Are 70% royalties the future?

It’s possible that 27th January might be remembered as the day that destroyed publishing. But if it is, it may be a day of joy for writers.

Unless you are living under a stone or a raving technophobe you are probably aware that on 27th January, Apple, the people who brought you the iPod and the iPhone are likely to announce the iTablet (or iPad, or iSlate, depending on the rumour mill you listen to) The iTablet may do many things, but the consensus of opinion seems certain it will operate as an eReader, and that Apple will launch some form of eBook market place to provide content, with Harper Collins in the frame as a major content provider.

In what is almost certainly a pre-emptive strike against Apple, Amazon, the people who brought you the Kindle and its Ebook marketplace, have raised their royalties from their current 30% to a wapping 70%. Given that Amazon is unlikely to give away 40% of any income stream without good reason, it is likely that Apple’s eBook marketplace will offer royalties at a similar level.

Which marketplace will win is difficult to predict, although given their preeminence at cornering markets my money is on Apple (but only just, as Amazon are no slouches either) The really interesting question is this. If a digital eBook marketplace gains the same dominance in publishing that the iTunes music store has gained in music, is there any role left for publishers?

Standard author royalties run at 10-15%. That is a low figure by any reckoning. But it is a level most authors have had to accept in order to do business with publishers, because publishers control the means of distribution. Yes, publishers do many other things as well – editing, marketing, production and so forth – but it is the reach of a publishers distribution chain into bookshops that makes them a necessity. A dominant online marketplace would seriously threaten publishers monopoly over distribution.

If the effect of digital downloads is any indication, publishers will survive just as record labels have. But their role will be significantly altered. If it transpires that authors can publish work directly to an eBook marketplace for a 70% royalty, is it possible that those authors will continue to accept a 10% royalty from a publisher to put them into the same marketplace? Likely not. Cold hard numbers will ultimately answer that question, but it seems very likely that significantly higher royalties will be an early outcome of the eBook revolution.

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5 thoughts on “Are 70% royalties the future?”

  1. What kind of marketing and PR is Amazon/Apple/Whomever going to provide? Little to none is my guess.

    I’m all in favor of a (much) better return for authors, but authors still do not have influence over the distribution channel with this move.

    I suppose that whether this really takes hold and works is dependent upon the ability of authors to market themselves.

    But nothing here says that the distribution channel can’t/won’t change their rates again at some future time when no one is fighting over distribution market share.

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    1. Interesting questions Steve. I think I’ll do a follow up post on this bringing together some of the interesting points made by various commentors here and elsewhere.

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  2. The royalty structure will have to go in favor of the author if anyone hopes to make any kind of living from writing and putting out ebooks. That said, with so many people being able to self-publish ebooks and offer them at little or no cost, I feel like finding the “best seller” is going to become more and more difficult. There’s going to be so much choice for consumers, that finding something genuinely good is going to become more and more difficult. As a result, I think a phenomenon like Harry Potter or Twilight is going to become more common as people clamour for something that is getting a following and therefore perceived as good.

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  3. I wonder if, when iBooks takes off and more and more people move to eReaders as their price comes down, whether the majority of reading will done electronically but that books will come with a ‘print settings’ feature that one uploads to, say, Lulu and then prints out a copy of any favourires to keep on the shelf for those books one really wants to keep.
    These would become the new generation of classics.

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