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By David Rothman

randomhouse Publisher often love to draw a connection between money and the quality of a book—and you can bet that includes e-books. I agree. Editing, design, promo and the rest aren’t free, no matter what the medium.

But how about the money-quality connection in the case of writers? Random House, it would appear, is taking at least a small step backwards. And writers and society at large will be the losers. Yes, manuscripts abound. But the smaller the rewards for writers, the less incentive they will have to do their very best. Even literary writers like the late Kurt Vonnegut—follow the just-given link—aren’t impervious to the allures of cash.

So what’s Random House been up to? From E-Reads, via the TOC blog:

A recent Random House contract states that on all copies of a work sold as an electronic book, the royalty will be 25% of the US suggested retail price until the book’s advance has earned out, and 15% of the list price thereafter. Under the current (pre-change) royalty structure, on a book retailing for, say, $10.00, the e-book royalty would be $2.50 per download at 25%, then $1.50 per download when the royalty rate shifts to 15%.

By contrast, the new royalty of 25% of the net receipts [after distributors' cuts] comes to something like $1.25 per sale on a $10.00 book (25% of 50%). So, Random House’s change is definitely a reduction of e-book income for authors.

Just $1.25 for the most important person, the author? So much for the efficiencies of E, huh? Among Random House’s justifications: “…The new rates are very much in line with the e-book and digital audio rates being offered today by our major competitors…”

Detail, from E-Reads: “By way of comparison, and as a matter of full disclosure, E-Reads pays a royalty of 50% of net receipts for e-book sales, and has done so since its founding in 2000. On a $10.00 book, that means a royalty of $2.50. At no point is the royalty rate ever reduced.”

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