A Major Publisher Jumps the Shark

Wipe Out

[Publishers’] savings on printing, binding and distribution make up for the lower revenue from lower ebook prices– and increased profitability is coming entirely off the backs of authors.

Those are Brian DeFiore‘s words, emphasis mine, in an article important to writers.

Porter Anderson, PorterAnderson.com, Writingon the Ether, Ether for Authors, London on the Ether, Jane Friedman, Ed Nawotka, Philip Jones, Publishing Perspectives, The Bookseller, books, ebooks, author, agent, Amazon, publishingThe 10 salient words here are suitable for memorization:

Increased profitability is coming entirely off the backs of authors.

 

DeFiore’s article is headlined eBooks and profitability– What we’ve always said and publishers have always denied.

Here’s what you need to know to understand why I’ve chosen this as our Provocation in Publishing today.

(1) The “we” as in “what we’ve always said?”—is literary agents.

Brian DeFiore

(2) DeFiore is one. His firm is Union Square’s DeFiore and Company, an outfit that has the grace to describe itself on its site as “a mid-sized literary agency.” When was the last time you heard a company volunteer that it wasn’t absolutely planetary in its stride?

(3) DeFiore sits on the board of directors of the Association of Authors’ Representatives (AAR)—the US agents’ professional organization. DeFiore is the chairman of the AAR’s Electronic Rights Committee.

So you’re hearing from the presiding agent for things-digital at the main American organization of literary agents, writing on its official site.

Every time a hardcover sale is replaced by an ebook sale, the publisher makes $2.20 more per copy and the author makes $1.58 less.

Sitting up yet? Let DeFiore put it another way for you:

If the author made the same $4.20 royalty on the ebook sale as he/she would have [made] on a hardcover, the publisher would STILL be making an improved profit of $6.28.


UPDATE: Before going on as written, I want to call your attention to a very generous comment that DeFiore has provided to this post.  He wants to clarify that his post at the AAR site is not to be taken “as an official statement or policy of the AAR or its board.” He also writes that the source of discussion here (you’ll see the slide below) is “a simplistic look at a complex issue” because it represents one profit scenario devised for investors’ eyes, an example that can be affected and changed by “all kinds of pricing experiments and price points.” In all fairness, I commend his comment to you along with his point that we are focused here on only one aspect of the “inestimable value to the process” that he says he believes (and I do, too) most publishers add for most writers. Do have a look.

I’m returning now to this post as previously written, with hopes you’ll be sure to check out everyone’s comments and DeFiore’s in particular, afterward.


POST RESUMES:

HarperCollinsPublishers have steadfastly maintained that this kind of math is wrong. But this time, the ciphering is  based on one big house’s own brag-numbers. It’s how they talk to their corporate parents’ investors.

So that friend from the traditional publisher who just changed the subject and offered to freshen your drink? Don’t fail to notice the wet suit. Listen for a sotto voce shark-jumping “Oooops!” from the bar, over the happy sound of Campari blessing the ice.

Ironically, if it weren’t for DeFiore and Michael Cader, we might have missed this intriguing slip off the board, because it occurred just as the surf was way up for the May 29-31 BEA, BookExpo America.

Publishers LunchDeFiore is handily chasing Cader’s big wave at Publishers Lunch. (This requires a subscription to Publishers Marketplace. I highly recommend it.) That original June 4 article is here, in case you do have a subscription: Harper Shares Data on Light Third Quarter; Shows Investors Profitability of eBook.

In that write, Cader provides this graphic from a May 28 News Corp. “investor day” presentation. News Corp. is the parent of Big Six/Five publisher HarperCollins.

 

HarperCollins invetors meeting graphic - per AAR

 

Cader explains that the graphic is part of a presentation on “Harper’s strategy going forward.” He writes, emphasis mine:

[The slide] shows that — under Harper’s new post-settlement agency ebook pricing (which raised prices slightly versus their original agency price tiers) — ebooks are significantly more profitable than print books. In the sample case of a new release frontlist title, the ebook edition is 39 percent more profitable, returning an additional $2.20 in profit to the publisher over the hardcover. Authors and agents will immediately note that much of the additional profit exists because the royalty allocation once earned out is $1.58 lower on the ebook than for the hardcover.

A bit more, my emphasis again:

On a hardcover, the author earns 30 percent of the publisher’s gross revenue, and 42.5 percent of the total margin (what the author and publisher together earn). For now, on the ebook, the author earns 25 percent.

GalleyCatHere’s another of our good colleagues, Jason Boog at GalleyCat. His story is headlined Do Authors Deserve a Higher eBook Royalty Rate? And he’s following up on DeFiore’s write, emphasis again mine:

DeFiore and Company founder Brian DeFiore shared the most important stats: a “$27.99 hardcover generates $5.67 profit to publisher and $4.20 royalty to author” and a “$14.99 agency priced ebook generates $7.87 profit to publisher and $2.62 royalty to author.”

Bottom line: in traditional publishing, an ebook gives the publisher more and the author less.

Your traditional-publishing buddy heading back from the bar to you with that drink?—is fully as wet as you’ve always suspected he was.

As DeFiore points out, major publishers have been splashing water on anyone who said this was going on in the past. Now, one has been found strutting this stuff as a point of corporate stewardship.

DeFiore seizes on the moment to champion the author’s interests, which is what our best agents do:

We have all heard…that for a very large percentage of authors this is irrelevant since their advances don’t earn out – effectively raising their per-unit royalty. That may be true, but it logically leads to what seems to me the most unfair aspect of all: That, therefore, the only authors that are financially punished by this system are the ones whose books perform very well. The ones whose books earn out. The big name authors and the celebrities whose books don’t perform to expectation are untouched; the author who gets a reasonable advance and whose book sells much better than expected are the ones who suffer the greatest loss.

The BooksellerThis all dovetails with the coming completion of the Penguin Random House merger. Another industry-news subscription service I can heartily endorse, The Bookseller, is doing some nice work on the runup to that union of bird and building.

Philip Jones
Philip Jones

The lead is sounded in Bookseller editor Philip Jones’ analysis, Taking flight:

One of the more subtle changes over the years has been in those businesses at the top that have reoriented themselves around digital, and those declining enterprises that have not. The challenge for global publishers is how they get from here to there without forgetting the qualities that got them here in the first place. A new study, helpfully about penguins, has concluded they don’t fly because they don’t have to. They found fish in the water and chose swimming. Publishing businesses don’t have this option: they have to do both.

That piece is coupled with a collection of Viewpoint observations from several members of the industry! the industry!

A quick pastiche of what some of them are saying:

Jonny Geller
Jonny Geller

Agent Jonny GellerFrom the author’s point of view, change is only useful if it improves standards of development, production and distributionHow can a merger of two dominant publishers improve the “rights” of an author? Will there be more flexibility in contracts or less? Agents obviously fear the latter.

Nick Harkaway
Nick Harkaway

Author Nick HarkawayTo compete with a seller of electronics, clothes, and garden furniture, publishers need the help of their own umbrellas. But size alone won’t cut it. The key word will be “clever.”

Rebecca Smart
Rebecca Smart

Publisher Rebecca SmartI would be looking afresh at Author Solutions [which Pearson-Penguin owns] and thinking about how to use its workflow infrastructure and production network to create a new self-publishing services offering that uses scale to provide low-cost, clear, fair assistance for authors.

Caroline Michel
Caroline Michel

Agent Caroline Michel of PFDTo a writer the size of the publishing house doesn’t really matter, some of the most promising books in some of the largest publishing houses fall off the radar. What matters is getting the book they have written into the hands of as many readers as possible in whatever form, print, digital, audio.

Based on the Cader-DeFiore material about HarperCollins’ ebook profitability, which appears to take advantage of authors, I’d like to offer an additional, quiet viewpoint on the advent of PRH:

Surely, one of greatest initiatives that could be made by the new entity would aggressively establish transparent and friendly terms for authors—without whom not one publisher of any size anywhere can function at all.

I could support PRH in a very noisy rollout of a new set of principles for its dealings with the artists of our profession. And, in fact, with such size, PRH is about to feel more keenly than ever, I’m hoping, the burden of its responsibility to authors and their cultivation, in many ways handsomely handled by Amazon.

DeFiore says it well in his write-up and calls the correct question when he looks at what’s washed up onto the beach on HarperCollins’ rising tide of ebook profit strategy:

How can anyone in this industry see that as defensible?


So you tell me: is HarperCollins’ increased ebook profitability defensible if royalties are structured this way? Is this how readers would imagine one of our biggest publishers compensates its authors? How much goodwill do you think another major, such as Penguin Random House, could achieve if it made a solid, clear break with such patterns of author dealings? 

Main image: iStockphoto – PixelChik
Provocations in Publishing graphic – Liam Walsh

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About Porter Anderson

@Porter_Anderson, BA, MA, MFA, is a journalist, speaker, and consultant specializing in publishing. Anderson is The Bookseller's Associate Editor for The FutureBook in London, a sister site focused on developments in digital publishing. He is also a featured writer with Thought Catalog in New York, writing on publishing and on #MusicForWriters in association with Q2 Music. In 2015, Anderson has programmed the IDPF Digital Book Conference that opened BookExpo America (BEA) and is programming the First Word event at the Novelists Inc. (NINC) conference later in the year. And he is working with the Frankfurt Book Fair on special programming for its new Business Club suite of events and facilities, now in its second year, 13-16 October, in the 2015 Buchmesse. More on his consultancy, which includes Library Journal's and BiblioBoard's SELF-e among its clients in 2015: PorterAndersonMedia.com | Google+

Comments

    • says

      Thanks, Alex –

      You’re the early bird again, sir, and always generous with a quick comment, totally appreciated.

      Looking forward to seeing where these numbers take us — now that they’re out there, I think it’s going to be harder to maintain this kind of revenue structure, and it’s great to see the author advocacy of AAR and Brian DeFiore in a case of this kind.

      Onward, sir, and thanks again!
      -p.
      On Twitter, @Porter_Anderson

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  1. says

    We really shouldn’t be shocked, shocked at this. It’s the DNA of big business to seek profitability. This is still free enterprise, thus, publishers are free to run their businesses any way they wish. Agents are free to push for better terms. And writers are free to decide if they want to do business this way, or another (which is the biggest innovation of all in the history of publishing).

    Porter, you suggest that a publisher offering more author-friendly terms would engender massive goodwill among the people (product producers) they need to succeed. True. But that is essentially asking a business to accept less profitability in the near term in order to develop a foundation for long term gain. Yet the constituents of that long term are uncertain, unnerving, and without precedent, which is what sells Pepto-Bismol in Manhattan.

    It’s all a fascinating study in tectonic disequilibrium in the business world. The only certain survivors are the writers. Like lawyers and cockroaches, we never go away.

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  2. says

    Hey, Jim,

    Spoken like a lawyer and a writer, and well put, too, thanks for the commentary here. :)

    I agree, being shocked, shocked at this would be jejune. At the same time, however, this particular revelation has a lot of resonance, in that it short-circuits many of the usual cocktail party protestations to the contrary about models on which authors are compensated. It’s a lot harder for publishing to talk fairness when its own numbers reveal what we’re not shocked, shocked to learn. In instances of this kind, the lack of surprise in what we find doesn’t devalue the finding, itself, nor the need to get it out to as many people as possible.

    While all parties are free to participate or not, as you say, there are interesting shadings here. For example, if authors want to participate in the largest and most traditional of publishing models — proponents of which are at such pains these days to defend — it really is rather daunting to think that they, those authors, need to be prepared to suffer what appear, in fact, to be unfair royalty structures on the fastest-growing sector, ebooks. Sure, our authors have the right to decide not to play ball. But that doesn’t exonerate an unfair (and until now unspoken) profit structure. No one should have to choose not to participate because the offer was unfair. We can call that wrong. And I think we should.

    Does a company have the right to pursue profits at the expense of its author-vendors? Sure. But having the right to do something doesn’t make it the right thing to do. We need to say that.

    And yep, I agree with you that asking a publisher to seek more author-friendly terms is asking that publisher to accept less in the near term for that long-term foundation you describe. I don’t think there’s a problem in asking that when, in fact, authors — as prevalent as you know they are — are also, and as single agents, having to face just as much uncertainty as publishers.

    Big publishers love to talk of how they shoulder the financial risk of the standard model. I don’t think it’s wrong to ask them to live up to that talk and to reconsider shifting more of that risk to their indispensable vendors, the writers. It’s right to ask them to reconsider. In their hearts of hearts, I think they know that. Some of their corporate parents may be less easily convinced. So there’s a little something for them to work on.

    You’re right, it’s fascinating. As the “tectonic disequilibrium” goes forward (you really did have the Caffè Verona today, didn’t you? lol), I think we’ll see more such moments as that slide revealed in News Corp’s investors’ day presentation.

    Leave room in that Venti for some healthy indignation. It’s the right reaction. :)

    Grazie!
    -p.
    On Twitter, @Porter_Anderson

    I do think it represents a turning point in what is known and perceived (from one side and another) of the business

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  3. says

    Hello Porter,
    Always enjoy your posts. I especially look forward to each of your articles of provocation! I beg forgiveness for the length of my response. You have touched a nerve!

    As an author, I must say that at points along my journey to publication, I have been at times fascinated, awed, overwhelmed, and deeply troubled by the industry juggernaut. Sadly, it comes as no surprise that HarperCollins takes a calloused approach to the source of its success, its authors. Unless one is a huge name, we have reached the point where publishers do nothing for their authors other than put the physical books together and toss them out into the universe. The success or failure of a launch rests almost solely on the shoulders of the author. For publishers, this is, after all, a business and the big houses answer to parent companies who answer to investors. The small houses simply struggle to stay afloat. I do not believe that the way most authors are treated is fair or right, but it is a business reality.

    That said, it boggles the mind that publishers are surprised, nay shocked, when one of their stars decamps for self-publishing. I have read more than one article addressing this issue, usually written by an editor or agent. If one could see the industry individual writing the article, he/she would most likely be wearing that tight-lipped smile one gets when trying very hard to put the best possible face on a bad PR situation. Logic would dictate that in the name of self preservation, publishers of all sizes might want to consider what they can do to nurture their authors, rather than treat them as tools.

    I realize that is a harsh statement, but again, it is reality. Of course, under the veneer of polite interactions in any business, there lies the dreaded bottom line. Publishing is no different. In fact, it is probably more so due to the topsy-turvey nature of the industry at this time. It is going to take a very skillful prognosticator to see what form the industry will ultimately take when the technology dust finally settles.

    As for me, I will continue to write my stories while keeping an ever watchful eye on my back. I have a growing number of writer friends and colleagues. We pretty much circle the wagons when one of us has a book release. At the risk of being seen as a rabble rouser, I would like to pose a question of my own. Is it possible that authors may become the new Mary Pickfords and Charlie Chaplins? Might there one day be a United Artists of the publishing world?

    Paints a right pretty picture, doesn’t it?

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    • says

      Hey, Linda,

      First, my apologies for being so long in responding on this very busy day. I actually held off because I needed to find an earlier Writer Unboxed post of mine to show you.

      Have a look at this post, “And the Boat We Rowed in On” from last spring. It contains my speculative suggestions about a Magnum Photos-like development among authors in which we might see groups of high-powered, like-minded, cooperative authors come together in collectives and consortia to hire their own publishing resources and put out their works, much as Magnum photographers are served by their organization in their business and archival needs.

      Here is the post: http://writerunboxed.com/2012/03/24/social-media-and-the-boat-we-rowed-in-on/

      I’m glad you’re seeing this potential. The Cartier-Bresson model requires a rather accomplished group of authors, there are many shadings and gradations of this concept afoot. One I’ve written a great deal about being The Rogue Reader http://theroguereader.com/ That one is a curated group of suspense writers brought together by Movable Type’s literary agents Jason Ashlock and Adam Chromy.

      The author collective, of whatever configuration, is indeed, I think, a viable answer to the needs of the authorial community.

      Your concern is appreciated. Thank you for sharing your thoughts with us today.

      Cheers,
      -p.
      On Twitter, @Porter_Anderson

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      • says

        Thank you, Porter. Don’t know how I missed the post you have referenced, but I will certainly read it. I has become clear to me that surviving the industry upheaval may ultimately require creativity that has nothing to do with the act of putting words on paper and a whole lot to do with business precepts. I also have wondered from time-to-time if the small presses that are cropping up have a better business model than the old established houses. Many of them seem to be growing instead faltering. I’m sure it begins with their not paying out advances, but that can’t be the only thing in their favor. Otherwise, the larger houses wouldn’t be so anxious to buy them and keep the names and imprints going.

        Publishing was once seen as such a stogy industry. Nothing interesting or dynamic ever seemed to happen on a fundamental level, but no more. About the only thing we may be able to count on is that the future is going to be interesting.

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        • says

          Linda, I may get this line from you into a tweet: “surviving the industry upheaval may ultimately require creativity that has nothing to do with the act of putting words on paper.”

          Could not be more correct.

          You’re focusing here on what becomes one of my most persistent messages to authors these days: You are an entrepreneur now, not a mere supplier to a printing firm. Authors simply have to get “business-ed up” and take hold of this reality — or find the resources to pay to have someone do it for them.

          My best advice is to find an agent. Many are working aggressively to develop the agent-manager model I keep talking about (OK, pushing, lol) everywhere, something approaching the impresario model captured in agent Jason Ashlock’s brilliant phrase, “radical advocacy” for the author. Your radical advocate (agent-manager) can be your best friend and aide in everything from self-publishing to traditional and back.

          Don’t try to do this alone. Do become the business person you’re smart enough to see you must be. Do look into this concept of a consortium or collective of authors (and radical advocacy — as in Ashlock’s work with this Rogue Reader group — should surely be a big part of that approach, each collective will need major agent-managerial support).

          You’re on all the right paths of thought right now. Keep us posted on your progress and don’t let the pressures of it all rush you.

          As I was just writing to Adan below, the disruption makes publishing better for writers tomorrow than it was today. As things develop, redevelop, and then resolve, the entire landscape will become less torn up, less fraught with unknowns, and more welcoming to strong, entrepreneurial authors. So bide your time.

          All the best,
          -p.
          @Porter_Anderson

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  4. says

    “the author who gets a reasonable advance and whose book sells much better than expected are the ones who suffer the greatest loss.”

    I suspect the ones who suffer the greatest loss are emerging authors who are forced to accept lousy terms to get their initial contracts, especially if they become successful enough to discover they are locked into poor participation in other rights away as well.

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    • says

      Hello, James,

      And many thanks for joining us here today and dropping a note.

      Have a look, if you will, at author Roz Morris’ comment — you can reach it directly here http://writerunboxed.com/2013/06/22/a-major-publisher-jumps-the-shark/comment-page-1/#comment-401198

      I think you’ll find some kindred sentiment there and a bit of discussion.

      Certainly your concern is very valid and in time will be addressed both by market forces and by the still relatively nascent entrepreneurial author movement as it develops alternative approaches to the traditional publishing models.

      Thanks again, meantime, it’s good to have you with us.

      -p.
      On Twitter, @Porter_Anderson

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  5. Brian DeFiore says

    Porter,
    Since you spend a lot of time quoting my relatively short piece on the AAR blog, I want to clarify and expand on my thoughts a bit here.

    First and critical: that blog is very clearly indicated as thoughts on digital publishing matters from individuals who sit on the AAR Digital Rights Committee. It is meant to inform and perhaps occasionally entertain our members– it is not in ANY WAY an official statement or policy of the AAR or its board.

    Second: I fear that your piece is using my words to storm the barricades in a way that I did not intend or feel comfortable with. Keep in mind a few things: the example that Harper used in that presentation was one title at one price point. At that price point, the effect on profitability is clear, and Harper management clearly used that as an example to investors for a good reason. It put the best scenario for profitability forward. Similarly, in writing to the AAR members I riffed on their example for the same reason: it put our best argument for higher royalties forward. But I understand that it’s a simplistic look at a complex issue. There are all kinds of pricing experiments and price points that change the formula. And I’m sure publishers can (and I have heard it!) show how and why that rate is fair. And, the much bigger picture: e-book royalties are a significant but usually not the major part of the way authors are compensated by the major publishers: they are also paid advances, and they are paid hardcover and paperback royalties.

    The publishing business model is complicated, and the publication of one book usually encompasses several editions, each of which contributes to the bottom-line for authors and for publishers differently. We need to see the entire picture of a book’s publication effort—in all formats—to judge value.

    The point in my piece was an important but relatively isolated one: that the digital royalty rates currently in contracts harm successful authors the most. Those writers who get paid a reasonable amount as an advance and whose book takes off and whose advance earns back are the only ones who suffer.

    As for the digital royalty rates overall: Of course I don’t like them, as I and virtually every other agent has said from the start of “agency model” selling of books. When we all agreed to the 25% of net rate, it was based on an understanding of digital sales being sold “wholesale.” That led to a much higher dollar-figure royalty to authors. The switch to agency brought that dollar-figure down significantly. Publishers were hit, too, by the switch to agency of course. Their revenues were cut drastically on e-book sales. And the contracts with the royalty rate already existed. As pointed out by other commenters, of course continuing with the agreed-upon royalty rate made perfect business sense for them.

    I will continue, as I’m sure most agents will, to try to get a better rate for my clients, and as you suggest, certainly if one publisher were to cross the line and pay a higher rate they will get a sharp advantage in negotiations with authors. But let’s be clear: unlike some of your readers, I am of the firm belief that publishers add inestimable value to the process for most writers. A higher royalty rate on some self and digital only publishing is great—but one has to look at the big picture for most authors and understand that the high rate is not of much value if it ends up applying to a small number of copies sold (often at very low prices—therefore very low royalties) in only one book-buying channel.

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    • says

      Hi, Brian,

      Many thanks for taking the time to give us such a full and careful clarification here, it’s most appreciated.

      In fact, I’ve gone into the post above with an update to call readers’ attention to your comment here and link them easily to it so they’ll be sure to read what you’re adding here and understand the points you’re making. Storming barricades in ways that make you uncomfortable is hardly my intent. :)

      I do think you’ve done us a service in bringing this instance of internal corporate representation of some numbers to light. And while I take careful note (and thank you) that this is not an official AAR position, I don’t know that our handling here is too far afield from the tone of your own presentation of these points.

      While, yes, any one price-point example is bound to be subject to multiple readings and changes according to setting, conditions, and — as one reader has pointed out — fixed cost issues not dealt with in the News Corp example (the same reason national budgeting issues can seem completely academic at times), there is an over-arching understanding here that ebook costs and compensations are as yet far from stabilized and leave many questions and concerns in the minds of observers, particularly (I’m telling you?) the minds of authors.

      I feel that your post brings to light, as does your comment here, an important and comparatively tangible issue. As you write here, “As for the digital royalty rates overall: Of course I don’t like them, as I and virtually every other agent has said from the start of ‘agency model’ selling of books.” Your explanation of the wholesale concept is excellent, as is your recognition that publishers were impacted with the adjustments of agency, as well.

      As you know, I appreciate entirely and without reservation your and your colleagues’ efforts to “try to get a better rate” for clients.

      And I can wholeheartedly join you in saying that I think publishers — when functioning at their fullest capacity on behalf of an author — can add, as you put it, “inestimable value to the process for most writers.” It’s good of you, in fact, to have given me this chance to say that. I am hardly averse to the best work of the major traditional houses. Quite the contrary.

      Very much like the isolation of a price-point example, I find that at any moment, someone reading me in one spot or another tends to come away with the assumption that “Porter thinks this” or “Porter thinks that.” I’m sure you’ve had the same experience many times in your work. We are, none of us, able to expect or have credit for the full range of our thinking on almost anything, especially in such fast-changing times as these in publishing.

      So, I thank you again not only for your clarification but for the chance to do a bit of the same on my own part. Your work, your observations, your care, and your concerns are appreciated.

      All the best,
      -p.
      On Twitter, @Porter_Anderson

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  6. says

    I’ve never understood this argument from publishers, and a lot of what publishers do with authors and their contracts is not defensible. I don’t have much to say, but I do continue to be discouraged by the way that authors are treated in many traditionally publishing situations (at least the ones that we are made aware of.) Thanks for the fine article.

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    • says

      Thanks, Lara — both for reading and for commenting, as usual, with real candor and concern.

      Brian DeFiore has also left a helpful comment in which he tries to clarify some of his own positions here and to warn us — me, in particular — of an over-interpretation. All this much be taken carefully onboard, and I’m really glad he’s weighed in, it’s great of him.

      At the same time, I think the premise from which I start (in a lot of my work, in fact) is echoed very keenly in your comment. When you say you’ve “never understood” the publishers’ position on ebook royalty rates, you’re really speaking volumes. In a podcast I recorded recently with Len Edgerly for his Kindle Chronicles series, in fact, I spoke of what I call “the silence of the grands.” There is a tradition here of the great houses not speaking, not explaining and thus leaving their constituents — who are, in fact, authors as well as readers — in a lot of confusion about how they devise their business model, especially as it pertains to authors. You hear this in the comments of many agents, as well (though I won’t put any words here in DeFiore’s mouth, I’m simply speaking of agents with whom I talk regularly).

      There is, in the aggregate, a great deal of confusion, of question, and — most evidently — of unahappiness in the entire topic of author compensation in traditional publishing. Sometimes it cannot possibly be fair to publishers, I feel sure of this. And yet we so rarely hear from them that it’s extremely hard to feel we have a good idea their intentions or challenges.

      You’ve put your finger on it. That lack of understanding. If, as DeFiore says — and I feel sure he’s right — that the presentation at the News Corp event is created to give a certain impression to investors, then where is the actuality?

      I’d like to think that some day the majors will feel they can speak freely, clearly, fully on these issues. But that time hasn’t come yet. And, like you, many just don’t understand.

      Many thanks again, always great to have you.
      -p.
      @Porter_Anderson

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  7. says

    What do readers imagine? They think authors are all Rowling in dosh. I don’t think it occurs to them that many authors are not rewarded fairly for their contribution. What’s more, the reading public probably think we’re spoiled when we do complain. How many people sympathised with Prince and George Michael? Unfortunately that’s the precedent.
    It’s long been known within the industry that traditional publishers get a grossly unfair profit share from ebook royalties. 25% is the standard royalty in the UK for ebooks, according to one of my agents, and he reports that publishers are not willing to negotiate on it.
    DeFiore is rather short-termist with his observation that only the high-selling authors will be penalised, because most books don’t earn out. They may not earn out in the first few years, but the contract will presumably last for the author’s lifetime – especially as books can stay in print indefinitely because of print on demand. It may take 20 years, but a book can earn out an advance of £5k (the standard advance). So a fair ebook royalty will potentially make a difference to every author; it’s never ‘academic because it won’t earn out’.
    So it’s great that you’re bringing the issue out to be scrutinised here, Porter. We need ammunition like this so that we can make a better industry.

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    • says

      Hey, Roz!

      Thanks for this incisive comment — as usual, you bring a gift of context to things that we all need (moment to moment these days, the way the industry! the industry! is going).

      I agree with you that the public’s concept of author remuneration and general well-being is likely informed only by their glimpses at “lifestyles of the rich and famous” and rarely by an understanding of what the rank and file really experience.

      I do think that over time — and how good you’re invoking the long-term, as Brian DeFiore does, too, at one point — I think that one of the great benefits of the entrepreneurial author movement will be that readers, drawing nearer to their authors and being in touch and meeting them and interacting with them, are starting already to get a clearer, more real-world look at who and what authors are. At BEA, for example, when the #Indie6 authors, the “Indie Bestsellers” who set up Booth 966 together, were signing books for fans, there was no hair-and-makeup operation going on behind the curtain, no wide table to keep the fans at arm’s length. And in many instances, an author would dash out into the aisle, hug a reader and get into a picture with one or more fan, arms around them, one of the authors dressed in a T-shirt. This was true person-to-person contact, in other words, of the kind that has always, always made the relationship between artist and consumer so much richer. The more our authors today, both traditional and self-publishing, cultivate that kind of contact, that kind of ACCESS, as we were talking about in the Amazon Roundtable at BEA, the more the humanity and actual socio-economic realities of the writing life will start to come into focus for readers.

      Let’s face it, for decades, authors have been presented as pretty vaunted beings, held out of touch by the buoyant creativity wrapping them in untouchable splendor…for the most part. A few were able to drink themselves out of that faux image, lol.

      It’s a good time for more reality of that kind, and it’s coming. I’m always impressed when authors talk to me about the direct, pushy-but-well-intended messages they’re getting from fans who want to know when they can have more to read. What a fantastic problem to have! Somehow, in all this confusion, we’re doing a few things right. And that access has to be one of them.

      Now, as to your (again good context) concerns about the long-term effects on authors who earn out over time, I do hear what you’re saying, and I think it’s a true problem that gets at what I see as one of the most difficult issues of all, the rights-control matter. To echo Lara Schiffbauer in her good comment, this is one of the main areas in which we simply don’t understand enough, “we” being just about all of us. Certainly authors feel perplexed about this problem, and even the concept of partial rights — as in a major seller granting only print rights to a big house while retaining e-rights (Andre, Howey, etc.) — even that is in question as the industry takes a breath and asks itself how quickly precedent might become standard procedure. These dilemmas get at the heart of the author-publisher relationship as it has existed for so long. Even trying to re-open the questions is difficult. But it’s what must happen and, I believe, it’s what is about to happen.

      You’re kind to thank me but I take DeFiore’s metaphor very seriously, too (from his comment above) and remind myself that mounting barricades isn’t the point. So rather than think of ammunition here, I’d like to consider discussions like this as explorations. Less Les Miz, more Royal Hunt of the Sun, LOL.

      When exploring and spelunking, really, trying to suss out those new Pathways to Publishing as agent April Eberhardt calls her fine new workshop program, we can really go far down the wrong hill or up the wrong tree.

      I think a great many of us, while appreciating the array of things a good, engaged publisher can do for an author, will agree with you that 25% isn’t working. Finding a better route, though, is — as DeFiore reminds us, complex. Mountainside blasting won’t handle it.

      Conversations like this, and the ideas that arise from the perspective that you and DeFiore with his nuanced follow-up and perspective like that of James Scott Bell and Linda Pennell and Lara and so many others bring to it are, in the end, the scratchings-around that will eventually spawn better ideas and move us forward in the disruption.

      In short, we’re going to have to talk our way out of this one, whether we like it or not. So thanks, as ever, for being a key part of that discussion and one that always speaks up with context. We can’t get too much of that at the moment.

      Cheers,
      -p.
      @Porter_Anderson

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  8. Ronda Roaring says

    Porter, thanks for this revealing and depressing report. Am I correct in assuming then that, for most authors, there are two options, be scammed by a publisher or self-publication? Is that the correct conclusion to draw from all of this?

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    • says

      Hey, Rhonda,

      Thanks so much for reading and dropping a note.

      Actually, the good news is no, being scammed by a publisher or self-publishing aren’t the only two options. There is, in fact, a great deal that a good, major publisher can do. Agent Kristin Nelson, for example, recently made the point that getting a book to go “wide” on a global scale, making an international success of a book, is something we have yet to see happen without a major publisher in place. Certainly, while distribution isn’t the only selling point a major brings to the table, it’s a huge bargaining point, along with many subtler services and supports.

      Don’t forget, too, that “publishers” are not only the Big Six-Becoming-Five. There are mid- and small-size publishers, presses of many stripes and kinds, services of real depth and, growing fast among them, Amazon Publishing, has just had its first million-selling author (this is not self-publishing via CreateSpace or KDP but Amazon Publishing, itself, which also is cultivating new work through its Breakthrough Novel Award).

      In short, there’s a widening range of offerings for authors beyond the Old Publishing majors. And even in their houses, things are changing.

      We can certainly say, though, that the self-publishing movement has helped to light a fire under things. Whether an author feels it’s the way for her or him to go, that continually deepening range of options is helping the entire industry loosen up and explore — as I was just mentioning to Roz Morris in a comment to her — what we have ahead of us and how we might make it better.

      DeFiore’s message to us is that the simplistic look at a single price point can surely make it look like authors might be “scammed,” as you put it, but the truth is more complex and we need to try to hold that wider view in mind.

      I’ll tell you of one interesting development this week. First To Read is a new initiative from Penguin in which users get to ask for the chance to read books before they’re released. The users will be interacting with the brand and with fellow users. And this is an example of a big publisher reaching out to readers, something these houses have not been known for doing. It’s brand new, so we don’t know how First To Read will fare, but it’s an interesting step.

      And eventually, we need to get past the divides in the industry (not possible yet, of course, but down the road). At the end of the day, the readers don’t want the industry’s agonies, they want good books.

      So thank you for all your concern and thought. Keep trying to look for those gradations of potential that mean it’s not just one way or the other. Because we’re finally going to need this to work for an awful lot of people and the more breadth we can bring to it, the better we’ll be able to do that.

      -p.
      On Twitter, @Porter_Anderson

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  9. says

    As an author and a reader what jumped out at me from the graph was the price of an ebook. Are they really expecting to get long term sales of ebooks at $14.99?

    It is going to be interesting to sit outside the industry and watch the transformation. I believe that the publishing industry will survive, but it will look like a completely different animal than it does today.

    Thanks for the post, I love reading this blog.

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    • says

      Hi there, and many thanks for reading and commenting!

      You bring up, of course, the $64,000 question of the moment. Especially as the closing arguments have passed this week in Judge Denise Cote’s court on the Apple-Department of Justice anti-trust trial in which Big Six publishing chiefs were on parade about just that: price.

      At this point, Digital Book World’s weekly ebook ranking project — which includes an aggregate Top 25 listing — is seeing a pronounced turnaround in pricing toward the upside.

      The latest report from Jeremy Greenfield is here http://www.digitalbookworld.com/2013/avg-best-seller-price-continues-to-tick-up-as-big-publishers-score-hits/ and as he points out:

      “A resurgence of relatively high priced titles from the larger publishers combined with a decline in self-published hits priced at around $4.00 or lower has pushed the average price of an ebook best-seller to its highest point since 2012. This week, the average price of an ebook best-seller is $9.17. It’s the first time this index has recorded a price over $9.00 since last year.”

      In my own completely informal checks on pricing online, I, too, am seeing a marked trend toward higher pricing, especially in the traditionally published ebooks. Rather than the great blood-letting of discounts many warned would be imposed by Amazon in the wake of the agency rollbacks (required by the big publishers’ settlements with the DoJ), we’re seeing quite a lot of prices above $10 and they’re holding, at least, as I see them, relatively steady.

      Those retailers have to show a break-even result on books they’ve discounted this year. As Greenfield notes, there’s a chance they’re now letting higher prices ride without discount because they need to balance their books to show no discounting that goes beyond break event.

      Whatever is behind the apparent upward trend (and realize these gauges can be quite volatilve), the big-picture answer is yes: there are those who think the $14.99 range on an ebook can be sustained.

      And, as far as I’m concerned, it’s good to see an author’s hard work go for such a price. I’m not fond of these deep, deep discounts we’ve watched in play for a couple of years because I don’t think they help us represent writing as a business worth a respectable charge.

      However, time will tell, and as I say, you mention a great question here. Many thanks,

      -p.
      On Twitter, @Porter_Anderson

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      • Carol says

        Yes the prices have been increasing but how many readers are actually paying the price? The number of units actually SOLD would show the true picture of pricing – not “list” prices. As a reader, I know I will not pay e-book prices over $8, in fact I give serious thought to books self-published and priced over $4 (not that I don’t believe the artists may be worth it, but I feel I’m taking a chance on an indie unknown) . If I’m getting to the $8 price point I’ll purchase a hard-copy that can be easily loaned, re-sold or donated to my library. Knowing that authors are getting higher royalties on print books I feel even better for that decision.

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  10. says

    well, i am “almost” glad i haven’t “made it” yet, with all this turmoil :-)

    and you made one point in particular in the comments above, “making an international success of a book, is something we have yet to see happen without a major publisher in place…” –

    which is worth thinking about, but then, what use is “success” for an author, without compensation –

    it’s still a hostage situation, sorta (of course), so i’ll continue doing the only think i can control, continuing creating new work

    either way, this “leak” of where the profits really are, with the larger houses, is vital information, so many thanks for those :-)

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    • says

      Hello, Adan,

      My apologies for not getting back to you more quickly.

      I do want to offer you a bit of hope here, all is not so bleak. Mike Shatzkin, a leading industry consultant (which means he works with the majors, so we always keep that in mind) and keen observer, long in the industry, is writing “Royalty rates on ebooks from big publishers are bound to go up (while royalty rates for print books will probably go down).” His point being that as ebooks become, proportionately an increasingly important element of the market, all elements of publishing will have to contend with this, and it’s hard to see how the royalty rates being debated here today (ebook rates) won’t be going up as the counterweight of print lightens.

      Thus, there are many good things — and not just in the royalties arena — ahead as the digital dynamic continues to work its way through publishing and transform it.

      Agents like Brian DeFiore and his colleagues at AAR will be on the leading edge of the growth of authors’ presence in this newly reforming market, and we can expect to see them, as he says, fighting to get those rates up — which, in turn, can help preserve for entrepreneurial authors the option of the traditional route as something valuable and worth pursuing.

      Hang in there, then. You are correct: Keep creating new work. Just make it the absolute best work you can create. My column below, “Faster, Authors, Faster!” touches on the myth and the mistake of the pressures in the industry on many to produce more and more, faster and faster.

      My advice: Relax into your work, remember that the digitally energized market for your efforts will be better tomorrow than it is today. Waiting and working is not evasion, it’s a smart strategy for many good authors at a time when so many unknowns can scuttle their finest efforts. You’re on the right track, sir.

      Thanks so much for reading and responding!
      Cheers, and all the best from here,
      -p.
      On Twitter, @Porter_Anderson

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      • says

        porter, first let me thank you for such a thoughtful reply, much more than i could have expected or anticipated, in a good way

        you list several points i really resonate to :

        1) “there are many good things — and not just in the royalties arena — ahead as the digital dynamic continues to work its way through publishing and transform it…” –

        that the future includes, as a positive for writers, the seen possibility of good things “not just in the royalties arena” is, not only surprising, but something to look forward to

        2) “the mistake of the pressures in the industry on many to produce more and more, faster and faster” –

        and within ourselves, especially if financial needs are pressing; if faster and more and more is inwardly driven, well, get outta the way then i guess ;-) ; but if not, yeah, gotta take that breath a little more slowly, a bit more deeply

        3) and really love your advice : “Relax into your work, remember that the digitally energized market for your efforts will be better tomorrow than it is today. Waiting and working is not evasion, it’s a smart strategy…”

        don’t know if it’s just cause i’m getting old(er), but slowing into the work, even when it’s a rush :-) is getting more and more fulfilling

        *

        thanks so much again too for the link to your “On the Ether: Faster, Authors, Faster!” post –

        that’s one heck of a read on jane’s site (following the links), and have sent it to kindle for that slow read :-) –

        the comments are good too it looks, so by highlighting “that” text, i can then send them also to kindle, to read more leisurely later tonight

        take care, best wishes

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  11. says

    …”relax into your work…”

    I can’t tell you how much I appreciate your message of hope, Porter. I have been working on my craft for years but have only recently queried agents. (I’ve had good responses and request rates for the full, but, in the end, passes.) I’m working on a revision now to improve pacing and am utterly stymied about next steps: Keep trying agents? Sub directly to small presses? Self publish? I’m continuing to read as much as I can about all of it.

    In general, I am excited and optimistic about the changes we’re seeing, but it can also feel overwhelming and scary, especially when pursuing fiction writing as a second career (ie a newbie who isn’t “new.” Lol). Thank you for all of your wonderful info!

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  12. says

    Wow, Porter … this post, comments included, has been a wild read for me. The thought of getting “business-ed up” makes me want to poke my eyes out, but then I remember the letters of Flannery O’Connor in The Habit of Being. Tons of them were to her agents, her publishers and her editors and consternation was not an uncommon theme. And this was in the ’50s and ’60s and she was dealing with the only show in town at the time, traditional publishing.

    Also compelling—the model you pitched of a collective or consortium of writers helping each other get “business-ed up.” I’ve already noticed that vibe with the published authors who have come to our local writer’s workshop: super willing to help and share knowledge and strategies. This goes for both the traditionally published author who visited and the self-published authors. If that goal were defined and expanded … the possibilities seem huge.

    Now I’m gonna read your post “And the Boat We Rowed In On.”

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    • says

      had to give you a “like” on your comment just for the title of your “latest blog post” –

      “It’s Sad When You Have to Read Your Blog to Find Out What You’ve Been Doing” – :-)

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  13. says

    Porter, you are so ding-dang REASONABLE, amidst the cudgels and the curtsies of publishing’s courts. Thank you for coaxing Mr. DeFiore into the discussion, and for nimbly springing from his clarification into your own, which allows for the many shadings of grey (but thankfully, not fifty) in these sometimes stormy skies.

    (And of course for using “jejune” in one of your comments. We do need to give shuttered words an airing now and then.)

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  14. says

    Porter, I am flat back in my chair reading your effort on this subject and situation. Your post and comment replies are insightful, detailed and generous to many points of view, which together bring hope in what has been a long campaign of artists (and all workers, really) to live and create in a corporate-dominated market.

    The image comes to mind of the company store–outlawed by Congress over a hundred years ago–where workers become indebted to the store (someone’s business) BY working for the development of product, by doing what they were hired to do. We writers are receiving shavings of gold off the gold bars our work generates. It is a long struggle and arguments on both hands have merit. EG Big houses do create possibilities for authors, and, without the authors’ effort and skill there is no gold.

    History shows the middle ground of some optimal balance being claimed back and forth. The last thirty years have pretty much been a time of corporations running the table. The advent of digital press and POD inspires upset and creativity, which I see as THE great opportunity of our time, and I expect the future will only lie still when writers and those who travail for other’s profit are honored more than they are currently and for who they are.

    Your concern and advice will be part of that change. Thanks.

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