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Is a Flat Royalty Rate in Our Future?

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The publishing industry is in a state of flux. We all know that. The digital revolution has upended the book business in under 10 years. But, truth be told, we’re just at the beginning of the changes we’re going to see in the way books are distributed. We need to admit that, and we need to prepare for it. Everyone interested in the existence of a thriving and diverse literary culture will have to work together in a spirit of open-mindedness if we’re going to prosper in the new digital economy.

I saw some of that spirit recently at a panel discussion at BookExpo America in May. I was moderating the panel on behalf of the Authors Guild, and sitting on the panel were the head of a Big Five publishing house, the head of a leading independent publishing house, and a literary agent. Panels like this can get contentious. Each side sees it their way, and they tend to dig in their heels.

We were talking about royalty rates. The standard e-book royalty rate for many publishers is 25 percent of net amount received*; the publisher shares just a quarter of his profits with the author. At the Authors Guild, we’ve always said that when it comes to e-books, it should be twice that. There should be a 50–50 split in e-book profits. Publishers, naturally, disagree. At any rate, we were having a back-and-forth on that topic, when one publisher raised the idea of a flat royalty rate. That is, rather than having different royalty rates for different book formats (25 percent of net for e-books, 10–15 percent of list price for hardcover, 6–7 percent of list for trade, for example), why not make it easier for everyone and pay the author one set rate across all formats?

When the idea of a flat royalty rate came up, a strange thing happened: everyone seemed to agree it was at least worth considering. The details will need to be worked out in the marketplace, of course, and we may never get agreement on what that rate should be, but it has some benefits for authors. Most importantly, it could make royalties less complex, and it would end the practice of certain publishers favoring formats that pay the publisher more (because the author gets a lesser share). Alongside a flat rate, we’d also like to see the end of deep discounting, a practice where publishers are contractually permitted to reduce authors’ royalty rates when selling at a discount to large booksellers or wholesalers.

In any event, the principle is what’s important here, and it’s stunningly simple: Let’s think together and work together to find solutions that benefit us all.

* The standard e-book royalty rate many publishers use was misstated in the version of this article that ran in the July 2016 print edition of IBPA Independent magazine. The correct rate is 25 percent of the net amount received.

About the Author:

Photo of Mary RasenbergerMary Rasenberger is executive director of the Authors Guild, the nation’s oldest and largest professional organization for writers. Based out of New York City, the Authors Guild’s mission is to support working writers and advocate for the rights of writers by supporting free speech, fair contracts, and copyright.

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