Tuesday, July 27, 2010

The AG Puts Numbers to Odyssey's Model

Yesterday the Authors Guild (AG) issued an announcement here on the Advocacy section of their website with respect to the newly launched Odyssey Editions.

The AG didn't pull any punches:
To a large extent, publishers have brought this on themselves. This storm has long been gathering. Literary agencies have refused to sign e-rights deals for countless backlist books with traditional publishers ... Knowledgeable authors and agents ... are well aware that e-book royalty rates of 25% of net proceeds are exceedingly low ...

You go, Authors Guild!

The AG also voiced the same concerns I have expressed multiple times on this blog when they said: "Amazon has, time and again, wielded its clout in the industry ruthlessly, with little apparent regard for its relationships with authors or publishers or, for that matter, antitrust rules ..." The AG directs authors to this site here where they summarize Amazon's troublesome history.

The Authors Guild runs the numbers, using the agency model established by the Big Six and using the $9.99 price point for e-books that Amazon prefers. I'm going to expand on their explanation here:

First, if we use the Big Six's present system, Amazon gets 30% of the $9.99 price or $3.00. The Big Six publisher and the author share the 70% or $6.99. Using the Big Six's 25% royalty model, the publisher keeps $5.24 while giving the author $1.75. The author still must pay 15% to his/her agent or $.26 per copy, leaving the author a net total of $1.49 per e-book sold.

Next, let's see what happens when Odyssey replaces the Big Six in the equation. If we keep the price constant, Amazon still gets their 30% or $3.00. Odyssey and the author take the 70% share ($6.99). If we assume that Odyssey does not exploit its new position as a publisher and sticks to its 15% share as agent, the company would receive $1.05 while the author would pocket $5.94.

To summarize:

  • Amazon gets $3.00 in either scenario
  • The Big Six gets $5.24 in the first scenario and nothing in the second
  • The author gets $1.49 in the first scenario and $5.94 in the second
  • The agent gets $.26 per copy in the first scenario and $1.05 in the second

Yeah, I'd say Random House has a reason to be concerned.

And props to the Author's Guild.

1 comment:

Victoria Dixon said...

Pretty Cool. Thanks for sharing!