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:
- No advance
- High royalty (usually between 35-40%)
- No returns
- No resale market
- Monthly payments
The print publishing model.
- 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).
- Low royalty. Most print authors receive 6%-10% on mass market sales, 8-12% on trades, and 15% or higher on hardcover sales.
- 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.
- Quarterly or semi annual payments, if your royalties exceed your advance
- 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.
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.
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.
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?
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.
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.