Monthly Archives: November 2011

PG tweeted the Publetariat version of this before discovering the post originated with regular visitor and author M. Louisa Locke:

I have a lifetime of experience of being supported by people I know, whose friendship, sympathy, advice, and encouragement has sustained me in my life and work. However, in the past two years that I have been involved in self-publishing, I have been overwhelmed by the way previously unknown strangers have helped me, and today I wanted to give thanks to them.

First there were the bloggers. When I started on the journey to self-publishing, my writer friends were still firmly enmeshed in traditional publishing. That was their experience, and most of them thought that was their future.  This meant that I had to turn to strangers, bloggers I had never heard of before, like Morris Rosenthal’s with his How to Publish A Book, Jane Friedman’s There Are No Rules, Mick Rooney’s POD, Self-Publishing, and Independent Publishing, Joanne Penn’s Creative Penn, Henry Baum’s Self-Publishing Review, and J.A. Konrath’s A Newbie’s Guide to Publishing. I know how difficult it is to write consistently, clearly, and frequently about a subject that is so complicated, varied, controversial, and changeable. Yet these bloggers were doing exactly this when I started to look into self-publishing in 2009. It was these bloggers that convinced me that there were other options besides traditional or “vanity publishing.” These were the bloggers who gave me the confidence to choose self-publishing and the information I needed to become successful, and I thank them.

However, among their ranks there were bloggers who reached out and directly helped me in ways I can never repay. When April Hamilton made me a regular contributor to her wonderful and comprehensive site Publetariat this provided a platform for my ideas that I would have never have reached on my own, helping me build a following.

Joel Friedlander is another blogger who has gone out of his way to promote my blog, featuring my posts on his blog the Book Designer and tweeting about them. Whenever my back posts get a spike in hits, I can often count on Joel to have been the one who has caused this.

. . . .

I know that on the surface the examples above might not seem like kindness, but just people making good social media connections for their own benefit. Yet what has struck me consistently about these and other members of the self-publishing community is that they seem genuinely interested in both sharing information with and promoting other self-published authors. I am a very small fish (in terms of length of time in self-publishing, books published, and breadth of my social media following) in a vast ocean, yet I have never been made to feel that way. Instead, I have been made to feel welcome, and the kindness of these strangers has been a large part of the reason I have enjoyed the process of self-publishing so much.

. . . .

Finally there are the readers. Strangers who write unsolicited thoughtful reviews on places like Amazon or Goodreads, write me emails telling me how much they enjoyed my work, and comment on my facebook page. Small acts of kindnesses that are more precious to me as a beginning writer than all the sales. Some of these people even offered to be beta readers for my sequel, Uneasy Spirits, giving me wise advice, close edits, and the confidence to get the book out before Christmas. Without every stranger who was willing to take chance on buying a book by an unknown author, I would have no success, and I thank them all.

Happy Thanksgiving to you all.

Link to the rest, including many more people that she thanks, at M. Louisa Locke

From the Los Angeles Times:

Hollywood buys film rights to obscure short story by famous author. Makes movie. Movie makes money. Producers then claim they never needed to buy rights in the first place. Demand their money back.

Emblematic Philip K. Dick story elements: Attempt to turn back time and murkiness of reality. Extra mind-bending plot twist: Author of original story is named Philip K. Dick.

As Laura Dick Coelho, one of the late author’s daughters, told me: “Everything in the Philip K. Dick world is complicated.”

She was talking specifically about the personal life of her father — she’s the offspring of the third of his five marriages. But her observation applies well to the dispute over the 2011 Matt Damon film “The Adjustment Bureau,” which was based on “Adjustment Team,” a short story Dick wrote in the 1950s.

. . . .

The Dick estate, which is managed by Coelho, 51, and her half-sister Isa Dick Hackett, 44, optioned the film rights to “Adjustment Team” to writer/director George Nolfi in 2001 for $25,000. Nolfi, who subsequently wrote the screenplay and directed the retitled film version, had transferred the rights to Media Rights Capital, an independent studio. The producers exercised the option by paying the estate $1.4 million, with at least $500,000 more due once the film achieved its break-even point.

But the rest was never paid. Media Rights Capital says it has learned that “Adjustment Team” first appeared in a cheap pulp sci-fi mag in 1954 and that the copyright was never renewed. That means the story has been in the public domain since 1982 and is available for anyone to exploit for free, like a play by Shakespeare.

. . . .

None of this would rise beyond garden-variety Hollywood accounting shenanigans were it not for the identity and life story of the original author.

Dick was an outstandingly prolific writer who labored in poverty for most of a three-decade literary career. The breadth and quality of his oeuvre were scarcely known to the public until the release of Ridley Scott’s “Blade Runner,” which was based on Dick’s 1968 novel “Do Androids Dream of Electric Sheep?” and came out four months after his death.

Since then, his recognition as a science-fiction giant has spread. His books have been turned into hit movies including 1990′s “Total Recall” — from the 1966 novelette “We Can Remember It for You Wholesale” — which starred Arnold Schwarzenegger. “Minority Report,” from a 1956 short story, was directed by Steven Spielberg. A three-volume collection of his novels was brought out by the prestigious Library of America in 2009.

Dick’s allure for filmmakers is no mystery. His works are often built around a richly imaginative kernel involving shifts of memory, identity or time that can be dramatically fleshed out by a skillful screenwriter. The resulting screenplays often depart far from the sometimes sketchy plots of the original stories, but their pedigree as Philip K. Dick creations is never in doubt.

As for the publication history of “Adjustment Team,” the facts may be shrouded by three decades of lost memory. The estate says that “Orbit Science Fiction,” the 1954 pulp magazine in which the piece first appeared, may have been the product of the pioneering science fiction editor and publisher Donald A. Wollheim, whose Ace Books was among Dick’s first legitimate publishers.

Wollheim, who died in 1990, was not above playing fast and loose with the copyright law; in a famous episode, he exploited a loophole to bring out unauthorized paperback versions of J.R.R. Tolkien’s “Lord of the Rings” in 1965. In his later years, Dick accused Wollheim of having cheated him of royalties years earlier, according to the author’s daughters.

Link to the rest at the Los Angeles Times via the always-tweeting Elizabeth S. Craig

Here is a Hollywood Reporter story on the litigation.

Regular visitors have read Passive Guy’s explanation that in the United States a copyright lasts for the life of the author plus 70 years, so the copyright parts of the Times story may be confusing.

Here’s a simplified overview:

The Copyright Act of 1976 set the duration of copyright as the life of the author plus 50 years. In 1998, a retroactive amendment increased the term of a copyright to the life of the author plus 70 years and applies to works created after the enactment of the 1976 Act.

Prior to 1976, the principal source of US copyright law was the Copyright Act of 1909. (Although Congress tweaks copyright law more frequently, major overhauls are rare. Before 1909, copyright law was governed by the original Copyright Act passed in 1790.)

Under the Copyright Act of 1909, the duration of copyright protection was 28 years. That duration could be extended for an additional 28 years if an appropriate filing was made with the US Copyright Office. With the extension, the maximum duration for a copyright was 56 years.

The rules for when copyright protection began were also changed by the 1976 Act. Under the 1909 Act, copyright protection began (and the 28-year clock began to run) when a work was published with a notice of copyright. If a work was published without copyright notice included, it was automatically in the public domain. Prior to 1976, only state copyright laws governed unpublished works.

The 1976 Act provided copyright protection from the time the work was created, without regard to publication date. Notice of copyright is no longer required for copyright protection (but may be important in proving willful copyright infringement which carries significantly increased penalties for infringement).

To put all these dates together, generally speaking, in the United States, all books and other works published before 1923 have expired copyrights and are in the public domain. In addition, generally speaking, works published before 1964 that did not have their copyrights renewed 28 years after their first publication year also are in the public domain.

PG uses the weasel words, “generally speaking,” because, as the Philip K. Dick case discloses, under the 1909 Act, a publication not authorized by the author may not have started any clocks running.

If you really want to get into the details of copyright expiration, the Cornell Law School has compiled a detailed listing of the dates upon which US copyright protection expires for all sorts of different people in different places.

Book designer Joel Friedlander conducts a monthly awards program for ebook cover designs. The link will provide a brief explanation plus additional links to the August, September and October ebook cover awards entries.

If you want to submit an entry this month, go here before the end of November.

Joel provides expert commentary on the award winners plus many of the other submissions. Even if he doesn’t comment on your cover, your book will gain some exposure on a busy website.

Agent Jennifer Laughran answers a question from an author:

I get a variation on this question all the time. So let’s tackle it here.

The fact that you are asking a stranger about this is a bad sign, to be honest. To me, it means you don’t have a good enough relationship with your agent to have a frank conversation with her.

Either:

A) You are right, she is not jazzed about your book anymore (or your next book, or whatever it is) — in which case you need to TALK TO HER and find out what the problem is, and if she has lost faith in your book you need to find out why and discuss the possibility of revisions, or tell her the other awesome idea you have up your sleeve, or part ways with her, or SOMETHING. But nothing will get accomplished if you don’t talk to her. You sound like you are stuck in a rut right now, and something needs to change for you to move forward. Or…

B) You are being a neurotic stressball (common in the writer community) and you need to TALK TO HER and realize that she still adores your work and is waiting until after the holidays, or is swamped and not being the communicator she should be, or SOMETHING, but again, you can’t find that out unless you talk to her. She is probably not psychic and will not know you are upset unless you tell her.

. . . .

But if by chance she does end up dropping you (OR vice versa)… it won’t be the end of the world. In fact, you might find it a blessing in disguise. Even if you really like somebody as a person, you don’t want them as an agent if they aren’t excited about your work. And you certainly don’t want to work with somebody you don’t trust enough to talk to.

Link to the rest at Jennifer Represents

Passive Guy was struck by how similar Jennifer’s advice about a business relationship was to boyfriend-girlfriend issues/shaky marriage advice.

PG also remembered a couple of comments to his recent repost of Your Agent Isn’t Your Mommy.

The first, from Camille:

And, let’s face it, the traditional writing culture is VERY much like being a woman in the 19th century. Catching an agent is like catching a husband. You’re a failure and a hopeless wallflower if you don’t do it, it’s your crowning glory, and by the way, he will take care of you forever and ever so you don’t have to grow up and take care of yourself.

The second, from Susan:

I have a trad-published friend who made the comment “My agent takes care of me.”

My reply – “You mean like your first husband did?”

So yeah, I agreed with the “abused spouse” comparison long before it was proposed.

An archaeologist is the best husband a woman can have. The older she gets the more interested he is in her.

Agatha Christie

From David Gaughran:

A bestselling self-published novel – Sugar & Spice by writing duo Saffina Desforges – disappeared from Amazon UK 18 days ago, with no reason given to the authors. Repeated requests to KDP UK have failed to elicit an explanation, let alone a solution, costing the authors significant lost sales.

. . . .

Like every corporation, Amazon looks out for their own interests. In fact, that is their legal and financial duty to their shareholders.

Having said all of that, I think that Amazon is the most “indie friendly” of the major retailers. I mean this in a relative sense.

Amazon don’t massage their bestseller lists to prioritize trade-published books (like Barnes & Noble are suspected of doing), don’t build storefronts for books from large publishers (like Apple are planning), and don’t discriminate against self-published titles by actively reducing their visibility (like pretty much all the other major retailers do).

I don’t think Amazon does this out of any special love for self-publishers. Rather, I believe that the level playing field we are afforded is a happy symptom of Amazon’s mission to always display customers the books they are most likely to purchase whoever the publisher is.

. . . .

Also, while the service I have received from KDP US has been (mostly) excellent, I have heard mixed reports for authors using KDP UK. This latest incident, however, is by far the most serious.

“Saffina Desforges” is the pseudonym of a pair of British self-publishing writing partners. Their debut novel Sugar & Spice was a huge hit, shifting around 100,000 copies – mostly on Amazon UK, largely earlier this year.

Their issues with KDP UK started in the summer when Amazon began cracking down on what they felt were extraneous sub-titles to novels. Without warning, or requesting the authors to make the change themselves, Amazon removed their subtitle – which was something along the lines of “the controversial psycho-sexual crime thriller”.

Amazon don’t have any clear guidelines for sub-titles, and while some authors/publishers may have strayed into a gray area by mentioning things like competing authors or titles in their sub-title, that was not the case here.

The effect of this sub-title alteration was to put the book back in “publishing” mode. This also coincided with a huge drop in both sales and ranking, costing them the hard-fought #2 spot in the overall UK Kindle Store and – they believe – significant sales (they were shifting over 800 copies a day at the time).

. . . .

In this case, however, Amazon made repeated changes to their subtitle throughout the summer, and the same pattern was observed: the book slipping into “publishing” mode, and an ensuing drop off in sales and ranking until the book went “live” again and gradually recovered position.

. . . .

This sub-title issue, however, was only the beginning of the problems with Sugar & Spice.

18 days ago, Sugar & Spice disappeared from Amazon UK altogether. The book is still on sale on Amazon US, but the address where the book should appear on Amazon UK leads to a generic page indicating a broken link. UK sales, obviously, have ground to a halt.

To be clear, the authors didn’t un-publish it, and no notice was served by Amazon regarding its removal. Indeed, KDP UK have been unable to ascertain the reason for the book’s disappearance, or resolve it, and can only confirm that they are still “investigating” the matter – 18 days later.

Needless to say, the authors are upset. I contacted Mark Williams (one half of the Saffina Desforges partnership) after he blogged about it this weekend, and he estimates the loss of sales in this eighteen day period as being in “four figures.”

It’s hard to believe that the book may have been removed deliberately (for whatever reason). While some books have been removed in the past for – amongst other things – content violations, this is a book which has sold more than 100,000 copies over a period of eleven months without any such complaints. In any such cases that I am aware of, the publisher was always notified. Indeed, the (same) book is still on sale on Amazon US.

Link to the rest at Let’s Get Digital

Here’s a link to a blog post by one of the authors describing the experience. The Amazon discussion begins about two-thirds of the way through the post.

Passive Guy shares David’s puzzlement about this affair. It appears that Amazon US and Amazon UK, while undoubtedly using the same underlying publishing platform, seem to have different business practices. PG hasn’t heard any reports of subtitle removal on Amazon’s US store, for example.

Operating internationally is going to involve some differing practices. A title that may be offensive and violate Amazon’s Content Guidelines in one country might be mainstream in another country, but if a title is taken down, PG would think a standard procedure would be followed throughout the world.

If you want to support the authors, here’s a link to their novel on the Amazon US site.

UPDATE: SL Clark made a comment PG thought was useful:

PG, what the… I can’t believe you have ANY sympathy for this nonsense. These, um publishers knew *exactly* what they were doing when they tried to game the AMZN url system:

Here’s their “americanized replacement”, trying desperately to get around Amazon yet again:

http://www.amazon.co.uk/Sugar-Spice-American-controversial-ebook/dp/B004W0IJCU/

The US KDP (likely UK too) control panel says:
Book name:
Please enter the exact title only. Books submitted with extra words in this field will not be published. (Why?)

Clicking the “Why” link pops this up:

‘In order to provide the best possible tools for independent publishers, and the best experience for your readers, Kindle Direct Publishing does not publish content that is intentionally confusing or misleading. Book titles that are unnecessarily long, or contain extraneous terms, can lead to inaccurate or overwhelming search results and impair readers’ ability to make good buying decisions.”

They did their deed for visibility and now that has been taken away. Take a look at their “author” page, those off AMZN urls should have their account banned, but no these folks cry foul. I say BS and goodbye.

Another valuable essay from Kris Rusch:

While the royalty rates and escalators got handled by the accounting department and would happen once the book went on sale, the marketing plan, the vision, and actual support of the book itself often got tossed out the window if the editorial team that bought the book left the company. Some new editorial directors, concerned more with their own careers than the books they inherited, would actively kill a line designed by their predecessor. (This has happened to me personally three different times—fortunately, in two instances, I was able to buy the book back from the publisher before publication.)

These things still happen on both large and small scales. A large-scale case hit the news just last week. Kaplan Publishing, which those of you who have taken the SAT test recognize for its ubiquitous test prep books, tried to add a trade line. The problem is that they did so right at the beginning of the economic collapse.

Kaplan reassessed, as good businesses do, and dropped the trade line this year, firing staff, and disbanding everything from editorial to publicity to sales. The problem was that no one told the authors. One author, Dr. Yvonne Thorton, with a major bestseller to her name (The Ditchdigger’s Daughter) had sold a book at auction to Kaplan, foregoing other companies that offered more money for Kaplan’s better promotion model.

By the time her new book came out, Kaplan had decided to abandon the trade line. By the time she noticed that her book had been published “dead” as the phrase goes, there was only one guy left in the trade arm’s office, and he couldn’t do anything. I suggest you read about this case if you ever think of going with a traditional publisher, because these things happen all the time.

Traditional publishing companies have a lot of inventory—books written by writers—and these publishing companies are dealing with the inventory as they would any other product. The problem is, that for the writer, the inventory, the product, might be the only thing they worked on for the past five years.

Folks, when any business has a term for something, that means the something is common. I’ve had at least a dozen books published “dead” either here or overseas. What happens is that the publishing company has decided to move away from that genre, or the editor left and no one picked up the slack, or the publisher has decided to quickly get rid of “excess inventory,” which your book is part of.  The first time that happened to me, it happened at the end of the horror boom, and my publisher cut their horror line. They published my novel, co-written with Kevin J. Anderson, anyway, with a terrible cover and no support. They dropped the second book on the contract, returning it to us like bad fish.

The next time I had a book published dead, the editor had left, and the publisher loathed the replacement editor.  The publisher decided to destroy the replacement editor’s career, and actively ruined the book line that the new editor was overseeing, so that the new editor could be fired. I managed to buy one book back from that debacle, but another got published dead right into the mess.

The most recent time I had a book published dead was with my novel Fantasy Life, part of Pocket’s aborted modern fantasy line. My novel was supposed to be a hardcover lead. By the time the book came out, the editor had been gone for nearly a year, the publisher had left, and the novel had no editor at all. No one in the house even knew the book existed. Some poor managing editor shepherded the book into print, slapped a bad cover on it, and didn’t even know that my contract and letters back and forth with the team stipulated hardcover first, with tons of promotion.

Once upon a time, back in the land of no choice, a writer had to do what she could to save her career when such things happened. She had to change her name or be savvy enough to see the handwriting on the wall and rescue the book before publication (usually by buying it back and canceling the contract) or find some other publisher to buy a bunch of books before the “dead” book came out, so that the other publisher would throw a lot of money in the mix to save the other books.

A lot of careers ended because writers didn’t know how to handle the situation above.

. . . .

I went over all of the royalty statements that I received from all of my traditional publishers. These statements covered the first half of 2011.  Then, I chose to examine a statement closely from a publishing company whose royalty statements are accurate. This company is working hard to be transparent, which I appreciate.

The numbers I got from the company for my e-books are in the same ballpark as the numbers I have from WMG on the e-books under the same byline. I’ve seen other numbers which confirm that the numbers I’m getting from this company are accurate.

Using this royalty statement, I did a comparison of the amount of money I would have made if I had self-published the book compared with the amount of money I made because the traditional publisher published it. I did this for the e-book only.

Here was how I figured it: The traditional publisher put a $6.99 price on the e-book, but sold it at $5.49, which I would not have done.  I would have used the $6.99 price, since the book was new. (I put backlist at $4.99; front list at $6.99.)  The contract I signed with this publisher pays 15% of net on e-books, and I had an agent on the deal.

The time period was also short, a little over one month from the time the book came out to the end of the royalty period. That made the comparison very easy.

The sales of this e-book that month were no different from backlist titles by this byline. So the traditional publisher added no value on this e-book (for the front half of 2011).

It seemed like a good opportunity for a comparison.  So I did the math. I was startled by the number that I came up with.

When all of the factors were taken into account, the traditional publisher paid me 10% of what I would have earned on my own had I published the e-book myself. At 70% of the cover price (from Amazon, etc), I would have earned about $800 on that e-book. From the traditional publisher, I got about $80 on the same e-book.

This frontlist book came out in the middle of the darkest part of the publishing downturn, as Borders disappeared (and wasn’t ordering), and Barnes & Noble hadn’t yet determined what they were doing with books. So the paper book only sold 5,000 copies.

Compare that with the first novel published under that byline, which came out more than 10 years ago. At that point, the first novel under that new pen name sold 30,000 paper books in its first month of publication. Different time period, different market, different company, and a completely different world.

Right now, we all—the traditional publisher and me as well—consider that shipment of paper books at that point in time, on an unusual book, a complete success, given the book’s advance and the expectations we all had.  I should also note that I am happy with this company’s marketing efforts, its covers, and the penetration the company got into stores.

Still, that 10% e-book number bothered me, and made me ask the question: What could the traditional publisher do for me that I couldn’t do for myself?

I have some answers to that question, and I’ll be getting to those later on. But looked at from cold financial point of view—and with the expectation of an exponential growth in the e-book market—the traditional publishing route looks like a bad deal.

. . . .

In this new world, writers shouldn’t blindly choose between traditional publishing and indie publishing. Writers need to learn how to assess all the offers that come to them and then see what will benefit the writer the most.

Then the writer is going to have to do something most writers haven’t done in the past: the writer will have to negotiate.

Let me repeat that: The writer will have to negotiate.

That doesn’t mean that the writer must handle the actual back-and-forth herself. She can hire an intermediary, be that an agent or an attorney. But the writer has to control the negotiation herself, and make all the decisionsherself.

Why am I stressing that? Because the changes in the industry mean that agents at the moment have a different agenda than the writers they represent. The agent might not want a writer to say no to a $50,000 deal from a traditional company because the agent wants the commission. But if the writer does the book herself, the agent won’t get a commission (or shouldn’t—never give an agent a commission on a book you publish yourself. Ever.)

If the writer hires an attorney to do the negotiation for her, then she has to know what she wants from the negotiation. Because an attorney will only do what the client wants. The attorney makes recommendations, but never takes action on his own. (Unlike agents, who often make decisions without asking the writer at all.)

. . . .

And here’s the important thing: In this day and age, never ever ever sign a multi-book contract. The multi-book contract forces you and the publisher to stay together even if the relationship doesn’t work.

Writers have a lot of clout now because we can say no to a bad deal. We no longer have to take or leave what we get offered. We can not only walk away, we can walk somewhere else—and often, somewhere better.

The more of us who stay in traditional publishing and negotiate better contract terms, the more that will help the writers who decide to only publish traditionally.

Whether you want to go indie part time or not, you as a writer must now take a position of power. You need to negotiate from the position of power, not from the position of someone who is grateful for attention. Even if you never indie publish anything, this new world can benefit you—if you let it.

Link to the rest at The Business Rusch

Long-time publishing pro Mike Shatzkin talks about pricing books and dividing the sales revenue:

The division of the consumer’s dollar across the publishing value chain has a history of change. When I came into the business 50 years ago, discounts from publishers to retailers often topped out at 44% and even wholesalers seldom got more than 48% off the retail price on hardcover books. Today discounts into the mid-50s for big retailers and for wholesalers are common.

The top royalty for authors was, as it is now, 15% of the retail price, but there were fewer exceptions allowing the royalty to be cut, contractually or in practice. Today “high discount” clauses, calling for a royalty of something less that 15% of retail (and sometimes a lot less than 15% of retail) will often apply to more than half of the sales the publisher makes. (It is also true that in those days the agent’s standard cut was 10%. The 50% increase they’ve achieved to 15% is the single biggest change in share in the past 50 years.)

Lower royalties subsidize higher discounts and higher discounts have subsidized price cuts to the consumer. Discounting off the publishers’ suggested price by the retailer was rare until the Crown Books chain, which had a meteoric tenure as a major retailer from the mid-1980s until the mid-1990s, made it a core component of their offering. The Barnes & Noble and Borders chains, which rose to prominence during the Crown decade, used the tactic, although less aggressively than Crown.

All of these numbers: the discount determining what the retailer will pay; the royalty calculated either as a percentage of the stated retail price (usually printed on the book) or of the net paid by the retailer on a high-discount sale; and the ultimate consumer price (whether what the publisher printed or lower if the retailer wants it lower) are based on the price the publisher sets and prints on the book in the first place. The informal internal formulas for setting the price have changed over the years too and, although it is a bit hard to really compare, it would appear that the markup over manufacturing cost has also risen steadily over the past 50 years.

So we had reached a point, somewhat before we had the Internet and Amazon.com, where, on big books at least, the publisher would charge a price higher than they expected the consumer to be charged, give the retailer a discount larger than many retailers would keep as margin, and state a percentage as the per-copy royalty in the main body of the contract that didn’t apply to most of the sales. One could say there was a “virtual” world in trade book publishing’s value chain before the term was applied to our new digital reality.

The core underlying point here — obvious but often ignored — is that the division of revenue across the value chain is never fixed. That’s important to remember as we consider how the ebook chain is shaping up. One hears authors and publishers arguing about what is the “fair” division of the ebook consumer’s dollar (as if “fair” had anything to do with it, which it doesn’t) and we have a very unsettled picture of what the retailer’s share of that dollar will be (even though Apple is doing its best to be definitive about it.)

. . . .

Another value chain segment the industry is still trying to value and price is the percentage a distributor can charge in the digital world. There’s wide variation here already, as there is in the print world, where the same bundle of services (sales, warehousing, shipping and returns processing, collecting receivables) can cost anywhere from around 20% to around 33% (fully loaded.) In ebook distribution, we see BookBaby willing to set up for a fixed fee (with no percentage deducted), BookMasters and Smashwords and some agent services like Knight charging about 15% of the revenue, and then offers from various publishers, distributors, and literary agents that go as high as 30% of the revenue.

Usually those offers are framed as “we pay 70% of revenue” which, I think, some hope will be confused with the 70% the agency retailer pays of the consumer dollar. Of course, if they are paying 70% of the revenue on a wholesale account buying at 50% off and the account doesn’t discount to the consumer, the distributor is actually paying 35% of the consumer dollar to its client.

The challenge for distributors is to offer services which don’t commoditize. Many authors already manage their own digital publishing affairs and sneer at the idea that a distributor or publisher has anything to offer that is worth even a token payment, let alone a substantial share. Over time, one can imagine information dashboards, metadata enhancement, dynamic pricing, and marketing assistance capabilities that will give ample justification for a distributor’s presence in the value chain for many authors and small publishers. It would be premature to predict how much value can be added and how much margin it could command. Most of these roads aren’t paved yet. What the distributors are offering at the moment is their ability to navigate unpaved roads and constant marketplace change which, despite the skeptics, is service many of us can see the need for.

What gets perhaps the most attention in the industry’s conversation about dividing the digital swag, but which is dependent on the upstream divisions of revenue, is the author’s royalty from the publisher. The majors have held the line for a year or two at 25% royalty, which means 25% of the 70% they get from the retailer, or 17.5% of the consumer’s dollar. That’s a quarter of what the author can get from Amazon or Kobo, and just a bit more than a quarter of what they can get from Barnes & Noble. Aside from publishers’ significant efforts to build marketing capabilities that will grow sales and their ability to charge a retail price often four times higher than an author would on his/her own, the publishers are offering guaranteed payments (advances against royalties) and a print revenue stream to sugar-coat the 25% digital royalty. Still, as the percentage of books sold digitally rises, it is likely to pull up the percentage of the sale authors will get along with it.

Link to the rest at The Shatzkin Files

Passive Guy will emphasize one of Mike’s points on printed books. An author needs to pay close attention to the royalties payable for discounted books, inexpensive hardcovers, etc.

A typical royalty clause in a publishing contract will lead with a 15% royalty based on the retail price of a hardcover book, followed by trade and/or mass market paperback royalties. Somewhere down the page will be a royalty for discounted books. Sometimes, this royalty is half the royalty payable for full-priced hardcover, trade paperbacks, etc. Sometimes the royalty is calculated on the net amount received by the publisher instead of the cover price.

It’s important for an author to understand that a large percentage of sales will typically come from discounted books. Sometimes the definition of a discounted book means that all or virtually all sales will be “discounted” books. Instead of 8% trade paperback royalties, an author will receive 4% discounted trade paperback royalties, sometimes calculated on a lower royalty base than list price.

PG has seen royalty statements in which 98% of all books sold during a six month period were discount books with a teeny per-book royalty. In some cases, these statements included books that were newly-released during the royalty period – 98% of which were immediately discounted.

Those who prefer their English sloppy have only themselves to thank if the advertisement writer uses his mastery of the vocabulary and syntax to mislead their weak minds.

Dorothy L. Sayers

Continuing a Thanksgiving weekend reprise of the most popular earlier posts.

Passive Guy was ready to hang up his fingers for the day when a perfectly lovely publisher fast shuffle caught his eye.

Romance conglomerate publisher Harlequin recently sent emails letters to existing authors announcing what the emails letters tacitly admitted was a less-transparent royalty structure for ebooks. What’s more, if you had written only a single title for Harlequin, you received a higher royalty rate than if you were a series author.

But Wait! There’s More!

It’s all automatic and retroactive. If you don’t like it, you have to tell Harlequin soon, otherwise it just happens to you, like that tornado that destroyed a city in Missouri a few weeks ago.

e-reads helpfully provides copies of two emails letters.

First, the royalty structure change description:

As you know, until now Harlequin’s position has been that digital royalty rates as a percentage of cover price is a more transparent way to pay authors than as a percentage of net receipts: authors know exactly how many copies they sold at what price and their compensation is not affected by unspecified costs. Over the past several months we have worked to ensure a smooth transition from the current percentage of cover price calculation to a net receipts calculation while maintaining the same transparency.

It’s so nice that the “same transparency” will be retained, but no explanation of how the new royalty structure works is included. “A net receipts calculation” is never defined in the email letter.

“Net Receipts Calculation” sounds like a dial-a-royalty system for Harlequin, a black box that spits out whatever number is most convenient.

Here’s more language from the email letter (bolded in the original):

Effective January 1, 2012, series authors who are actively writing for Harlequin will receive a digital royalty rate of 15% of net digital receipts for each digital unit sold in the English language, United States and Canada, frontlist and backlist. This will include books in Harlequin’s digital backlist program, Harlequin Treasury.

Lovely. The email letter describes a “net receipts calculation” and the bolded language describes “Net Digital Receipts,” evidently retroactively amending every contract for every series author at Harlequin.

If you’re a single title author, you receive bolded language that’s nearly identical, only you get 25% of “Net Digital Receipts.”

The first lesson is that writing a single title pays better than writing a series.

Let’s go to one last paragraph in the emails letters (bolded language included in the email letter):

Given that these are more favorable terms than those in your existing contract(s), this notification will be considered the amendment to those contract(s). If you wish to maintain the existing terms of the contract(s), please let us know by Friday, July 15th, 2011.

Isn’t that wonderful, an automatic email letter-powered contract amendment. With a deadline. You better hope you’re not on an expedition to climb Mt. Everest and out of email letter range until after July 15.

Passive Guy would be greatly tempted to send a email letter back that said, “I hereby terminate my publishing contract(s) with Harlequin. Given that these are more favorable terms than those in my existing contract(s), this notification will be considered the amendment to those contract(s).”

So, Harlequin is telling its authors that a mysterious, undefined “net receipts calculation” resulting in “net digital receipts” are “more favorable terms” without explaining what the new terms are and, PG’s cynical lawyer mind notes, not saying for whom the terms are more favorable.

The tone and tenor of the email letter clearly imply that these black box changes are for the author’s own good and that nice authors should just sit primly with their knees together and not make a fuss. But the specific bolded language representing an “amendment” to existing contracts most definitely does not say who is the beneficiary of the more favorable terms.

The legal and business issues of these emails letters are so obvious and extensive, PG will cut his snarky legal analysis short.

He will simply say that few legal documents (or emails letters purporting to be legal documents) are breathtaking for him any more. But these are truly breathtaking.

The emails letters remind PG of something the kind Old Massah might have sent to the slaves if Old Massah had an email account wrote letters to the slaves in the Old South.

Here’s a link to the most-helpful ereads post containing the full texts of both emails letters.

Link to the 37 comments to the original post. Feel free to comment here if you like.