What is a Fair Ebook Royalty?

The increasingly volatile argument over ebook royalties threatens to do great damage and needs to be calmed down. The truth is that no one knows yet what a fair royalty is for ebook sales. It is undoubtedly true that the fairness of a 25 per cent ebook royalty is largely untested. This is because sales are small (less than 1 per cent of the UK market) and the model still developing: the costs, price points and degree of physical book substitution are all largely unknown. Viewed in isolation, as the royalty for an edition with lower costs (e.g. no print and inventory), I can understand why writers are concerned that publishers are not offering a fair return, especially for backlist titles. Viewed, however, in the context of the large investments publishers make in advances, creating a publishable text and promoting to create a readership, the same royalty might look more reasonable. This uncertainty about what is fair is already reflected in contracts for ebook rights which allow renegotiation once the market has settled. The presentation of this complex debate to consumers by the media, though, suggests that publishers have dug in at an unreasonable rate, authors are outraged, and digital-only publishers and ebook retailers are riding to the rescue with dramatically higher shares of income for authors. Publishers, though, are not blameless in this.

Publishers must engage in an open process of establishing a fair royalty, one that evaluates the real costs and profits across physical and ebook publishing – i.e. for the work. They also need to convince writers, agents and the media that digital publishing is not a discrete activity. If we allow digital formats to uncouple from traditional print formats we will undermine physical publishing, which for the foreseeable future will be by far the more significant earner for writers and publishers. It is in writers’, publishers’ and, I would argue, readers’ interests that this be prevented.

The truth is that publishing inhabits a finely balanced ecosystem. To hive off digital rights from physical publishers is shortsighted about the long-term interests of authors and book culture. It is equally unwise for publishers to insist on a percentage royalty without making it clear that they seek to share fairly the wealth created with authors. Meanwhile, we should really all concentrate on creating a thriving market for ebooks alongside physical books, expanding the total market, and ensuring that physical and digital thinking is joined up. To do that we need to acknowledge that nothing can yet be set in stone and ensure that this is understood by the media and consumers. It’s a project to undertake openly and with attention to the complex issues. The alternative is to squabble over percentages in a weakened and fragmented market.