The Business Model of E-Publishing

If you belong to the Romance Writers of America, you’re aware of the ongoing controversy over the validity of e-publishing and whether RWA treats e-pubbed authors unfairly. Many of us e-published authors get frustrated with the impression that detractors don’t understand how the e-book industry works and insist on confusing all e-publishing and Print on Demand with vanity publishing. A letter in the latest RWR (RWA’s membership magazine) approaches the issue from an angle I haven’t seen before. The writer says, “Publishers who do not pay advances use a profit-sharing model without any base compensation.” After repeating the frequently stated argument that absence of an advance signifies the publisher’s unwillingness to accept risk (paying for website space, editing, cover art, and online distribution doesn’t constitute an investment in the work?), she further says, “Unions have always fought against profit-sharing models of compensation because they provide no guarantee the worker will actually be paid for her work.”

This argument does seem, at first sight, to make some sense. It occurred to me, though, that the parallel may not be completely valid. Authors aren’t employees of their publishers (except in specialized “work for hire” situations). Authors are independent contractors. Moreover, aren’t there a few jobs in which even employees’ incomes depend directly on sales volume (I think—isn’t that the way car salesmen and real estate agents work?)? Personally, I don’t feel my e-publishers are taking avaricious advantage of me by paying much higher royalty percentages at more frequent intervals in lieu of up-front advances.

Over a period of almost forty years, I’ve had books released by academic publishers, print small presses, e-publishers, and mass market publishers. Each type has advantages and disadvantages. Large traditional publishers pay advances and get books into national distribution. The writer gets the benefit of the “impulse purchase” factor by having her work on the shelves of chain bookstores where readers who haven’t heard of her before may stumble across it. So a traditionally published book from a major publisher (as opposed to a small press, which may have trouble getting its books widely distributed) will probably sell lots more copies than an e-book. On the other hand, the book may not “earn out” for years after publication (if ever), producing a long wait for royalty payments over the advance. And mass market publishers tend to be painfully slow in evaluating submissions and putting books into print after acceptance. From initial submission to actual publication could easily take three years.

Most e-publishers work a lot faster, both in replying to submissions and in getting books on the market. They typically pay royalty rates of 35% or more, and payments come quarterly (or in some cases, monthly) instead of semiannually. Communication from the publisher is likely to be much more frequent and prompt. Authors are allowed input into decisions on cover art, blurbs, etc. The only drawback of e-publishing, actually, is that unless you’re already famous or have stellar promotional skills, you probably won’t achieve nearly the level of sales you would with a mass market publisher. While it’s true that most independent e-publishers embrace the best of both worlds by publishing their products in trade paperback as well as electronically, there’s still a distribution problem.

Another wonderful thing about e-publishing, however, is the flexibility. You can publish short stories and novellas as stand-alone works rather than part of a magazine or anthology. If you write novels of epic length, an e-publisher can afford to take a risk with that size of book because a large file doesn’t cost any more to upload than a small one. Also, you can mix genres and write about quirky topics, because e-publishers are more willing to cross boundaries. And with no inventory costs to worry about, they can keep your backlist on sale forever. New readers can always find your earlier books.

Margaret L. Carter
Carter's Crypt