Authors Are Earning Less, And Other Hogwash

Literary agent Chip MacGregor is back this week with more baseless doom and gloom about the ebook market.

Authors Are Earning Less, And Other Hogwash DeBunking ebook sales Self-Pub

When last we looked at MacGregor, he made various improbable predictions like we would soon see indie authors quite self-publishing and also see the end low-priced ebooks. Today he is back to justify that second claim.

The problem is, his claims don't add up and his "facts" simply aren't true.

In response to a self-asked question whether low price ebooks are costing authors money, MacGregor writes:

So are the low costs of e-books costing authors money?

Sure. (Expect to see a bunch of indie published authors tearing their hair out over this response, because they tend not to want to hear about economics, in my experience.) Okay, if a retailer sells a book for $20, the royalty paid to the author is higher than if the publishers sells it for $10. The average e-book is way down — many below $5, and often you’ll see a slug of books for 99 cents.

Let me stop you right there.

Those cheap ebooks are, for the most part, sold by indie authors. This means that a $2.99 to $4.99 ebook is earning the author more than they would get if the publisher sold that hardback on the author's behalf.

The indie author is earning about 70% of list for a self-published ebook ($2.99 and above), and that comes to a lot more money than authors would get from a 10% to 15% royalty on the sale of that hardback.

MacGregor doesn't want to tell you this, but cutting out the publisher leaves a lot of money for authors.

That doesn’t leave much for an author. So earnings are down across the board, but they are more spread out among a wider group of authors — that makes it feel as though there’s more money being paid out. Economically, it’s not true.

Except as I pointed out above, cutting out the publisher means authors are earning more. But you don't have to take my word for it; Hugh Howey explains this point in detail.

The overall sales numbers are fairly stable the past couple of years. So with all the low priced ebooks and mass market titles earning less per book, the overall income of authors is actually down.

Yeah, that's not true.

For one thing, Data Guy says the ebook market is still growing, and for another, the repeated reports of declining publisher ebook revenue mean that authors are gaining the revenue that publishers are losing.

DG publishes the Author Earnings Report, a quarterly estimate of who is selling how many ebooks. Data Guy calibrates his algorithms based on earnings data shared privately by authors and publishers, which means he has one of the best views of the market short of Amazon.

He says the market is still growing (his statement is at the end of this post).

Furthermore, if the ebook market is growing while publisher revenues are declining then sales have to be shifting from the major publishers to smaller publishers and indie authors.

And so author revenue is actually increasing.

Saying that doesn’t make me negative on indie publishing, by the way, and certainly not on genre publishing. Anyone who knows me or has read the blog for any length of time knows I have long been a fan of indie publishing, and I’ve represented a ton of category fiction. The concern is with the low price point, which has lowered the earnings of authors — particularly established authors.

I have read MacGregor twice, and if I told you what I think he is some would accuse me of name-calling.

So instead I will go with the second option, that he is ill-informed, and leave you with the links I already posted as well as DG's statement.

O O O

In mid-May I asked Data Guy whether he thought the ebook market was declining. That was what many mainstream media reports were claiming at the time, but DG's access to author and publisher revenue data painted a different picture:

When you consider ALL paid ebook consumption (including KU) as sales, then ebook sales on the whole aren’t down, although growth has slowed to the low single-digit percentage range now, as opposed to a continuation of the double- and triple-digit percentage growth we saw in the ebook market’s early years.

Trad-sector ebook sales are significantly down for the big trad publishers (because they very deliberately applied the brakes via a policy of consumer-unfriendly digital pricing to discourage digital adoption). That’s where the Guardian et. al. get their headlines, because the only data they see is from those big publishers, whom they then mistake for the entirety of the market (rather than just the third of it those big publishers comprise in unit-sales terms, and slightly more than half of it in top-line dollar terms). OTOH, smaller trad players (like Open Road Media, Bookouture, Sourcebooks, etc.) are still seeing significant ebook sales growth, while academic/professional publishers are seeing extremely strong growth in *their* digital sales. So even among traditional publishers, the mileage varies significantly, with the below-radar players growing strongly even as the big players celebrate shrinking digital sales.

In the non-traditional sector, indies were WAY up for all of 2016, despite an October drop that quickly stabilized. Their steady growth/recovery has continued (albeit at a slower pace) into 2017. And Amazon publishing, of course, is on a tear.

Put all that together, and you get an ebook market that continues to grow but the anchor-drag of the big publishers anti-digital policies has slowed that growth from a gallop to a crawl.

image by starmanseries

About Nate Hoffelder (10071 Articles)
Nate Hoffelder is the founder and editor of The Digital Reader:"I've been into reading ebooks since forever, but I only got my first ereader in July 2007. Everything quickly spiraled out of control from there. Before I started this blog in January 2010 I covered ebooks, ebook readers, and digital publishing for about 2 years as a part of MobileRead Forums. It's a great community, and being a member is a joy. But I thought I could make something out of how I covered the news for MobileRead, so I started this blog."

3 Comments on Authors Are Earning Less, And Other Hogwash

  1. Now now, Nate, he’s perfectly right if you add just the right words to that. 😉

    “Literary agent Chip MacGregor is back this week with more doom and gloom about the overpriced qig5 ebook market.”

    Being tied to/stuck with trad-pub, it’s understandable that poor Chip is upset with indie/self publishers selling their ebooks for less than what the qig5 will let his ebooks go for. Then to add insult to injury, those same lower priced indie/self-pub ebooks are earning their authors more per sale than what his publisher pays him per sale.

    Let’s say his trad-pubed ebook was a steal at $15. Let’s also say that Amazon was only keeping 30% of the profit and Chip’s contract says he gets 15% of what the publisher got for the ebook. After his agent gets their 15% of Chip’s 15%, chip takes home about $1.34 per sale. Compare that to an indie offering an ebook on Amazon for $3.95 who gets 70% minus a bit for transmission fees (I know this one because that’s the price I was asking!) sees $2.73 per sale or better than double what poor Chip is seeing (no wonder he’s upset.)

    (For those that haven’t been on ‘the passive voice’ site, the ‘Big 5’ isn’t highly reguarded, so they’re only the big5. After one of their dumber money grabbing stunts someone dropped the bar on the ‘b’ and they were the pig5. This didn’t last long as people like pigs more than they like those five so the ‘p’ was turned around to give us the qig5. To date no one has come forward to defend qigs from being compared to certain large publishing houses. 😉 )

  2. My bad, I should have gone over and read what Chip actually said.

    Seems he’s an ‘agent’. Which means he’s seeing twenty-four cents of each of those fifteen dollar ebook sales. Pretty good for a one-time task of convincing a author that the trad-pub contract was the best the author was going to get for that book.

    But unless an indie/self-pub suddenly wants a publisher (and needs an agent to get there), Chip and his like make nothing on all those ‘cheaper’ sales – and 15% of what those authors are making is more than what Chip’s authors are feeding him.

    I’m guessing if ‘Print-on-Demand’ gets a little cheaper/faster agents like Chip will need to find a new line of work, which helps explain his views of doom and gloom.

  3. Smart Debut Author // 6 June, 2017 at 4:23 pm // Reply

    The reason Chip feels he has to lie about this so blatantly is obvious.

    Authors, by dumping traditional publishers or never pursuing them in the first place, are now making far more money than ever.

    But agents?

    Eh, not so much… 😉

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