The royalty issue is larger than that, of course. (It's not all about me, after all.) I've explained what books cost in the old days. (Like, before 2009.) This was from a small-time publisher's point of view. But it's not far off. And we couldn't stay in business with this model.
Now, we're in transition. I mean, everyone's in transition. The whole publishing world. Maybe some companies don't fully recognize this—but they'll look back (in my opinion) and realize when the changes began.
At the moment, I receive 7% royalty for the majority of my titles. At the start of the ebook revolution, I received 7% from the list price regardless of whether the book was print or "e." So I would receive a 7% royalty off of $14.95 (or so) no matter what the e-book sold for. (Unless the publisher slashed the price of the title below 60%, and then I received 1/2 a royalty.) My contracts shifted at some point, and on many of the newer titles I receive 7% royalty off the print price or e-book price. So if one of my novels sells on Kindle for $9.99, I make about 70 cents. (This is not across the board. Some publishers did up my ebook royalty. But most did not.)
Authors have been pushing back on the e-book royalties for years. I began in 2009 (or so) stating that e-book royalties should be higher than print book royalties. Why? Because you take out: printing, warehousing/storage, fulfillment, and shipping. And those are the largest costs for publishers—after the discount to the stores.
25% as an e-book royalty became the norm, I believe, in 2011. This year, authors are pushing for 40-50%. The flip is that you might make a larger royalty, but off a smaller cover price. Or off the net. (Another sticky place. Some publishers put a lot of expenses against your money before you get your cut. "The net is the final amount after all other amounts have been taken away." If you read anything about movie finances, you know that you have to watch being offered any amount off the net. Because the net can be 0. I just read an article about how a movie that cost $19 million to make and brought in $150 million still had a net of 0.)
Still, for all of the turmoil, I feel that we're moving toward a fairer model. The reader receives a discount—the discount being no print cost ($2.00 on average), no fulfillment (10%), no shipping (God, the shipping)... and the author receives a larger portion, as well. Because—hey. The author wrote the fucking book. Shouldn't the author be the one who sees a decent return? At one point, one of my publishers cut a rights deal and told me I was going to receive .05 on every dollar. I said, no. I said it should be a 50-50% split, like other deals. She said, "We have to pay all of our expenses out of the .95 cents." I said, "I have to pay all of mine out of the .05 cents."
(One of those conversations you can't believe is actually happening.)
What do I see for the future? I think big publishers are going away. I don't mean this as a any sort of judgment statement. I'm related to publishers. I love publishers. I mean it as a fact. I think most publishers aren't going to be able to hang on. (Which is where indies come in!) Authors and smaller publishers with lower overhead will embrace the ability to charge a fair price for their work and put out exactly what they want. I'm working on this now. Figuring this out. But I'm happy not to be the only one. All of the articles on publishing and pricing that I read show that everyone is confused.
Transitions are difficult.
Even for royalty.