News / Canada

Between e-books and Amazon, how do authors get paid?

Last week, Canada's biggest authors penned a strongly-worded letter to the country's biggest library. Writers like Margaret Atwood and Vincent Lam were rattling their pens in protest over a policy that allowed the library system in Toronto to purchase used copies of bestselling titles from the public.

The library claimed the program was needed to reduce waiting lists for popular books, but to the 31 undersigned authors, it was another blow to a publishing industry already reeling from "great technological and social change."

"Were the program expanded, we believe it would do harm to writers and publishers depending upon slim and diminishing revenues of their own," the letter read.

Strong words, but are they true? In an age of e-books, Amazons and self-publishing success stories, Metro opens the book on how contemporary writers and publishers are – or aren't – getting paid.

Advances and royalties

Despite the technological upheaval mentioned by Atwood et al., the book publishing industry still functions much like it did before the arrival of the Internet.

Once an author inks a deal with a publisher, they're given a cash advance – the more popular a book is expected to be, the larger the advance – and hope to collect royalties from sales.

According to John Degen, director of the Writer's Union of Canada, royalties are set at between 10 and 15 per cent of a book's retail price.

Only a select few authors in Canada earn a living from royalties, Degen said, with most "cobbling together income" from other writing gigs and appearances.

"The reality is that most books don't earn out their advance," he said, while also noting that advances have gotten smaller as publishers become more risk-averse.

"The industry has survived by consolidating and tightening up their contracts," he said. "You need a serious track record of blockbuster sales to get an advance that will give you a living."

E-books

In 2012, the Ontario Media Development Corporation estimated that e-books accounted for 15 per cent of book sales in Canada, a number that's expected to grow to at least double by 2018.

E-books are cheaper to produce than their paper counterparts, and are sold at only slightly lower prices. House of Anansi vice-president Matt Williams says electronic books cost his firm about 20 per cent less on average.

The result has been a higher profit margin for publishers and higher royalties for authors.

Degen said e-book royalties start around 25 per cent, but his organization is pushing for even more from publishers.

"We've done our own math and we don't see the justification for only 25 per cent," he said. "The cost of making the product is just so much lower."

Public lending rights

Believe it or not, authors in Canada are actually compensated for having their books in libraries. In addition to the royalties they receive when a library buys their book, they also receive an annual payment from the Public Lending Rights Commission.

Last year, the PLR program paid out $9.7 million.

The system checks a library's catalogue and notes the presence of a book. Currently, authors get paid the same whether there's one copy or 100 on the shelves, but those who administer the program are looking to change that.

Copyright

Authors are also paid when their works are copied or used by governments, educational institutions or businesses. In Canada, this money is collected and distributed by a group known as Access Copyright.

However, Degen believes recent changes to the Copyright Act have impacted how much money is flowing to authors. Between 2013 and 2014, he said Access Copyright payments went down nearly 30 per cent.

"We've watched a steady decline in the annual average earnings for authors," Degen said. "And I'm sure there are authors in Canada that have just given up because they can't earn a living."

Amazon

No single force has been as disruptive to the publishing industry as Amazon. Seen by some as a near-monopoly, the company accounted for 40 per cent of global book sales in 2014, according to Publishers Weekly.

The online retail giant is putting books in the hands of customers, but it's also been blamed for the closure of bricks and mortar book stores and accused of bullying publishers.

Degen said some authors see the company's emphasis on low prices as a race to the bottom, while others are embracing the site as a platform for self-publishing.

"Publishers used to be the gatekeepers and the authors were the supplicants, saying 'please publish my book,'" he said. "But now, you can avoid the publishing industry altogether."

Authors who retain their digital rights can sell e-books directly through Amazon and get royalties as high as 75 per cent. Degen believes the competition is forcing publishers to take better care of their writers.

"We look after our writers as best we can," said Williams. "It's about more than printing their books. We look after publicity tours and exploit other rights for film as best we can."

The future

In contrast to the doom and gloom touted by some authors and publishers, the Ontario Media Development Corporation says Canadian publishing industry is still growing at around 1.5 per cent per year. Sales of print books are trending downward, but those losses are being offset by the growing e-book market.

"The industry isn't going anywhere," Williams said. "It's contracting in some areas, but it's sure as hell growing in others."

The industry has also largely avoided the same fate as its peers in music and film, which saw their sales impacted by online piracy and new entrants to the market like Spotify and Netflix.

"In books, we're lucky," said Williams. "People still have bookshelves in their homes and you've got a lot of people who still value the printed book."