What if (when) royalty rates go down for eBooks? A red flag for indie authors.

Expert publishing blog opinions are solely those of the blogger and not necessarily endorsed by DBW.

Publishing is a business.  In a capitalistic society, the goal of most businesses is to make a profit.  Currently, the largest eBook platforms have P&L statements that aren’t exactly golden, with slim profit margins.  Some of that is competition and a desire to be the leader. But are they sustainable rates for those businesses?  Even more importantly, what is keeping those rates in place?

Self-published authors are relishing their 60-70% royalty rates for cover prices between $2.99 and $9.99.  On a $2.99 eBook, I make roughly $2.09, which is a far better royalty than I made with a traditionally published $5.99 mass market paperback at 8% of cover price which was roughly .48 cents.  In essence I’m making over four times as much per eBook.  Love it.

But.

One of the tenets of Special Forces is to worst-case situations.  Worst case here is the Mayan calendar proves true before the end of 2012 and we’re all getting our hearts ripped out on top of pyramids and our brains are being eaten out of our discarded bodies by the zombies massed around the base of the pyramids while hovering vampires are sucking what little blood are left out of our still beating hearts.

Okay, so let’s move past that one for the time being.

What happens if the major eBook platforms such as Amazon and PubIt (Barnes and Noble), having a captive audience with their Kindles and Nooks, decide to alter that royalty structure?  Agency pricing is already in place with the Big 6 and most other publishers.  Amazon is battling IPG over their contract.  In essence Amazon would be adjusting the rates for a broad cluster of players who really have little clout—the indie authors in KDP.  What’s to stop them?

Zombies?

I’m not suggesting this will happen, but I am considering it and factoring it into Who Dares Wins Publishing plans for the future.  Why?  Because I’m a realist, I’m an ex-Green Beret and it’s good business sense.  And yeah, I’m a bit paranoid.  It’s served me well.  Still standing while others around me have gone down.

Traditional publishing ignored the rise of the eBooks and Skynet becoming self-aware even while the data was flowing on the walls and the music business crumbled.

I believe indie authors need to be aware of the possible changes to their world.  What will I do if my royalty rates get cut in half?  Well, I’m keeping the string on my crossbow waxed and ready for the zombie onslaught.  Got food supplies piled up.  But what if my income is cut in half?  How do I not only have my business survive but flourish?

More product in more markets is the first and immediate answer.  I’m investing a lot of money in Audible ACX audiobooks.  In just two months, several of my first audio titles there have already shown a profit such as Area 51, Atlantis and Write It Forward: From Writer to Successful Author.  I believe audio will be an ever-expanding market and interestingly, I’m finding nonfiction is a very solid seller there.

Translations.  We’ve got Area 51 and Atlantis in Spanish.  Bodyguard of Lies in German.  Several other translations in progress, including Area 51 in Airlia, the language of the aliens.  Their mothership is really cool by the way.  Been there a few times.  They told me they will likely sit back and side with the winner of the Human-Zombie-Skynet war.  Or wipe us out.  They aren’t sure yet, but if they see another episode of Orange County Housewives, we might be doomed.

New content.  I, Judas: The 5th Gospel will be out within two months.  I’m working hard on Area 51: Nightstalkers which merges the science thriller aspect of my Area 51 and Atlantis series and the Special Operations aspects of my Black Ops and Green Beret Books.

And yes, even preparing for the worst, I’m working on The Green Beret Survival Guide for the Apocalypse, Zombie Attacks and Other Lesser Disasters.

Another answer?  I was talking to a very smart friend in New Orleans this past weekend in his club on Bourbon Street.  He told me that when he was a lawyer he realized there were only so many billable hours in a day.  That to move past that barrier he needed to get a slice of other lawyer’s billable hours.  To do that in an equitable way, he had to provide a needed service to those other lawyers.

At Who Dares Wins Publishing, while we have done very well initially on my backlist, we’ve got authors who are really starting to sell and Jen and I love that. Colin Falconer is featured in Nook First in March with Venom and has been knocking himself out promoting on-line.  Kristen Lamb has built her WANA community.  Jen Talty’s romance titles based on her solid reviews.  We’re talking to some agents about their clients’ backlists which they have rights to.  Rather than try to build their own in-house publishing arm (a lot harder than most people think it is) we’re offering our services, already established; tried and true experience in e-publishing.  We’re negotiating very favorable author royalty rates with agents for select clients with solid backlist to support their traditionally published frontlist.  It’s a win-win for the “hybrid” author, a term I believe I invented about a year ago on my blog.  It’s a win-win for the agent and even the traditional publisher as we adjust what we do to support the author’s future titles via their backlist.

Also, remember a truism of eBooks:  If someone hasn’t read your backlist, it aint backlist. 

Damn.  Cool Gus is barking.  Looks like a zombie in the back acreage.  Gotta go get the crossbow.

So what are you doing to prepare for 2012?

16 thoughts on “What if (when) royalty rates go down for eBooks? A red flag for indie authors.

  1. andyholloman

    thx bob, smart to be planning ahead, i see things as you do, don’t believe the hi-royalites on my ebook will continue, prepping for the zombies myself

    Reply
  2. Jim Kukral

    I get the concept Bob. What-if scenarios are fun to debate about. Here’s my answer to your question.

    The future of commerce on the Web is going direct to consumer. Amazon is on borrowed time. Every day it gets cheaper and the technology gets easier/faster for us to reach customers/readers directly. Not to mention social media where we can build our own audience, and paid, targeted ads where we can get our message to our exact target audience with pinpoint precision through a FB ad or niche topic site.

    Also, every day people become better marketers. All that being said, in the future, I foresee a time when you won’t need a Google or Amazon to find the eyeballs for you. You’ll be able to reach them yourself, and keep ALL of the profits.

    Reply
  3. Jonathan C. Gillespie

    There’s a temptation when you read something like this to outright dismiss it, and say to yourself “it could never happen”, but I think Bob hit it out of the park here. Amazon can very emerge as the dominant player in this market — even when they haven’t been on top of other sectors in the past (such as music), they’ve shown an ability to make inroads into seemingly impossible territory, such as launching the Amazon MP3 store against the Apple Music Store juggernaut.

    Starting with an already strong footprint — probably the best footprint — in publishing means they’ll have even more sway, and having incentivized a bunch of authors into the mix, I can easily see them tightening up the feed to the stables now that they have a base established.

    Reply
  4. James

    Publishers are unreliable and Amazon can be unreliable someday as well. The main thing to do as a writer is look out for yourself. Always adapt and diversify to the next thing that can make you money. Bob has the right idea as does Dean Wesley Smith. Amazon is good for writers at the moment, but always set yourself up for the future.

    Reply
  5. Helen W. Mallon

    The stakes have always been against writers in my position–literary writers with not much cred. What I’m doing to prepare for the apocalypse is to work on my novel, hone my craft, & keep up w/ my (often) funny blog, knowing that people will always hunger for a great story, well-told. I never expected to make money form writing anyhow, which is reassuring while I wait for the dust to settle.

    Basically, you have to be nuts to do what I’m doing. You ain’t got nothing, you got nothing to lose…

    Reply
  6. Helen W. Mallon

    The stakes have always been against writers in my position–literary writers with not much cred. What I’m doing to prepare for the apocalypse is to work on my novel, hone my craft, & keep up w/ my (often) funny blog, knowing that people will always hunger for a great story, well-told. I never expected to make money from writing anyhow, which is reassuring while I wait for the dust to settle.

    Basically, you have to be nuts to do what I’m doing. You ain’t got nothing, you got nothing to lose…

    Reply
  7. Joan Reeves

    Good one, Bob! This is my year to branch out too. Have you blogged yet about obtaining translations for your books and where you post the translated copy for download?

    I made a very nice sale to France for print and ebook rights to 3 of my ebooks late last year. I’d be interested in cracking the Spanish language market for starters.

    As for the zombies, when they rise, I hope my family and I make far better decisions than the TSTL bunch on The Walking Dead! *LOL*

    Reply
  8. Lisa Grace

    I agree. branching out is the way to go if you want to make a living off books or writing. There’s quite a few baskets out there and it makes sense to put some eggs in each one.

    Reply
  9. Ursula

    Always the strategist. Excellent post.

    So building on the Burbon Street discussion, if you’re already doing backlist, is ‘front’ list publishing for other authors on your radar?

    Reply
  10. Ty Johnston

    Hrrm. I tend to hate posts such as this. Why? Because they are always full of gloom and doom and the-sky-could-be-falling thinking. The truth? Yeah, sure, Amazon and everybody else could undercut us tomorrow morning and only offer 5 percent. Could they? Maybe, maybe not. One thing is for certain, though, and that’s that change seems to be consistent in the publishing industry nowadays. Yes, writers need to be prepared, they need to diversify as much as possible in as many ways as realistically possible, but sitting around fretting about all this stuff accomplishes nothing.

    Reply
    1. Bob Mayer

      I don’t view it as gloom and doom. I view it as looking at possibilities. If traditional publishing had done that a decade ago as the music industry imploded, perhaps their situation would be better than it is.
      I actually view it as pointing out possibilities.
      There seems to be a portion of people who would really prefer not to look at possibilities and stick their head in the sand hoping everything will turn out all right as long as they ignore it.
      Perhaps it’s my Special Forces background, but preparing for many possibilities is innate. And has served me in good standing.

      Reply
      1. Ty Johnston

        Ha! Bob, I don’t disagree with you that writers should be prepared. I think I’ve simply read and seen too many articles/posts/etc. of late with headlines similar to the one on your article. For me, and perhaps only me, the general impression I’ve picked up of late from many of today’s writers, especially the indie writers, is of a bunch of chickens running around waiting for their heads to be lopped off. Frankly, it’s tiresome, and I feel counterproductive. And no, I don’t mean that as a slam against you or your article. I’m just being grumpy. 😉

        Reply
  11. Kelly McClymer

    One thing I don’t understand about the battle between publishers and Amazon is why publishers (even little indie self-publishers like me) don’t understand why Amazon has the advantage right now: customer service. Amazon is like the ultimate matchmaker between goods (including books) and customers.

    Scott Turow talks about Amazon having a negative effect on the publishing ecosystem, but is it any more — or less — than the big box bookstores had when they got so big they started causing the indie bookstores to close? Publishers liked that one, because they had fewer people (i.e. customers) to deal with when it came time to distribute books and make sales decisions. It wasn’t good for authors, though, when the initially friendly book-loving local big box book manager was replaced by the kid who couldn’t be bothered to stock local books or arrange book signings for anyone but mega-sellers.

    In that context, it is wise for all of us to take a huge lesson: if we want to be viable if and when Amazon starts cutting corners and caring less about customers (and indie self publishers are a customer subset of Amazon right now), then we have to know who our customers are, and find ways to keep them happy, no matter where/how we distribute our books. Publishers lost sight of their true customers — the readers — in favor of distributors and booksellers. Instead of spending the last ten years trying to figure out customers, they outsourced that job (and what traditionally published author can blame them — isn’t that what we do when we sign a contract with a publisher? \Here, you do it, I don’t want to do the hard part of the job.\ And there are people still signing contracts with traditional publishers without realizing that many publishers haven’t shifted gears yet and may not be doing the hard part well any longer.

    Amazon hasn’t outsourced that customer knowledge base, it has mastered it. And it looks like B&N is trying to give it good competition using their own customer knowledge database. But publishers have created a sales expertise for themselves that does not rely on deep understanding of what readers want, but on what distributors want. Publishers wanted to be left alone to choose and showcase the books they decided to publish. They’re either going to have to partner with those who know readers (there are reader communities out there, GoodReads, Figment, Readmill, Copia, etc.), or they’re going to have to reestablish active communication with readers.

    For those of us indie publishing, who are leaner and hungrier than the big publishers, that’s a much easier target to turn and aim for. And Amazon knows that. Because it knows us. We should thank them for giving us some leverage in this business…and then build our relationship with our readers as quickly as we can.

    Reply

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