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Originally Posted by Kali Yuga
Just to be clear, I am not saying that Baen screws its authors, nor do I claim to have any insider info about their contracts. I'm merely guessing that the compensation is less than at a big publishing house, and this is one factor in lower book costs. (Acting as their own retailer is another.)
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Here's my understanding of author compensation at Baen, based on talking with a variety of authors and agents at SF cons. They were speaking "not-for-attribution," so no names here. Note also that I have
absolutely no inside knowledge here; rather, this is a dump of what supposedly-knowledgeable folks have told me. That said, here goes...
It seems that Baen's royalty rates are competitive or better, and that they pay competitive advances. On the negative side, they don't have deep enough pockets to pay
giant advances to top-tier authors (some sources speculated that this may be due to lack of a large corporate parent) -- but note that this effect is a non-issue until an author hits at least top-of-mid-list status. On the positive side, they have a reputation for being totally up-front and ethical with their authors; "you can do business with them on a handshake, and it'll be fine" was a common description. They also have deep knowledge of what sells to their chosen markets (their sell-through rates are the envy of the industry), and a well-respected start in ePublishing.
Some of their very top authors could probably get larger advances from other publishers, but there's no reason to believe that those authors would wind up with more income overall. For an author who is routinely best-selling, and considering things on a long-term basis, switching from Baen's "smaller advance with royalties on earn-out" to other publisher's "larger advance, but you probably never earn-out" system winds up looking like a one-time bump of shifting income 12-18 months earlier.
Some authors have jumped ship over that, others have not. YMMV.
Baen doesn't exactly act as their own retailer, by the way. Webscriptions is a completely separate business run by Arnold Bailey. However, Arnold cooperates very closely with Baen. It looks (from the outside, and via rumor and grapevine) like he performs many of the steps of ebook production and formatting that would normally have to happen directly at the publisher's expense. Also, there's no other distributor intervening between Baen and Webscriptions. IF this picture is correct (note the important caveat!), ebook production has a somewhat lower direct cost for Baen than it does for many other publishers. And the only markup between publisher and reader is Webscriptions -- who are providing quite a few useful services to both publisher and reader.
It seems to me that the key cost reductions in their scheme are (1) shortening the retail distribution chain by cutting out middlemen, (2) moving some production costs to a partner who is paid on sales volume rather than on fixed price, and (3) running an amazingly efficient shop.
Xenophon