindle or to otherwise make e-vailable, and how that works differently from straight digital publishing by the established e-pubs like Samhain, EC and others.

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  17. Kelly Jamieson
    Jun 21, 2009 @ 13:05:07

    @SonomaLass – I’d be happy to share details off this loop – send me an email!

    And I look forward to reading the answer to your other quesitons…

    ReplyReply

  18. Karen Ranney
    Jun 21, 2009 @ 15:36:27

    Why would a print author go to an e-publisher for books that have reverted to her?

    Frankly, I have used both MobiPocket and Kindle to upload my reverted books. I, essentially, have become my own publisher by doing that.

    To me, using the digital market is just smart. I’ve got print books plus books that are only available as downloads. One helps the other and I’ve watched it happen.

    In addition, I have three or four books that never found a home because they were “different”. I’m toying with the idea of releasing these as original e-books (again, using MobiPocket and Kindle). The cost to buy ten ISBN numbers is about $300.00.

    Just seems smart to me.

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  19. Marion Gropen
    Jun 21, 2009 @ 15:46:29

    I’m sure most of your readers know this, but because some newcomers don’t, I’ll emphasize that it’s critical when you talk about royalty rates to include the base to which that rate is applied. (Older hands have been known to make this mistake, too, by the way . . . )

    Many kinds of royalties are applied to some sort of net, in particular the 35 and 40% rates are always a fraction of net. The mainstream rates for fiction are applied to the list price, not to the net, so that they’re a smaller piece of a much larger total.

    You can’t make any conclusions about author earnings in the above analysis unless you include the differences in probable sales volume, and the definitions of “net.”

    In other words, the math above is incomplete, which means that you need to do some crunching and grinding before you make any conclusions. If you want to try to estimate your likely sales in the way a sophiticated publisher might do it, there are some posts on my blog, and some to come there, that will help guide you through it.)

    In this, as in all decisions about the business of publishing, you absolutely MUST run the numbers. There are no shortcuts.

    ReplyReply

  20. Ally Blue
    Jun 21, 2009 @ 16:14:12

    Many kinds of royalties are applied to some sort of net, in particular the 35 and 40% rates are always a fraction of net. The mainstream rates for fiction are applied to the list price, not to the net, so that they're a smaller piece of a much larger total.

    I can’t speak for anyone else, but my Samhain contracts give me 40% of the list price on my ebooks. Loose Id pays on the list price also; can’t remember off the top of my head whether it’s 35% or 37.5%, though…

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  21. Jane
    Jun 21, 2009 @ 16:36:12

    @Karen Ranney It sounds like you should be giving a seminar on this. Have you seen JA Konrath’s posts about putting his short stories on Kindle & making approx $100 per day off those? Anne Frasier is looking for some input on how to digitize one’s reverted books. Maybe I could direct her your way?

    ReplyReply

  22. Jennifer McKenzie
    Jun 21, 2009 @ 16:38:44

    It’s also important to mention that price plays a big role in sales.
    For example: My ebooks from ebook publishers such as Liquid Silver Books sell for a certain price. From the publisher, I receive the usual 40% royalty. Then, the book goes to Fictionwise. My percentage there is less BUT the volume of sales is higher.
    But say I release a book with Berkeley. The book is released on Fictionwise and the book is SIGNIFICANTLY higher than other ebooks. (I’ll use “A Vampire’s Claim” as an example) That book is $15 to me, the purchaser (and worth every penny IMHO). But a Joey W. Hill title of the same length at Ellora’s cave is $7-$8.
    So when NY authors claim lower numbers for their ebooks, perhaps it ISN’T because people aren’t interested in buying them, but because they’re expensive.
    These are the kinds of things ALL authors need to know NOT just electronic authors. If you’re a Harlequin author, it might be helpful to know what the going rate for an ebook actually might be.

    ReplyReply

  23. » 2nd Edition of Romancing the Novel Carnival
    Jun 21, 2009 @ 17:15:44

    [...] Jane at Dear Author shares thoughts onDigital Publishing and the Alternative Economic Model. [...]

  24. Karen Ranney
    Jun 21, 2009 @ 17:19:08

    Jane,

    It’s an incredibly easy process. In fact, I was amazed at how easy it is. I have watched Konrath’s experiment (and Lee Goldberg’s), and although my results aren’t as rewarding as Konrath’s, I do get a nice little monthly check from Amazon and MobiPocket. Amazon will do the Kindle readers and MobiPocket everything else.

    The price point on all of the reverted books are less than the print editions – if you could find them.

    It seems to me that if I did more publicity that it would be more lucrative, which is just what putting a brand new book out there might do.

    I’d be more than happy to help anyone.

    ReplyReply

  25. ilona andrews
    Jun 21, 2009 @ 20:15:59

    For authors who have benefited a long time by the advance/low royalty model, it seems incomprehensible to move away and it likely doesn't make financial sense.

    It’s not so much that it doesn’t make sense or it’s incomprehensible. It’s simply the matter of numbers: e-book market is a tiny slice of the audience. By my last statement, money I made from electronic versions of my books amounted to less than 5% of my total earnings. The books sold well, the latest hung on Fictionwise bestseller list for a couple weeks, and the prices were equal to or less than the price sticker of the printed edition.

    E-books are the future no doubt about it. I wouldn’t be surprised if we eventually moved to rental content rather than purchase model, with books available for download for a monthly fee at online libraries. A book Netflix. Download, read, be done. There will always be a demand for print books, but the print run will likely shrink eventually. I prefer my books in e-format, as I ran out of space, like instant gratification, and am spoiled by e-bookmarks and search options.

    But that future is far away at the moment. Meanwhile, we have to pay the bills. Which isn’t to say that releasing material in e-format can’t provide great supplemental income. But in my particular case, it will be a while before I can live on what I earn from my online sales.

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  26. Lisa Hendrix
    Jun 21, 2009 @ 21:01:56

    @Jennifer McKenzie said:

    But say I release a book with Berkeley. The book is released on Fictionwise and the book is SIGNIFICANTLY higher than other ebooks. //snip// So when NY authors claim lower numbers for their ebooks, perhaps it ISN'T because people aren't interested in buying them, but because they're expensive.

    Your basic assumption is untrue. My current release, Immortal Outlaw (Berkley Sensation), is actually a bit cheaper in eformats at Fictionwise than in paperback. For that matter, at $6.79, it’s cheaper than the $7-8 you mentioned for Joey Hill’s title at Samhain. I’ll have to wait to see what the sales on this one are, but initial results for the last one, Immortal Warrior, didn’t wow me as a percentage of total sales. That may change over time, of course, esp. after the books aren’t available in stores. We’ll see. (Oh, and someone asked how erights are handled in print contracts: There is an electronic display clause in the contract that sets out those rights and royalty rates and other details. Accounting is done along with the regular royalty statements, with the various major e-tailers broken out so it’s possible to see exactly where the electronic sales are.)

    @Jane: Excellent outline of the basic differences between the two business models. Thank you.

    What I don’t understand is why established epublishers can’t pay both higher royalty rates AND advances against those royalties. They’re not mutually exclusive, after all, and it doesn’t have to be one or the other.

    If publishers understand their markets and correctly estimate sales, it wouldn’t cost them any more money in the long run to pay an advance, and it would show a willingness to share in the risks of publishing and a commitment to author success (which is what the RWA standards are aimed to encourage, btw, however un/successful you think they are, and no, I still don’t want to get into the middle of that argument).

    At the very least, it seems epublishers could offer advances to authors with established sales records, say, an amount equal to one-third or even one-half of the royalties earned on the previous book from that publisher during the first year of publication. As authors built their sales, their advances would rise along with their ultimate earnouts–but they’d have that chunk of money upfront where it could help with promotion and advertising, etc. Where would be the downside in that?

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  27. Jane
    Jun 21, 2009 @ 21:05:17

    @Lisa Hendrix: If the current business model for digital publishing works, why should it change to suit RWA? The whole premise of the high royalty v. no advance (or in the case of Samhain $100 advance) is to allow digital publishers to take risks on a number of authors, pay out quickly, not hold cash in reserve (which I am sure is an accounting headache), not worry about the pressure of “selling through”. After all, an advance is a prepayment against royalties only.

    Let me repeat this. There is nothing wrong with the digital publishing model. What is wrong is that people refuse to see it as valid.

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  28. Angela James
    Jun 21, 2009 @ 21:09:34

    @Marion Gropen

    Many kinds of royalties are applied to some sort of net, in particular the 35 and 40% rates are always a fraction of net. The mainstream rates for fiction are applied to the list price, not to the net, so that they're a smaller piece of a much larger total.

    This is incorrect. Samhain pays 30-40% of list price (% depends on the distributor). That alone makes your “always” incorrect.

    While there are some epublishers who pay on net, many do not. I can think of only two of the better known ones off the top of my head, but I do admit to not keeping close track of other epublishers’ contract terms so I wouldn’t doubt there are others. A visit to the RWA approved list of non-vanity/non-subsidy publishers will show you the ones who do not pay on net. Quite a few, actually.

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  29. Angela James
    Jun 21, 2009 @ 21:11:49

    @Lisa Hendrix

    Not only does Joey Hill not have a Samhain title, we don’t charge more than $6.50 for any of our ebooks and that only for titles that top 100k. You might want to re-read Jennifer’s post.

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  30. Jane
    Jun 21, 2009 @ 21:11:55

    @Angela James: Ironically, Random House & Simon & Schuster pay 25% off net only. (Also that is the rate that every author who opts into the GBKS will get paid as well. Their contractual percentage will be off the 63% less the Book Registry administrative costs less whatever else the publisher deems ‘net’).

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  31. Angela James
    Jun 21, 2009 @ 21:14:48

    If the current business model for digital publishing works, why should it change to suit RWA? The whole premise of the high royalty v. no advance (or in the case of Samhain $100 advance) is to allow digital publishers to take risks on a number of authors, pay out quickly, not hold cash in reserve (which I am sure is an accounting headache), not worry about the pressure of “selling through”. After all, an advance is a prepayment against royalties only.

    Let me repeat this. There is nothing wrong with the digital publishing model. What is wrong is that people refuse to see it as valid.

    Just a quick correction that while we (Samhain) did offer a token, $100 advance, we discontinued that earlier this year.

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  32. Angela James
    Jun 21, 2009 @ 21:17:57

    @Jane: Conversation has circled back to net a lot recently, no? Net isn’t inherently evil and probably is something that will start to come up much more frequently in terms of many publishing models. I think that we agree that where net might get muddy is in how it is defined by various publishers. It was interesting to me when we were talking about this on Twitter last week that someone in Asia jumped in and mentioned to me that all publishers there pay only on net.

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  33. Sami
    Jun 21, 2009 @ 21:55:39

    Samhain used to offer an advance to those authors who chose to accept it, as Angela said. I have always waived that right because it keeps the money situation straight in my head. It makes absolutely no difference to me one way or the other–I have a day job (which in light of this discussion I figure I’ll be keeping well into the future!), so I don’t rely on an advance to pay for advertising expenses, neither do I view it as some kind of act of faith on the part of my publisher. I figure their willingness to contract my work in the first place is an act of faith on its own.

    As I recall, the offer of any advance, no matter how small, used to be enough for RWA, now they’re stating the amount the advance has to be. Seems like a case of moving the goal posts to me. Why should digital publishers have to chase recognition? Shouldn’t their track record in quality and sales (relative to their portion of the market), be enough to lend them credibility? It seems like a lot of effort to run around after RWA, an effort that will be wasted in years to come, when we’ll all be toting e-readers like they do in Star Trek :). In the long term future, print books will probably be an anomoly. What kind of business model will be used then, I wonder?

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  34. Lisa Hendrix
    Jun 21, 2009 @ 22:08:26

    Not only does Joey Hill not have a Samhain title, we don't charge more than $6.50 for any of our ebooks and that only for titles that top 100k. You might want to re-read Jennifer's post.

    @AngelaJames Oops, you’re right. She said Joey’s book was at Ellora’s Cave. I should have given them the plug, huh.

    Am I reading your comment right? The more a book sells, the more you charge customers to buy it? I guess that’s supply and demand–but not really, since ebooks are in infinite supply.

    @Jane said

    If the current business model for digital publishing works, why should it change to suit RWA?

    I did NOT say the model should be changed to suit RWA. What I said was that author protection is the intention of the standards, however well it works or doesn’t work.

    And in fact, the model change I suggest would help protect authors. I’ll repeat a portion of my post from the earlier discussion to illustrate how:

    “One e-pubbed author I know, who makes decent money with one of the bigger e-publishers, has told me that her per-book return has dropped considerably because the publisher brings out so many more books each month now. As a result, each book sells fewer copies (i.e., the market is diluted). To make the same money in a year, she now has to write more books, thus diluting her personal market even further…//snip//

    “There's no real risk to the publisher in having more books on the website, since 4×1000 is the same as 8×500 or 32×125. [ED: to the publisher, not to the authors, who make less and less per book] On the other hand, if the publisher paid a $1000 advance per book, it would be in the publisher's interest to avoid diluting the market, so that there was a stronger chance that each of those books would earn that advance back. As it stands now, it's possible, perhaps likely, that some of those 32 authors will make nothing or next to nothing.”

    Also, an expectation of advances would chase off many of the fly-by-night epublishers who set up a site, ‘buy’ books (in quotes because no money changes hands), put up a bunch of e-files, sell a few or even a lot of books and collect the money…and then vanish without paying authors (see http://www.anotherealm.com/prededitors/peba.htm for evidence of this)

    Upfront money is an indication of publisher investment in the author. Not a guarantee, but it does show good faith.

    And that’s why to consider changing the model. Again, where’s the downside?

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  35. Mary Winter
    Jun 21, 2009 @ 22:21:16

    There's no real risk to the publisher in having more books on the website, since 4×1000 is the same as 8×500 or 32×125

    @Lisa – I’m sorry, but the more books the publisher has out, the more risk the publisher takes. Each book requires an ISBN#, cover art, formatting, editing, etc. This is money that the publisher pays up front for the book before it even earns a dime. Sometimes several months before it earns money.

    From a technical side, more books means more server load, more bandwith, more chances for the site to malfunction, more storage space, more security, etc. Depending on how the hosting is setup, this would entail additional money and financial risk as well. (Technical staff is not cheap.)

    Now, I will say this, that as a small publisher, my overhead is a lot less than the larger epublishers, thus, I am more willing to take a chance on things, such as sweeter romances or f/f. But just because I don’t pay any advances doesn’t mean I’m not invested in my author’s success or have any financial investment at risk.

    True, if we’re referring to the same publisher that diluted each authors’ earnings, I saw, and experienced, that dilution too. However, that is a business decision made by that publisher. It’s up to each author to determine if that model still works for her (or him). And, such a business decision doesn’t invalidate the entire model.

    In fact, that is part of the reason why there is a romance reader survey on our site that runs through the end of the month. Because as a reader and as an author, I see more and more books getting published and readers’ time and money only goes so far. As a business woman, I wanted to do a little personal market research. (http://www.pinkpetalbooks.com/index.php?/News/romance-reader-survey.html )

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  36. Ann Bruce
    Jun 21, 2009 @ 22:24:26

    @Lisa Hendrix: Ms. Hendrix, you are not reading Angela James’ comment correctly. The 100k refers to word count, not copies sold.

    ReplyReply

  37. Lisa Hendrix
    Jun 21, 2009 @ 23:28:08

    @Ann Bruce — Aha! Thought that sounded strange, but my mind was on book sales and not word counts. Thanks for clarifying that.

    @MaryWinter — Thanks for taking the time to explain some of your costs, which I hadn’t fully considered.

    And thanks for paying attention to the market dilution issue. I do see that as a major issue in epublishing, just as it is an issue in traditional publishing (for instance, Harlequin occasionally must adjust its monthly publishing schedule to avoid over-saturating the market).

    Some seem to think there’s unlimited room in e-publishing. That’s true in terms of physics, but clearly not in terms of market, which is only going to stretch so far (even if paper should disappear entirely). Yes, things will grow for a long while, but even in a growing market, if the pace of publication outraces the pace of growth, individual authors will feel the pinch, and likely more than the publishers. It’s exactly the same principle as other businesses: a finite number of hamburger eaters divided by too many McDs means corporate gets their money while franchise owners struggle. A finite number of readers with a finite amount of discretionary income divided by an infinite number of books means those books’ authors are pretty much screwed.

    Which is why I think it’s reasonable for an author to expect an advance as a good faith commitment from the publisher, who will then also have a financial incentive to avoid that dilution in order to at least *try* to ensure the advance is recouped.

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  38. Lisa Hendrix
    Jun 21, 2009 @ 23:34:31

    BTW – Ja(y)nes — Have I ever told you how much I love you for having an edit comment function on this site? No matter how much I proof and preview, I always see something after I hit post. Usually several somethings. Or I see a better metaphor. And here, I can actually fix it.

    Thankyouthankyouthankyou.

    ReplyReply

  39. Marion Gropen
    Jun 22, 2009 @ 08:09:32

    Ah, I was coming into this discussion in the middle, and read “digital publishing” as that using POD printing, rather than e-publishing. In most insider discussions I’ve been in, you don’t see digital publishing used to mean e-books.

    Yes, e-publishers DO sometimes pay higher rates on list. But, the sales universe has been about 0.005 of that for print. So, again, the numbers have to be crunched.

    Fortunately, you can publish electronically AND in print. Of course, piracy is an issue, but I don’t think you’ll find e-piracy impacting your print sales yet, so I wouldn’t let that stop you.

    As for the RWA’s attempts to protect its author-members: in my opinion, education works better than exclusion. And the vast majority of authors need a lot more information about the numbers in publishing than they have.

    But that may just be my jaundiced viewpoint from the other side of the desk. I’ve never been an author, although I’ve been running publishing companies (or helping to do it) for too many years.

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  40. Allison Brennan
    Jun 22, 2009 @ 08:57:17

    I have been an opponent of net for reasons that have nothing to do with the percentage. Different retailers get different discounts, so a major mass market bookseller like Walmart might get a bigger discount. For the sake of argument, most traditional outlets “buy” (get credit, whatever) for 50% of the cover price. So on a $6.99 book that Borders sells, they keep $3.50, the publisher gets $3.50–and out of that $3.50, they pay shipping, overhead, professional services (editor, cover design, marketing) and author royalties. The profit margins are extremely low on mass markets, which is why publishers want big sellers. It’s far more profitable to sell 100,000 copies of one title than 10,000 copies of 10 titles.

    But Walmart might get a discount and pay $3.00 per book back to the publisher. They discount the book further, and take a lower profit margin because they sell more titles they can do this and remain profitable.

    In cover price, I’d get (roughly) 56 cents per book sold at 8% royalty. At 25% e-book cover rate, that’s $1.75 no matter what discounts the publisher instituted with the retailer.

    Under the same discount structure, I’d get 87 cents for a “traditional” net sale of $3.50 and 75 cents for a discounted net sale. I’m actually fine with this because my royalties are still higher than print books–and I’m fine with the 8-10% mass market royalty structure.

    HOWEVER, I’d never know WHAT I’d get for ebooks because every retailer will get a different discount, and that really screws with accounting. E-books sold at fictionwise, for example, might yield 87 cents, but kindle books might be 70 cents. And try to audit that.

    So that’s why I oppose net.

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  41. DonLinn
    Jun 22, 2009 @ 09:10:48

    Fascinating post and thread. Thank you, Jane.

    With respect to digital publishers paying $1000 advances as a show of good faith and an ‘investment’ in sharing risk with the author, first, the publisher (if even remotely legitimate) is making an investment by editing the manuscript, converting the files, building the e-commerce site and/or arranging distribution and promoting the book. It’s not quite as simple as acquiring a manuscript and hoping for a few sales. Second, whenever I hear cries for advances, I wonder if authors would be willing to repay any unearned advances. I’m not proposing this, but what if an advance were escrowed until it earned out and then paid?

    ReplyReply

  42. RWA and Digital Publishing: It’s Time for New Think | Quartet Press
    Jun 22, 2009 @ 10:05:04

    [...] Digital Publishing and the Alternative Economic Model: Jane/Dear Author again, this time looking at the different economics in the business models [...]

  43. Karen Templeton
    Jun 22, 2009 @ 10:11:32

    I’m not proposing this,
    but what if an advance were escrowed until it earned out and then paid?

    Then it wouldn’t be an “advance,” but simply royalties paid out as earned. Same as the “no advance” model.

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  44. Estara
    Jun 22, 2009 @ 12:24:22

    @Jane: Regarding authors that are ebook marketing their own out-of-print backlist themselves, have you seen the female fantasy/scifi author collective at Book View Café yet? They’ve got quite a few well-known names there and are selling their ebooks from their site only, as far as I know.

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  45. SonomaLass
    Jun 22, 2009 @ 13:08:58

    @Estara: Thanks for that link! There are some excellent authors on that site, and some books and short stories that I can’t wait to buy. Quite reasonable prices, too.

    I hope GrowlyCub is following this thread — she hates overpriced short works.

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  46. DonLinn
    Jun 22, 2009 @ 13:11:42

    then it wouldn't be an “advance,” but simply royalties paid out as earned. Same as the “no advance” model.

    Why not? The publisher would have demonstrated good faith, made a cash commitment and ensured payment, so the author couldn’t get cheated, at least up to the amount of the advance.

    There’s a bit of a definitional problem in play here. An advance is an advance against future royalties, not a guaranteed minimum, though that’s what most traditional publishers have allowed it to become (and that’s one of the sources of some of their problems).

    Again, I’m not proposing the escrow model, just saying it’s a possibility to lower author risk of non-payment by unscrupulous publishers…e or p.

    ReplyReply

  47. Estara
    Jun 22, 2009 @ 14:03:18

    @SonomaLass: I wasn’t sure if everyone here didn’t already know about them, they’ve already been to a few cons (as you can see from their blog) but I figured mentioning them wouldn’t hurt.

    I mean McIntyre, LeGuin, Zettel – in a few weeks Judith Tarr – , Gilman, Golden, Kimbriel, Lange, Radford and even Madeleine Robins… – it’s like my reading list from the 80s and 90s ^^ – and I’m sure the others are very interesting, too. Their blog posts are really interesting, too.

    Judith Tarr has offered to answer horse questions from other authors as one of her regular blog entries on there and Bonhoff is giving insider info on what it’s like to write canon Star Wars novels and McIntyre wrote a bit about how she got to write the first Star Trek Movie novelization (and how she gave Hikaru Sulu his first name).

    AND if you’re happy to read online they also offer LOTS of free content, whether short stories or entire novels (of course you can also buy the novels as pdfs – they still have to work some on offering more formats, I think).

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  48. Stevie
    Jun 22, 2009 @ 15:41:35

    And there are three more SF/fantasy female authors getting their backlists, and some new works, out online; C J Cherryh, Jane Fancher and Lynn Abbey at The Closed Circle:

    http://www.cherryh.com/WaveWithoutAShore/?p=406

    Incidentally, C J Cherryh’s ‘The Paladin’ is one of my top ten all-time great romances; I have never seen it reviewed as a romance, but it is one.

    It’s written from the hero’s perspective, and it’s amazing…

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  49. Steve Hedge
    Jun 23, 2009 @ 04:48:51

    This was a terrific breakdown of the two models; however, there is a third model. Print-on-Demand, known as POD, has made it possible for unknown or new authors to break into the field of writing. It is a form of self-publishing that has quite a number of benefits:

    1) roughly 25% in royalties,
    2) the same or similar conditions noted here for digital printing,
    3) editorial and marketing services are available (at reasonable rates),
    4) the author keeps the copyright (usually it’s awarded to the publishing house in normal book deals),
    5) and, lastly, authors are given discounts on their books for promotional purposes like book signings (often they are given 300-500 FREE copies of their book followed by discounted copies later).

    I have researched quite a number of the self-publishing companies and the two best ones that I located are: Authorhouse and <a http://www.iuniverse.com/

    I have personally spoken with Susan Driscoll, the owner of Iuniverse, and both she and her company are extraordinary. She published a book that I highly recommend to anyone looking to self-publish titled “Get Published” which is available at Amazon.

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  50. Marion Gropen
    Jun 23, 2009 @ 07:21:57

    I disagree strongly about the efficacy of using a vanity/subsidy/online or so-called POD publisher if your goals include either exposure or profit.

    Even self-publishing (as in founding your own company, buying an ISBN block, hiring pros to do the parts of the process you don’t know how to do, and getting a printer to print and bind your book) is a hard way to go.

    If you use a known pay-to-play house, as the above presses are, you make getting onto bookstore shelves, and getting reviewed in influential publications, much, much, much harder.

    In our world, if you think you see a new and seductive shortcut you should take another look. You’re missing something and you’ll regret it.

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  51. Steve Hedge
    Jun 23, 2009 @ 10:36:45

    Marion,

    I see where you are coming from with your opinion, but I just don’t see the facts to support them. You state that POD is a “hard way to go” to gain “exposure or profit” as it really is not and quite a number of my friends have used this process successfully (earned a generous profit) and have had reviews in “influential publications” such as “The New York Times”, which has reviewed books published by BOTH of the companies I noted earlier. How much more “exposure” does one need? Admittedly, it’s not as exciting or glamourous as landing a deal with a big publishing house and the attention that garners, but for many struggling writers that want to be heard in some way, this is a fine alternative. Not every writer need to or expects to be the next John Grisham or Stephen King or Nora Roberts, but they are satisfied to know that their work is being read.

    In addition, I’m not sure what your “our world” comment means, but it certainly sounds exclusionary (as if those who go the self-publishing route are not part of the “real world” of writing). You sound rather condescending with your comment that POD is some sort of “new seductive shortcut” that only a fool would use (not knowing any better), and your categorizing of this method of publishing as a “seductive shortcut” implies that it is used by writers to somehow cheat the system and dismisses their hard work. BTW: POD isn’t “new” and has been around now for over a dozen years. It is doing very well in regards to profits to authors and the companies. It’s not some “flash in the pan.”

    Not everyone is blessed with connections in the publishing industry or is so gifted enough to get an agent and publisher right away, but that doesn’t mean that a given writer should forever put off getting published. Not everyone is a Hemingway, Steinbeck, or Dr. Phil, but that doesn’t mean their work isn’t good just because it hasn’t gotten noticed by an agent or major publishing house. It sounds awfully elitist to dismiss POD as something only the uninformed use or people who couldn’t get published any other way. Again, not every writer wants to rule the universe, make a zillion dollars, or appear on Oprah.

    I offered up this third method of publishing since Jane posted about the other two, the traditional print and digital publishing options. You can dismiss the POD method if you wish, but it is not the awful option you seem to present it as being and some recognition to those who have used this method and have done so successfully after much hard work would be appreciated. I would hate to think the work of my friends, or me for that matter, were dismissed as writer-wannabe’s who couldn’t make it in the “real world” of publishing and resorted to a cheesy shortcut.

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  52. Marion Gropen
    Jun 23, 2009 @ 21:11:32

    Steve,

    I’m very sorry that my comment came off as arrogant. When I said “our world” I meant the world of books, including you. I may come from a mainstream background, but I have no bias against self-publishing. After all, I moderate 2 of the 4 largest listservs for small and micro publishers, and more than half of our members have published one of their own manuscripts along the way. And many of my clients publish, or started by publishing, their own books.

    As for profitability: it is possible with the so-called POD publishers, it’s just harder than it would be with the alternatives. I’m sure you know, for example, that using a POD printer to do true self-publishing has much better margins for any reasonable sales volume.

    Which brings us to exposure: again, it’s possible, just harder than with the alternatives.

    This business is complicated, and getting more so. Why wouldn’t shortcuts be seductive? All publishers, big and small, look for them. And all of us have taken paths that turned out to be problematic. You don’t have to be a naive newbie to miss the ways that they’re less than optimum.

    I hope, whether it seems obnoxious or not, that you’ll take my advice here: look more deeply into the rewards and costs possible in other paths. Consider the objective market potential of your future works and then crunch your numbers. You might be surprised.

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  53. Mark Coker
    Jun 23, 2009 @ 22:47:33

    When publishers pay up to 85% net against a sales price set by the author, as we do, it turns things even more in the favor of the author.

    ReplyReply

  54. Steve Hedge
    Jun 24, 2009 @ 10:44:35

    Marion,

    Thank you very much for response and I apologize if I went after you too harshly. I appreciate your explanation of your viewpoints in your last post. I don’t think many would argue against you, myself included, that going the way of a traditional publisher is the preferred route; however, that just isn’t always a possibility for some. If you have ideas or suggestions on how to get noticed or published by any of the smaller publishing houses, I’m all ears (we could discuss it via email if you like). Like many writers who dream of being published, I have enough rejection letters to wallpaper my entire house. I noted the POD option here as an alternative for those who can’t break into writing world in the traditional way. At least POD gives anyone a chance to publish his or her work.

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  55. V. Greene
    Jun 24, 2009 @ 11:57:12

    Thanks for the rundown. Searching markets on duotrope.com (for instance) tends to turn up a lot of epublishers, especially if you’re looking to place something GLBT or not-doorstop-sized. However, while links to the publishers’ homepages are lovely things to have, they don’t get into the practical details (not unreasonably, since they’re trying to sell themselves), and your post did.

    It seems to me when I go to a bookstore that there is an increasing hope by publishers that the reading public will take a chance on a $20 large book, and that small paperbacks for a small price are vanishing. Are they all going onto ebooks? If anything, from a reader’s perspective I’d almost prefer that the carpal-tunnel books go onto a lightweight eformat and the little books stay in paper, and I’d rather buy four little books by unknown authors than one big one for the same money, but it looks like I’m the odd one out.

    I have to agree with you, though, that sorting the business models of companies by the initial author payout does seem somewhat beyond strange. We don’t sort manufacturers of anything else by how they pay the engineers, but by what the final product of the company is, whether the company profits by it, and whether the workers are satisfied. Is the ebook publisher staying afloat? Is it putting out good books? Is it on any writers’ watchlists? Yes, yes, no? Well, then, it’s a good business. Advances are nice. For certain markets, though, they don’t appear to exist.

    Thanks again!

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  56. Marion Gropen
    Jun 24, 2009 @ 18:13:37

    Steve: Thanks for the gracious response. One note: I was obviously unclear. One of my points was that even using a POD printer for a truly self-published book would out perform the same book when done by a so-called self-publishing company if your goals include significant sales volume and profitability or large exposure.

    Mr. or Ms. Greene: There really is are solid reasons for the way things are done in this business, and they have nothing to do with envy, fear, or stodginess. It has to do with reducing the load on the “gatekeepers” to manageable levels.

    There were roughly 500,000 new titles produced in the US alone in 2008. A superstore might stock 1 in every 10. The all-important PW reviews might cover 1 in 100, and similar numbers will apply to LJ, SLJ and Kirkus. Of course places like the NYT are far smaller, but they’re also usually less crucial for trade books (for those who aren’t into the jargon, that’s more or less the kind of books that you find in a bookstore).

    These gatekeepers can’t possibly screen EVERY one of those titles, so they look for filters to help them.

    The Pay to Play companies generally don’t screen their product. So, the gatekeepers say “no POD, and no self-publishers.”

    NB: What they mean is: don’t waste your time if you’re from a Pay to Play, or if you’re not ready to play in prime time. If your book is done well enough to go toe to toe with anything from the Big Boys (and Girls), if you do your research and learn the rules of the game, and if you have your marketing and your distribution ducks in a row, then you have a fair shot.

    ReplyReply

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