Macmillan to put the squeeze on eBook authors

charleski · 10-29-2009, 07:48 PM

While many eBook publishers pay royalties of around 40% of net, Macmillan has decided to make a grab for a bigger slice of the pie and is slashing author royalties from 25% to 20% of net.

Original report: Publishing Perspectives via Teleread.

Richard Curtis has published the letter that accompanied the new contracts on his blog and notes that while eBook royalties are going completely the wrong way, Macmillan is increasing the royalties on direct-to-consumer sales by 2-3 times and speculates that they might be gearing up for a fight with Amazon and B&N (does anyone else sell books nowadays?...)

The letter from John Sargeant of Macmillan is an illuminating read, including such gems as, 'as ... the distinctions between sales and licences blur.' I think we all know what that means, and it's not good.

neilmarr · 10-30-2009, 04:14 AM

Not just Macmillan, Charles; according to this week's trade press, the trend is pretty general -- at least where the bigger houses are concerned. Twenty percent seems to be the figure becoming standard. My own wee indie house and others I know will make no change in author royalty ... minimum 10% on treebook and 40% on ebook. Anything lower suggests desperation or greed. Neil

nboshart · 10-30-2009, 11:34 AM

It's worth noting that MacMillan is raising its tree-book royalties by 5% as well. But from 5% to 10%, 15% for established authors.

Which is insanely low. I can't believe they were giving authors only 5% royalties. Maybe I don't know enough about big houses. But yikes.

basschick · 11-01-2009, 07:19 AM

i've read that 8% is average - whether that's true, i don't know.

Quote:

Originally Posted by nboshart

It's worth noting that MacMillan is raising its tree-book royalties by 5% as well. But from 5% to 10%, 15% for established authors.

Which is insanely low. I can't believe they were giving authors only 5% royalties. Maybe I don't know enough about big houses. But yikes.

neilmarr · 11-01-2009, 09:37 AM

Yep ... it's bloody incredible that grubby-fingered shop keepers (I'll let publishers off for creative input) demand for a few inches of shelf space four, five, six, seven -- keep counting -- times as much from a book as does the author.

jasonkchapman · 11-01-2009, 10:49 AM

We should keep in mind, though, that of all the players in a standard deal with a big publishing house, the author is the only one who gets most (usually all, since most books don't earn out) of his money up front. Historically, that's served to reduce the upward pressure on royalties.

neilmarr · 11-02-2009, 03:01 AM

True, Jason. But giant advances these days are reserved for brand-name authors. Mid-listers and new authors are often offered very, very small advances. Minnow publishers -- like my own house -- offer no advance but a slightly higher royalty.

A funny thing with royalty advances, though, is that folks think these actually ARE 'payment in advance'. In reality they ain't. They are payment for raw materials that may have taken the creator several years to produce. They are actually payment in retrospect. Can you think of any other industry that calls payment for its raw materials an 'advance'?

Cheers. Neil

jasonkchapman · 11-02-2009, 10:41 AM

I don't disagree. My point, however, is that when Joe Midlist's agent goes in to negotiate, Joe's agent is much more likely to try to negotiate the advance up from, say, $5,000 to $6,000, rather than trying to get an extra point on the royalties. X dollars now is almost always more appealing than the possibility of X+/-? dollars later, especially since everyone involved knows how low the odds are that the book will earn out even at that level of advance.

As to the raw materials comparison, I'm not sure it's apt. The arts almost always puts the work ahead of the reward, except for back in the days of arts patronage. I admit that my perspective may be skewed by the fact that I write fiction, rather than non-fiction or technical manuals, though.

neilmarr · 11-02-2009, 12:18 PM

Bear in mind, though, Jason, that just because an author might not earn out his advance, it doesn't necessarily mean that his book hasn't produced profit all round. Earning out happens at a set sales-figure point, not at break-even point. Cheers. Neil

MaggieScratch · 11-02-2009, 12:25 PM

Advances for most authors are based on how many books the publisher thinks will sell. The big blockbuster advances are for celebrity authors or the rare novel with lots of interest.

In my opinion, it pays the author more to have a higher royalty rate. If the book sells as many copies as projected, you'll get your money either way (the advance is an advance on royalties, so any lack in the advance will be made up later). If the book sells better than expected, you'll make more on the backend with a higher royalty rate.

fugazied · 11-02-2009, 05:49 PM

Oh give me a break. Publishers will put themselves out of business. In the music realm we recently saw bands like Nine Inch Nails and Radiohead release their own albums for FREE (donations and paid collectors versions available) and make as much or more money than they would have going through a music publisher.

If they lower author royalties, how long will it be before Grisham just says 'screw it' and releases an ebook only release in conjunction with Amazon. The publishers do what exactly with ebooks? Their very existence is questionable in the next 20 years. Lowering author royalties isn't going to help them.

DawnFalcon · 11-02-2009, 06:31 PM

Quote:

Originally Posted by neilmarr

Can you think of any other industry that calls payment for its raw materials an 'advance'?

Music.
Scriptwriting.
Some Games business models.

10-29-2009, 07:48 PM	#1
charleski Wizard Posts: 1,196 Karma: 1281258 Join Date: Sep 2009 Device: PRS-505	Macmillan to put the squeeze on eBook authors While many eBook publishers pay royalties of around 40% of net, Macmillan has decided to make a grab for a bigger slice of the pie and is slashing author royalties from 25% to 20% of net. Original report: Publishing Perspectives via Teleread. Richard Curtis has published the letter that accompanied the new contracts on his blog and notes that while eBook royalties are going completely the wrong way, Macmillan is increasing the royalties on direct-to-consumer sales by 2-3 times and speculates that they might be gearing up for a fight with Amazon and B&N (does anyone else sell books nowadays?...) The letter from John Sargeant of Macmillan is an illuminating read, including such gems as, 'as ... the distinctions between sales and licences blur.' I think we all know what that means, and it's not good.

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10-30-2009, 04:14 AM	#2
neilmarr neilmarr Posts: 7,215 Karma: 6000059 Join Date: Apr 2009 Location: Monaco-Menton, France Device: sony	Not just Macmillan, Charles; according to this week's trade press, the trend is pretty general -- at least where the bigger houses are concerned. Twenty percent seems to be the figure becoming standard. My own wee indie house and others I know will make no change in author royalty ... minimum 10% on treebook and 40% on ebook. Anything lower suggests desperation or greed. Neil

10-30-2009, 11:34 AM	#3
nboshart Connoisseur Posts: 65 Karma: 456 Join Date: Sep 2009 Location: Toronto Device: Kobo	It's worth noting that MacMillan is raising its tree-book royalties by 5% as well. But from 5% to 10%, 15% for established authors. Which is insanely low. I can't believe they were giving authors only 5% royalties. Maybe I don't know enough about big houses. But yikes.

11-01-2009, 09:37 AM	#5
neilmarr neilmarr Posts: 7,215 Karma: 6000059 Join Date: Apr 2009 Location: Monaco-Menton, France Device: sony	Yep ... it's bloody incredible that grubby-fingered shop keepers (I'll let publishers off for creative input) demand for a few inches of shelf space four, five, six, seven -- keep counting -- times as much from a book as does the author.

11-01-2009, 10:49 AM	#6
jasonkchapman Guru Posts: 767 Karma: 2347 Join Date: Jul 2007 Location: NYC Device: Sony Reader, nook, Droid, nookColor, nookTablet	We should keep in mind, though, that of all the players in a standard deal with a big publishing house, the author is the only one who gets most (usually all, since most books don't earn out) of his money up front. Historically, that's served to reduce the upward pressure on royalties.

11-02-2009, 03:01 AM	#7
neilmarr neilmarr Posts: 7,215 Karma: 6000059 Join Date: Apr 2009 Location: Monaco-Menton, France Device: sony	True, Jason. But giant advances these days are reserved for brand-name authors. Mid-listers and new authors are often offered very, very small advances. Minnow publishers -- like my own house -- offer no advance but a slightly higher royalty. A funny thing with royalty advances, though, is that folks think these actually ARE 'payment in advance'. In reality they ain't. They are payment for raw materials that may have taken the creator several years to produce. They are actually payment in retrospect. Can you think of any other industry that calls payment for its raw materials an 'advance'? Cheers. Neil

11-02-2009, 10:41 AM	#8
jasonkchapman Guru Posts: 767 Karma: 2347 Join Date: Jul 2007 Location: NYC Device: Sony Reader, nook, Droid, nookColor, nookTablet	I don't disagree. My point, however, is that when Joe Midlist's agent goes in to negotiate, Joe's agent is much more likely to try to negotiate the advance up from, say, $5,000 to $6,000, rather than trying to get an extra point on the royalties. X dollars now is almost always more appealing than the possibility of X+/-? dollars later, especially since everyone involved knows how low the odds are that the book will earn out even at that level of advance. As to the raw materials comparison, I'm not sure it's apt. The arts almost always puts the work ahead of the reward, except for back in the days of arts patronage. I admit that my perspective may be skewed by the fact that I write fiction, rather than non-fiction or technical manuals, though.

11-02-2009, 12:18 PM	#9
neilmarr neilmarr Posts: 7,215 Karma: 6000059 Join Date: Apr 2009 Location: Monaco-Menton, France Device: sony	Bear in mind, though, Jason, that just because an author might not earn out his advance, it doesn't necessarily mean that his book hasn't produced profit all round. Earning out happens at a set sales-figure point, not at break-even point. Cheers. Neil

11-02-2009, 12:25 PM	#10
MaggieScratch Has got to the black veil Posts: 542 Karma: 2144168 Join Date: Aug 2007 Location: Southeastern Pennsylvania Device: Kobo Aura One, Kindle Paperwhite 2	Advances for most authors are based on how many books the publisher thinks will sell. The big blockbuster advances are for celebrity authors or the rare novel with lots of interest. In my opinion, it pays the author more to have a higher royalty rate. If the book sells as many copies as projected, you'll get your money either way (the advance is an advance on royalties, so any lack in the advance will be made up later). If the book sells better than expected, you'll make more on the backend with a higher royalty rate.

11-02-2009, 05:49 PM	#11
fugazied Wizard Posts: 1,305 Karma: 1958 Join Date: Jan 2009 Device: iPod Touch	Oh give me a break. Publishers will put themselves out of business. In the music realm we recently saw bands like Nine Inch Nails and Radiohead release their own albums for FREE (donations and paid collectors versions available) and make as much or more money than they would have going through a music publisher. If they lower author royalties, how long will it be before Grisham just says 'screw it' and releases an ebook only release in conjunction with Amazon. The publishers do what exactly with ebooks? Their very existence is questionable in the next 20 years. Lowering author royalties isn't going to help them.

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