Surprise! Guess who benefits most from higher ebook prices?
One argument publishers like to use to justify higher ebook prices is that it will also benefit their authors by means of higher royalty payments. But now that publishers are switching to the agency model in an attempt to increase ebook prices, the amount of author royalties is actually going down.
Surprise! Higher ebook prices benefit only the publishers.
Author Michael Stackpole wrote a very eye-opening article for the Huffington Post entitled Who Benefits from High Ebook Prices? As a traditionally published author, he knows the ins and outs of the publishing world and how royalty payments are calculated and paid out.
He breaks down the argument that higher ebook prices only benefit publishers by comparing the old Amazon ebook model of charging $9.99, compared to the newer agency model where ebook prices are expected to jump as high as $14.99.
Under the old Amazon model, the publisher would get half the price of a book–$12 for a $24 hardback. Amazon would list the ebook for $9.99, eating $2 a copy to subsidize folks buying the Kindle. Out of that $12, authors would get $3-$6 dollars depending on their ebook royalty rate.
Now, compare that to the agency model:
Now Amazon is shifting to an “agency model,” (like Apple’s model for the Appstore), where the publisher will get 70% of the retail price. By way of example, let’s assume a price of $14.99 for a new release. The publisher takes home $10.50, and the author gets between $2.63 and $5.25. Authors end up losing money, and still have to deal with the archaic royalty reporting system where publishers will take 6 to 9 months to send that money to the authors.
Stackpole also notes that Amazon pays publishers within 30-60 days, yet forcing authors to wait almost a year for their royalty check. Authors are not benefiting from higher ebook prices both in terms of lower royalties and decreased ebook sales as a result of charging the consumer more.
Turning to self-publishing and cutting out the middleman
Michael Stackpole also notes, the agency model, and the decreased royalties it gives the authors is another reason why authors should self-publish their back list as ebooks and then sell them on a platform like Amazon or Smashwords.
One of my publishers recently offered me the 25% deal on one of my older novels. I turned them down because when I publish the novel myself, either at my website or via Amazon, I make that same 70% the publishers ; and I’ll get it in at the most 60 days.
With publishers taking advantage of higher ebook prices and authors, why should most authors even consider publishing their ebooks with a traditional publisher? Certainly not production and distribution. Authors can do that on a variety of self-publishing website. Marketing? Maybe. But with social media popping up everywhere, an internet-savvy author can do his/her own marketing.
Higher ebook prices breeds piracy
Publishers charging more for Ebooks is an obvious problem, and a symptom of that problem is (you guessed it) piracy! Here’s a very simply formula to think about: Publishers charge more for an ebook, price increases, piracy increases, publisher’s profit decreases. Publishers end up screwing themselves over, not to mention the author who loses out on those royalty payments.
Again, piracy is not the problem, it is a symptom of a larger problem – publishers ignoring how much a given market is willing to pay for an ebook. The general consensus is that ebooks should be no more than $9.99. So by demanding higher prices, publishers are only encouraging consumers to get their ebooks elsewhere.
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- New ebook publishing startup places power in the hands of the author!
- J.K. Rowling still fighting ebook piracy, and ebooks are still being demonized
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