From Forbes blogs:
Like many authors, I’ve been struggling to decode all the noise coming from Amazon and traditional book publishers, in hopes of figuring out which side is right in this long-running quarrel. The breakthrough moment for me came earlier this month, with the arrival of a new royalty statement from my New York agent.
Clearly, there’s a tug-of-war going on right now about what books should cost — and how the revenue should be divided between authors, publishers and retailers. The immediate battleground involves Amazon’s pricing of e-books published by Hachette, one of the publishing industry’s “Big Five” players. Amazon wants lower prices and leaner terms for Hachette; the publisher prefers the opposite.
While the battle rages on, distribution of Hachette books on Amazon is getting snarled.
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I’ve been writing books since the early 1990s. That’s provided opportunities along the way to write for three of the Big Five publishers, as well as to see Amazon emerge as an important marketplace for my own books about everything from Wall Street to talent selection. To date, both sides have provided fair terms and good value for what they do. But it’s a fast-changing world, and the message hit home for me when I got a new royalty statement for my very first book, “Merchants of Debt.”
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The Beard contract wasn’t my favorite, because the $34.95 price to buyers seemed quite steep, and because my royalties per copy were only 15% of the purchase price. But that 15% royalty rate has long been the norm for print-publishing contracts.
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Then, in 2013, my agents, Inkwell Management, arranged to have Merchants of Debt republished as an e-book. We created two versions: a full-length e-bookpriced at $9.99, and a condensed version, priced at $3.99. In each case, e-tailers such as Amazon or Apple’s iTunes store get 30% of sales revenue; Inkwell gets 21%; I get 49%.
You can probably guess what’s happened to sales trends. Overall sales of the book have more than tripled, and nearly 90% of the sales are coming from e-books. We’re still talking about small amounts of money, but the checks now pay for getaway weekends, rather than an occasional lunch or two. Customers are getting a much better deal. And the e-books’ royalty formula means that I make almost exactly as much on a $9.99 e-book as I would have on a $34.95 paperback.
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Amazon believes it has figured out how to keep its book business vibrant in such changing times. I’m starting to think that the old guard’s ferocity in the current Hachette-Amazon tussle reflects deep anxieties — perhaps even outright terror — about what to do next.
Link to the rest at Forbes blogs and thanks to Hugh for the tip.