The Apples and Oranges Debate over Royalties

No matter the opinion and rhetoric I read regarding the ongoing battle between publishers and Amazon, someone, or several someones always brings up the notion of who has the author’s interests? Usually, this is framed as publishers don’t give a crap about authors and Amazon does. What this generally devolves into is looking at royalty rates. What I question here is this. Are royalty rates all that matter when you are looking at who has your best interests?

First of all, publishing is a business. The companies that conduct this business want to make money, because at the end of the day, if nobody makes money, books don’t get produced and sold into reader hands. So, at a base level, there’s a certain overlying element of selfishness at play. Second, nobody has more interest in a book than the author who wrote it. This can’t be trumped. There is no, “I care about this book as much as you do” that can come from anyone in the industry on any kind of honest level. Anyone who says that is full of shit. People can certainly care about your story, be invested in its success, but this isn’t about seeing who cares as much as you do. Nobody does.

So, let’s look at investment then. There are obviously different levels and definitions of this relating to books.

  1. The most obvious and clearly talked about is pay. This gets framed as royalty. It’s the easiest to look at and compare. Publishers range on this number from 25-40% for digital and can be on gross or net earnings (in general). Typically big pubs offer on the lower end, while digital pubs are on the higher. At Amazon, it’s 35% at the low and high end of retail, and 70% through the middle. The advantage here is clearly for Amazon.
  2. Time. Publishing a book is not an instantaneous event. It takes time to produce. Editors take time to read and help polish a story, communicate with the author and other staff related to seeing the story through the process. Copy editors spend hours picking through an entire manuscript for errors. Cover artists take hours producing a cover that will hopefully grab reader’s attention. Marketing people spend time deciding what and how much resources can be devoted to the book. Promo people spend time getting books out to reviewers, placing ads, etc. Time is spent formatting a book for the various digital formats. Time is spent in meetings figuring release schedules. Time is spent seeking foreign rights, t.v., and movie deals. Publishers invest a lot of time in getting a book published. Amazon does not invest directly in individual books. Their investment is in creating and maintaining an environment in which to market and sell your book. While this is certainly a significant investment, spread out over tens of thousands of authors, the investment per author is small.
  3. Resources. The people involved in publishing a book on the publisher’s end are many and varied. They require pay and benefits to perform their tasks related to the book. They have offices in which to work which have equipment used to perform tasks related to getting the job done of creating the book. It requires financial resources to pay for and maintain these. Amazon provides you with an environment in which to sell your book.

So, if we’re talking about an investment of time, resources, and money, publishers invest a lot more in an author’s book than Amazon, even if we’re taking out the print/distribution from the equation. I honestly don’t know numbers or if they’re even available anywhere in any form that allows us to see a breakdown of costs vs. profit on a book at Amazon or any publisher. I would truly love to see what the profit percentages are for a self-published kindle book. Is Amazon clearing most of that $.65 they take on a dollar book or do they only clear a dime per copy? I doubt we’ll ever know because Amazon is never going to let anyone see that kind of info.

I’d love to see some publisher transparency. Take an average midlist author and give us a breakdown of  of the hours and money spent to get a book on the shelf. If they’ve put that out there for us to see, I don’t know about it. My understanding is that they lose their investment on a lot of books, which is covered by books that do well. You could say there is a great deal of inefficiency in publishing, which is probably so. I’d like to know if that low end royalty percentage is set where it is because that’s the most they can offer and still come out ahead on average or is it set because it’s the least amount they can get away with?

The claim by most of course is that publishers lowball authors as much as they can in order to maximize profits. In the business world, most companies do indeed try to get the products they sell for the least amount of money. While one can’t exactly fault this business practice in general, publishing is its own odd little industry. Books aren’t widgets. The products are unique to themselves and thus prone to the subjective whims of the buyers. While on the one hand, this makes them more valuable, on the other it makes selling them a very inconsistent process. Investment does not equal profit a good chunk of the time.

Which brings me to the point of how comparable is it to look at royalty percentages between a publishing house and Amazon? You have two very different types of business doing very different things, investing different types and amounts of resources into the author’s work. It’s almost an apples and oranges type of comparison. You can’t do it in any level sort of way. Am I saying that pubs are offering what they legitimately should to author’s? No. I wish I could see information from publishers to gain a better understanding.

I suspect you have the problem of costs incurred in running a large organization compared to say an epub which has far fewer inherent costs by comparison. They pay authors more because they can afford to. Amazon is the same way. They can give 70% because their costs per author are minimal. Going with a paper publisher offers the advantage of paper books. I can understand a differential in royalties as a trade-off. But as digital continues to grow in market share, that trade-off becomes less valuable, and pubs are not altering their game to adjust. They have to because we’re getting to a point, if we aren’t there already where authors are saying, “All things being the same” as far as my chances for success, I’ll go with the higher royalty.

So, think twice before offhandedly slamming mainstream publishers. It’s not a simple matter of “look who offers better royalties.” You’re comparing different things when you do that. Just saying, “Screw you, pubs!” isn’t productive and is a disservice to those who do invest in your work and give their time and energy to try and make you successful. At least understand the entirety of the ballgame here. For me, it’s more of waiting for the giant to turn its lumbering ass around. The playground has moved, but I’m not writing it off. I want it here to play with, because it plays certain parts of the game very well.


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