Monday, March 2, 2009

Why ebooks cost so much

Richard Curtis was my first literary agent (and he still represents several of my friends, including James Alan Gardner, Linux guru Marcel Gagné, Harlan Ellison, and Greg Bear).

Richard is one of the most insightful writers about the book business, and here he sheds light on the mystery of why ebooks cost so much.

The Robert J. Sawyer Web Site



At March 03, 2009 8:10 AM , Blogger SL said...

Interesting article. It's gotten me to wonder though... As an author, do you get paid the same regardless of the format of your book sold or do you get paid less for say an ebook, compared to print or audio?

At March 03, 2009 9:41 AM , Blogger RobertJSawyer said...

It totally varies by format, even in print. At most publishers, mass-market paperbacks are 8% of cover price, trade paperbacks 7.5% of cover price, and hardcovers 10% of cover price. (And it depends which country you buy it in, too!)

Ebooks *should* be 20%, but publishers like Tor farm out the work to an intermediary, which lets the print publisher take half the authors' money for themselves (by claiming that it's a 50:50 sub-licensing split). Audiobooks vary, too.

Also, print book royalties are calculated on the cover price (so it doesn't hurt the author if Amazon or someone else discounts the book), whereas ebook and downloadable audio royalties are based on the actual selling price (if the book is sold at a discount, the author's share is cut).

Best deal for most authors is if you buy their book new in hardcover, where, on a $24.95 book, they get $2.50.

At March 03, 2009 10:22 AM , Blogger SL said...

Hmmm... so in a way, it looks like ebooks are a lose-lose situation for you. You get paid less for them and the cheaper they are sold for, you get even less than that. Unless maybe it evens itself out. If you sell 1 hardcover book... you make $2.50. However, it can be resold multiple times, given away and read by hundreds of people. You still only get that $2.50 once. When people read your book electronically, it has to be downloaded and paid for each time, so for every book read that way.. you get paid. So lets say with the first example someone buys your latest hardcover and you make $2.50. He gives it to a few friends to read, they pass it around too and then he sells it at a garage sale. In the end, 10 people have read your book, but you've still only made $2.50. Let's say you only make 50 cents for an ebook. However with DRM.. if 10 people read your ebook, you get paid for 10 copies. So in this case, even though you get paid a smaller percentage, you end up getting paid more ($5) because you can guarantee each 'read' is paid for. I guess what I'm getting at is, do you think it would be better for authors financially in the long run if ebooks really take off as more devices like the kindle and etc. come out? Or is it better that more people have access to the book (whether you get paid or not for the sale), so that it promotes future sales (whether they be digital, print or audio)?

At March 03, 2009 11:09 AM , Blogger RobertJSawyer said...

Hi, SL. You write, "When people read your book electronically, it has to be downloaded and paid for each time, so for every book read that way.. you get paid."

Yes, that's the way it works for most ebooks right now, but there are a lot of people who are pushing for the elimination of DRM (digital rights management -- copying controls) from ebooks, and if DRM is eliminated, then there's nothing stopping a single legitimately sold copy of an ebook being given a way to hundreds, thousands, or millions of people. The DRM issue that so many rail against in a kneejerk fashion is at the crux of whether ebooks make sense at all as a business model FOR SELLING BOOKS.

Yes, yes, giving away content online may be an effective way of boosting a paid speaking career -- but very, very, very few authors have managed to build up one of those, although the biggest advocates of no-DRM tend to be those authors who don't in fact depend on sales of their books for the majority of their income.

In the long run, the future is definitely ebooks, and I'm all for it. But a way has to be found to make sure authors are fairly paid FOR THEIR BOOKS (not some vague hand-waving about them somehow magically making money in other ways simply by virtue of being an author).

At March 03, 2009 12:36 PM , Blogger SL said...

You bring up a good point about the anti-DRM authors.. I'm sure Wil Wheaton and Neil Gaiman could go to a sci-fi/comic book convention and sit around, sign a few autographs, talk for 30 mins and get paid decent money. However, most 'regular' authors can't do that. So I guess if they did lose sales to piracy, it wouldn't matter much to them. Plus, they sell books because they are well known... you have to sell books to be well known. (if that makes sense). I think in this day and age (and despite Apple's change), DRM has to be a given for any digital format. I think for the cheaper price (which all digital downloads should be cheaper, since there are no manufacturing and shipping costs) and the instant gratification of it... you should be willing to have limited rights. If not.. pay more and buy the cd/dvd/hardback. I know that's an unpopular view for some. Now if only publishers, record companies, studios and etc. actually gave the appropriate compensation to writers, artists and musicians....

At March 03, 2009 12:48 PM , Blogger RobertJSawyer said...

Very, very few authors get paid to autograph books, even at big conventions.

However, if I had to bet, I'd say that most of Neil's money comes from Hollywood these days, and so the larger his audience and more popular his books appear to be, the bigger fees he can command from there. Hollywood doesn't care at all whether Neil gets paid for his books, all they care is how big they gauge the audience for adaptations of his books to movies to be.

Likewise, Cory doesn't make his living writing books; he makes it on the lecture circuit, blogging, and doing consulting.

For authors who just write books, and don't do public speaking and haven't caught Hollywood's eye, it is enormously hard to get a paid public reading that pays more than a couple of hundred bucks, and enormously hard to get more than a handful of those each year.

Hell, the only income stream (of all the things I do) that is SMALLER than my paid-reading literary-event stream is (wait for it) my ebook-revenue stream. ;)

(On the other hand, I am lucky enough to have a vigorous sideline as a corporate keynote speaker, and to make a good amount of money off of broadcasting and film, while still producing about a book a year. But I am, literally, one in 100 out of the members of Science Fiction and Fantasy Writers of America in that regard.)

At July 19, 2009 9:22 PM , Blogger John said...

I'm a big fan of ebooks. Don't get me wrong, nothing beats the feel of a real book but ebooks are so handy. I have a phone/pda with over a hundred books loaded and it comes in really handy when I'm waiting for the girlfriend while she is shopping ...

Most of these ebooks are from the baen library and about 5 years ago I was curious as to how many of their printed books I had actually purchased so I went through my library, pulled them all out and counted. There were over 80 and since then I have acquired many more. Did the ebooks have anything to do with my purchasing the hard copies, you bet. Strangely, I have the hard copies of about a third of my ebooks.

Considering the fact that the publisher does not have to print, bind and ship a book only to have 30% of them returned unsold, I have to consider some of the pricing for ebooks to be nothing short of a ripoff. The Association of American Publishers reported (1995) an Operating Margin of 11.5%. At $6.00/ebook, they should be able to pay you hardcover royalties and still exceed their normal margins.

I am at this website because it's a hazy, lazy Sunday, I have just finished reading Hominids (in 4 hours) and was looking forward to the rest of the series. Maybe authors should be negotiating deals that have the digital rights revert to them when the book goes out of print. At the speed that I read, I would gladly pay you for the ebook but not if there is DRM involved. I often re-read books and electronic devices are too prone to natural failure and accidents. If there is any possibility that the DRM would prevent me from transferring the book when my phone fails, I want nothing to do with it. A ebook reader breaking should not have the same affect on your collected literature as having your house (with your library) burn to the ground. My bad, it would be worst, if your house burned to the ground the insurance company would cover it.


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