“An e-book should cost 50 cents,”

Tomorrow I head out for three weeks in Kenya, Tanzania, and London--researching and allowing my soul to grow in Africa and then hawking my latest at the Historical Novel Society conference in London.  To the extent that my internet connections allow, I will apprise you of my progress as I go along.  In the meanwhile, discussions I have had with readers and writers in the last couple of weeks have encouraged me to return to this post from three and half years ago.  As predicted, the situation is worse now than it was then.  The US government has sued publishers, giving even more power to Amazon, and Amazon is "renting" ebooks of current novels free of charge to their "Premier" members.  The members pay Amazon $75 a year for the privilege and, of course, pay Amazon for the Kindle on which they read.  Authors and publisher get zilch.  OY. OY. OY!!!

…the woman at the gym said to me and a couple of others. We had just taken an exercise class together and were chatting as we changed to go out into cold and windy mid-February New York. “I mean,” she went on, “it doesn’t cost anything to produce.” The person who was speaking is a grownup who lives on the Upper Eastside of Manhattan. She reads a lot, so presumably she is capable of more subtle thought than she was displaying at the moment. She had been touting reading on a Kindle to one of our group who was about to head out on a vacation away from the sleet and slush. The main advantage the speaker saw in the electronic book reader was that one can carry so many books so easily. That e-books cost less than print copies made up for the cost of the Kindle, she thought. Then she dropped that bomb about 50 cents being the appropriate price for an e-book.

I spoke up to defend the rights of the writer. I even defended the right of the publisher to make a profit for taking the considerable trouble to publish the book. Once I pointed out that a writer had probably spent two years working on the book and deserved get more recompense than such a price would afford, and that publishers had to maintain offices and pay editors, the 50-cent-lady changed her tune. The discussion then turned to an even more difficult subject. One of the company had heard that only the most successful authors make more than a pittance for their work. Why do they do it, they asked me. By then I had revealed my profession.

Fact is that if authors don’t get a decent cut of the income from the sale of electronic books, our plight is going to get worse and faster than was predicted even just a year ago. A couple of days after that discussion at the gym, I received an email from The Authors Guild outlining the impact of e-book sales on authors’ royalties. The story isn't pretty. Quoted here is what the Guild said:

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.

How much better for the publisher and how much worse for the author? Here are examples of authors’ royalties compared to publishers’ gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

“The Help,” by Kathryn Stockett
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%

“Hell’s Corner,” by David Baldacci
Author's Standard Royalty: $4.20 hardcover; $2.63 e-book.
Author’s E-Loss = -37%
Publisher’s Margin: $5.80 hardcover; $7.37 e-book.
Publisher’s E-Gain = +27%

“Unbroken,” by Laura Hillenbrand
Author’s Standard Royalty: $4.05 hardcover; $3.38 e-book.
Author’s E-Loss = -17%
Publisher’s Margin: $5.45 hardcover; $9.62 e-book.
Publisher’s E-Gain = +77%

So, everything else being equal, publishers will naturally have a strong bias toward e-book sales.

We can suppose that the future will belong more and more to e-book formats. If publishers continue find them so much more profitable than printed books, they will push change even faster.

Much as I love the tactile experience of reading what I still call “a real book,” I have begun to buy e-books too and to read them on an iPad. I like it that the device is backlit, which allows me to read in the dark, since I am often awake in the night and turning on the light would wake my husband. I love it that if I am reading to research a story, I can highlight and write notes on the text quite magically. And I have to say, that I do like the lower price.

But now having seen the Authors Guild’s numbers on the subject, I feel guilty depriving my fellow authors of a fair share of the profits from their work. Predicting how all this will work out is a favorite game in every corner of the publishing industry these days. For my part, I am counting on organizations like the Guild, Mystery Writers of America, and other author advocacy groups to press for authors' rights. In the meanwhile, I am grateful to the Guild for giving me information to set the record straight when the subject comes up, even if it's just in response to uninformed opinions in casual discussions at the gym.

By the way, the following week, one of the other people who overheard our conversation brought in a hardcover copy of one of my books and asked me to autograph it. Now there is something you can't do with an e-book!

Annamaria Alfieri