E-book royalty rates rising, shows Digital Book Census

Digital royalty rates paid to authors by publishers are creeping upwards, though there remains widespread disagreement over the level at which they should coalesce.

According to the results of the 2011 FutureBook Digital Book Census, the proportion of publishers paying a royalty of 15% or less has halved in the past year, while the percentage paying above 20% has grown slightly.

However, authors and agents who believe the battle has been won will be mistaken. A fifth of publishers were still paying below 20%, with 16% offering a rate of between 21% and 25%. Just 7% paid between 26% and 50%, while only a very small number paid over 50%. One in 10 publishers (10.4%) said they paid a variable rate.

It is understood that the major publishers are offering digital royalty rates close to 25% net of receipts for most authors, though there have been reports of escalators being agreed, once a title has earned out its advance, as well as more generous rates for bestselling authors and writers with strong backlists.

Authors and agents have been seeking higher rates, with some believing that a rate of 50% on e-books could become the norm. Speaking at the Frankfurt Book Fair earlier this year, literary agent Andrew Wylie claimed a 50% digital royalty rate will become widely accepted by publishers once the digital "shake-out" settles down.

Wylie said: "Publishers were suitably careful about how they covered their costs in that transition period, but after the shake-up—which is probably still a point in the future—it will become obvious that a higher digital royalty is appropriate. It is happening a little now, and it will come to be the norm."

The Digital Book Census report provides the most comprehensive research into what the publishing industry thinks about digital developments, comprised as it is of responses from 1,650 industry professionals. The overwhelming picture is of an industry in transition, even as sales grow beyond all previous expectations.

There is widespread agreement in the Digital Book Census that digital sales will, in time, overtake print sales. More than half of respondents felt that the tipping point would arrive before the end of the decade. Around a quarter (25.9%) predict it will occur in the UK between 2015 and 2019, with smaller numbers forecasting 2012 (4.7%), 2013 (8.5%) or 2014 (16.5%).

Only a tiny minority (3.6%) think digital sales will never overtake print ones. Whether these forecasts are realistic—or rash consequences of the hype around e-books—remains to be seen.

The full findings of the report will be detailed at the FutureBook Conference 2011 on 5th December, and the report will be available to buy from that date, priced at £129.