Wednesday, October 19, 2005

More on Harlequin e-Books

Lots of chatter on the romance loops yesterday with authors expressing concern over rumors that Harlequin is only offering 6% royalties for their new e-books. People are outraged that Harlequin is not offering the 35%-plus royalties that e-publishers such as Ellora's Cave and Loose ID offer.

Look at it from Harlequin's perspective for a moment. A new author approaches them with a manuscript. They say to her, "Okay, we'll offer you a contract. We'll publish your book in both print and e-book versions. You'll get a $4K advance and 6% royalties on both. Do you want the deal?"

How many authors do you think will turn them down? I'm betting not many.

Let's say Allie Author replies, "Well, I don't like the deal you're offering me on the e-book. I'll sell you the print version, but not the e-book."

It's going to take Harlequin a year to get the print version to market. Do you think they're going to be willing to have Allie Author peddling the e-book elsewhere in the meantime? An e-book that can go to market in just a couple of months, way ahead of their print version? There's no way Harlequin will agree to that deal.

So, Harlequin says, "Sell us the rights to both or the deal's off." If Allie Author does walk, in today's world, she'll probably end up at a print house that doesn't offer e-books, or at an e-publisher that won't guarantee a print version. Harlequin's deal starts looking better all the time. I'm betting a bunch of writers will accept it.

There is an upside for unknown or little-known writers, as a group, in this scenario. We all know the per-unit cost of a print book is more expensive than the per-unit cost of an e-book. It's not just the process of physically printing a book that makes the hard copy per-unit cost so expensive. Harlequin has warehouse costs, and then they have to handle all the returns on the print copies. For argument's sake, let's say the sell-through rate on the print copies is 50% (half the books printed are returned by the bookstores for credit). Meanwhile, the sell-through rate on e-books is 100% (no virtual books are returned). The additional margin they make on those e-books will bring down Harlequin's total expense-per-unit for Allie Author's manuscript, making it easier to reach profitability. Yes, bottom line, I'm saying that Harlequin will make more money than before. Perhaps that dynamic will also make them more willing to take chances on newer, unknown authors.

As a writer, I'd be trying to structure my deal with Harlequin to build in incentives on both sides of the deal. Instead of trying to force them to give me a higher e-book rate, I'd be negotiating for a sliding scale rate on BOTH the print and e-book version. I'd say, "Okay, I'll take the 6% on the first 100K books sold (print and e-books total sales). But I want 7% on the second 100K books sold and 8% on the third 100K, etc. up to a 10% max." That deal doesn't cost Harlequin anything up front, but allows for a better payout for me, the writer, if my book sells well. On subsequent books, it could be very lucrative.

It's a cold, hard world out there. We need to be businesspeople as well as writers.

Just musing . . .

1 comment:

Sherrill Quinn said...

As always, you've looked at a potentially negative thing and found the positives to it.

Let's just hope that the e-pubs don't turn around and start offering less than what they're offering today...