When author Kelly McClymer asked her number-savvy scientist husband to help her make sense of the confusing world of ebook royalty rates, he did. Here he is, crunching the numbers in an effort to see what rates are fair for authors.
When your WW (Wonderful Wife) is an author you spend a lot of time talking about books and publishing. When the WW is number challenged and the industry is going through a paradigm shift you spend a lot of time talking about royalty rates, profits and fairness.
In order to defend my point of view (and the family fortune) I started reading her blogs and industry news, as well as attending a Ninc conference or two as a tagalong spouse. First thought: a lot of people who should know better don’t. These people are countered by the wonderful blogs of Konrath, Goldberg and others who can do math.
While reading another nonsensical blog from an unnamed source I started looking around and found a statement from the Authors Guild against the 25% of net on books. The key piece of this press release was the model that a 15% royalty rate on hardbacks was fair, with fair being defined as a 50-50 split between the author and the publisher. I could do something with this idea and I set out to determine what a fair Ebook royalty rate should be. I then found Lee Goldberg’s 2/3/11 blog which ran through the numbers of the 25% royalty rate. It is very good and I suggest you read it. I’ll wait…
…While Lee showed the 25% rate to be unfair he did not tackle the question of what a fair rate should be. Thanks for leaving me something, Lee!
In what follows I lay out the philosophy (a 50-50 split between author and publisher as achieved in hardback sales), and my assumptions to determine a fair Ebook royalty rate . If you don’t want to read through and argue over my assumptions here are my conclusions: Ebook royalties should be between 31.4%and 45% of net. The lower royalty rate assumes publishers have the same cost to publish an ebook as a paperback while the 45% has a more reasonable cost.