Amazon's CreateSpace is pushing its clients to do direct deposit

According to Galleycat, Amazon's CreateSpace self-publishing service is trying to push customers to accept direct deposit payments for their royalties instead of getting paid by check. The minimum amount of earnings for which CreateSpace will cut a check has been raised to $100 from $28. In addition, they now charge $8 to send each check (so, if you're only getting $100 in royalties, that's like paying 8% for your own money.) By comparison, CreateSpace will issue an electronic royalty payment for as little as $10, with no processing fee.

Bill will end discounting of new books in Israel, set minimum royalties

The Jerusalem Post reports that the bill under consideration in Israel to limit discounting of new books is now on track for passage. The Ministerial Committee on Legislation approved a draft of the law on Sunday, and the Prime Minister's office has said that it will approve it. Under the draft law, it will be illegal to sell books for less than list price for the first 18 months after publication, except during Hebrew Book Week and for a few weeks around Rosh Hashanah and Passover, where discounts of up to 10% will be permitted.

Royalty terms for authors will also be enforced by law: For the first 18 months after a title is published, authors will receive a minimum 8% royalty on the first 6,000 books sold, and royalties of at least 10% for all books sold above that number. The article also states that publishers will be obligated to pay authors at least 16% royalties on profits from their books, but it doesn't make clear how the two royalty schemes will work together.

What's more important to authors: Royalties or advances?

One of the strongest arguments for writers to self-publish their works is the potential to earn much higher royalties: Major publishers typically pay 10% to 15% royalties on the suggested list price of hardcover books, and 20% to 25% of their net revenue (wholesale price, or agency price minus 30%) for other formats. Self-publishers, on the other hand, can get as much as 70% of the sale price from Amazon and Barnes & Noble if they comply with those companies' restrictions. However, these numbers don't take into consideration the advances paid by publishers.

At the Digital Book World Conference that ended this week, Publishers Lunch Deluxe reported on a session on "Changing Author-Publisher Relationships" that shed some light on the question of advances vs. royalties. Madeline McIntosh, Random House's President of Sales, Operations and Digital said that over the last five years, for fiction titles, the company has paid 45% to 65% of its sales revenue to authors. Little, Brown Publisher Michael Pietsch said that, across all of Hachette Book Group's titles over the past 15 years, the share of the company's revenues that has gone to authors has risen from 30% to 40%.

Both companies' payouts are substantially higher than any standard royalty rate, suggesting that many, if not most, books fail to earn back their advances. The result is the same as a higher royalty on the actual number of copies sold. On the other hand, self-published books don't get advances, and the authors have to pay editorial, design and conversion costs themselves. As a result, self-published books start out much further in the hole financially, at least so far as the author is concerned.

The question for authors then becomes: Is it better to work with a publisher or to self-publish? If you know with absolute certainty that your book will sell more than it needs to in order to earn back any potential advance, you might make more money by self-publishing. However, if a publisher could sell at least two to three times as many copies as you could sell yourself, you're better off working with a publisher, since the increased volume will compensate for the lower royalty.

But what if you have no idea how many copies your book will sell? In that case, you probably should work with a publisher, because you'll get your advance no matter how many copies of the book are sold. However, there are two risks:

1. If the book earns out its royalty but doesn't sell many copies beyond that point, you might have made more money if you'd self-published it.
2. If your book doesn't sell well at all, the publisher will be much less likely to offer to publish your next book, and if it does, the advance will be substantially lower.

As a practical matter, the "publisher vs. self-publishing" question is often a moot point: If a book is rejected by multiple publishers, self-publishing may be the only option available. But, for those authors who can get a publishing contract, the decision may well come down to your confidence in the publisher vs. yourself.

Amazon's confusing self-publishing options

Tim O'Reilly just tweeted about Amazon's new Kindle Direct Publishing (KDP) program. This program enables authors to self-publish and have their eBook titles sold by Amazon. Authors are likely to be confused by Amazon's self-publishing options, for these reasons:

First, there are two royalty rates in the KDP program: 35% and 70% of the list price. To get the 70% rate, you have to give Amazon an exclusive on the eBook versions of your titles (you're allowed to sell the eBooks on your own website, but priced no lower than Amazon's price.) You also have to price the eBooks at least 20% less than the least-expensive print version of the same titles. In addition, you must support all the features that Amazon enables with the Kindle (text-to-speech, book sharing, etc.). If you fail to do any of these things (or don't meet other qualifications), Amazon will pay you on the 35% royalty schedule. Even with the 35% royalty, you still have to give Amazon "most favored nation" status on pricing--you can't sell eBook or print versions of your titles anywhere at a price lower than Amazon's price.

In other words, unless you give Amazon an exclusive and monitor all of your resellers daily in order to keep Amazon's list price the lowest, you could find yourself getting a 35% royalty with no recourse. Not such a great deal if you had expected to get 70%.

Another area of confusion is that Amazon has operated a self-publishing business, CreateSpace, for years. What if you want to distribute your title both in print and as an eBook? You have to work with and enter into separate agreements with both Kindle Direct Publishing and CreateSpace. What if you'd like to take advantage of the promotional packages and design services available from CreateSpace for your eBook? Too bad--CreateSpace only works with print versions, and Kindle Direct Publishing doesn't offer those services. Why aren't both programs unified in a single self-publishing program for eBooks and print? Ask Amazon, because it certainly doesn't make any sense to an outside observer.

I suspect that as more word gets out about the "gotchas" and limitations of Kindle Direct Publishing, publishers like Tim will have less and less to worry about.