Amazon offers Hachette authors 100% royalty

Amazon offers Hachette authors 100% royalty

I’ve previously said this:

“Hachette (a publisher) and Amazon (a retailer) are in the midst of a turbulent negotiation. It’s like Godzilla battling Mothra…and unfortunately, in that scenario,we readers are Tokyo.”

Well, there is another group that might be considered collateral damage…authors.

Those aren’t the only ones affected, but let’s focus on that for a minute.

Essentially, fewer Hachette books are probably being sold right now, because they are not as available through Amazon.

Authors traditionally get paid a percentage (called a “royalty”) when a book sells.

It could be a percentage of the purchase price, or a percentage of the list price of the book.

How much of a percentage?

That varies.

In p-books (paperbooks), a brand name author (Stephen King, Anne Rice) might get 25%, more authors might get 10 to 12%, and it can go down from there.

For e-books, the royalty tends to be higher. Independent authors who go through Amazon get 35% or 70%…the latter if they follow certain guidelines, including the price of the book and participating in Amazon’s special features (like text-to-speech).

In my last post on this:

Hachazon War: the Battle of Petition Hill

I wrote about some authors condemning Amazon, and some supporting them.

Well, according to this

New York Times article by David Streitfeld

Amazon is offering authors a higher royalty while this dispute continues.

Are they going to give these traditionally published authors the same royalty as the indies…35%?

Nope, higher.

70%?

Nope, higher.

Try 100%.

O N E  H U N D R E D !

That’s right…Amazon is offering to give the authors every single penny the retailer gets when it sells one of their e-books (published by Hachette).

What’s that dull thumping sound I hear?

Oh, it’s Amazon investors…fainting.😉

There are costs of sale for Amazon, so they would clearly be losing money on each of those e-books. They have to pay something for maintaining the infrastructure, the administrative cost of collecting sales tax (where they do that), other accounting, providing Customer Service, and so on.

This is getting heated, and public.

This

Mashable post by Jason Abbruzzese

has Hachette’s response to the offer (it’s not favorable).

Amazon’s response to that?

I quote in part:

“We call baloney.”

The company that sells

close to a thousand thesauruses (at AmazonSmile: benefit a non-profit of your choice by shopping*)

went with a schoolyard epithet.😉

What do authors think about the offer?

In that same article,

Douglas Preston (at AmazonSmile)

is quoted as saying,

“To take that money would really violate my moral and ethical principle.”

Preston mentions wanting to pay back advances before the author would take any of the millions of dollars this might mean.

Let me explain that part.

One of the big arguments for tradpubs (traditional publishers) is that they pay authors advances.

What that means is that, if they are reasonably sure your book will sell (because you have a solid track record, or are perhaps a celebrity, or they like your topic), they will pay you the royalties first…often before the book is even done being written.

That’s an “advance” on the royalties.

That’s often what enables an author to complete a book.

Let’s say you are a brand name author…you are likely to earn millions in royalties from next book (and the publisher is going to make many times that).

They could give you $100,000 for you to live on for a year to write the book…but you would have to pay them back out of the first sales of the book.

My understanding is that authors are almost never asked to give back an advance even if a book doesn’t sell…but that has happened.

When you publish a book yourself, you don’t get an advance from a publisher.

One new technique is crowdfunding, though.

People pay indie authors in advance for a book…they buy it before it is published.

In exchange, they often get something extra: e-mails from the author, or maybe a special additional short story. There might be a “meet the author” party.

Those early buyers may even pay considerably more than the general public eventually will.

That’s one of the threats to tradpubs.

One thing about which I’m not quite clear.

It sounds like Amazon is proposing that Hachette also give up their part of the book sale in some of the articles I’ve seen…in others, it makes it sound like it is Amazon unilaterally giving up their part.

Obviously, that makes a difference.🙂

If the book is list priced at $10, we’ll say that Hachette would get $7 of it.

Amazon sells it for $8.

Amazon sends that $8 to the author (under the new proposal).

Do they also send $7 to Hachette?

If they don’t, clearly, Hachette would have to agree…and this letter would put the ball in Hachette’s court.

If they do send the money to Hachette, Amazon directly loses $15 instead of making $1.

Yep…an expensive proposal.

I think there is a lot at stake here.

This could change the landscape.

It might drive authors to do much more independent publishing.

It could cost Amazon a lot of goodwill with the public (although not, apparently, with my readers, based on a poll I did not too long ago).

It could cost Hachette marketshare.

However, on that last point, it’s worth noting that Amazon is going to have to negotiate with the others of the Big 5 publishers. Right now, I’m guessing they may be trying to wait to see what happens with this one. Contracts expire at some point, regardless, so it’s going to happen.

I do find this all quite interesting…but I am looking forward to writing about something else tomorrow!🙂

What do you think? How will this change the literary landscape…or is it just a bump in the road? Feel free to tell me and my readers what you think by commenting on this post.

Join hundreds of readers and try the free ILMK magazine at Flipboard!

* I am linking to the same thing at the regular Amazon site, and at AmazonSmile. When you shop at AmazonSmile, half a percent of your purchase price on eligible items goes to a non-profit you choose. It will feel just like shopping at Amazon: you’ll be using your same account. The one thing for you that is different is that you pick a non-profit the first time you go (which you can change whenever you want)…and the good feeling you’ll get. :) Shop ’til you help! :) By the way, it’s been interesting lately to see Amazon remind me to “start at AmazonSmile” if I check a link on the original Amazon site. I do buy from AmazonSmile, but I have a lot of stored links I use to check for things.

This post by Bufo Calvin originally appeared in the I Love My Kindle blog. To support this or other blogs/organizations, buy  Amazon Gift Cards from a link on the site, then use those to buy your items. There will be no cost to you, and a benefit to them.

4 Responses to “Amazon offers Hachette authors 100% royalty”

  1. Tom Semple Says:

    I think the landscape is changing, though not in a predictable way.

    Nevertheless, I predict attempts to return to agency pricing—maybe that is what Hatchette wants now and that’s why they are stuck? At least a couple of big publishers seem to see that as key to the survival of their business model, and to the ‘health’ of the industry generally, leveling the playing field and so forth, but I think they are misreading the evidence and do so to their own detriment. Amazon is a much more effective book retailer than they can ever be, and is far more focussed on customers than Nook, Apple, Kobo or Google. If they take back the pricing power from Amazon, it will only help their competitors (did Random House not gain market share in Agency period?). And it is not clear that trying to help Amazon’s competitors can help them in any way, either. I don’t think Amazon has succeeded in clawing back that much market share following the (temporary?) suspension of agency pricing, even with the decline of Nook. Everybody’s doing well, there is still plenty of growth potential. Competition in the digital market is real, and it is going to persist. They should stop fighting Amazon and start working on new business models.

    It seems obvious that digital is different, frictionless, and well suited to effective marketing. My purchasing patterns for ebooks are completely different than they were for print books: I spend more overall, read more, while spending far less per unit. It is the first of these facts that is most significant, not the last. Yet despite a mounting virtual mountain of unread purchases, I keep buying new stuff, at all price points. My appetite for new reading is unabated. Perhaps I’m atypical, but I feel I’m more than doing my part to support ‘literary culture’ and do not believe it is at all endangered. Traditional publishing models may well be endangered, but they are already being pushed aside by new ones.

    Subscription models are probably the future, if someone can come up with the right formula. What I’d like to see is something like this: a below-$10 monthly rate covers a large, quality ‘core’ selection (something easy for anyone to justify, like Netflix), but beyond that, you would be able to ‘rent’ a limited number of ‘premium’ (current best sellers, textbooks, etc.) ebooks for an additional $1-5 per month per book to give you access to everything that is ‘in print’. Maybe that monthly rental confers permanent access once what you have paid in rent exceeds full retail price.

    Prime Lending Library just isn’t a good enough ‘core’ for me to pay for. The Oyster’s and Scribd’s have a decent core, but don’t offer access to ‘everything that is available’ even if people were willing to pay something for access to that. I would give up the illusion of ‘ownership’ for the reality of ‘access’, and I would like to think that the amount of money I’m spending currently on reading would support such a model, and I’d probably wind up spending even more for more freedom, flexibility, convenience in my reading life.

    Of course the bugbear here is again, the fearful-of-change publishers who seemingly will never agree to such a model.

  2. Leigh Caroline Says:

    I’m pretty sure there are clauses in authors contracts that forbid this sort of thing. Even if somehow there aren’t, they’d still owe the appropriate shares of that income to the agent and publisher, which just makes it annoyingly complicated to arrange (in addition to the tax confusion that would result in too!). It’s a legal and logistical mess.

  3. Louis Says:

    I saw this in a summary of opinions on USA today. It may be an oversimplification. But also the way most Amazon customers (cest moi) relate to this situation.
    “Martin Shepard,The Cockedyed Pessimist: “(Hachette wants) more of the electronic pie, and if they can’t get it (they’ll) howl and rage about it. … All these companies are — and should be — free to set their own terms based on their bottom lines, and publishers like Hachette might consider tempering their complaints about Amazon’s discrimination or restraint of trade. Bezos didn’t create Amazon for Hachette, and Hachette isn’t forced to use Amazon for distribution.”
    Louis

  4. Amazon offers Hachette authors 100% royalty | I Love My Kindle - IBook Store Says:

    […] Read more from the original source: Amazon offers Hachette authors 100% royalty | I Love My Kindle […]

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