Tuesday, October 16, 2012

The Slippery Slope of E-Originals, Part 1


| | DBW

In the last year a number of major publishers have begun offering authors contracts for “e-originals” – books released originally – and exclusively – in e-book format. Though this is a logical step in the evolution of traditional publishing houses from tangible to virtual formats, the deflationary nature of its business model poses a serious threat to author earning power. Less obvious but ultimately more dangerous is the implosive effect the shift may have on the publishing companies themselves and the people who work for them.

What’s Wrong with Paperback Originals?
The first and obvious question is, what’s wrong with paperbacks books, that publishers are abandoning them in favor of digital originals? The fact is that in the past fifteen or twenty years, mass market paperback books have transformed from a breeding ground for fresh talent to an exclusive club for bestselling authors.
The reasons for this metamorphosis are complex (you can read about them in The Rise and Fall of the Mass Market Paperback: Part 1, Part 2), but in essence the ruthless math of an industry based on the returnability of books has made it almost impossible for fresh talent to develop over time in the nursery of original paperbacks. Though many promising genre authors, especially romance writers, continue to be introduced in mass market paperback, the sales thresholds they must achieve in order to make a profit for their publishers have risen to almost unattainable heights.

Cue e-book originals.
At first blush, e-originals appear to be the perfect way for publishers to pull authors out of this death spiral, for many of the costs of manufacturing and distribution are lower or negligible. You would think that the savings would be passed along to authors in the form of higher advances and royalties. So far, that has proven far from true. Why?
At the present time, the so-called “standard” e-book royalty paid by the Big Six legacy publishers – Random House, Hachette, HarperCollins, Simon & Schuster, Penguin and Macmillan – is 25% of net receipts. Though many independent e-book publishers (including, full disclosure, my own firm E-Reads) pay 50% or higher, the Big Six justify the 25% royalty on the strength of the high cost of manufacturing the print books that serve as the launch pad for their e-book reprints. If it costs X thousand dollars for a publisher to produce and publish a hardcover book, publishers reason, a portion of those costs should be allocated to the production of the e-book.
Though many authors deny that assumption, let’s grant it for the sake of argument. It is, however, much harder to grant it in the case of original e-books. Though the cost of producing e-books is higher than most lay people may think (see Are Publishers Making a Killing on E-Books?, Part 1 and Part 2), it is considerably lower than the cost of producing print books.
Publishers, however, don’t see it that way. They contend that they are not yet selling e-books in sufficient quantities to merit advances commensurate with those paid for paperback originals. Advances for e-originals are therefore dropping by half or more of those paid for print originals, and in some instances publishers are offering no advances at all. To compound the injury, they remain adamant about the 25% net royalty.

The rest at Digital Book World

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