ACX, the Audiobook Creation Exchange, is an Amazon-owned platform that not only distributes audiobooks to Amazon, Audible, and iTunes, but acts to bring authors and producers together, enabling the creation of the product it sells. Yesterday they sent out an email detailing some rather severe changes to their program, changes that may have a negative impact on the production of audiobooks.
What the deal was
I’ve produced several audiobooks through ACX for my Galvanic Century steampunk stories: And They Called Her Spider, Maiden Voyage of the Rio Grande, Sky Pirates Over London, The Tower of Babbage, Fine Young Turks, Chronicles of a Gentlewoman, and March of the Cogsmen. For each of these products I was locked in for a seven-year exclusivity, and chose to split the royalties with my narrators.
We started out with 50%, and for every 500 books sold this rose another percentage point. So I made 25%, the narrator made 25%, and audible keeps 50%.
This wasn’t a rate I was thrilled about, considering that I was effectively paying the costs of production as well. I also had the option to pay the narrator upfront for-hire, but as this could run into the thousands per-project it wasn’t exactly within my capabilities. For their 50% cut, audible acted as a distribution platform.
In addition to the exclusivity (which I could forego by chopping an extra 25% off my royalty rate), Audible also reserved the right to set the pricing for my audiobooks at will based on length. I had no say in this, and no recourse when And They Called Her Spider’s price was dropped to $1.95 – meaning that my narrator and I each received about $0.25 per sale.
It was also arduous to deal with their support on any other issue, and I lacked a simple way to update product descriptions or album art without asking them to make changes. When you add to this the fact that their reporting is abysmal and they only added direct deposit options late last year, one questions why one would ever use ACX to begin with.
The answer is simple: They’re the only game in town.
Oh, sure, there are other distributors of audiobooks, but none with near the market share of audible, Amazon, and iTunes. ACX has, in essence, a monopoly. Your only recourse is to not make audiobooks.
Then ACX went and cut royalty rates
ACX sent out emails yesterday explaining that they were cutting royalty rates for audiobooks produced after March 12th to a flat 40%. There was no real explanation given for this action, but the prevalent opinions among authors is that “the monopoly decided they wanted more money.” Gone is the potential for making a higher rate through more sales, and with it, all incentive for producers to accept a royalty split.
For many of us self-published authors, that royalty split was the only way we could afford to get our audiobooks produced. For the rest of us, at a 40% rate it’ll take far longer to earn back the costs of production, particularly when we still have no control over pricing.
I can only speculate that this will result in fewer books being produced. Few talented narrators will gamble on a royalty share when there’s no higher percentage rate to win, and few authors can afford to gamble on high production costs that result in a 40% royalty rate.
On the other hand, the market is rife for a new distributor to rise and challenge ACX; when Apple opened its iBookstore to indies, Amazon raised its ebook royalty rates from 35% to 70%.
I can say that while I personally have a few books currently in production that will be grandfathered in under the old rates, I am unsure as to whether I can afford to produce new ones. It doesn’t look like it, but we’ll see what the future holds.
Update: Hugh Howey has weighed in on the situation at authorearnings.com