How the Macmillan embargo impacts authors

Here we compare what authors make from library sales versus retail sales and will look at what an embargo does to revenue and readership.

Library sales 

The typical Macmillan eBook currently has a base price of $60.00. OverDrive purchases the books as a wholesaler at a discount. We do not know exactly what this discount is, but common wholesaler discount for books is 50%. The typical author cut is 25% of Macmillan’s revenue.

  • Library pays: $60.00
  • OverDrive receives: $30.00
  • Macmillan receives: $30.00
  • Author receives: $7.50.

Retail sales

A typical Macmillan eBook at retail is $14.99. Amazon works with publishers on an agency model rather than a wholesale model and receives 30% of a sale, while Macmillan receives 70%. Again, the typical author receives 25% of Macmillan’s revenue.

  • Individual pays: $14.99
  • Amazon receives: $4.50
  • Macmillan receives: $10.49
  • Author receives: $2.62


For an author to see increased revenue from an embargo, the restrictions will have to generate three new retail sales for each library purchase.

  Before embargo After embargo  % difference
Price $60.00 (library) $14.99 (retail)  
Author’s cut $7.50 $2.62  
Copies 1 3  
Total revenue $7.50 $7.87 4.9%

If short-term revenue is the only variable that matters, then an embargo does make sense for authors.  But over the longer-term future, an embargo’s impact on readership becomes important.  A retail sale has only one reader per copy.  At my library, Macmillan eBooks released between January – July 2018 had an average of 28 readers per copy.  (I chose this time frame because it predates the Tor embargo. Also, library readers have to wait their turn for eBooks exactly like they do with print books, so library readership can take 6-12 months to run its course.) If we add those numbers into the mix, it looks like this.

  Before embargo After embargo  % difference
Price $60.00 (library) $14.99 (retail)  
Author’s cut $7.50 $2.62  
Copies 1 3  
Total revenue $7.50 $7.87 4.9%
Readers per copy 28 1  
Total readers 28 3 -89.3%

According to Macmillan, 45% of readers are library readers. If an author loses 89% of those readers, then the total readership on an embargoed book will drop 40% compared to a non-embargoed book.

Library purchases after embargo

The scenarios above imply that libraries will not buy embargoed books at all. For some authors, that is an oversimplification. Libraries will reliably buy best-sellers and award-winning authors, and those authors should not see as significant a drop in readership. But for many authors, there is a good chance that libraries who bought their books before the embargo will not buy them afterwards.

This is mostly a matter of workflow. At my library consortium, we use the New and Upcoming lists in the OverDrive Marketplace to do the bulk of our selection. The Macmillan titles will be present there, since we are allowed to buy one. However, we are unlikely to buy that copy, because it will create costly customer service issues. We will have to go back later, do a custom search, and buy it closer to the end of the eight weeks: extra work for which we have little time. It will be simpler to buy the books in the New and Upcoming lists from other publishers, who make their books available on the release date without restrictions. That also is the more responsible use of taxpayer dollars, rewarding the vendors who offer the best value for the money.

As such, I am confident that unless Macmillan authors are best-sellers or award-winners, they should expect libraries to buy far fewer of their books, and they should expect their total readership to drop accordingly. If that readership has a market value of its own, then the revenue that authors will theoretically generate from the embargo may be zero or negative in the long term.