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Finally, a Big 5 publisher raises digital royalties (but there’s a catch)

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Digital royalties have been one of the major sticking points in the debate over traditional vs. self-publishing, with many people (even from the traditional publishing world) arguing that big publishers should raise digital royalties on ebooks to at least 50 percent. Nonetheless, until now, publishers’ standard royalty on new ebooks has been stuck at 25 percent.

That changed somewhat on Thursday, when for the first time a big publisher made a step toward increasing digital royalty rates. HarperCollins announced on Thursday that it will offer authors who sell their books directly through its website, HC.com, “an additional 10% net royalty on print, ebook, and physical audio products.” So the standard royalty on ebooks sold through the site would increase to 35 percent and the standard royalty on hardcover books would increase to 25 percent.

HarperCollins relaunched its website this summer and is encouraging more authors to sell directly there.
HarperCollins relaunched its website this summer and is encouraging more authors to sell directly there.

“While our first priority is to sell books through as many different retail channels as possible, we are pleased to provide this platform for our authors who want to sell directly,” Brian Murray, HarperCollins president and CEO, said in a statement. In a veiled reference to the ongoing dispute between Amazon and Hachette and/or foreshadowing of similar disputes between Amazon and HarperCollins, he said, “Our authors can also be certain that their books will always be available to consumers through HarperCollins, even if they are difficult to find or experiencing shipping delays elsewhere.”

Many authors and agents will see this as a step in the right direction, but not generous enough: Many have argued for standard 50 percent digital royalties, since a publisher’s cost does not increase incrementally when another ebook is sold. Furthermore, sales through HarperCollins’ website are likely to make up only a very small percentage of an author’s total book sales, meaning the royalty increase wouldn’t necessarily account to much.

Nonetheless, it’s a step and it’s not difficult to imagine it expanding. Now let’s watch and see whether other big publishers do the same thing.

5 Responses to “Finally, a Big 5 publisher raises digital royalties (but there’s a catch)”

  1. Dave Cullen, author of ColumbineN

    This is a really welcome first move. Though I agree that the e-royalties need to be much higher, and for all books, not just direct.

    Direct sales are a pittance now, but than can change–and seems like one of the few plausible longterm answers to the Amazon menace: cutting them out of the equation. Amazon is the useless party adding little value. (Physical bookstores provide a great service, and I worry about them, but people ordering online are going to order online.)

    Amazon does offer great user benefits of customer reviews, searching, search-inside-the-book, etc., and I am thrilled by the irony of future users showrooming Amazon: using their free services and then buying elsewhere for less.

    But that brings us to a few problems with the initial HC step. I went to their site, and it needs work. First and foremost, if they want to lure buyers from Amazon, direct sales need to be competitive on price. (Since the publisher is saving a bundle by paying nothing to Amazon, they can afford it.)

    Also, the publisher is getting a windfall by saving the 50% it pays the retailer, so they should be giving a much bigger bump than 10% to authors. (Though if HC wisely discounts prices on its site, this figure because more reasonable, though still low.)

    One good piece of news for authors not made clear here, is that the incentive for authors is much better on ebooks. On physical books, our royalty is based on GROSS–the cover price. On ebooks, industry standard is 25% of NET–the price HarperCollins gets paid by the retailer, typically about half the cover price. Since Harper is eliminating the middleman, and getting 100% of the cover price (until they discount to buyer), the price our royalty is based on is much higher–twice as high if HC offers the consumer no discount.

    (FYI, just trying the HC site–(they are publishing my next book)–obvious issues: they don’t take Discover (come on), shipping costs are unclear, most books selling for full price, and the “Award Winners” listed first in the drop down appears to select only children’s award winners.)

    This approach needs a lot of refining, though a great first step.