Why books, like bananas, can be worth paying more for …
Over the past few months I’ve seen stories online that tell us about UK farmers who have been forced to sell their milk to supermarket chains below the cost of production. We’re regularly bombarded with information about people overseas who have no choice but to work for a pittance which is so small that they can’t afford to live at all. Concerns over the welfare and the right to a ‘fair wage’ for work done has resulted in a movement which has been labelled ‘Fair Trade’, where the shops stock coffee, bananas, chocolate and other goods that come under this label. We are encouraged to pay more for these items, as the money paid allows more of the cost to go to those lower down the chain. The aim is, of course, to ensure that the people who do all the hard work growing and making these things in the first place are given better pay, improved working conditions, and that they can work and live on the income they receive. There is a perception that these Fair Trade items are often better quality than the mass-produced fare, that because we are paying more for them, not only are we helping the producers, but that we get something better in return as well.
It would be interesting to speculate on what happens if you apply this principle to books. Some years back, Amazon began trading in cheaper books. Using a ‘supermarket’ mentality, Amazon bought in bulk from publishers, and increasingly used their position to negotiate better discounts. Initially this seems to have been on the basis of ‘we’re new, so we need a helping hand’, but latterly has been more along the lines of ‘we’re the only game in town’. So not only did they get the books cheaper than anyone else, but they discounted them as well, selling them at less than anyone else could. This is in part because they can demand large discounts (or they won’t stock your books) and also because the sheer volume meant that they could sell some titles at less than they paid for them, and still make a vast profit overall. This was made possible in the UK because the government had allowed the dissolution of the Net Book Agreement. From 1900 until 1997, all new books had to be sold at their recommended retail price. Unfortunately, some bookstores wanted to discount – reasoning that cheaper books would mean more sales – and they were prepared to take a small hit on their percentage to do that. However what the NBA did was to level the market – books cost the same everywhere, so a small high street bookshop could do as well as Tesco. However with the loss of the NBA, in came predatory pricing, and loss leaders, where a big store could offset the loss made on one item with a profit made on another. The small bookshops could not compete and so slowly started to dwindle.
And now there are eBooks. Notably for the Kindle, which is rapidly becoming the favourite with readers, publishers, and self-published writers who are trying to make a name for themselves. In the meantime the discounts that publishers are asked to give in order to get their books into the few remaining book stores, or onto Amazon, is getting higher and higher, crippling the authors as they have no say in what happens, and have to rely on contracts agreed in advance to protect them as the landscape constantly changes.
Despite the fact that book sales are increasing overall, advances – the up-front money paid to an author by a publisher in ‘advance’ of their sales – are actually getting smaller and smaller, and in some cases have vanished completely in favour of a buy out, or some sort of profit share. Publishing contracts have clauses that allow publishers to sell the books for less than the print cost, or at higher discounts, and in these cases, the author takes the hit on their royalty – receiving nothing whatsoever if the book is ‘sold’ at less than cost, or reducing dramatically if the books are sold at higher discounts. All this means that the author suffers as they don’t get royalties, because there is no money left for them. In addition, publishers aren’t putting as much money behind up and coming authors for promotion and marketing. Corners are being cut in every way possible, and mostly to the detriment of the authors. And why? Because the booksellers are demanding more and more discount. I’ve heard of some booksellers wanting 60% discount, plus full sale or return at the publishers’ cost, and they won’t pay the shipping to get the books to them either … all that has to be covered by the publisher.
I can’t liken the plight of authors to that of people in third world countries who are paid a pittance for their labour: certainly in the UK, we aren’t starving just yet, or living in abject poverty. But professional writers are more often than not forced to have two jobs with their seemingly successful writing careers taking a back burner to the day job that really pays their bills.
We live in a world where people increasingly think that they are owed everything for free, and that they don’t have to pay into the system which provides that which they consume. Some readers think they should be ‘given’ books for nothing, or that they should pay just a few pence as that’s all they should cost. There is no consideration or respect for the months and years of work that have gone into the making of the product. There is even criticism if you try and charge a reasonable price for a book. Readers make no apparent distinction between the professional (who needs to live off what they are paid) and the hobbyist (who does not).
When we had the Net Book Agreement all UK retailers had by law to sell new books at their recommended retail price. This meant in turn that a clear royalty was being paid to the author. It was simple for the author to understand what they would be paid – x units sold at y RRP meant a z payment at whatever percentage had been agreed. Authors could therefore budget and work out how their income might run, and established authors had a good idea of what they might earn from any given book based on their previous sales. In those days a lot of writers were able to live on their advances and royalties. Today this isn’t the case. With royalties now based on ‘price received’ rather than RRP, authors are at the whim of the discounts, and the more the discount, the less the author gets.
This situation has been caused by greed. Supermarkets wanted to offer discounts, mostly to encourage customers to buy more with them, so they made more money overall. Online sellers wanted to offer discounts, to undercut the competition and to get people buying from them. But they can only do this if the producers are complicit and agree to the discounts being demanded. With the boom of the world wide web, and internet businesses making millions overnight, you can see why sellers everywhere wanted to have room to manoeuvre and to protect their profits. They wanted a bigger mark up. Whether they needed it or not is irrelevant. This is business and making money is all that these large companies care about. There was never any thought at all to the little guy or gal who was sitting back in their study writing the product that these fat cats were then going to make a massive profit on.
It is quite sobering to think that anything from 40 to 60% of the price you pay for a book goes to the company selling it to you – and if they are online, then they don’t even have the same cost overheads (premises and so on) of a bricks and mortar store. No wonder that people are up in arms that Amazon don’t pay taxes in the same way as other stores do.
The principle of being able to earn a fair wage for the work you do is an important one. If writers can’t live on their work then they will either give up writing completely or they will work extra jobs, squeezing in the creation of their worlds of wonder around the edges of their regular lives. This in itself does not allow for the best creative working conditions. Nor does it encourage authors to spend literally months, and often years, writing a book. Nor does it allow the financing of research, of travel, of going to some distant, dusty library to leaf through ancient tomes in search of obscure histories, facts and figures to bolster the fiction or to form the backbone for the non-fiction.
Many people seem to think that eBooks should be free. But the same amount of time and effort has gone into the writing of these works as goes into producing a traditional paperback. There might not be the print and storage costs for a physical copy, but the author still deserves an advance, and they deserve royalties. If the books are professionally produced then an editor will work many months with the author, refining and improving. Someone needs to typeset the book, to create the cover, to market it, to promote it. All of these costs mount up. It can cost a publisher many thousands of pounds before a single copy of a book even appears in a bookshop or online.
If we assume that the royalty on a book is around 10% paid to the author (and it can be less, and sometimes is more), then the common misconception is that on a book selling for £8.99 the author will therefore be getting around 89 pence. Unfortunately, most publishers these days will pay royalties on net sale not on RRP. So if a bookseller insists on a discount of 65%, this means that the publisher receives just £3.14. The cost price per copy (depending on print run size of course) is often between one and two pounds. On top of this there are the costs for designers, artists, typesetters, editor, publicity, premises, marketing, storage, shipping, accounting … the list is endless. And the author ends up with 31 pence from the sale of a book with a RRP of £8.99.
So for months and months and possibly years of work on this book you are earning just 31 pence a copy. As far as I am aware, the average mid-list author will sell between five and ten thousand copies of a paperback (if they are lucky) which means that they will earn £3100 pounds if they sell 10,000 books. The writer could easily have spent six months writing this book full time. That means they have earned an average of £500 per month. Let’s say that the writer has spent eight hours a day, five days a week on this book. That’s 40 hours per week. There are 52 weeks in a year – half a year therefore equals 26 weeks spent on this book. That is 1040 hours. If we divide £3100 by that, then the writer is getting £2.98 per hour for writing the book. Less than half the minimum wage and that is gross, so before tax, and before any of their expenses incurred during the writing are taken into account.
I wonder if the average person would work for this – or whether any other business could get away with paying that as a wage in the UK?
This is in part why authors are so beguiled by Amazon’s self-publishing model. You get 70 or 35% of the price (depending on how much you want to sell it for). If you opt for selling it at 99c (which is 63 pence) then you get 35% or 22 pence of that – not much less than what you might receive from traditional publishing. However (and it’s a big however), if you are unknown, then you are up against the thousands and thousands of other unknown authors in the biggest bookshop in the world which has every title ever published in stock all the time. And so the chances of you selling even a fraction of 10,000 copies is practically unheard of. What you almost certainly won’t do is make enough money to live off.
So what we need are Fair Trade books. Perhaps if everyone started considering and paying a realistic price for books. Buy in bookstores, rather than online – you’ll be helping to keep the high street bookstores and their employees in work. Cast your eyes up from the 99c books to those priced at the far more realistic $2.99 and above – you may get a better quality product from a professional author as a result, and they in turn will receive more of your money. Don’t, under any circumstances, accept free pirated eBooks – pay for them, and research where you are buying them from as many pirate websites seem on the surface to be completely legitimate. If you can’t afford to buy books then go to your local library (assuming you still have one) and borrow them. The author receives a small royalty from the loan, and you will be helping to keep your local library in business. Also consider that almost everyone selling a book, whether online or otherwise, is making a profit on that sale. If the book is cheap, it’s because they have gained a bigger discount from the publisher, and that reduction in income is in turn passed to the author.
These are moral choices. Just the same as choosing to pay more in the supermarket for those Fair Trade bananas and coffee because you know that it is helping someone, somewhere to be paid a decent wage for the work that they have done to bring you those goods. Are we going to have Fair Trade books or are we going to find ourselves without new literature and professional writers because the majority of authors can no longer make ends meet by writing?
Originally posted on Do Authors Dream of Electric Books on 31st August 2012.