27 August 2010

Why being paid in the indie way works for you...and against you!

Some of my NY conglomerate published friends do not really understand the way indie press pays on net (read this as your royalty rate applied to the actual amount received for the book from third party distribution sites). For someone that makes the same percentage of the cover price, no matter where the book sells or what price it sells at, it seems counterproductive to use a net contract, but the contracts both work for us and against us.

In most cases, the indie net contract works for authors. We get a much higher percentage of ebook sales than NY conglomerate authors do, in general, and a much higher percentage of ebooks sold from the publisher site than we do with any given distribution channel. The NY conglomerate authors will make the same percentage, no matter where the book sells and a lower percentage than indie authors make, in general. It's a no-brainer to see why the net contact is appealing to us.

The publishers (depending on which one I'm dealing with) give me between 30% and 60% of cover price on all sales from the publisher site. But I get that same percentage (or slightly higher*) on the amount they receive from the distribution channel on third party sales. So, if it's a $6 ebook, and I have a 50% royalty rate, I make $3 on sales from the publisher site but may only make $1.05 to $1.50 to $2.06 on the same book selling from a third party site (35% to 50% to 70% (less 10 cent "delivery charge" on the latter...thank you Amazon) remitted to the publisher and then my 50% royalty rate). The highest royalty rate is currently Smashwords, but that's assuming it sells directly from Smashwords (few books do) and not via a channel Smashwords is the aggregator for...and assuming you choose not to opt into paying people that send business to your book/s.

Now, when does it work against us? When the contract between the publisher and the distribution channel allows the distribution channel to play games with sale price and pass that along to us!

I'd propose that Amazon and the other distribution channels should be FORCED to sign agreements with us that say the publisher gets a set rate (a set dollar amount) on every ebook sold, and if they want to play price games and loss leaders, they do so out of THEIR portion of the book sale and not ours...just as I understand they do with paper books. Right now, that's not the case. So that works against us.

*Some publishers are nice in that they give a higher percentage rate from distribution than from the home site. At one, I get 40% on publisher site sales, but they raise it to 50% from distribution channels, so that $6 book nets me $2.40 from the publisher's home site but that same $1.05 or $1.50 or $2.06 from distribution channels...assuming the distributors DON'T have undercutting sales with each other and further cut my royalty rate by up to 50% trying to outdo each other's sales, dropping me to $.53 or $.75 or $1.03 per book sold, for THEIR greed, their attempts to monopolize the market. And this happens far more often than you might believe.

See why I say we need to make them eat that instead of us? I have nothing against a free market and sales for readers, but this sort of free market hurts the authors and publishers instead of the distribution channel choosing to do it. But when the Big 6 pushed for contracts that said Amazon wasn't allowed to hold sale prices, they were accused of price fixing and are being investigated for antitrust/monopoly issues. I can see why they might say that, but... The obvious answer is to make the distribution channels eat the sale. That works for me. It might not work for NY conglomerate, since they are all about protecting the "price point."


BrennaLyons said...

One more note... Remember that the distribution channels are not without nits. You cannot make 70% on EVERY book you list on Amazon, for instance...only those within their pricing range. And you currently cannot list free reads on Amazon, which you can do with every other distribution channel I use.


Anonymous said...

Thank you, that was extremely valuable and interesting...I will be back again to read more on this topic.

Anonymous said...

Wow neat! This is a really great site! I am wondering if anyone else has come across something
exactly the same in the past? Keep up the great work!

Anonymous said...

Thanks for sharing the link, but unfortunately it seems to be down... Does anybody have a mirror or another source? Please answer to my post if you do!

I would appreciate if a staff member here at brennalyonsden.blogspot.com could post it.