Half of something or a hundred percent of nothing?
December 13, 2013
One of the stories that gets passed around at our family gatherings is the one about my sister-in-law and her hesitance to go out on a date with a certain guy.
As the story goes, she explained her thinking to one of her sisters by saying the would-be suitor was too short for her.
The sister replied, “Well, he’s taller than nothing.”
Nothing like kicking a girl when she’s down, huh?
But the point is well taken.
Half of something is better than a hundred percent of nothing.
Which brings me to audiobooks and Audiobook Creation Exchange (ACX), Amazon’s portal through which authors, narrators and audio producers meet.
The other day I ran into an Indie author at a retail store, and she explained to me that she had been working on creating audiobooks of her works.
“Through ACX you can pick a narrator who will do the work and produce the book on shares,” I said.
“I don’t want to share my royalties with anyone,” she said.
And that pretty much ended the discussion.
I understand why an author would not want to give up a piece of her royalties. Who wouldn’t prefer to keep as much of them as she could?
But the book business is all about shares (royalty splits).
The genius of ACX’s model is that by sharing royalties with narrator-producers, authors can have their books created and distributed as audiobooks with no upfront costs.
That is a revolutionary idea for authors who otherwise would have to incur steep production costs. Those costs will easily run into thousands of dollars if the author purchases them up front.
Under the standard ACX contract, an author who agrees to exclusive distribution of his book through ACX receives a fifty percent royalty. That royalty has an escalator clause in it that increases the royalty percentage when book sales reach certain thresholds.
Under a “shares” program, the author splits part of her royalty with the narrator-producer as payment for the narration and production costs. A common deal is a fifty-fifty split, which means the author retains a twenty-five percent royalty.
How many authors received a twenty-five percent royalty on their books under the old world of traditional publishing?
Not many. Those royalties were in the six to ten percent range.
Now an author can keep a twenty-five percent royalty, have an audiobook produced with no upfront costs and have it distributed to Amazon, Audible.com and iTunes.
I can understand a select few writers not wanting that deal. For instance, if an author had a sales history that would lead her to project sales of a particular audiobook at 10,000 copies, she might prefer to pay the production costs up front and retain a fifty percent royalty. ACX permits that approach as well. If she hits her projected sales number, she wins the bet and has made a good business decision.
But for most of us a shares approach makes much better financial sense.
It allows us to make half of something, rather than a hundred percent of nothing.