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Are e-stores siphoning too much from authors and publishers? Mike Shatzkin thinks so
May 4, 2009 | 4:46 am
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By David Rothman
Should e-tailers get just 20-percent discounts from publishers, not 50 percent? Are they making too much for taking low risks compared to paper-bookstores?
Mike Shatzkin, a publishing guru, thinks so. And literary agent Richard Curtis agrees.
Meanwhile novelist Orson Scott Card has complained that Amazon is grabbing too high a percentage of book revenue.
The TeleRead take: Part of the discount issue is whether the e-tailers are adding value. Amazon adds a lot in the form of, say, reader comments and other community features. What’s more, some publishers’ prices are just too high—$25 for an e-book?—meaning that the 50 percent discount might not always be so outrageous. I don’t think these issues are entirely black and white.
Related: Michael Cairns’ post headlined Amazon Stanza: This changes nothing. He makes a point I often have—namely, that publishers would enjoy more leverage with Amazon if they took standards more seriously. In addition he wonders about publishers collaborating on sales outlets.
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Comments:
There are several isses in ebook pricing and in getting consumers to buy that affect etailer discounts. As noted, asking $25 for a leased DRMed ebook, especially in the Babel-of-formats war, is asking too much. Giving the etailers a large discount lets them discount the ebook price to perhaps something closer to realistic. But then consider the consumer’s buying habits: What consumer today buys at MSRP retail? Consumers look for and expect a discount and the greater the discount, the more likely a consumer is to make the purchase. If you cut ebook etailer discounts, there will be no room for consumer discounts and everyone will suffer.
Of course, there is an easy solution: Do away with DRM, make all ebooks available in DRM-free ePub, and sell ebooks at a MSRP of 75% of the MMPB (not trade) price beginning on the day of first release of the hardcover version. A scenario like that would justify limiting ebook etailer discounts to 20% plus would appease the consumer.
Two things:
Well, there’s adding, and there’s annoying. Frankly, all of the peripheral noise on every Amazon page is, to me, much like a carny huckster (or Billy May) shouting at you as you try to find the thing you want. If that’s what we have to look forward to in terms of “value-added,” count me out. I’ll actually pay more for a little peace and quiet.
Second, the Cairns article hits on most of my cylinders, too. Whether or not publishers will willingly band together for their own common good is anybody’s guess.
Obviously I’d like to keep as high a percentage as possible. It seems to me that I do a lot of work editing, and the authors do a lot of work writing, so we should keep the bulk of any payments. On the other hand, my sales and total revenues went up when I switched from a direct sales model to a distribution model. Also, there are distributors who charge less than 50%, but so far, they haven’t offered the kind of volume sales to me, at least, that Fictionwise offers.
I’d love for Fictionwise to charge less but they have been a key part of making eBooks happen.
As far as eBook pricing, most people on this loop know that I believe in affordable eBook pricing.
Rob Preece
Publisher
50%? Sounds like an improvement to me. Amazon takes 65% at the Kindle store. But yes, 50% is too high as well. It’s time we authors actually made something for all our efforts.
Remember, a publisher is going to keep some of the money themselves. If you self-publish through Amazon, they act like the publisher and collect an additional fee. Most publishers are not paying 65% to Amazon.
Rob Preece
So even though they’re performing none of the functions of a publisher, they feel entitled to take the publisher’s share?
A couple of notes on the Amazon Kindle side of the discussion:
1. Amazon also contributes wireless connections for the Kindle. I have never seen any details on Amazon’s deal with the wireless carrier, but few telcos are known for steep discounting and razor-thin profit margins. In the case of Kindle editions, Amazon must pay not only when we download the book in purchasing, but also when we download the sample chapter and pay nothing. Servers and IT support also cost.
2. Orson Scott Card did not complain about Amazon’s obscene share of the pie; he complained about the obscene share of the pie that Amazon and the publishers were taking, combined. Kindle editions give the publisher 35% of the suggested retail price, and if Amazon decides to discount that price, the publisher still takes 35% of the full, non-discounted price. Card goes on to say that in his case his publisher is paying him ‘standard’ royalty rates of about 10%; in other words his publisher is hogging most of the money Amazon passes along.
So while Card probably thinks Amazon is taking too much, what he’s complaining about is the author’s share, which is (price) – (Amazon cut) – (publisher cut) = (author’s cut)
I would expect big name authors and agents to try to add Kindle-specific clauses to their contracts in future, carving out a bigger piece of pie for the author when a Kindle edition sells. I expect publishers to resist.
The interesting part of this is how big name authors can simply retain for themselves all electronic rights, and cut their own deal with Amazon for 35% of the sales. That would be a lot higher than any author gets for print editions; just imagine that $27 hardcover yielding $9 per copy to the author — even when the bookstore sells it at a discounted $16!
@Rob: if ‘most publishers are not paying 65% to Amazon’, how much are they paying? Any ideas on how it breaks down between Amazon and the big publishers?
Pond,
I have no idea exactly what sort of deals the big publishers have cut with Amazon. I’m prepared to guess that it scales down from 50% rather than 65%, however. To me, the Amazon digital publishing deal is similar to the Advantage deal they offer self-published authors–major publishers can cut more attractive schedules.
Rob Preece
Publisher
Every quote I’ve ever heard about Amazon’s cut off of the Kindle editions is 66%. No major publisher has said otherwise.
That any publisher with any clout would take that kind of cut appalls me. Kindle needs content, particularly name content, so the publishers should have had the upper hand.
Unfortunately, most of them can’t seem to figure out that ebooks are only going to become more important in the coming years as the readership and ebook hardware improves, and the brick and mortar stores continue to die.
The authors with the major publishers are really being screwed with their 10 to 15% cut of whatever comes back from Amazon and other distributors. Most epublishers and small publishers give a minimum of 50%.
The Orson Scott Cards of publishing should find themselves a good epublisher for ebook format instead of losing so much profit. Ebooks don’t need a big publisher’s name on it to get placement in ebook stores, unlike the brick and mortar variety.