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How Audiobook Authors And Narrators Are Paid By Audible-ACX. We Think.

How Audiobook Authors and Narrators are Paid by Audible-ACX. We think.

This is the second in a series of posts about the campaign known to self-publishing authors as #AudibleGate. ALLi would like to extend thanks to Colleen Cross for this post and for her work with the Fair Deal for Rights Holders and Narrators pressure group.

If you haven’t already, please sign the #Audiblegate petition here . We will keep you posted as the campaign develops. Now over to Colleen, to explain how audiobook authors and narrators are paid.

How Audiobook Authors and Narrators Are Paid

Colleen Cross

As we await Audible to provide the audiobook returns data requested by authors and narrators since October 2020, it’s time to question everything about ACX/Audible “royalty” payments, or lack thereof.

Despite producing and publishing more and more audiobooks, many of us see dramatic decreases in our earnings per audiobook. The sparse details on our ACX/Audible “royalty” statements don’t provide enough information on returns or other adjustments made to our earnings.

Why?

It appears that Audible’s Great Listen Guarantee (GLG),  a “free return or exchange” scheme, is nothing more than a disguised lending library cementing Audible’s monopoly, and paying nothing to authors and narrators, intellectual rights holders and creators.

All of this made me wonder what else besides returns (the subject of a future post) is eroding our Audible earnings.

Is the Audible “royalty” calculation even fair?

Authors and rights holders invest thousands of dollars in each audiobook produced. “Royalty” Share (RS) narrators invest many hours in exchange for an uncertain future compensation. Narrators often have out-of-pocket production costs as well. It takes many hours to produce one hour of finished audio. Unlike authors and narrators, Audible/ACX makes zero investment in time and money in audiobook production.

As rights holders, many of us expected our upfront investment in audiobooks would lead to future profits. We further assumed our “royalty” to be based on the Audible retail selling price. That is not the case. Audible bases much of our earnings on what they call a “listener credit”.

So what do rights holders earn per Audible listener credit? Short answer: Much less than you think.

Settle in for the longer answer.

What is ACX’s Service?

Firstly, for clarity, some facts about Audible/ACX.

ACX is not a separate company from Audible, despite what some ACX customer service reps tell us. ACX.com is simply a website platform operated and controlled by Audible.

ACX offers these services:

  • A matching service for narrators and authors. This is rife with scam books and narrators can be left spending hours and weeks on a project only to discover it will never be released. Their loss is not just in time but production costs.
  • Quality control and approval of audio quality prior to sale on Audible. Since 2019, the time taken for this has stretched from an advertised four weeks to sometimes nine months. All for books for which payment has already been made or time invested by author and narrator with “royalty” share. This is potential income loss to authors and creates uncertainty with marketing.
  • Delivery of the book to Audible, Amazon and Apple Store.
  • Calculate and pay “royalties.” Audiblegate outlines the issues with their opaque accounting and statements, and returns fraud.

Since ACX only supplies a service, and Audible is simply a sales platform and retailer where we list our books, let’s not call our income “royalties.” It’s sales income or sales earnings. What we pay Audible should be considered commission. (See ALLi’s glossary for more on this).

This is an important distinction because 60% and 75% commission now sounds pretty expensive, right?

Audible Listener (AL) Royalty Category

These are the sales when an Audible member uses a credit to buy a book and is the second royalty category on your ACX monthly earnings statement. The sales in this “royalty” category have dramatically increased percentage wise vs. the a la carte direct sales to non-members, and ALOP (sales to members not using a credit) categories over the last year.

AL is the most profitable category for Audible, and the easiest to manipulate.

The AL category now forms the bulk of rights holder earnings. This is understandable with Audible’s aggressive marketing of the value of membership. It’s to these same members Audible markets their “Great Listen Guarantee” to first sell them a subscription and then habituate them to continue. $14.95 for as many audiobooks you like a month? That’s a great deal for a listener.

Not so great for authors when this unmonitored scheme is used as a perpetual library-style access to books. Royalties for this category are earned when members redeem a credit, but are clawed back each time a member returns or exchanges an audiobook. Members are led to believe Audible is funding this, not authors. Some even think it’s a glitch because it’s almost too good to be true.

It’s all in the hidden math…

If you’ve ever looked at the Audible ACX contract, you’ve seen the complicated sales earnings math (another future post!). For now, let’s focus only on the result: the amount of money which ends up in your bank.

The Audible ACX contract states a 40% “royalty” or 25% “royalty,” depending on which Audible distribution option is agreed, exclusive or non-exclusive. Cut that percentage in half if you are in an author/narrator “royalty share” agreement.

Well, prepare yourself for a nasty surprise.

It’s not 40% for exclusive pay for production. It’s not 25% for non-exclusive. Not even close. I compiled sales data from many Audible authors at different price points and came to the same conclusion for all. Authors are only paid a fraction of the stated “royalty” rate.

Why?

Because sales earnings are not calculated on the selling price on the Audible store like Audible implies here:

This leads authors to believe their audiobooks will primarily sell at the retail price, unless there is an occasional sales promotion. It also implies the selling price is the basis for the “royalty” calculation. Makes sense. Why wouldn’t it be calculated on the retail sales price? In assessing the viability of turning your books into audiobooks, you’d likely assess the probable payback on your investment, like this:

Cost: Narrator cost per finished hour (PFH) of $200 x Audiobook length 7 hours = $1,400

Earnings per audiobook: 40% x $19.95 retail price = $7.98

Breakeven point: $1400/$7.98 = 175.4 audiobooks

You need to sell 175 audiobooks, each earning $7.98 at 40% “royalty,” to break even on your $1400 investment.

That’s a smart way to assess the viability of your audiobook. Unfortunately, it’s wrong!

Audible never pays authors the stated “royalty” rate. Instead, they base the “royalty” on “Net Sales,” a number so heavily manipulated by Audible, that these “Net Sales” adjustments amount to a 50% deduction from the retail selling price.

This is the figure upon which authors’ share of the sale is calculated. Not retail price.

Does Audible deserve their lion’s share cut?

What, exactly, does Audible do to earn near 50% right off the top, before even calculating the split between you and them?

Audible didn’t produce the audiobook. They didn’t pay the narrator. They certainly didn’t write the book. There seems to have been little investment in the ACX interface since the launch of the company back in 2011. So, no author tech investment, either. No explanation has been given on the necessity to deduct almost half the retail price to arrive at this “Net Sales” amount.

So, let’s do the true ROI calculation

Rights holders need to understand the true breakeven point to make informed business decisions about audiobook production. So, now let’s adjust the math to what the real breakeven point is for this same 7-hour audiobook, using “Net Sales”.

Cost: Narrator cost per finished hour (PFH) of $200 x Audiobook length 7 hours = $1,400

Earnings per audiobook: 40% x $10.37 Net Sales* = $4.15

Breakeven point: $1400/$4.15 = 338 audiobooks

*the actual per unit payment for a 7-hour audiobook, per Audible earnings statement

Based on Audible math, you need to sell 338 audiobooks before you break even on your 7-hour audiobook investment. That’s near twice as much as the 175 audiobooks needed to break even when the “royalty” is based on the Audible retail price (not Net Sales).

You need to sell nearly an audiobook a day for a year to earn back your cash outlay, and that’s only if Audible doesn’t lower the price, or allow Audible listeners some of those “Great Listen Guarantee” returns. This represents a huge hurdle before you even make a penny beyond your original investment.

Okay, so hit me with the real “royalty”!

The above example assumes you chose the 40% exclusive to Audible rate. If you chose the 25% non-exclusive rate, your earnings—and breakeven point—will differ. Same if you are “royalty”-sharing with a narrator. Each “royalty” option is illustrated in the tables below, which compare the stated “royalty” % (what you think you get) vs. the effective “royalty” % (what you actually get).

In this Exclusive, Pay for Production example on a 7-hour book, you only received a 21% “royalty”, not the 40% stated “royalty” rate.

Apologies for the math. Painful as it is, it’s best to be fully informed before you lock yourself into a 7-year contract with a business partner who makes all the rules and takes 79-87% of the money.

A further warning if you think non-exclusive is the answer…

Many authors are now deciding to produce audiobooks on non-ACX platforms. Others have postponed or even stopped audiobook production altogether. If you decide to produce audiobooks elsewhere, please be aware most or all other audiobook distributors also use ACX or they use a boilerplate contract the same as ACX’s to publish to Audible, you will also be subject to the same sales earnings and losses from returns less the distributor cut.

Ask what terms apply on audiobooks they distribute to Audible…

If instead you choose to sell your audio rights to an audiobook publisher, be aware they are also likely locked in to the ACX contract. Ask them about Audible terms before signing a contract. Also know that the publisher royalty rates are a percentage of a percentage. For example, a 30% royalty rate will be 30% times the ACX non-exclusive rate of 13%, which amounts to less than 4% of retail price. Whatever road you take, ensure you are fully informed. Do the math if you paid for the production yourself. How much quicker would you own the book and be making clear profit?

Now the math:

See the tables at the end of this post to determine the net sales earnings you will receive under the four types if you contract directly with ACX.

Now you are informed and can make business decisions based on fact. It’s time for Audible to fairly compensate the content providers who supply the bulk of Audible audiobook content. Authors and narrators deserve to be paid fairly for their work. That’s all we ask.

Audible, are you listening?

Audible “Royalty” Tables

 

 

Colleen Cross

Colleen Cross writes financial thrillers and white-collar true crime, drawn from her background in forensic accounting and fraud investigation. She is a CPA with CFO/finance executive experience at large multinational corporations. She believes in following the money to find the truth.

This Post Has 11 Comments
  1. How does this work with the free book a month primer subscription? Does the author/vocalist still get paid the same amount?

  2. Hello. I am an avid audiobook fan and was googling the topic of fair pay/royalties and found your post. I boycott Amazon and am trying to find alternatives. Currently I subscribe to LibroFM with the money for the audiobook going to my local bookstore. Most but not all audiobooks are available through LibroFM. For the others, I’m wondering if you find that Apple Books pays more fairly than Audible. If not, are there any companies that are better? I’d appreciate any info and would share with my friends/family and online.

  3. Thank you for the in depth analysis! I have narrated/produced 30 titles through ACX. Nearly half have been RS+. Unless something is a best seller, most RS productions are little more than an unpaid internship for Amazon. In 2020 my average monthly ‘royalty’ was $56.52 so it’s little more than a glorified hobby. The ACX website itself is glitchy and titles are not vetted for scams. It’s a minefield. And with so many people working from home these days, everyone and their cousin is auditioning for the ever shrinking number of decent titles. Competition is fierce. I don’t see too many authors/producers motivated to do audiobooks with so little incentive.

  4. As an author who has several audio projects out with ACX (starting in 2015) I can absolutely attest to the low payouts. You’ll be lucky to make $4 on an audiobook that sells for $24.99 (that’s with the exclusive option). When I started to get my royalty statements, I was shocked. And I ended up selling the backlist audio rights because the earn-out was going to take years.

    Good point, too, about the traditional publishers being in the same horrible boat. Miniscule profits to the author, honestly.

    High time some regulatory agency held Audible’s feet to the fire!

  5. Wow. I wish I could say I was surprised that Audible/ACX are ripping off authors and narrators to this level, but sadly, I am not. One only has to look at Amazon’s overall unethical business practices to see the truth. From ebooks, to Audible, to refusal to pay income taxes, right down to how they cheat vendors and employees, this company is a scourge on earth. The last “shocking headline” was the theft of drivers’ tips to the tune of $62 million. Who is shocked, really?
    Yet, it’s worse than I imagined. I have my audio book production on hold due to the cost, so the actual level of royalty being paid is something I wasn’t aware of. It’s unimaginable that creators are making less per audiobook than on ebooks, considering the extra time and cost to produce them. Unimaginably unfair, that is.
    As some narrators have pointed out, $200 is an unbelievably low figure per finished hour for audio. $1400 for an audio book? As an author, that would be an incredible deal, but as a fellow creator, this is quoting a rate far too low for the provided services, as Emily pointed out.
    I feel the same way about my ebooks when readers complain $4 is too much or about my editing services when someone expects an extensive copyedit of 90,000 words for $300. Please don’t underquote the cost of professional services. Creators and artists are undervalued and undercut at every turn, like what we do isn’t a real job, with real value. We certainly entertained and helped a lot of people through 2020 with our stories, did we not?
    But thank you for taking this on. Seeing the author/narrator community standing together to take this on is amazing, and I do hope that as a group, we can make some real and lasting changes. In support, I signed the petition early on in the fight, and I am also in the process of replanning my business strategies to exclude the distribution of future ebooks through KDP (same company, and I don’t have any audible books to take away from them!) My way of saying “enough is enough, Amazon.”

  6. I second Amy M’s comment above. While you have written a superb analysis of a truly horrifying market situation, your use of such a low PFH rate for narrators is really upsetting. Especially because using actual market rates (union minimum of $250pfh plus a minimum of $75pfh for post-production costs) would make an even stronger case for how bad the numbers really are for authors and RS narrators. Please consider revising the post to acknowledge that.

  7. Hey, Colleen Cross! Your Audible “Royalty” Tables are most helpful for me. I appreciate you and your informative thinking.
    Thank you very much, Colleen!

  8. Let’s look closely at this line:
    “It’s time for Audible to fairly compensate the content providers who supply the bulk of Audible audiobook content. Authors and narrators deserve to be paid fairly for their work. That’s all we ask.”

    Not only do we, the rights holders, demand fair compensation for our products, we also demand that Audible back-pay us for their years of fraudulent and predatory practice – and then add the interest we lost on propping up their company with our hard-earned money.

    Thank you Colleen, Susan, Orna and the many others who have fought to bring the hidden behaviour of Audible into the light. Looking at these numbers it is now clear why Audible have said nothing, avoid meeting with our representatives, and continue to dodge owning the reality of their abuse. Like cockroaches scuttling along the kitchen floor, Audible’s management should well be frightened now that the spotlight is on them.

  9. Thank you for your thorough analysis. I appreciate having a more clear understanding of what anyone working with ACX is up against. But in presenting subpar narrator rates as if they are the norm, you are doing a great disservice to the narrator community, because it normalizes rock-bottom rates in the eyes of every author reading this article. While I assume you picked a random number as an example, you didn’t frame it that way – you framed it as the standard rate. However, the rate you listed is far lower than the norm for most experienced narrators (lower than the minimum to put an ACX job through the union) and doesn’t take into account the post-production costs on top of that amount that the narrator has to handle when they accept an ACH job – work for which they will have to pay either in money to hire production professionals, or in time by doing it themselves. If the goal is to present a realistic picture of what’s at stake, I would suggest talking to a wide range of experienced narrators, or SAG-AFTRA, and use accurate rates in your calculations. Otherwise, all you’ve achieved is setting the bar unrealistically low for anyone reading the article, thereby making it harder for narrators to make a living from their hard work.

    1. Yes, fabulous article, but my chest seized up at the quoted narrator rate… I kept thinking, “is this a Royalty Share Plus PFH rate being quoted”.

      I’ve been confused over the years as royalty income has fluctuated so greatly, depending on acx/audible’s current “program”. I agreed to several Royalty Share contracts when acx PAID us for distributing the pre-generated “free codes”… would I have taken on those projects and invested HOURS of my time, had I known said “program”(for lack of a better term/name) would be removed months later? Absolutely not!

      Thank you for your research and work at clarifying and articulating what’s really going on behind the scenes here.

  10. As shocking as this is … and it IS shocking … ACX/Audible no longer surprise me with the sheer audacity of the lengths they’ve gone to since their inception to hide their deception from authors and narrators. They do not hold up to their own contracts, they’ve never reported properly to any of us, and now we can see they’ve never paid us properly as per their very own contract terms … We must stand together to fight them on this and so many other shady dealings. I’m disgusted with how they’ve replied to me when I’ve pointed out these very same errors … or rather, how they’ve NOT replied. ACX/Audible must be held to account for this and so much more! #Audiblegate Thank you so much for all your hard work Colleen in uncovering this. We all appreciate you very much.

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