This is why, in a nutshell, authors are going to leave the publishing houses:
Joe: We figured out that the 25% royalty on ebooks they offer is actually 14.9% to the writer after everyone gets their cut. 14.9% on a price the publisher sets.
Barry: Gracious of you to say “we.” You’re the first one to point out that a 25% royalty on the net revenue produced by an ebook equals 17.5% of the retail price after Amazon takes its 30% cut, and 14.9% after the agent takes 15% of the 17.5%.
Joe: Yeah, that 25% figure you see in contracts is really misleading. Amazing, when you consider that there’s virtually no cost to creating ebooks–no cost for paper, no shipping charges, no warehousing. No cut for Ingram or Baker & Taylor. Yet they’re keeping 52.5% of the list price and offering only 17.5% to the author. It’s not fair and it’s not sustainable.
Amazon offers 35% royalties on 99 cent ebooks, 70% royalties on $2.99 and up. Every way you turn it, the publishers are screwing authors on ebook royalties. And self-publishing has become easier, faster, cheaper, and more respectable. And it’s opening the market for short stories as well, a market that used to afford a living for writers like Kurt Vonnegut, but that now pays almost nothing.
Joe: You’re on track to make $30,000 this year on a self-published short story. I’m not aware of any short story markets that pay that well.
Barry: Well, it’s early yet, but yes, The Lost Coast has done amazingly well in its first few weeks, netting me about $1000 after the initial fixed cost of $600 for having the cover designed and having the manuscript formatted. I plan to continue to publish short stories and I’ll be getting the new John Rain novel, The Detachment, up in time for Father’s Day, and I have a feeling that each of the various products will reinforce sales of the others.
That sound you hear is the sound of thousands of authors realizing that writing for money is not dead. In fact, it sure looks like a new age of writing and reading is just around the corner.
Time to decide between Nook and Kindle, methinks.
For the real writing/reading geeks among you, here’s the link to the full conversation—all 29 pages of it.