Macmillan Authors Take a Pay Cut

Publishing giant Macmillan (including the Farrar Straus & Giroux and St. Martin's Press imprints) has a new deal for its authors, one that lowers royalties on e-books to 20% of net proceeds received by the company. That is well below the 25% rate paid by most other mainstream publishing houses.

According to the New York Times,

Currently, most popular retailers of digital books sell new releases and best sellers for $9.99 apiece, far below the typical $25 to $35 list price on hardcovers. For now, the retailers still pay publishers a standard wholesale price that is equal to half the list price of a hardcover book, but publishers fear that as e-books grow to a bigger share of the total market, the retailers will pressure publishers to cut their wholesale prices.

Paul Aiken, executive director of the Authors Guild, said that Macmillan was anticipating a time when Amazon, Barnes & Noble and other e-book retailers would try to push down wholesale book prices. “This is Macmillan’s attempt to pre-emptively squeeze authors.”

[...]

Richard Curtis, a literary agent ...said the difference between Macmillan’s standard e-book royalty and other publishers was not the point. “The point is whether we should be playing on such a low ballfield at all,” Mr. Curtis said, “and whether the industry should not really be thinking about a 50 percent royalty of net receipts.” He argued that because the cost to publishers of producing e-books was so low, authors should get a higher proportion of sale proceeds.

What Mr. Curtis says makes perfect sense to me. It costs the publisher relatively little to produce and market an e-book in comparison to doing the same for a paper version of the same title. Why should the authors accept such a small royalty percentage when publishers appear to be making a bigger profit, percentage-wise, on e-books than they make on the paper and cardboard kind?

I am intrigued by how the publishing and book marketing business models are evolving - and by the rapid pace things are changing. This is going to get interesting. At this point, I only hope that things work out well for all of us: publishers, writers, and readers. Are you an optimist or a pessimist?