Economics of Digitial Self-Publishing

Aspiring authors with an interest in digital self-publishing would be wise to review this June 3rd article from the Wall Street Journal: ‘Vanity’ Press Goes Digital. One of the big factors driving the viability of self-publication is this month’s changed revenue split with Authors by Amazon – rising from 35% to 70% for e-books priced from $2.99 to $9.99.

The article breaks down a lot of the economics involved, especially for authors with a smaller fan base:

“Some people will be tempted by the 70% royalty at Amazon,” Mr. Nash says. “If they already have a loyal fan base, will they want 70% of $100,000 or 15% of $200,000 for a hardcover?”

Another example shows how one author is the leveraging his backlist titles:

Mr. Konrath says he’s already earning more from self-published Kindle books that New York publishers rejected than from his print books. In the past 14 months, he has sold nearly 50,000 Kindle e-books, and at the current royalty rate, he makes $58,000 per year from his self-published works. When Amazon royalties double this summer, he expects to bring in $170,000 annually.

“I’m outselling a bunch of famous, name-brand authors. I couldn’t touch their sales in print,” Mr. Konrath says.

There’s also a breakdown of the status of the e-book industry (sales tripled to $313 million in 2009), and how e-books compare to traditional publishing (only estimated at 5-10% of the overall market), but the interesting part here is the author’s perspective. Despite the abundance of book writers these days, the ‘best’ writers have some important business decisions to make. And in some cases, clout. Publishers will need to sell the entire package of their services – editing, marketing, brand authority, distribution channels – and yet, may still need to sharpen their pencils.

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