A Most Audible Alarm: ACX Chops Royalties

6 March 2014 iStock_000013877749Small photog LJupco texted story image

Table of Contents

  1. The White Noise of Falling Royalty Rates
  2. Ask the Question, Give No Answer
  3. Difficult Interpretations: “Not Your Friend”

The White Noise of Falling Royalty Rates

Porter Anderson, PorterAnderson.com, Writingon the Ether, Ether for Authors, London on the Ether, Jane Friedman, Ed Nawotka, Philip Jones, Publishing Perspectives, The Bookseller, books, ebooks, author, agent, Amazon, publishing, The FutureBookIn Audible Lowers Royalty on Self-Published Audiobooks,  Publishers Weekly announced it this way:

Up until now, Amazon was offering an escalating rate of 50%-90% on ACX titles sold exclusively; now it is dropping the rate to a non-escalating 40%. (ACX audiobooks distributed non-exclusively are dropping to a non-escalating rate of 25%.)

As if the winter wasn’t cold enough, you could feel a new chill hit the headsets. PW was following our good colleague Laura Hazard Owen at GigaOM, who took the time to point out that ACX (for Audiobook Common Exchange) has been undergoing its own evolution parallel to publishing’s:

At its launch in 2011, ACX was geared toward professional authors and publishers; Random House and HarperCollins posted books on the rights exchange, for instance, and Random House CEO Markus Dohle praised Audible in the official release for being a “great [advocate] for the audiobook consumer experience.”

Laura Hazard Owen
See? Laura Hazard Owen looks exactly as she did before the baby.

Boy, am I glad Owen’s back from maternity leave. She was missed. I finally prevailed on her to leave the kid a loaf of bread and a jar of peanut butter.

In Amazon-owned Audible lowers royalty rates on self-published audiobooks, she’s teasing out an important element of the news of Audible‘s change royalty-and-bounty structure changes:

Audible has increasingly geared ACX toward self-published authors and has begun to describe audio rights in terms of being “liberated” from traditional publishers: Its homepage, for instance, features bestselling self-published author Hugh Howey and mentions that Neil Gaiman used ACX to “liberate audio rights.” There’s also paranormal romance author Marta Acosta, who “wrestle[d] back her audio rights” from her publisher when “technology gave a giant kick to the backside of the publishing world and Audible.com burst onto the scene.” And self-published author Bob Mayer notes, “[W]hen I compare my ACX sales to my royalty statements from a few of my books that are still controlled by a Big 6 publisher, there is no comparison in sales, just as my indie eBook sales outsell my Big 6 eBook sales.”

She’s describing how ACX has positioned itself as an enabler of rights “liberation” for entrepreneurial authors…only to then yank half the rug out from under them by dropping royalties of up to 90 percent down to 40 percent.

She’s also talking about bonding, the kind of loyalty and fondness that smart branding and good service are meant to generate in customers, the kind of allegiance so beautifully created and capitalized on by ACX’s parent, Amazon.

Many, many authors have been thrilled with the ACX program.

Elizabeth Spann Craig
Elizabeth Spann Craig

I remember cozy mystery specialist Elizabeth S. Craig, for example, doing extensive blog entries last year on her experience in starting to work with ACX. In almost every element of the process, Craig seemed pleased and surprised to find how workable it was to audition voice actors, and with the plan that allows those actors to work initially without pay in exchange for a royalty split — which now may be worth a lot less.

In October, Craig’s Updates on ACX and Goodreads, Thoughts on Freebies was upbeat:

ACX—Still steady income for the $0 I put into the process. Readers are requesting that more books go to audio (several readers wrote that they’re losing their eyesight and can only “read” via audio). 

But as the Publishers Weekly story had it:

The move, Amazon said in the post, which takes effect March 12, 2014, will, in part, encourage authors to become more aggressive marketers. With the drop in royalty rate, for authors selling their audiobooks exclusively, Amazon has bumped up its “bounty” program. The bounty is the amount awarded to the author (or royalty earner) whenever an audiobook is the first purchase of a new ember of the organ. Previousy the bounty was  $25 and now it is $50.

Existing projects will retain the older royalty structure. New projects “on and after March 12, 2014” will come under the new regime.

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Ask the Question, Give No Answer

ACX from AmazonOn the ACX announcement page for all this, Important Update Regarding ACX Payments, the company unfortunately does that thing corporates do so well — asks a question and then doesn’t answer it. I’ll show you — question and then answer:

Q. What is the reason for this change?

A. We’re really proud of the innovations ACX has pioneered, including our aggressive payment structure and royalty sharing programs—and we are especially proud of the number of ACX audiobooks earning growing royalties. We are committed to continuing our record of innovation and creating and expanding opportunities for more rights holders and producers in 2014—both current users and those new to the service. Furthermore, we want to encourage Rights Holders and Producers to promote their audiobooks with the increased bonus payment from $25 to $50 (or from $12.50 to $25.00 on Royalty Share deals).

Nope, it’s not you. The corporati are at work. Somebody has vetted all good sense right out of that Q&A. They strictly do not answer the very question they’ve put to themselves. They asked, on the readers’ behalf, what the reason is for the change in royalties, right? Instead of answering, they proclaimed their pride in their innovations “including our aggressive payment structure and royalty sharing programs”—the very “aggressive payment structure and royalty sharing programs” they now are rolling back.

Want to see why this sort of slight of ham-handed non-speak backfires on you?

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Difficult Interpretations: “Not Your Friend”

Chuck Wendig
Chuck Wendig

Here’s Chuck Wendig, getting himself into the Ether once more, busy guy, with Diversify Your Publishing: Why Amazon’s ACX Royalty Change Matters. He writes:

Amazon is not your friend, author person.

Amazon is a giant corporation. It serves itself. You might think, It serves its customers, which is only true in that to serve itself it generally has to serve its customers. And this is entirely fine and normal. To reiterate: Amazon is not your friend. Its job is not to be your friend. Amazon is a great disruptor. Amazon is a powerful business. Amazon has done wonderful things for the World Of Books. Hell, I love Amazon Prime. I love that I can order chimpanzee chow, 9mm ammo, and drill bits at 3AM in the morning and have them in two days (though, hey, Amazon — your Prime shipping times are slipping, just between you and me). Amazon is also the publisher of some of my young adult books through its imprint, Skyscape. My experience there has been wonderful. Great editors, great attention, strong promotion, and they give me input and allow me to have control over the work and input over things like the cover. Amazon does a lot of cool things.

Amazon is still not my friend. Nor is it yours.

This is how the battle of public opinion is lost. You’re watching it in action. You’re reading Wendig (without a single curse word, I think he’s ill) show you exactly where trust and high regard for a company goes when it makes a move of this kind. Can this possibly be good business?

Hugh Howey
Hugh Howey

Well, speaking of guys who get themselves into the Ether a lot, Hugh Howey is one of the most successful of Amazon’s self-publishing authors, at least three times a Kindle Million Seller. In the past, he’s been an outspoken proponent of Amazon.

Now? Here you go:

Personally, I’m shocked that Amazon would do anything to fuel the speculation that once they grow big enough, authors will suffer. Whatever margins they hope to improve by this 10% move can’t possibly be enough to cover the damage they’ve caused in public relations or the power they’ve granted to their detractors.

Author EarningsThe piece in which he’s writing that is called ACX Lowers Royalty Rates and is housed at Howey’s new AuthorEarnings.com site on its blog page.

Some in the industry still are eager to dismiss Howey as a fine author with a good heart and an empty head for business.


Mike Shatzkin
Mike Shatzkin

Just this week, Mike Shatzkin has a rich, widely gathered piece out with the leisurely headline, Declarations and forecasts of Great Change in the book business need specificity to be useful and often do not provide it. It’s a good write, I hope you’ll read it, take your time with it, learn from it.

And in it, you see him write:

Generalizations about the book business, whether they come from a self-publishing author or an industry expert like [Brian] O’Leary, really require us to do a little parsing to make them useful.

agent, author, books, digital, ebooks, Jane Friedman, Porter Anderson, publisher, publishing, Writing on the Ether, Tools of Change, O'Reilly Media, author platform, blog, blogging, journalism, TOC, #TOCcon, Author (R)evolution Day, #ARDay, Publishing Perspectives, Ether for Authors, Ed Nawotka, The Bookseller, FutureBook, Philip Jones, Sam Missingham, Foyles, #FutureFoyles, London Book Fair, #LBF13
Brian O’Leary

He’s right. And he’s referring, by the way, about Brian O’Leary’s fine essay for The Bookseller contest (which is basically a competition for writing about Great Change).

It was run at The FutureBook site here: Publishing has entered a new and different era. I hope you’ll read it, too. O’Leary actually goes after the Great Change predictors in his own, incisive way, arguing that you’re on shaky ground whether you’re saying “the prevailing supply chain will somehow adjust [and]…look like the past, just that much more digital” or that we’re about to witness “the demise of reading as we know it.” As O’Leary writes:

Neither of these two endpoints makes sense. We’re moving inexorably toward what I have called a “pre-book world”: a living manifestation of the development, refinement and extension of a particular work. At various points, an object – a book or an eBook, as examples – may be rendered, but it will be a subset of a conversation that includes content, comments, annotations, sources and more.

And for my money, Shatzkin then goes on to do a super job of offering three good questions that he (and I) would like to see placed front and center each time someone declares a Great Change, as he terms it, is nigh-ish. Everybody should have to bullet these points right up at the top. How do we get a law passed about this? Here they are, for when you’re about to write your next Great Change piece, quoting Brother Shatzkin:

(1) “Which books might be affected?”

(2) “How soon can we expect a meaningful change in the perceived utility, and therefore the demand, for the affected books?”

(3) “How likely is it that whatever the Great Change is going to be that publishers are well-positioned to affect or control or accommodate it?”

Howey’s piece came out before Shatzkin’s.  So I’ll just hit those three rightful questions from Shatzkin for you, no extra charge, using what Howey has written.

(1) Which books might be affected by a Great Change represented by the ACX royalties roll-back? Answer: Here’s Howey telling you that we’re talking about self-published audiobooks. Those are the ones that could be affected. Howey writes:

The barrier to entry is high for self-publishing audiobooks. If the VA [voice actor] is paid upfront, costs can exceed $3,000 for a professionally voiced work of 100,000 words. Another way to produce works through ACX involves the VA doing the work for free in exchange for half the royalties received for each sale. A reduction of royalties means it will take longer for the author to pay back the VA in the first case and makes the risk of performing for free much greater in the second case.

(2) How soon can we expect a meaningful change in the perceived utility, and therefore the demand, for the affected books? Answer: We don’t know. Here’s Howey with all the right questions:

It remains to be seen what the result of the reduced rate will be…Will the third type of ACX production — author-recorded — become the new defacto? And will that result in a drop in quality? Will VAs stop auditioning for as many jobs, now that earning out will be more difficult? Will a new distributor emerge, and how will they match Audible’s current distribution network? Will ACX go global in order to make up for the drop in participation by casting a wider net worldwide? Or will the backlash and fears of KDP or CreateSpace following suit with their own reduced royalties cause Amazon and ACX to do an about-face and raise the flat rate to a more reasonable 50% or 60%?

Porter Anderson, Writing on the Ether, Jane Friedman, author, publisher, agent, books, publishing, digital, ebooks, RogueReader.com, The Rogue Reader, Jason Ashlock, Movable Type
Jason Allen Ashlock

(3) How likely is it that whatever the Great Change is going to be that publishers are well-positioned to affect or control or accommodate it? Well, since this one is about self-published audiobooks, I think we can safely say that publishers (other than ACX/Amazon) are not at all well-positioned to affect, control, or accommodate it. Remember the “bifurcation” of the industry that Jason Allen Ashlock and I like to talk about?

But Howey does have this to say about what is likely ahead in his best estimation:

The result of this will inevitably be less participation in the ACX program. 40% is an odd rate, in my opinion, as authors and VAs are delivering a final product that only needs distribution. The letter announcing the royalty rate points out that the 40% is greater than what most publishers pay, but those publishers also fund the recording and handle all QA and production duties. A fairer move would have been to get rid of escalators and move to a flat 60% royalty rate. Given the higher bandwidth needs of audio, matching the 70% of KDP seems unlikely, but 50% should be the bare minimum for distribution costs. Bookstores take less than this to store and sell physical books.

The Body Artist by Don DeLillo read by Laurie  Anderson 2Look, me? I still don’t know why voice actors are called narrators. They don’t narrate a story (which means to tell it), they read it. They’re readers. They read the text aloud. I’m torching for the old term lector. A hundred years ago, lectors stood or sat on raised platforms and read newspapers and entire novels to whole rooms of workers rolling cigars in Florida’s Ybor City as they worked.

And as I was telling a friend in the UK last week, if you’ve never heard the lector Laurie Anderson read Don DeLillo’s The Body Artist or the lector Campbell Scott read Henry Miller’s Tropic of Capricorn, you’re missing some of the purest, most translucent oral interpretations of literature out there.

Tropic of Capricorn read by Campbell ScottAlmost as abruptly as fax machines surrounded us, audiobooks have become a significant element of the marketplace of literature. And not as abruptly but even more profoundly, ACX’s parent Amazon has become a fabulously prominent force in publishing. When such a big player makes such a substantive move in such an important format, everyone is right to stop, look, and listen.

On some days in this disruption, awareness of the shakes is all we have. I wish you lots of it.

And I wish you’d tell me what you think it means — or doesn’t mean — that ACX’s rates for royalties and bounty payments have been adjusted as they have. Drop a line here in comments.

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Main image – iStockphoto: LJupco

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