Interesting Post

Sunday, December 06, 2009

Moira Rogers has a good post which adds an important caveat to my simple formula that earnings = royalty rate x sales volume: Why 3rd Party Royalty Rates Matter. Third party sales will be increasingly important as the ebook market matures.

9 comments:

Moira Rogers - Bree 6:45 PM  

Actually, I thought about your site while I was spending a few days formulating this. Because it wasn't until recently that I wondered if the people reporting numbers to you were including 3rd party sales. I know I've told you before how much I love your site and the service you provide, but it wasn't really until I had a ton of my own data from epublishers that spanned the spectrum that I really understood how much those numbers could vary when it came to practical money.

Whaqt I don't have is a good understanding of how the 3rd Party ratios have changed from a few years ago. I have no Fictionwise or ARe numbers from before 2009, so I can't be sure if ebook sales are growing because of distribution, or shifting to distribution, or both.

Anonymous,  1:39 AM  

Does this mean you're going to convert to actual $ amounts instead of the copies sold to help clean up this misconception?

Anonymous,  2:04 AM  

I think third party retailers matter a lot, and I think publishers who try to manipulate those royalty numbers so they receive more (such as by offering a higher retail price on third party sites) will shoot themselves in the foot by alienating readers who know better.

With more and more "multiple publisher stores" in the market, having multiple distribution outlets will become even more essential.

Treva Harte 5:46 AM  

Authors better hope larger distributors like Kindle really max out in volume because they take a largish cut. A lot of distributors are also slow to pay out. Epub royalties are becoming much more complicated.

roslynholcomb 8:13 AM  

I'm pulling my spreadsheet together now so I'll have concrete numbers, I've already got a sense of it, but I want to see it on a chart. (I'm visual that way.) I would think that third party vendors would make up the difference in volume, but if they don't, why bother?

Moira Rogers - Bree 8:23 AM  

Roslyn, I do think that the 3rd Party sales are absolutely worth it still. For one thing my data is skewed--I've only had stuff on sale for about 16 months and because of the lag in both uploading & reporting, I don't have very much 3rd party data from FW & ARe. I think that's the sort of thing that plays out over time.

I also think exposure is big, and while some people might wait and buy the book discounted on FW, there are going to be enough people buying it who never would have gotten it from the publisher's website that it will make up for the difference in royalties--IF the royalty percentage is fair to the author to begin with.

And for people who publish with multiple epublishers, it's nice to have all (or most) of your books listed in one place so sales from a new title at publisher X might move some backlist titles from publisher Y. (Obviously websites can do that as well, but the convenience of being able to buy them all in one place is hard to beat!)

M Barnette 10:55 AM  

Fictionwise really screws over the pubs and the authors with their constant sales. In addition they no longer have the live reporting they had before B&N took over so pubs can no longer see how many copies have been sold. We have to trust them not to lie to us. Barnes and Noble's 'customer service' for publishers and authors is horrible. I have been trying--as has my publisher--unsuccessfully to get them to remove books that are out of contract and have been for months. No contact has resulted in the books being removed from the B&N site, and I'm not the only one with this problem.

Fictionwise also no longer replies to efforts by new publishers to list with them. This has been an ongoing issue since B&N took over there.

All in all, my experience with Smashwords has been much better and they take a far smaller cut.

Emily Veinglory: 8:24 PM  

From my point of view I guess I am still more interested in sales numbers. There are a lot of things like book length and pricing strategy that I didn't want to get into.... But there is Brenda Hiatt to check for how it lines up with earn out.

Xandra Gregory 8:48 PM  

From what I understand, epubs vary widely on their royalties from 3rd party vendors. Some only sell via 3rd party sites, some offer royalties on cover price no matter where the book is sold or what discount a vendor may have gotten, and some offer royalties at percentage of whatever the publisher pulls in from the 3rd party. Some pubs have differing royalty rates for 3rd party vendors versus native website sales (reminiscent of book club royalties with print publishers). All very confusing.

I'd like to understand if a 3rd party has a huge discount sale on a title, is the payment to the publisher discounted as well. For example, if a vendor that normally gets a 50% discount on publisher titles priced at $5.00, the sales of that title at the 3rd party net the publisher $2.50. If the 3rd party then decides to have a blowout sale or special discount offer and sells the book for $3.00 instead of $5.00, do they pay the publisher $1.50 instead of their usual discount on cover price?

With a vendor of material stock, the vendor usually purchases the stock at wholesale, and the dealer gets the full wholesale price no matter how much the vendor marks up (or marks down) the stock to move it from the shelves. But with a virtual product, there's no stock to "expire" so to speak.

I'd be interested in any insights.

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