Digital Royalties

Ebooks have become a substantial profit-maker for heritage publishers, Some houses are reporting that over 30% of their revenue comes from ebooks. With the lower costs, many people assume digital is a big area where publishers can thrive.

Authors have been confused about what they’re likely to see as their cut of the benefits of lower costs. While many indie authors find that they get about 70% of the price, heritage publishers are still holding the line at 25% for authors. This includes works they are looking to republish under new contracts that include digital rights for works that came out before digital was part of the marketing plan.

Many people don’t feel this is right. But comparisons to indie authors’ royalty rates don’t account for the fact that the indies have to finance all the marketing themselves. For first-time authors, receiving a contract from a traditional house (even a very small one) can still be the easiest and most cost-effective method of building their fan base.

The dynamics change for those who have already created indie success or who have built a fan base after several traditionally published novels. The case can be made that the publisher has little more to invest that laying out the ebook and distributing it…which can be done for under $1K total by freelancers. Heritage publishers still have a network of existing contacts that are the buyers of books. Foreign rights, too, can be sold more easily through a traditional house.

When deciding which way to go, consider where you are in your career as an author. It could make a big difference to your success down the road.

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