eBook Royalty Rates 2012

Royalty rates for ebooks vary widely. We have seen rates ranging from 10% to 50%.

Current Royalty Rates

The big New York publishers have standardized on a 25% of net receipts royalty rate. These publishers provide authors access to their extensive publicity, marketing and distribution resources. These publishers also all cover design and editing services  at no cost to the author.

Open Road Media is offering a 50% of net receipts royalty to authors and estates for the right to e-publish their backlist titles.

O’Reilly Media pays the author 10% of all net income that they receive from all sales of whatever format or licensing agreement.

eBook romance publishers tend to pay royalties of 25% to 44% of net receipts.

eBook Royalty Survery for romance publishers

Trends

Publishers are willing to pay higher royalty rates for backlist titles that require no prepublication expenditures (editing, cover design, proofreading).

Some publishers offer escalating royalties on ebook sales to established authors.

New startup publishers are attempting to lure authors with promises of high royalty rates (as high as 100% of net receipts); however, the author is responsible for all costs associated with the book and they provide minimal or no marketing for the published work.

Ebook only publishers tend to pay ebook royalties monthly or quarterly.  Publishers offering books in print and ebook format tend to pay royalties semi-annually or annually.

The big NY publishers forecast rising ebook royalty rates due to competitive pressures from other publishers.

E-book Royalty Math

The Authors Guild website has an interesting article about royalty math.

The mathematical analysis in this article highlights that fact that publishers earn more money selling e-books than print books.

“The Help,” by Kathryn Stockett
Author’s Standard Royalty: $3.75 hardcover; $2.28 e-book.
Author’s E-Loss = -39%
Publisher’s Margin: $4.75 hardcover; $6.32 e-book.
Publisher’s E-Gain = +33%

Read the full article to learn how the the publisher’s gain was calculated.

Read the royalty math article

Royalties & Digital Publishing

The growth in ebook sales has led to changes in royalty contracts offered by book publishers;

1. Reserve for Returns– New royalty contracts often exclude ebook sales from the reserve for returns. Why? The returns rate for eBook sales is effectively zero. [Read more…]

eBook First Royalty Rates

Royalty rates for book publishers are changing. Recently we had the opportunity to hear two romance book publishers discuss their royalty policies.

Both publishers are paying royalties of 30% of list on direct eBook sales and 15% of list on indirect royalty rates. That means that if a customer purchases the eBook from Amazon the author recieves 15% of list, and if the order comes from the publishers own web-site the royalty is 30%.

Futhermore these publishers pay royalties monthly; as their are no returns on eBooks. The authors really appreciate this, as both publishers do not pay advances.

These publishers also offer time limited contracts, i.e. the contract is for a set period – say 5 or 7 years. After this period the author has the right to take his book elsewhere. One publisher has a clause that allows this at the end of the period if sales are less than a specified number of copies a year.

 The other publisher does not place a limit on this, feeling that if an author is not happy he should have the right to change publishers.

Rights & the International Kindle

How will digital editions affect international rights sales?

This is the question that the Publishers Weeklyarticle “Questions Mount Before Debut of International Kindle”;  authored by Jim Millon and Rachel Deahl, discussed in its October 12th issue.

In summary, this article presented the view that availability of digital editions has increased the value of digital rights. This has increased the increased the pressure exerted by publishers to acquire these rights.

It also highlighted the fact that the value of territorial rights will be threatened as e-retailers sell their products into regions quicker than print editions are available.

Royalty Advances Declining

Advances paid to trade authors are down by 30% to 40%according to a panel discussion published in the October 5th issue of  Publishers Weekly; Religion in Academic Publishing: The Agent View by Jana Reiss.

Read the article

This view corresponds to what we are seeing in the market. Trade publishers are reducing the advances paid to authors, while royalty rates are staying the same.

Why? Its harder to predict how many books will sell and sales are down in many categories. Fewer bookstores, fewer readers, too many tiles, fewer book review sections in major publications are some reasons why sales forecasting is harder, and advances are generally based on the projected first year’s sales of a title.

iTunes Royalty Lawsuit #2

What’s the royalty due on an iTunes song sale? In a suit by Eninem a jury ruled for Sony that an iTunes song was the equivalent of a CD (i.e. royaltiesd were pennies on the dollar). 

The Allman Brothers has sued UMG and Sony claiming that iTunes sales should be accounted for as a song license for a commercial – where the artist’s royalty would be about 50%.

According to www.techdirt.com the court refused to dismiss a lawsuit by the Allman Brothers against Universal Music Group.

Read the article:

http://techdirt.com/articles/20090917/0420056224.shtml

New Online Radio Station Royalties

The New York Times reported that record labels and online radio stations have agreed to new royalty rates.

A summary of the new royalty rules for internet radio stations follows.

1. $25,000 annual minimum fee that can be applied against their royalties payable.

2. Online radio stations with revenue of less than $1.25 million will pay 12 to 14% of revenue for the right to stream music.

3. Online radio stations with revenue of $1.25 million or more will pay the greater of 25% of revenue or a fee per song that increases from 0.08 cent in 2008 to 0.14 cent in 2015.

4. Webcasters must provide detailed information about the songs that they play and how many listeners each song has to SoundExchange. They must keep these records for four years.

Romance Royalties – Print vs Digital

Royalty rate rates for print vs digital romance books are compared in an article posted at DearAuthor.com

The article summarizes the economic models that differentiate print and digital royalty rates for romance novels.

In summary, it states that print books are usually accompanied by a royalty advance and a low royalty rate of 8% to15%. 

Digital book authors usually receive no royalty advances and a royalty rate that averages 35% to 40%. The article notes that only steamy sexy novels are selling well in a digital format.

With print books, though a lower royalty is paid, the author is likely to earn much more in terms of royalties.

The author closes her article by stating that “digital publishing can be for those who are just starting out; for manuscripts that are gathering dust; for works that no one in NY wants to take a chance on.”

Songwriter Royalty Rates

The Federal Copyright Board froze for five years the royalty rate that songwwriters receive on sales of CD’s and digital downloads at 9.1 cents per song.

For ringtones (aka mastertones) the FCB set a royalty rate of 24 cents per song.

The songwriter royalty rate for the interactive streaming of songs and limited downloading offered by subscription services such as Rhapsody was set at 10.5% of all revenue less composition performance royalties.

Easy Royalties software can handle each of these royalty rates in one contract. How? Create a seperate edition of the title for each format. Each title can be linked to an unlimited number of editions. Then create a royalty rule for each format; CD, digital, ringtones and subscription.