A few days ago the AG started posting a series of alerts on the problems they see in ebooks, authorship, and publishing. Why a series? Because they wanted to remind you of the Great Blackout, as they call it (when Amazon pulled Macmillan titles last year).
Inthey argue that with Agency pricing for ebooks, authors are actually getting a radical reduced cut of the ebook income (when compared to the traditional split). I know that sounds nutty, but bear with me:
E-book royalty rates for major trade publishers have coalesced, for the moment, at 25% of the publisher’s receipts. As we’ve pointed out previously, this is contrary to longstanding tradition in trade book publishing, in which authors and publishers effectively split the net proceeds of book sales (that's how the industry arrived at the standard hardcover royalty rate of 15% of list price). Among the ills of this radical pay cut is the distorting effect it has on publishers’ incentives: publishers generally do significantly better on e-book sales than they do on hardcover sales. Authors, on the other hand, always do worse.
I know that even though they're getting more than before they're whining about not getting a big enough cut, but I happen to agree with them. Leaving aside the absurd rhetoric of the article, it does have a point. The current split gives publishers an incentive to replace sales of paper books with sales of digital content.
Of course, I happen to think that's wonderful news. It's going to inspire publishers to find new ways to sell ebooks, which will grow the digital market. It's also encouraging them to adapt to the new reality of digital content, thus making it more likely that they will survive the ebook revolution.
In the long run I expect ebook royalties to increase due to market pressure. As authors find out they don't need publishers as an absolute rule, they'll leave the confines of traditional publishing and strike out on their own. So the fact they're low now isn't all that big of a concern.
image by austinevan