Should You Sell Your Audiobook Rights? #Audiblegate

If you have not already, please sign the #Audiblegate petition here and follow the current at Audiblegate.com to be kept upgraded as this crucial project establishes. Now over to Colleen, to discuss the value of intellectual residential or commercial property, especially in relation to audiobook rights.

Colleen Cross

This is the fourth in a series of posts about the campaign known to self-publishing authors as #AudibleGate. Today were looking at whether or not audiobook authors need to offer/ license audiobook rights.

Should You Sell Your Audiobook Rights?

You offer up a percentage of earnings for a guaranteed payment, plus the possibility of earning beyond your initial advance.

So authors venturing into audio face hard decisions.

Should you keep your rights, and presume all threat in producing your own audiobooks?
Or, should you appoint your audiobook rights to an audiobook publisher?

Independent authors keen to reach new audiences and capitalize on their intellectual property (IP) have actually branched off into audiobooks increasingly more. Such audiobook authors deal with two options: work directly with storytellers to produce audiobooks, or offer their rights to an audiobook publishing company.

Audiobooks normally cost much more to produce than ebooks, yet audio royalties are much lower. Much of this is brought on by the stranglehold Audible has over the market and the control they wield over choices like price point. Marketing and promo of audiobooks is hard since ACX, the indie publishing platform operated by Audible, provides no facility for authors to set their own prices or utilize rate promos to market their audiobooks.

Making an audiobook can be a big in advance financial investment costing authors thousands of dollars. An authors time is also important. That time spent effects author income down the road.

Publishers are buying up audiobooks like insane right now. In return for the right to produce, theyll offer your audiobooks for an agreed term.

Show Me the Money

Perhaps youve chosen to take the “sure thing” and sell audiobook rights to your six-book series. Aside from the time conserved by not doing it yourself, you got an advance, state $1,000 per audiobook.

DIY Publishing by means of ACX

You made presumptions on total audiobook sales, which were really simply a guess. Lets say you assumed you would offer 1,000 audiobooks of each title, which appears totally workable over a 7-year term. You even more assumed a $19.95 selling cost for each audiobook, with a 40% royalty (ACX special terms), based on ACXs guide:

Utilizing that $19.95 market price x a 40% royalty rate outcomes in a $7.98 royalty. ACX just pays you $4.15. If you havent yet read my blog post on royalties, read it right after this post, because it explains why the math is wrong. Lets look at the numbers using the real, proven amounts paid by ACX for a 5-10 hour audiobook, which is a per unit royalty of $4.15. We will even more assume audiobook sales of 1,000 units. Which, by the way, is much higher than most audiobooks will ever make. Your books are excellent enough to draw in the attention of an audiobook publisher, so lets be positive!

Your math will look like this for your audiobook (9 hours in length), presuming you sell 1,000 audiobooks:

Do it Yourself

Expense: $0.

Expense: $200 Per finished hour (PFH) x 9 hr. audiobook = $1,800 expense per audiobook

There is no guarantee you will sell anything close to 1,000 audiobooks, naturally. If your books do not sell, you could even lose your $1,800 financial investment under the DIY alternative. For a 6-book series, thats nearly $11,000 expense, and perhaps a risk you cant afford to take.

Net return: $1,000.

Threat vs. Reward.

Expected incomes: $4.15 x 1,000 books = $4,150.

Net return: $2,350.

Anticipated profits: $1,000 advance + 30% of all sales after the advance earn-out.

Notification I didnt include any sales earnings beyond the preliminary advance. Youll see why in a minute.

The concern is, 30% of what? If your contract defines net earnings, then that 30% isnt computed on the audiobook selling cost. It is determined on the net payment your audiobook publisher gets. That includes only the net profits of audiobooks not clawed back by ACX/Audible as returns.

Contract with Audiobook Publisher.

If you sign with a publisher and your audiobooks dont offer, you will not lose anything, and the advance appears good enough. If you do sell a lot, then your upside is likewise limitless due to the fact that as soon as you earn out the advance, you will continue to get 30% royalties.

Why does that matter?

Do audiobook publishers receive the very same $4.15 ACX/Audible royalty for a 9-hour audiobook? Do they have the very same ACX agreement that DIY indie authors do? Based upon anecdotal evidence, it appears that a lot of or all audiobook publishers have the exact same ACX arrangement as a DIY indie author.

That suggests that an author gets simply 30% of $4.15 from the publisher, which equates to $1.25. It might be even less, if that book is sold for a rate lower than $19.95. Naturally, thats just if the audiobook publisher is special to ACX. Many publishers are non-exclusive and pay the author 30% of $2.59, which equals $0.78.

That $0.78 is more reduced by their percentage commission if your offer was through an agent. This isnt appearing like such a lot any longer, is it?

Because 30% of an already little number leads to an even smaller revenues allowance against your $1,000 advance. It will take a lot longer to earn out. Like perhaps even never. Some authors are content to never ever get revenues beyond the advance, rationalizing that they never would have done audio otherwise. The devil is in the information.

What bonus do publishers provide you for taking 70% of an already small net royalty?

You would assume that an audiobook publisher would release to all sales channels, and not just exclusive to ACX/Audible. Obviously, a minimum of one major audiobook publisher just releases through ACX. Im sure if you ask around, you can find out which one. This critical info dramatically affects your income, so be sure and ask before signing any offers where the publisher distributes. In reality, be sure to have it composed into your agreement.

Lets presume your audiobook will be released to all sales channels. You would need to offer 1,282 audiobooks (on Audible) to earn out your $1,000 advance at $0.78 per system. Thats a lot of audiobooks! Suffice it to say that, aside from your preliminary advance, you may never see another penny for the rest of your 7-year term.

Are they promoting your book? Investing in your career? Organizing trips for you?

Are you alright with that when producing the audiobook yourself offers you total control and future continuous greater revenues? We indies love our control. Thats why were indies in the first location. Yet numerous of us turn over ownership of important copyright without a reservation.

Most likely not.

7-Year Term is still a 7-Year Term.

Before the truth was exposed about ACX/Audible revenues, Indie authors assumed 40% (special) and 25% (non-exclusive) incomes, based on retail selling rate. Audiobook publishers utilizing the very same ACX platform are subject to the same rates.

The Sure Thing.

Hang on … You are still composing the series.

Due To The Fact That till Fair Deal for Rights Holders (FDRH), ALLi, and other author companies battled, and Audible yielded, a 7-year lock-in term used to everyone using the ACX platform, including publishers and distributors. If you signed with a publisher, your term stays at 7 years, or whatever your agreement term is.

Unless your audiobooks are total bestsellers in each audiobook shop, those small portions mean you probably will not get anything beyond that preliminary advance.

Possibly youve thought about all these elements and choose to sign with a publisher anyway. Publishers still pay advances, so you decide to go for it. A bird in the hand, so to speak?

The Devil is in the Details.

What if they dont wish to buy future books in the series? That might indicate various covers, narrators, and so on. If you dont own it, you likewise cant market the first audiobook in a series.

There is another even larger “but”. Its going to sound a little crazy …

Are audiobook publishers even knowledgeable about ACX/Audibles innovative use of portions?

When their bottom line suffers, so does yours. As soon as you sign with a publisher, you are locked in and lose any flexibility to check out alternatives.

Did the publishers base their rights acquisitions, and royalty payments, on 25% or on 13%? An incorrect assumption has even higher effect on audiobook publishers than it does indie authors. A publisher on a rights-buying spree might have already invested hundreds of thousands, or even millions of dollars, based on erroneous information.

Audiobook publishers make substantial upfront investments with the expectation of big, but steady, returns on investment months and years later. Erroneous assumptions will drastically impact publisher success. Thats without even factoring in ACX/Audible revenues claw backs for returns, which was unknown to both indie authors and publishers up until ACX/Audibles bulk returns modification that clawed back sales in October 2020.

What does all this mean for you? It implies that even if you get a good advance and earn out, somewhere down the road, your publisher might end up in a cash crunch.

What if audiobook publishers got it incorrect? Only when their cash on hand balance diminishes will they realize that those anticipated 40% or 25% royalties never emerged.

The Unknown Risk.

Will they stay solvent long enough to pay out your profits?

Should You Sell Your Audiobook Rights? Modify Your Perspective.

Seven years is an actually very long time to pay for mistakes and mistakes, even under the very best financial circumstances. Simply since a publisher is owned by a big conglomerate does not indicate that their parent company will bail them out. Youll never get anymore money from a bankrupt publisher, and great luck getting back your audiobook rights.

After all, nobody has a crystal ball, although you are now much better notified. Selling your audiobook rights isnt about getting cash youre leaving on the table; its about making excellent service choices for your future.

Ask your future or existing publisher these questions.
Make sure specifics are defined in your contract.
Structure your agreement so that you are paid a percentage of retail list cost, with those prices defined in your contract.

The questions raised in this post are critically important and require thoughtful answers, both from authors who have already certified their rights, and authors considering it.

At least you got an advance. Simply dont rely on anything else. Thats not so awful, other than for something. What if your book is a phenomenal one in ten-thousand mega bestseller? What if the audiobook market explodes? It is on track to exceed the ebook market within a year. Its not looking so good anymore, is it?

Perhaps you should wait and produce your own audiobook?

You may not have the cash today. When you offer your rights for a small amount, its comparable to borrowing at an extremely high interest rate, with a financial obligation you live with for 7 years. Why not save for the production costs? Each time you sell an ebook, deposit a percentage of it into a separate checking account. Maybe itll take you a while to save enough, but it cant potentially take as long as 7 years, where youll just earn $1,000.

Unless a publisher is investing considerably in your book on the marketing side, its crazy to go for anything less than maintaining the rights for your own book.

Now, you do not have the time or cash, however its not that lengthy or difficult to make an audiobook. Its enjoyable to end up being a manufacturer. Youre an indie, with a sense of adventure, arent you?

Isnt it worth a little money and time to keep the value of your IP?

An incorrect presumption has even higher impact on audiobook publishers than it does indie authors.

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Today were looking at whether or not audiobook authors must sell/ license audiobook rights.

Please share this #Audiblegate post with other rights holders. Understanding is power

Marketing and promo of audiobooks is tough given that ACX, the indie publishing platform run by Audible, uses no center for authors to set their own costs or use rate promos to market their audiobooks.

Do audiobook publishers get the same $4.15 ACX/Audible royalty for a 9-hour audiobook? Based on anecdotal proof, it appears that most or all audiobook publishers have the very same ACX plan as a DIY indie author.

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