Audio royalties come under scrutiny  as sales of audiobooks continue to soar

Audio royalties come under scrutiny as sales of audiobooks continue to soar

Debate is raging in the publishing industry over whether authors are benefiting fairly from the audio and e-book boom, with concerns over the “Spotification” of books, as sales soared even further in lockdown.    

Agents are urging for a greater share of royalties for authors beyond the standard 25% from these formats, while publishers argue writers do receive their fair share.    

According to the Publishers Association’s recent Publishing in 2020 report, audio downloads have soared by a third to a value of £133m (+37%), while consumer digital sales rose by almost a quarter to £418m (24%), of which £267m is domestic (+29%), across invoiced sales. Over the past five years, audio downloads have risen by 241% overall.   

However, almost every agent who spoke to The Bookseller revealed concern for how authors are getting the “thin slice of the digital pie”. Caroline Michel, c.e.o. of PFD, believes the situation is too rigid. “Publishers very quickly made [e-books and audio] part of the volume rights to a book, but have stuck religiously to 25% of net receipts as a royalty. You get movement on backlist books... but when it comes to frontlist titles, it is pretty set. I know that publishers for certain authors—you know, the huge sellers—can get some movement, but for most authors it is set and publishers seem to treat it as a nice add-on rather than actually a pretty established format.     

“Publishers now are making audio very much a take-it-or-leave-it part of the deal. There should be a fairness for the author in those royalties. You have exactly the same with audio, 25% of net receipts without any proper consideration for how audio is not an add-on. It’s another established format.”    

The president of the Assocation of Authors’ Agents and Blake Friedmann m.d. Isobel Dixon said: “I don’t believe that what many might cite as ‘standard’ for digital formats is calibrated well enough to be truly fair remuneration for the creators of the work.

"The statistics are very clear on the fall in average author incomes and yet we see corporate profits in publishing rise. And then there’s the spectacular increase in Amazon’s profits, with books in print and digital formats part of the picture. It’s heartening to see reports of the rise in reading overall, and I’m grateful for the resilience shown by publishing as a whole, but it’s sobering to look at it on a granular level: to see who the winners are who take all, or so much; which authors fall through the gaps in those balance sheets; and how little so many authors earn per copy, across many formats.  Issues around subscription and streaming models only add to downward pressure on authors’ incomes, part of the narrowing of the field of possibility for writers. All this at a time when companies purport to be seeking to promote greater equality, diversity and inclusion and welcoming more writers’ voices.

"It’s up to individuals and companies to negotiate the best deals they can, but it continues to be dismaying to keep seeing evidence in hard numbers of authors getting a very thin slice of the digital pie, while so much is expected of them in terms of input and effort, beyond the writing, than ever before.”

Literary agent Madeleine Milburn said industry standard rates needed to be revised across traditional publishing. She explained: “Digital publishers and imprints offer a far more competitive rate for e-book and we’re also seeing more and more digital publishers offering advances alongside their preferential royalty rates. Given the consistent growth of this format for both digital first and traditionally published authors, it becomes difficult to comprehend why a traditionally published author should see less income for their e-book edition just because their book is available in a traditional format too."

Trade body the Society of Authors is also concerned about the royalty rate. Nicola Solomon, its c.e.o., said: “We believe that current royalties paid to authors are too low across the board, and should be reviewed and increased by the publishing industry.     

“Our concern is that publishers often do not do this risk-balancing exercise but tend to put a net cap on royalties of 25% of net receipts on e-books and audio, no matter what advance they have paid or the risk they have taken. It is particularly egregious when publishers are publishing already successful works that have earned out their investment in e-books or audio, when rewards should be shared at least 50/50, or when advances are low or non-existent, so the author’s time and contribution in creating the work is immense in comparison with the risk taken by the publisher.”    

The online issue

Streaming and subscription models pioneered by e-retailers such as Amazon (through Kindle Unlimited) and Audible were cited as serious areas of concern by some agents. Many in the music industry have called for fairer payment to artists on streaming platforms in recent years, and earlier this month a Copyright (Rights and Remuneration of Musicians, Etc.) Bill in Parliament sought to amend UK copyright law, so that secure “fair remuneration” for musicians featured on such platforms. Could this be a canary in the coalmine for the literature industry?    

“Issues around subscription and streaming models only add to downward pressure on authors’ incomes, [and are] part of the narrowing of the field of possibility for writers,” Dixon said. “All this at a time when companies purport to be seeking to promote greater equality, diversity and inclusion and welcoming more writers’ voices.”    

An agent, who spoke to The Bookseller on the condition of anonymity, agreed. “My worry is the constant ‘Spotification' of audiobooks: if you think authors are doing badly now, then wait until that happens. This is the constant push by Amazon, for membership options of ‘pay £10 a month’ where you get as many books as you want, with e-books as well as audio. It will inevitably result in less money for the authors. The writers get a percentage of the overall pool of money from this, rather than [a cut of their titles’] sales normally. A lot of the titles [on subscription platforms] are rubbish, but they are creeping towards better and better content, which means the more serious the threat to authors.”    

A key trade figure suggested that the anxiety over such membership models was more about the issue of a monopoly of one retailer. “I think there’s an opportunity in opening the market and making sure no one retailer has the monopoly. It’s always important in a market to ensure there are multiple players and to ensure consumers have the choice of more than just one.”    

They added: “I feel that agents want to have an anti-competitive conversation about this. I think agents should speak directly to publishers about this when they do deals with their authors. Agents might have frustrations about particular rates but I don’t see any difference between print, audio and e-books.”    

Some cited the positivity of newer, smaller digital publishers such as Joffe Books and Canelo, which pay a greater share of royalties rather than in advances. Similarly, the Hachette-owned digital imprint Bookouture offers a no advance/high royalty model, paying a 45% digital royalty (as stipulated on its website), paid to authors quarterly. Michael Bhaskar, co-founder and publishing director of Canelo, said: “From the start we have prided ourselves on offering 50%, going up to 60% net receipts on our e-book sales [rather than paying advances].”

No corporate publishers responded to The Bookseller’s invitation for comment, except for Amazon. “At Amazon Publishing, we are committed to an author-centric publishing model and innovating on behalf of our authors,” said Mouncif Faqir, head of Amazon Books for Europe. “We pay competitive rates on e-book royalties and offer transparency in the publication process, and real-time access to sales data and monthly royalty reports.
We also only negotiate rights where we believe we can create opportunities that will benefit the author.”

The independent view

Meanwhile, indie publishers stressed the costs of digital formats. Sam Jordison, co-founder of Galley Beggar Books, cited the “considerable backroom costs in producing e-books, and even more so for audiobooks”. He added: “There’s also the question of how much those e-books are selling for, given the nature of the promotions on Amazon—and the horrors of the streaming model—all of which is a long way of saying I always worry when people try to suggest e-book royalty rates aren’t fair if they are already higher than paper royalties.”     

Karen O’Sullivan, founder and publisher at Orenda Books, echoed how publishers are heavily investing in these formats. “The ‘boom’ is also fuelled by an immense amount of money poured into [book marketing service] BookBub, Amazon advertising, sponsored products and marketing, which is expensive.” She also cited the additional costs of “commissioning our e-book distributors here and in the US/Canada, Amazon co-op charges, the cost of staff hours [in] constantly updating metadata to compete and pitching for promotions, advertising... the apparent ‘windfall’ isn’t really that at all”.    

She added: “Far from raking it in, publishers are spending a lot of money trying to keep e-books in the headlights, in an extremely competitive, noisy market. We have always looked at e-books as part of the book budget as a whole, and e-book income definitely supports our ability to create, print, market and sell physical books. That said, I am painfully aware of how little authors are making in general, and we have a rising royalty in our contracts for all formats, to try to help pass on more. But the costs are constantly rising. What we should be looking at, as an industry, is book pricing across all formats, which would allow more to be paid to authors, without whom there would be no industry... There are significant issues at the heart of this debate that need to be addressed.”