Why Indie Authors Must Start Producing Audiobooks

One of the first questions that indie authors and small- to mid-size publishers ask me about audiobook production is, “How much does it cost?”

My answer is always, “It depends.”

Producing an audiobook is like building a house: your choices dictate your final cost. Each recording is custom-made rather than mass-produced. When people contact me about narrating and producing their audiobook for them, I always want to educate them about the time and skills necessary for a polished production. However, most people want me to simply cut to the chase and give them a firm number.

Before I can even give a ballpark estimate on a custom quote, though, I point out, “You can have the finished audiobook fast, good, or cheap. Pick any two.”

Since no dollar figure can apply to all circumstances, the more useful questions for authors might be:

1. How much do I need to pay up front?
2. What are the long-term costs?
3. If I pay up front, how long will it take to recoup my investment?

While other production sites and models are available, I’ll use Audible’s Audiobook Creation Exchange for this discussion, since it’s practically the only way for an author to produce an audiobook with a professional narrator and have no up-front costs. ACX also is a completely free service to both authors and narrators. Finally, in my research, I have not found a company that will pay a higher royalty rate than the 40 percent offered by Audible.

Traditionally, publishers have paid narrators, sound engineers and proof listeners on a per finished hour (PFH) basis. However, studio time may be charged in real hours.

The general rule of thumb is that at least 6.2 hours of time are required to produce that one finished hour. The 6.2 hours covers the recording, editing, proofing and mastering needed to create the retail-ready product.

An audiobook that runs 10 hours, therefore, generally would require at least 62 hours to complete—and possibly many more, depending on its complexity.

Given the number of people involved and the studio rental costs, you’ll often see traditional production quotes of $5,000 or more, depending on the length of the book.

On ACX, the narrator is also the producer who is responsible for all phases of production. Most narrators on ACX have created a home recording studio and do not charge a separate fee for its use. The narrator may do her own editing, proofing and mastering, or hire someone to do those tasks.

Now that you have a little background, let’s look at each question individually.

1. How much do I need to pay up front?

If you want to pay nothing up front, you could post your book on ACX under a royalty share (RS) contract. Many authors think of this type of production as “free,” but it’s really a deferred payment in which the costs of production are repaid to the narrator over time through the royalties paid by Audible. Choosing this option means:

  • You must choose exclusive distribution with Audible, which includes Amazon and iTunes in its reach. You won’t be able to sell your audiobook on any other website—including your own—you won’t be able to sell it on CD, and it won’t be available to libraries.
  • You will split the royalties paid by Audible 50-50 with the narrator for the seven-year distribution period. Under the current terms, each of you would earn 20 percent of the royalties paid in that timeframe.

The author earns royalties from all editions of her work, but the RS narrator only gets paid when the audiobook sells. Therefore, the RS narrator is taking ALL of the risk for low or no sales of the audiobook.

She also has to consider her up-front costs: she must pay her editor and proofer at the time service is rendered. Since a narrator could easily stay in the red for quite a long time on an RS project, most experienced narrators are reluctant or may even refuse to consider an RS contract.

Alternately, you could decide to pay the production costs up front by hiring a narrator on a PFH contract, which is a buy-out option that lets the author retain all royalties. This choice is especially attractive when your ebook routinely sells 1,000 or more copies a month.

Experienced narrators charge between $200 and $400 per finished hour. For instance, at $200 PFH, a narrator would send a $2,000 invoice for complete production of a 10-hour audiobook.

By the way, if you want to select non-exclusive distribution with Audible, you must choose a PFH contract.

2. What are the long-term costs?

Although an RS contract initially seems ideal to authors, many indie authors get frustrated with it over time for several reasons:

  • Most narrators who work on RS projects understandably schedule those titles after work that pays up front. The audiobook might take longer to produce as a result.
  • Production and/or acting quality could be lower with inexperienced narrators, which might lead to bad reviews and lower sales of the audiobook.
  • Under exclusive distribution, the author incurs the hidden opportunity costs of unavailable options, like back-of-the-room sales.
  • The author earns only half of the available royalties for seven years.

On the other hand, a PFH contract has no long-term costs. The author pays once for the production, retains all royalties and has the freedom of choice in distribution options.

3. If I pay up front, how long will it take to recoup my investment?

Audible pays monthly royalties based on the amount it received for each unit sold, not the title’s purchase price. Audible member credits are worth about $10 each and account for the most sales. Other factors such as special sales and currency exchange rates affect the proceeds.

Generally, for a 10-hour book, Audible pays about $4 in royalties per unit sold. The author keeps the entire royalty amount on a PFH contract. On an RS contract, the author can expect to earn only half of the available royalties, or around $2 per audiobook sold.

In our earlier example of the $200 PFH contract, the author pays $2,000 for production costs of a 10-hour audiobook. After selling only an estimated 500 units of the audiobook, the author would break even from the royalty payments. From that point forward, all remaining audiobook sales would generate pure profit of around $4 in royalties paid per unit sold.

Many authors get quite excited when they realize that it may not take long to break even on a PFH contract and then earn double the profit they would have had in an RS contract!

A final useful question for authors who are thinking about audiobook production is:

With the increasing number of devoted audiobook listeners and press coverage about the audiobook industry, can you afford to not produce audiobooks of your titles?



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