The US Authors Guild is demanding that publishers start paying 50% of the revenue an e-book generates to authors, instead of 25%. They are trying to get the big name authors and agents to fight for it under the “fair contract initiative”.
The Guild has stated that publishers have not kept up with the times and they want their authors to have a larger piece of the pie. This is primarily because the e-book market in the US is booming and publishers are making a killing. According to the latest numbers from the Association of American Publishers, adult trade e-books brought in $1.3 billion in revenue in 2013, up 3.8% from $1.25 billion in 2012. E-books in 2014 accounted for 27% of all adult trade sales, up from 23% in 2012.
A Small History in e-book Royalties
From the mid-1990s, when e-book provisions regularly began appearing in contracts, until around 2004, e-royalties varied wildly. Many of the e-rates at major publishing houses were shockingly low—less than 10% of net receipts—and some were at 50%. Some standard contracts left them open to negotiation. As the years passed, and especially between 2000 and 2004, many publishers paid authors 50% of their net receipts from e-book sales, in keeping with the idea that authors and publishers were equal partners in the book business.
In 2004 Random House, which had previously paid 50% of its revenues for e-book sales, anticipated the coming boom in e-book sales and cut its e-rates significantly. Other publishers followed, and gradually e-royalties began to coalesce around 25%. By 2010 it was clear that publishers had successfully tipped the scales on the longstanding partnership between author and publisher to achieve a 75-25 balance in their favor.
Can anything be done?
Publishers now are fairly entrenched with the whole e-book revolution thing and it looks dubious that any body of authors have the power to negotiate better terms.
Some bestselling authors have managed to obtain a 50% e-book split, though they’re asked to sign non-disclosure agreements to keep these terms secret. I have also also heard of authors with strong sales histories negotiating 50-50 royalty splits in exchange for foregoing an advance or getting a lower advance; or where the 50% rate kicks in only after a certain threshold level of sales. For instance, a major romance publishing house has offered 50% royalties, but only after the first 10,000 electronic copies—a high bar to clear in the current digital climate. But overall, publishers’ apparent inflexibility on their standard e-book royalty demonstrates their unwillingness to change it.
Michael Kozlowski is the Editor in Chief of Good e-Reader. He has been writing about audiobooks and e-readers for the past ten years. His articles have been picked up by major and local news sources and websites such as the CBC, CNET, Engadget, Huffington Post and the New York Times.