Friday, July 25, 2008

Do E-Authors Make Money?

by Raelene Gorlinsky

This topic came up in our discussions of E-Myths and in a recent request for information in an article on the topic for RWR magazine.

The quick answer: Yes, e-authors in certain genres can make a lot of money.

But be aware of this reality: Only e-authors in the hot trends sell enough to be making any sort of decent income in e-publishing. Erotic romance authors can easily make enough to support themselves, a few make into six figures annually. I’ve heard that some science fiction books do extremely well in digital format. Books for smaller or niche markets that wouldn’t be picked up by traditional print publishers can succeed in digital format. These are genres where readers couldn’t find what they wanted on bookstore shelves, and so went to ebooks where it was available. And even now that erotic romance is plentiful in print, many readers are already committed to the ebook format so it continues to sell well. But most fiction does not, at least yet, git high sales numbers in digital format. However, ebook usage is growing, and with the Kindle and Sony and other new devices coming, will continue to grow even faster.

So where does the income come from for e-authors?

~ Few e-publishers provide advances, but royalty payments are immediate (monthly at most e-pubs, quarterly at a few) and reflect actual number of copies sold. With print books, many authors never earn out the advance or see any additional royalties. And they have to wait a year or more to get any royalties.

~ Ebook royalty rates are typically 35-40%. (Traditional print publishers who also hold the e-rights and are now making their print books available digitally are often paying only 15% or less for the ebook royalties.) Versus mass market print royalty rates of average 8% for new or low midlist romance authors.

~ E-books continue for sale for the life of the contract, they don’t go “out of print”. Therefore the e-author continues to accrue royalties from backlist. Every time the author releases a new book, we see sales go up on their backlist titles. For print books, the book is gone from store shelves within a few months. A reader can special-order it or get it at an online vendor (like Amazon), but that accounts for a lesser percentage of sales. And except for the big-name authors, once the print run is sold out, most books (especially genre fiction like romance) seldom get a new print run –- the print demand just isn’t there to make it worthwhile. So the author ceases to earn income on the older titles, and doesn’t get sales from them when a new book comes out.
It is the backlist sales that account for a lot of income of e-published authors, once they’ve got a bunch of books out.

~ Writing income is tied to frequency of release, number of books out. In e-publishing, an author can get releases out more quickly, and can have more releases –- thereby starting to earn money faster and on more books.

And here's something very important to keep in mind: For many authors of ebooks, the choice was not between “how much could you make with an ebook” versus “how much could you make with a print book” –- it is between the ebook sales or zero sales. This is most certainly NOT because e-publishers will take books not “good enough” for NY print pubs –- the better e-pubs have quality standards even higher than NY. But an e-pub can make a profit on a much smaller number of sales per title, so can take a chance on genres or story types, on niche markets, or on new authors, that NY is not interested in because the traditional print pubs don’t feel the books have big enough market potential. An author like this could sell that great book to an e-pub, or not sell it at all.

That is, after all, the history of erotic romance. NY did not believe readers wanted this type of book, so wouldn’t publish it; e-pubs proved it sells fantastically, and then NY jumped on the bandwagon. We’re seeing the same thing now with certain subgenres of erotic romance, like ménages and male/male -- it's been very hot in ebooks for quite a while, the NY print publishers are just recently venturing into it. Paranormal romance was highly popular with ebook readers when NY was contracting very little of it, now it’s hot. Authors in those genres could not sell to NY, even though the stories were fantastic, so sold to e-publishers. NY print publishers of romance have now learned to follow ebook trends to see what the next hot fad will be, and who the best authors are.


Debra Glass said...

Great article! Thanks for posting it!

Anonymous said...

Very interesting. Though it seems a bit counter productive for your interests.

Heather Massey said...

>I’ve heard that some science fiction books do extremely well in digital format.

That is music to my ears. Do you know if this refers to SF or SF with romantic elements or science fiction romance?

I recently blogged that a breakout SFR book will most likely come from an e-publisher. Now, I am nobody, but I can't be the only one to see that there's an interesting dynamic here with e-publishers being able to take more risks and how that impacts future markets.

Regardless of my own bias I salute the vision of e-publishers. I for one would love to be able to walk in a bookstore and see a variety of m/m, for example, on the shelves (even if it's not my cuppa). I just want the option to be widely available. Because one never knows what one might be in the mood for some day....

Kimber Li said...

Excellent article. It gives hope to those of us who can't color inside the lines to save our lives.