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Updated: The writing has been on the wall for some time in the book publishing business: platforms like Amazon’s Kindle (s amzn) and the iPad (s aapl) have caused an explosion of e-book publishing that’s continuing to disrupt the industry on a whole series of levels and reshape the future of the book, as Om has written about in the past. And evidence continues to accumulate that e-books aren’t just something established authors with an existing brand can make use of, but are also becoming a real alternative to traditional book contracts for emerging authors as well — all of which should serve as a massive wake-up call for publishers.
The latest piece of evidence is the story of independent author Amanda Hocking, a 26-year-old who lives in Minnesota and writes fantasy-themed fiction for younger readers. Unlike some established authors such as J.A. Konrath, who have done well with traditional publishing deals before moving into self-publishing their own e-books, Hocking has never had a traditional publishing deal — and yet, she has sold almost one million copies of the nine e-books she has written in less than a year, and her latest book appears to be selling at the rate of about 100,000 copies a month.
It’s true that the prices Hocking charges for these books are small — in some cases only 99 cents, depending on the book — but the key part of the deal is that she (and any other author who works with Amazon or Apple) gets to keep 70 percent of the revenue from those sales. That’s a dramatic contrast to traditional book-publishing deals, in which the publisher keeps the majority of the money and the author typically gets 20 percent or even less. If you sell a million copies of your books and you keep 70 percent of that revenue, that is still significant, even if each book sells for 99 cents. (Update: As a number of commenters have noted, only books that are priced at $2.99 or higher are eligible for Amazon’s 70-percent royalty rate; books priced cheaper than that are eligible for a 35-percent royalty rate).
The overwhelming appeal of that simple math has other authors moving away from traditional publishing deals as well. Terrill Lee Lankford wrote recently about how he turned down a deal with a major publisher in the middle of negotiations over a new book, because the publisher wanted him to agree to a deal for a future e-book that would have given the publishing house 75 percent of the revenue. The publisher tried to entice him with a hefty advance, but the author said no to both deals:
I see it as a permanent 75% tax on a piece of work that generates income with almost no expense after the initial development and setup charges.
Just as the music industry did, many book publishers seem to be clinging to their traditional business models, despite mounting evidence that the entire structure of the industry is being dismantled, and the playing field is being leveled between authors and publishers. And it’s not just individual authors who are taking advantage of this growing trend — author and marketing consultant Seth Godin has created something called The Domino Project in partnership with Amazon, which he sees as a new kind of publisher that can help authors take advantage of the e-book wave by connecting them with their readers and helping them promote their work through a variety of channels.
If traditional publishers can’t manage to adapt in a similar way to the new economics of their industry, they will find their lunch is being eaten by those who can.
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