Business Post: Audiobooks & Audiobook Contracts

I swear, I answer these questions so regularly; I figured I should just throw it all into a single document. Some thoughts about contracts and negotiations too can be found in these other articles about Contract Review (https://www.mylifemytao.com/business-post-contract-review/), Cost & Publishing Timelines for Audiobooks (https://www.mylifemytao.com/the-cost-of-publishing-timelines-part-2-audiobooks/) (a little out of date), Understanding Audiobook Pricing & Royalty Rates (https://www.mylifemytao.com/business-post-audiobook-payments-and-msrp/) and Audiobook Sales Ratios (https://www.mylifemytao.com/business-post-updating-numbers-audiobook-sales-ratios/) - note, LITRPG & Progression Fantasy only.  

All that is just background information that's useful. 

Audiobook Producers.

Podium - goes ONLY with Audible (and maybe iTunes? I can't confirm that second one). They are not wide, won't get you into distributors.

Tantor & Dreamscape - are the other major audiobook production companies that offer advances. They both are wide distribution and thus you get a lesser % from Audible which is 50-80% of the English market depending on who you ask.

Blackstone Publishing - seems to mostly focus on thrillers, literary fiction, mysteries, etc. I have no actual experience with them.

Other audiobook options & companies names bandieda bout:

Spotify - currently pays VERY high for the 15 hours of free listening. Like $1 per finish hour (so a 15 hour book pays $15). However, listens are still relatively low from what I understand.

Youtube - no audiobook producer does it, you have to create your own account, get 1000 subscribers and 4000 listening hours before you can start making money on advertising income. Again, amount you can earn varies by length and genre. Personally, my best Youtube income only generates around $20 a month for that single audiobook. Works best if you can keep the channel 'alive' by uploading more content on the regular.

Storytel - another audiobook distribution platform. Can pay out very well, if you are wide.

FindAway Voices - audiobook distributor. Currently owned by Spotify. You will get a higher % (50%) if you distribute to Spotify via them. 

Common Deal Points

Term: Deals can range from 5-10 years in terms

Royalty Rates: 15-25% royalty rates are the common opening offer. Maximum is up to 50% though you are VERY unlikely to get that. Soft top of 40%, 20-30% is most common.

Advance: $0-2.5k advances are a common start. I've seen audiobook producers 'easily' flex up to $15k after negotiations for books, you're likely going to hit around $5-15k depending on your book, book length, terms and other demands. 

Note that advances can hit up to $100k (or more!) per book, but again, those are for known producers in audiobook heavy genres (see LitRPG, Progression fantasy, etc.). Know your market, because as a % of sales, audiobooks in other genres sit around the 10-20% range only (unlike up to 60% in prog fantasy). So, understand that there's a BIG difference in genre.

If you're in the top 100 of Amazon.com; chances are, you can (a) make it yourself and (b) are probably better off doing it yourself.

Things to Note For Negotiations

• How big are you and in what genre? A lot of these answers are going to depend on your size (i.e. sales), how much audio sales are as a % of your genre and the length of your audio. 9300 words = one finished hour of audio (per finished hour or PFH in audiobook parlance). It generally cost, as per the above posts, around $350 per finished hour so you can now work out your math on how much it would (roughly) cost to produce your book.
  

Don't just focus on advances and royalty rates. Realise that there are significant differences in the way each of these companies promote and distribute. 

Things to find out (especially if they are not listed above):

- how do they distribute? Are they exclusive to Audible or wide? If wide, understand that you will get less from Audible than if you were exclusive, which (depending on genre) can seriously affect your royalties. Being wide gives you access to libraries and other bookstores which can be quite important (again, depending on genre and promo!)

- royalty rates can often be tiered / stepped royalty rates. So 15% at X, 20% at Y, 25% at z. This is often an 'easy' tier to negotiate.

- Term is HUGELY important. You don't want to be locked in for 10 years/etc. for a bad contract.

- Cover and narrator choice is important but often not included off the bat. Realise you need to be careful about HOW that choice is negotiated in your contracts too.

- What happens to the audiobook masters? Make sure to negotiate release / purchase for yourself, and NAIL DOWN the $ amount for the masters

- accounting method (individual or joint accounting)

- series commitment or for a single work? 

- Non-Disclosure Agreements (if you want the ability to discuss this)

- Option clauses - next book in series / next book written / etc. Make sure to review and remove these option clauses, or limit them significantly. You want to put a timeline on when they have to review/reject such options too, because you don't want to be stuck waiting for months just because they haven't gotten around to it.

- (see above post for more things to watch out for in general for contract negotiations)

- and obviously, the advance.

On advances.

1) Obviously, money earlier is better than later. I should also note that the three companies have varying timelines of when they pay out - Podium on delivery of manuscript, Tantor 1/2 on signing and then again on publishing and Dreamscape full amount on signing.

2) A higher advance often forces the audiobook producer to spend more effort into marketing you. If you get a $1,000 advance; they only have to recoup $4-6k worth of cost (production and advance). Assuming you sell well, they can ignore you.

If you get a $100k advance - they NEED to make sure you sell. So they'll spend more time marketing you, pushing your work, getting you better narrators (big narrators have their own fanbase) and the like. You aren't likely to get shuffled away because another 'bigger' author with a bigger advance is taking over their time.

3) Shifting of risk. Most of the time, I recommend doing the audiobook yourself if it's been released because by then, audiobook producers know that they can make money producing your work. If they came to you after you've released (and it sounds like it), you're mostly better off producing your own work. They are looking for 'easy' money. Doing it yourself keeps the money yourself.

HOWEVER, if you have not released yet, you can shift the risk of the unreleased work / experimental work / potentially new work to someone else. A higher advance is what you want here, because if the book doesn't work out well, it's free money.

If it does, you're just waiting a bit.

4) High enough advances can actually act as a higher royalty rate. If you get a high enough advance that you don't expect to clear, that can be the equivalent of your new royalty rate. For example...

If you get offered a 25% royalty rate, which is like... $2.50 per book. However, you only ever expect to sell 1000 books.

If you get a $5000 royalty, that's actually a 50% royalty rate ($5k/1k sales = $5).

Lastly, and most importantly, even after negotiations...

- MAKE SURE YOU GET A LAWYER TO REVIEW YOUR CONTRACT

They will often catch numerous items within that will save you money. A lawyer managed to negotiate a higher physical media royalty rate for me and physical media delivery. I didn't even think to do that. It worked out quite well, when the company chose to produce physical media.