Joe Konrath let me ramble on his blog today on the real reason behind why I decided to start self-publishing (but regular readers of this blog already know most of the story). Also Kristine Kathryn Rusch has an excellent post about how traditional publishers are making money (hint: not paying the writers near enough). Here's an excerpt:
But the biggest place that the publishers are saving money in the e-book side of things is author costs. Ten years ago, e-book rights got treated like any other subsidiary right. The authors got 50% of whatever the publisher got for that book.
The assumption in subsidiary rights is that the publisher would outsource them. That was especially true ten and twenty years ago, when book publishers published books only. But those of you who went to the links I posted above should have noted that the parent companies were major conglomerates with other holdings. So now, a lot of what used to be outsourced, from audio books to e-books, get produced in some other part of the parent company.
The suits at the parent company put pressure on the book publishers to change the contracts to reflect the in-house nature of the production. Contracts bought rights directly instead of splitting them, particularly in houses that also have a sister company that’s, say, an audio company.
Writers, writers organizations, and agents fought a lot of those changes, arguing that they still required the 50% of whatever the publishing house “got” for those rights. This battle got quite heated, and everyone expected give on both sides.
The battle was fought five to ten years ago (depending on the company), and back then, no one thought e-books would ever make any money.
So the writers, writers organizations, and agents had to cave on something to show they were “giving back” in the negotiation. They agreed to 25% of net or 15% of gross on e-books around that point, because “everyone knew” that e-books would never account for more than one-tenth of one percent of a book’s sales.
In current contract negotiations, e-books are no longer considered a subsidiary right. They’re a major point of sale, along with hardcover, trade, and mass market rights. Traditional book publishers have made e-books rights a deal-breaker in contract negotiation.
Either writers give the traditional publisher 15% of gross or 25% of net, or there is no contract. Some publishers are getting even stingier: 15% of net, not gross, and if you don’t like it, writer person, walk away.
Funny how things turn out sometimes, huh?