They key paragraph (which, incidentally, illuminated for me how publishers determined their hardcover royalties) was this (emphasis mine):
E-book royalty rates for major trade publishers have coalesced, for the moment, at 25% of the publisher’s receipts. As we’ve pointed out previously, this is contrary to longstanding tradition in trade book publishing, in which authors and publishers effectively split the net proceeds of book sales (that’s how the industry arrived at the standard hardcover royalty rate of 15% of list price). Among the ills of this radical pay cut is the distorting effect it has on publishers’ incentives: publishers generally do significantly better on e-book sales than they do on hardcover sales. Authors, on the other hand, always do worse.
The article then did some interesting maths (or math for our North American visitors) where they determined that Kathryn Stockett’s bestselling book The Help lost out by 39% on ebook royalties. Using industry standard royalty calculations, the example was:
Author’s Standard Royalty: $3.75 hardcover; $2.28 e-book.
Author’s E-Loss = -39%
Publisher’s Margin: $4.75 hardcover; $6.32 e-book.
Publisher’s E-Gain = +33%
To be honest, the maths has kind of gone over my head, but it was the bolded line in the quote above that started me thinking.
Either publishers are trying to position themselves to take advantage of the current ‘fog of war’ that has enshrouded the hearts and minds of authors struggling with the shift towards ebooks and self publishing – or they themselves have lost sight of their traditional methods for splitting royalties with their authors.
I don’t know which is more disturbing.
Posted in: writing