Buying choices

Book buying choices that work for everyone

I don’t like it when I see my books sold cheaply. But I’d like to think I’m speaking on behalf of all authors who are caught in this trap. It’s easy to think that readers gain a great deal by being able to buy books cheaply. But if a price is unrealistically cheap, it can damage the author’s reputation (or brand, as we say now), and lead to the impression that books are a cheap commodity and reading is an experience that’s not worth very much.”

Philip Pullman, July 2017

Authors are keen to ensure their books reach as many readers as possible, and we encourage reading as a source of good for both individuals and society as a whole.

Book buyers are no exception to the rule that everyone loves a bargain. But as the Fair Trade movement has shown, a good deal for the consumer can add up to a poor deal for the producer. Authors want their books to be read. But they also need (and deserve) to be paid. In a survey in 2013, ALCS concluded that writing is a very risky profession with median earnings of around £11000 for “professional” authors and around £4000 for all authors, less than one quarter of the typical wage of a UK employee. A reader’s buying choices can have a significant impact on such earnings.

Neither publishers nor authors can influence price at which a retailer sells any books, whatever impact a very low selling price may have on the rest of the market. Any influence must come from book buyers.

What the author is paid per sale is dictated by that author’s contract with his/her publisher (or, for self-publishers, the terms required by retailers). Payment clauses tend to be long and complicated but here[1] we flag up the impact on authors’ royalties from different forms of sale.

To be clear, this about giving you the facts – not telling you where to buy or source your books. That’s your choice.

Independent and chain high street booksellers

I very much want independent booksellers to survive and prosper. It’s not exaggerating to say that they are the lantern bearers of civilisation.”

Philip Pullman, July 2017

Independent bookshops and chain high street booksellers have to pay staff, business rates for a high street presence (which online retailers don’t), and they do not have the space or clout to stock books in bulk, so generally pay more for their stock than online retailers and supermarkets. They also cannot afford to treat bestsellers as loss leaders.

And authors receive full royalties on books sold by local bookshops.

We believe that the habit of culture should be as much a fundamental aspect of the environment as, for example, the country’s architectural heritage. The physical presence of high street bookshops underlines the importance of books, culture and learning. There is no joy like browsing in a bookshop and discovering a new book by a favourite author - or being led by serendipity to pick up a new author’s works. Many also willingly provide venues to promote local reading groups and authors.

There are no losers.  Independent bookshops and chains need buyers to survive. We urge everyone to support their local bookshops.

Public libraries

Libraries are a huge social benefit. Authors receive a royalty on the initial purchase of the book by the library. In addition they receive a modest payment (called PLR) currently around 8p each time their book is borrowed from a public library to compensate them for the fact that the library book will be lent out many times.

There are no losers. We urge everyone to support their local library.

Amazon and other online retailers

Amazon has done much to raise the profile of books and ensure their wide availability. With its print-on-demand and ebook facilities, it is a welcome outlet for self-published works which would probably struggle to find a publisher, or another bookseller willing to stock them. Particularly with some forms of genre fiction, it is meeting what would otherwise be a gap in the market. However:

Amazon and royalty-generating book sales

Amazon can and does absorb the cost of selling some books at well below cost price when it chooses, and it insists on publishers giving it the same sort of discounts given to the largest high-street bookshops – though Amazon does not have to meet the financial constraints faced by high-street bookshops. And that’s not all.

New and used

Amazon is not only selling books it sources from publishers but it is a marketplace for new books sourced from other routes. It is also the world’s biggest second-hand book dealer and has almost total control of the ebook market. And it allows those versions to be sold alongside ‘proper’ sales, directly competing and very often at prices which undermine ‘proper’ sales.

Clicking on ‘new and used’ often brings up a bewildering number of offers at wildly differing prices.  It is clear that “used” means second hand. An author will not receive a royalty on such sales although they may have received a proper author royalty on the initial sale of the book. The provenance of ‘new’ books is much less clear. A buyer would never know but ‘new’ in this context means ‘pristine’ not ‘a first sale of a book on which the author receives a royalty’.  

Where are all these cheap books coming from? We know that some heavily discounted titles intended for export, surplus stock initially bought ‘firm’ by mail order companies or bookclubs, and remainder stock turn up on Amazon Marketplace. Where only a hardback has been published in the UK, but there is a paperback version in print in some other territory, those paperbacks sometimes leak back into the UK market.  In all these examples, authors receive very low royalties on the initial sale, none of course on that copy’s re-sale on Amazon – and at the same time these versions undermine ‘proper’ sales and can undermine the economic viability of publishing the work at all.

We are urging Amazon to stick with the undertakings it gave to authors at its inception by prioritising ‘proper’ sales and making it very clear to buyers whether or not a copy is one which will generate an author royalty. Amazon’s principal loyalty may be to buyers not creators, but it should still treat authors fairly and recognise that, in addition, its own massive wealth is very much down to them.

Where viable we look to publishers to regulate the circulation of what can end up as cheap second-hand copies. We also urge Amazon to make clear to buyers where a sale is royalty-generating, strenuously to police territorial rights, and not to sell books – in print or electronic form – at prices so low that they damage any chance that the book world (authors, publishers, high street bookshops which give physical prominence to books in a way Amazon cannot emulate) might have of remaining commercially viable.

Supermarkets, clothes shops and other non-traditional outlets

Supermarkets and major general retail chains buy in large quantities and in return demand very high discounts from publishers. Sometimes the titles in question are niche (e.g. art books) but more often are the anticipated bestsellers.  In addition, books are a small part of these retailers’ business and often sold ultra-cheap as loss-leaders.

Publishers might sometimes conclude that the certainty of the size of the order outweighs the size of the discount they are having to concede.  Authors receive much lower royalties when the publisher sells to the retailer at a high discount but sales may be higher. The chances for independent booksellers and chains to sell the same books is  undercut, and the perception is likely to be that the true cost of creating and publishing a book is much lower than it is in reality..

Neither publishers nor authors can influence price at which the retailer sells those or any books, even if a very low selling price undermines authors and high-street bookshops but publishers can control the availability of such copies and we are encouraged by the positive response we are receiving to our campaign to ensure that authors are part of the decision-making.

Second-hand and charity bookshops

Second-hand books have an environmental advantage and it is great to see books shared and loved, but authors receive no royalty or other payment from sales of second-hand books  

Charity bookshops

In addition, authors are concerned that charity bookshops can compete unfairly with high street bookshops since they receive stock for free and do not have the overheads of high street bookshops as they are staffed by volunteers and do not have to pay business rates.

Discount high-street booksellers and garden centres

Such booksellers usually buy remaindered or special sales stock. The author will usually have only received a small payment but these sales do not usually compete directly with full price sales.

The Book People and other mail order and direct sale companies

Such companies buy in large quantities and they buy ‘firm’ (rather than sale or return). In return they demand very high discounts from publishers (sometimes as much as 80%).

The issues are the same as those relating to supermarket sales but with the added problem that because the company has acquired stock ‘firm’ (and very cheap), it is likely to offload any unsold copies under ‘new and used’ on Amazon, where those copies compete directly against royalty-generating sales. Control of the existence of such copies is in the hands of publishers and again we are campaigning hard to ensure that authors are part of the decision-making.

Ebooks

Authors usually receive a royalty on the sale of a legitimate ebooks. However, watch out for the following:

  • Free download sites – almost all such sites are illegal, and neither publishers nor authors receive any remuneration if ebooks are downloaded from them. Some don’t even actually sell what they claim, but are phishing for your credit card details. Don’t be taken in!
  • Public libraries are lending an increasing number of ebooks. Authors will receive a PLR payment for those loans from 2018, so do support your local library.
  • ebook lending sites - Please note that ebook lending is usually unlawful in the UK unless it is done through public libraries or other sources authorised by the author or publisher.
  • We are concerned at Amazon’s market dominance of the ebook market which enables it to insist on large discounts from publishers which leads to a lower income to an author. Do consider other download sites when buying ebooks.
  • VAT is charged on ebooks but not on physical books. That means that 20% of an ebook purchase is deducted in tax leaving less revenue for the publisher and author. We believe that reading should not be taxed.

Our final word: all authors want to be read and all reading is good - so please, however you do it, keep reading!

 

In the news

[1] How do authors get paid?

We are talking here about general consumer books. Different terms may apply to scholarly, educational, and highly illustrated and specialist non-fiction works.

Authors don’t get a salary, or standard wages of any kind; once an author has written a book it can be traditionally published - or the author can self-publish.

A self-published author will pay to publish the work (often sourcing outside help such as editors and designers) and will then sell it using any proceeds to defray the initial outlay and in the hope of making a profit. They will usually receive a proportion of any retailer’s receipts, so the more you pay the more they receive. That is quite simple.

The situation with books published by publisher is far more complex.

Publishers set the recommended retail price of a book, and retailers (and distributors) will acquire copies from the publisher at a discount (the discount to major retailers is likely to be more than 50%).

The author will make a deal with a publisher and enter into a contract. Traditionally under the contract the author will be paid an up-front sum, known as an ‘advance’ (advances are generally modest these days). An advance is a non-returnable loan paid by the publisher in anticipation of, and offset against, royalty earnings.

Royalties

The author is then entitled to royalties (which are first used to pay off any advance) from sales of the work. Traditionally the royalty is a percentage of the recommended retail price. A typical royalty is 10% of the RRP on hardbacks and 7.5% on paperbacks: so on a £16.99 hardback the author would receive around £1.70 for each copy sold and on an £8.99 paperback they would receive 67p. This royalty usually drops so that where the discount demanded by retailers is e.g. 52-55%, the author gets four fifths the full royalties, with a further drop on sales at even higher discounts.

Net receipts

It is also increasingly common for authors to be paid not on a percentage of the retail price but on a percentage of the monies paid to them by retailers – known as the publisher’s ‘receipts’. In other words the discount demanded by the retailer is deducted before the author gets a percentage of what remains – and as the discount grows, the royalty shrinks.

The discounts we are talking about here are those demanded by the retailer. Once it has acquired stock, the retailer can choose to sell it to readers at whatever price it wants. Usually the retailer will want to make a profit, but some major retailers (Amazon, and supermarkets) may be willing to treat bestselling books as a loss-leader.

When it comes to ebooks, the retailer pays the publisher a percentage of the recommended retail price (taking a discount in line with that for printed books) and the author receives 25% of the monies paid by the retailer to the publisher.

Fixed fee

For some specialist non-fiction and multi- contributor works it is not uncommon for authors to be paid a fixed fee and the same is often true for illustrators. That means that the author does not receive anything above the initial fee however many copies of the book are sold. However it is still important to the author that the publisher receives a decent return on the books because if a book doesn’t sell well the publisher is unlikely to commission the author again. The SoA believes that all contracts should be subject to a bestseller clause so if a work does significantly better than expected the author can share the reward.