Brandon Sanderson is one of today’s most successful authors. He’s succeeded on traditional metrics as a multi-time New York Times bestselling author and has succeeded entrepreneurially, building an impressive business around his books. In a recent episode of The Tim Ferriss Show, he offered a refreshingly candid take on the shifting dynamics of ebook and audiobook publishing—a discussion that resonates with many of the patterns I’ve outlined in my history of publishing essay.
At the highest level, he agrees with my take: “The power is in two people’s hands right now. It’s in the creators and the platform controllers. It’s not in New York’s hand anymore.”
While much attention gets paid to the traditional publishers, they cannot be creative, reach readers directly, or have any room to innovate. While, as Brandon says, they have “great people,” the structures of the industry will doom them.
The Economics of Ebooks
It was great to see Brandon’s behind-the-scenes look at royalties. This is because he is able to get the best deals possible. And for him, he still concludes that owning your rights for the ebook is almost always the best option.
He shares how the publishers only really have a slight edge:
“So on ebooks, basically, the publisher is getting 70 percent of price. It’s $10, they’re getting seven bucks. As an indie author who’s doing it yourself, you will get seven bucks, but they will take out a tiny distribution fee at Amazon, which is super annoying. If you have a lot of artwork, it can get higher. Usually it’s only like 10, 15¢. But they will take that out where they don’t for the New York publishers. So that’s one of the big differences.”
The one advantage traditional publishers have is getting this same deal while charging a higher rate. So this is often why they price higher. While authors only get 25% of list, the publisher is still getting 70% of the higher price:
“The other thing is they’ll let the New York publisher charge 14.99 for their book. You, they will only let charge 10. If you go over 10, they’ll only give you a 20 percent instead of a 70 percent royalty. They really need to bend that or break that.”
But as I’ve written about, this is madness. Pricing at $14.99 is not optimal. You sell less books and make less. It only makes sense if the publisher is trying to maximize hardcover books. As Sanderson says:
So if your book is priced at 9.99, as an ebook, there is almost no incentive to go to New York.
In essence, while independent authors might face small distribution fees from platforms like Amazon, traditional publishers enjoy a flexible pricing model that allows them to command higher cover prices and, in turn, secure a larger share of the revenue—even if it comes at the cost of a lower royalty percentage when the price goes above a certain threshold. This pricing structure echoes the historical profit splits I’ve discussed in my history of publishing essay, where the economic model historically favored middlemen rather than the creators.
On Audiobooks, the Traditional Publishers do have an edge but mostly because Audible is dominant and they can negotiate with them
For audiobooks, things aren’t as pretty
“They get $15 and after all our work and things, we get on average like four bucks out of that 15.”
He explained that, while the economics of ebooks tend to favor the indie route, the situation with audiobooks is a bit more balanced:
“I have ebook and audiobook and I have a profit share on the print with them. And then the ebook and audiobook, the ebook, straight up, is better. The audiobook we make more, but we would make almost the same with the publisher.”
This suggests that—with audiobooks—the potential for better revenue is less clear-cut. Here is his full reflection:
But it turns out that there’s all this shenanigans. They get $15 and after all our work and things, we get on average like four bucks out of that 15. The publishers do have something where they’re getting a little bit more. But at the end of the day, I earn more this way than I do with the publishers, even though the publishers can make up for it a little bit by having certain weird deals on what they get paid.
At the end of the day, I really wish we could push audiobooks into that transparent you get 70 percent of that 15 bucks is what should go to the author or certain percentage of that to the author, certain percent of the reader. Narrators don’t get royalties, which is kind of a thing. And I just really wish we could pierce that and make it happen, but we haven’t been able to.
Sanderson’s own arrangement means he benefits from a profit share model on print while finding that the ebook side (when done independently) can be more lucrative. Yet for audiobooks, the numbers are nearly even whether he works with a traditional publisher or goes it alone.
“The power is in two people’s hands right now. It’s in the creators and the platform controllers. It’s not in New York’s hand anymore.”
When Tim Ferriss asked whether Sanderson was interfacing directly with platforms like Amazon, his response was both blunt and revealing:
“Amazon would pay us better if we put them only on Amazon, but I refuse. And that’s one of the reasons the publisher’s deal, it’s a little better. Amazon gives them the deal that they give. If you’re exclusive to Amazon as an indie, they force you to be exclusive to get the good deal. They give that deal to the publishers, but they can be on everything. So yeah. It’s all so messy, right?”
Here, Sanderson underscores a key tension: while the giant platforms can offer better terms to those who sign exclusivity deals, traditional publishers—free from that constraint—can leverage their multi-platform presence to negotiate more favorable conditions. In his view, the power dynamics in the publishing world have shifted:
“The power is in two people’s hands right now. It’s in the creators and the platform controllers. It’s not in New York’s hand anymore. And that’s in some ways bad because those are good people. I think most creatives in the audio industry hate their business… But you as a content creator, I think, should be looking at the platforms and learning how to manipulate all the different platforms so that you can have the best world you can. So that’s where we live right now.”