Kristine Kathryn Rusch

2016 Disappointments

20 January 2017

From Kristine Kathryn Rusch:

As I write this in early January, fourth quarter numbers for all big businesses are just starting to trickle in. The whining about 2016 has commenced, some of it justified, some of it not.

The numbers aren’t just in for the major publishers; the numbers are in for indie writers as well. And the writers who crunch numbers are having varied reactions, often depending on years of business expertise.

I have a hunch that when all of the numbers arrive toward the end of this month or so, we’ll find out that 2016 was truly a mixed bag.

Which is what we should expect from a healthy publishing environment in transition.

. . . .

Self-published writers who remain in the business have become independent publishers in their own right. Which is why from now on in this post, I’ll call it indie publishing.

Even though ebooks have existed for decades, the Kindle made them a viable career path. Indeed, the Kindle and Amazon itself began a major disruption of the traditional publishing industry, a disruption all of us are living through.

Changes still happen almost daily. But a lot of us have worked on the indie side long enough now to take some things for granted. We’ve also worked in it long enough to have actual numbers. We can project this year’s earnings based on last year’s behaviors—kinda sorta.

I add the “kinda sorta” because, as I said, changes still happen daily.

As this blog goes live on my website (some of you got it early on my Patreon page), the Digital Book World conference is going on in New York. Data Guy is making a presentation that I’m sure will become public a week or two after the conference.

. . . .

Data Guy will be analyzing the digital market based on genre. But some of his findings have already gone public. He found—to the delight of traditional publishers everywhere—that indie book sales took a dramatic fall in the summer and early fall of 2016. (Writers have experienced this from the beginning.)

In the white paper, he notes:

In May 2016, verified self-published indie authors were taking home nearly 50 percent of all US Kindle author earnings. Now, as of early October 2016, the indie share has fallen below 40 percent.

As Porter Anderson writes in his introduction to the white paper, this rather steep decline brings indie sales back to their 2015 share of the digital marketplace. He adds,

No more can cordial skeptics like myself say that everything is always coming up indie roses at Author Earnings. The news of a downturn isn’t what the project’s chief admirers, the indie author corps, would prefer, obviously. But it helps lend a kind of real-world credibility to the effort: what goes up does not always keep going up in life as we know it.

Anderson is right: the downturn does show skeptics that Data Guy’s numbers are real and not just the product of indie “cheerleading” to use Anderson’s term.

Data Guy’s October numbers also show something that writers have been saying all summer: for many, their sales fell off a cliff. That cliff is composed of many things—the contentious U.S. election, the changes in Kindle Unlimited, a general overall retail downturn in the fall, and more.

I examined some of this in “Third Quarter Blues,” because as I learned when I wrote that post, that election downturns happen every four years in the United States—and some downturns are more prolonged than others.

However, the research told me (and the numbers later bore it out) that the U.S. retail economy would rebound after the election. The holiday season would set in with a vengeance, and consumers would buy more than they usually did in the last few weeks of the year to make up for time lost.

. . . .

Data Guy’s numbers are from October, before the holiday sales happened and during the election effect. I can’t wait to see his conclusions, because I suspect his spider, crawling through the various databases, will catch things we can’t see with the naked eye.

What we can see, though, is—I’m sorry to say—unsurprising in this kind of maturing traditional marketplace.

Some balance is coming back into the system. Consumers are getting used to a new way of doing things. Readers are getting used to a new way of doing things.

Readers still go to bookstores, yes, and some readers will go to the brick-and-mortar store first. But most readers go online first, even if they choose not to order the book there.

There’s an interesting piece from The International Council of Shopping Centers (which I found through the Marketing Land article). On January 3, the International Council of Shopping Centers released the results of a survey conducted after the holiday season ended. The survey had a relatively small sample size (1030 adults) , but the findings seemed to be backed up by the other data that’s coming in.

The survey found that 70% of the shoppers surveyed preferred shopping at a place with an online and a physical presence. That number was even higher for Millennials—81%. Part of the reason was the ability to compare prices, but some of it was—again—convenience. Since most shoppers waited until the last minute in 2016 to shop, they ended up looking online to see if what they wanted was at a store, and then they went to the store to pick it up.

Sixty-one percent of the people who went to the store to pick up the item they purchased online bought something else at that store (75% of Millennials.) Why am I harping on Millennials? Because they are the future of the next decade or so of retailing.

. . . .

What happened to books in 2016?

You’ve seen the traditional publishing headlines, right? Traditional Publishing Needs A Blockbuster, one newspaper wrote. And it’s true. There was no breakout book in the last part of 2016. The breakout books of 2016 were pretty small potatoes compared with previous years. In fact, single title sales were unbelievably tiny compared with…ahem…the 1980s or even the early part of this century. The week before Christmas, for example, John Grisham’s new hardcover sold “only” 71,000 copies.

Why do I say “only”? Because traditional publishing is set up so that the hardcover bestsellers sell best during the holiday season, and should rake in the bulk of the book’s profits by then. I quickly tried a like-to-like comparison with Grisham, using Google, and here’s what I found.

In 2002, Grisham released two novels—one in February (which I’m not using) and a non-traditional Grisham title, Skipping Christmas, which released on November 1. By the end of the year, Skipping Christmas had sold (shipped) 1,225,000 units.

Eight weeks left in the year when Skipping Christmas was released meant the book had to sell about 150,000 units per week. Clearly sales didn’t work that way—some weeks the book probably sold more than others. But book sales around the holidays are pretty consistent, and sometimes rise rather than fall.

In 2016, Grisham released a new traditional (legal thriller) Grisham title, The Whistler, and the hardcover “only” sold 71,000 copies in week seven after release. Of course, competing with that was the $14.99 ebook which—when I looked it up on the night of January 8—was #27 in the paid Kindle store. Price be damned.

. . . .

Mass market has declined because there are fewer mass market retail outlets. Most grocery stores have gotten rid of their mass market slots, many big box stores no longer carry mass market paperbacks, and many of the chain bookstores have closed. Mass market is dying from a lack of oxygen and shelf space, not because people dislike the format. Trad pub is killing mass market all on its own.

So what’s fueling the rise in print book sales? Availability. Traditional publishers never had a clue about what some of us called the book desert. There were large swaths of the United States where you couldn’t find a new hardcover book for sale on any shelf. Rural towns had mass market racks (sometimes) and libraries (often) but no bookstores. So rural readers were stuck buying books when they went “to town” or buying mass market off the truck stop rack or buying no books at all.

Now there is no book desert. Any rural reader with a mailbox and a debit card can order a book online and have that book delivered in any format in which the book is available.

. . . .

Perhaps the biggest retail story of 2016 came out last June where study after study showed that shoppers now make more than half of their purchases online. Remember when you knew a lot of people who refused to buy something online? Now, try to find someone who hasn’t ordered at least one thing online in the past year. If you’re dealing with people who have some disposable income (and aren’t living near the poverty line), then you’ll have a hard time finding someone who hasn’t ever bought anything online.

Consumers are moving between the digital world and the brick-and-mortar world with incredible ease. The transition is happening, folks, and we’re getting used to the new world.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

All Romance Ebooks & Visions of The Future Part Two

13 January 2017

From Kristine Kathryn Rusch:

The indie publishing world remains stunned by the sudden closing of All Romance Ebooks (ARe), an ebook distributor that had looked—at least in the beginning—like it was very successful. Maybe it had been, and had simply been undercapitalized (which is my guess).

But whatever the reason, ARe closed its doors on December 31, 2016, and is now dealing with a heck of a financial fallout.

. . . .

ARe wasn’t the only venture to go belly-up in 2016. A couple of other companies that got their start as some kind of support, or “new” business model based solely on the indie publishing revolution also liquidated in 2016. Another—Booktrope—vanished fast as well, although unlike ARe, Booktrope gave its suppliers a month to handle the loss.

. . . .

So, what are these three intertwining factors that will impact us in the next few years?

They are:

  1. A gold rush
  2. An investment bubble
  3. A business cycle

Each has patterns so clear that a thousand books have been written about those patterns. You can find the patterns by Googling, or (in the case of gold rushes) by watching the History Channel.

Let’s start with the gold rush, because everything starts when someone discovers a shiny hunk of metal hiding in plain sight.

The ebook revolution wasn’t a literal gold rush—there were no creeks, no slipping hands in ice-cold water to shake gold flakes loose from bare rock in a little makeshift pan.

What there was were a few frustrated writers who used Amazon’s easy Kindle interface to upload books that these writers either couldn’t sell to traditional publishers or were too afraid to try to sell. And because the Kindle was such a nifty device and because there wasn’t a lot of content, back in them thar days (nine years ago), these books took off. Writers who had books with bad covers and poor copyediting sold and sold and sold because those writers could tell good stories.

. . . .

Gold rushes follow a pattern. The pattern goes like this:

  1. The work is so easy that anyone with the desire can do it with little or no capital outlay. It takes being in the right place at the right time with the right set of skills. (In an actual gold rush, the first skill was patience and the ability to touch ice-cold water for hours at a time.)
  2. The tools improve. They remain easy to use. There’s a capital outlay, but it’s still tiny. Again, right time, right place, right set of skills. (In an actual gold rush, the miners built sluicer boxes that quickly separated the gold from the rock. The work with a sluicer box was faster than work with a regular pan, and much faster than working by hand.)
  3. Outsiders notice and want in. That’s where the word “rush” comes in. Everyone wants a piece of gold sitting on the ground. It’s easy. Everyone will get rich!
  4. With the outsiders come the side businesses. These businesses make it “easier” to do the work. Some actually do. Some fill a need—like the general stores that rose up around the mining camps. Others are scams, trying to take gold away from the miners. (Or money away from the writers.)
  5. The easily attainable gold goes away. Now, it takes some work to make money. In gold mining, the workers actually had to start mining for gold (yes, there were other steps here—establishing claims, etc. They’re no longer relevant to our discussion). It also takes money to do this work, not a lot, by normal business standards, but still more than some people have.
  6. The operation goes from low capital with small (or no organization) to large capital and big operations. The small workers who started all of this become one of three things:
    1. big business owners (and rich);
    2. workers with expertise…for someone else
    3. retired or bankrupt or moving on to the next crazy idea
  7. The gold rush is a distant memory but it has changed the landscape forever. New towns exist. New jobs exist. New wealth exists. New businesses exist. Lost in all that newness is the destruction of old businesses and the people who suffered lottery luck. (Lottery luck: they win riches, then spend it all, with no hope of ever having money again.)
  8. Small business becomes Big Business becomes The Way We Do Things Around Here. You see that in the American West, more than 150 years after the gold rushes of the 19th century. Mining still exists. Heavily regulated, with a ton of problems. States exist where there were only territorial governments before, because of mining. And so on and so forth. Indie publishing is decades away from this one.

. . . .

Here it is, the life cycle of an investment bubble. (If you want to read about this in-depth, go to Investopedia.)

  1. Displacement: Something happens that changes an industry, something that investors will eventually notice. Introduction of new technology, for example, might make some work easier. Consumers change their behavior for a weird reason. Whatever it is changes the way things are done, and investors start paying attention. Some get in on the ground floor.
  1. Boom: Everyone wants in. Everyone wants to invest money in this new thing, whatever it is. The increased investment spurs growth, but that growth isn’t natural. There is a natural growth curve, but it’s being masked by the enthusiasm.
  1. Euphoria: We’re going to be rich! Forever! It only takes a few dollars. Or as a friend said to me during the real estate bubble, parroting what he heard from his (now-out-of-business mortgage broker), Real estate always increases in value. It never goes down. Yeah, right. And I know of this land in Florida…oh, wait! I’m referencing yet another bubble (from the 1920s).

In other words, no one researches anything. Everyone throws money at this hot thing, thinking they’ll make a killing at it. This is different from a gold rush, in that we’re talking about people with money to invest, not people who will do the actual work. Keep that in mind.

  1. Profit Taking: Smart investors leave. In fact, some of them left before the euphoria started. But people who have been doing this for a long time recognize the euphoria for what it is and get out at the height of the market, selling their holdings for a profit. Stupid money stays. And believe me, there’s a lot of stupid money in investments.
  1. Panic: Yeah, you know this one. We’ve all seen the movies about 1929, where people jumped off buildings because they lost everything. (Not that such things actually happened, but they could have happened.) We lived through 2008-2009, which was a panic as well. People want their money now, and they want what they put into the investment, which is no longer possible.
  1. Never Again: This isn’t on Investopedia but it’s there. A lot of people, burned by the bubble, will never invest in that particular business again, whether that business is stocks, real estate, tulips, or technology. The romance is over, the possibilities are dead.

How does an investment bubble relate to publishing’s gold rush? There are two points of entry for investors into a gold rush. The first is #3: Outsiders notice and want in. Non-writers think they can profit on this growing phenomenon by helping writers with their businesses, by giving loans or doing other forms of investing.

The second point of entry is #6: The operation goes from low-capital to high capital. At this point, the gold rush is established and everyone knows about it. Even investors who don’t read knew what was going on in publishing. I had several angel investors approach me about my writing or WMG Publishing in 2014. I could have had meetings with venture capitalists who were willing to put $10 to $20 million into my publishing business—for 50% of the profits. I didn’t laugh. I made note of where we were in the investment cycle. Then I laughed—and did not take the offers.

. . . .

I’m telling you about the life cycle of a business, not to help you with your writing business (although you can probably see yourself here) but to think of all of those outside businesses that have attached themselves to writers who want to indie publish.

We’ve already seen countless business go out of business because they couldn’t survive the existence phase.

Most businesses that started to augment indie writers are now in the survival stage. This new environment hasn’t existed long enough for the businesses to adequately predict the future. They can only guess.

. . . .

If the writers don’t get rich, then the businesses that are making 10-20-30% off those writers don’t make money. Those businesses are hemorrhaging capital.

If the business managers/owners are optimist types who don’t understand the various bubbles and life cycles they’re in, they’re going to try to get investment. And they won’t be able to get real investment, because smart money left the industry years ago. Stupid money has lost its interest in publishing. And only usury types remain—the kind who give loans at 30-40%. These businesses won’t qualify for anything else.

Survival is all about cash flow, and managing cash flow is an art. The concerns of the business in the survival phase, according to Churchill and Lewis, are pretty simple:

  • In the short run, can we generate enough cash to break even and cover the repair or replacement of our capital assets as they wear out?
  • Can we, at a minimum, generate enough cash flow to stay in business and to finance growth to a size that is sufficiently large…to earn an economic return on our assets and labor?

Many of these side businesses will soon learn that the answer to those questions is no, because the flood of money is gone. The gold rush is dead, and investors want nothing to do with publishing.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

All Romance Ebooks & Visions of The Future: Part One

1 January 2017

From Kristine Kathryn Rusch:

All Romance Ebooks and its sister website Omnilit did something incredibly awful on December 28, 2016. It sent out a handful of emails, letting writers, publishers, readers, and others know that it was shutting its doors four days later.

The letter WMG Publishing got said this,

On midnight, December 31, our sites will go dark and your content will cease to be available for sale through our platforms. This includes any content you are having us distribute to Apple.

We will be unable to remit Q4 2016 commissions in full and are proposing a settlement of 10 cents on the dollar (USD) for payments received through 27 December 2016.  We also request the following conditions:

1.     That you consider this negotiated settlement to be “paid in full.”

2.     That no further legal action be taken with regards to the above referenced commissions owed….

It is my sincere hope that we will be able to settle this account and avoid filing for bankruptcy[KKR: all bold mine]

I have no books on that site. Hadn’t for a long time. If any of my work is there, it’s there through other publishers or as part of an anthology. WMG pulled its books off All Romance Ebooks (ARe) almost a year ago, because of problems dealing with the site, the people behind the site, and just some really unsettling business practices.

How unsettling? Nothing concrete. It looked (from the outside) like their interface was breaking down. We knew of sales on our account that never were credited to our account. I believe WMG even tested the site by buying (or having someone buy) a book, and seeing if we got credited.

We didn’t. Then we tried to track down what was owed, what payments had been made, and communications issues. We had a handful of truly incompetent employees (nice people; terrible workers) in 2014, and at first, we attributed our ARe problems to them. But after some dealings, we realized that, nope, the problem wasn’t ours. It was ARe’s problem, and that was a very, very, very bad sign.

We pulled all our titles off ARe, deactivated our account, and moved on to other sites.

So when we got this ridiculous letter, we knew it would have no effect on us. But as Allyson Longueira at WMG noted, ARe (a major Apple portal) made its announcement while Apple is shut down for annual maintenance, and writers who have to switch from ARe to Apple direct can’t do so.

Not only that, authors will lose any algorithm from Apple, and probably any revenue from them.

. . . .

ARe is a distributor, mostly, and so it is dealing with its writers as suppliers and unsecured creditors. I’ve been through a bunch of distributor closings, many in the late 1990s, with paper books, and they all happen like this.

One day, everything works, and the next, the distributor is closed for good. In some ways, ARe is unusual in that it gave its suppliers and creditors four days notice. Most places just close their doors, period.

I’m not defending ARe. I’m saying they’re no different than any other company that has gone out of business like this. Traditional publishers have had to deal with this kind of crap for decades. Some comic book companies went out of business as comic book distributors collapsed over the past 25 years. Such closures have incredible (bad) ripple effects. In the past, writers have lost entire careers because of these closures, but haven’t known why, because the publishing house had to cope with the direct losses when the distributor went down.

The difference here is that ARe wasn’t dealing with a dozen other companies. It was dealing with hundreds, maybe thousands, of writers individually, as well as publishers. So, writers are seeing this distribution collapse firsthand instead of secondhand.

To further complicate matters, ARe acted as a publisher for some authors, and is offering them no compensation whatsoever, not even that horrid 10 cents on the dollar (which, I have to say, I’ll be surprised if they pay even that).

. . . .

Now, let me give you all some advice.

Lawsuits cost time as well as money. I know a whole bunch of angry writers are banding together to go to war with ARe. Which is good, on the one hand, because these kinds of things should not ever happen.

But on the other hand, it’s not good, because a whole bunch of writers are going to lose a year or more of precious and irreplaceable writing time to go after this company.

Some writers have that time; others do not.

Frankly, if the writers’ organizations put together some kind of lawsuit, sign on to that, because it will be more effective. They can afford good lawyers and they will have a huge number of writers that they represent.

I know you’re angry. I know you may have serious financial problems because of this shut-down.

You need to take a deep breath, and look at the impact ARe’s shutdown and the loss of fourth quarter earnings will have on you. Then you need to understand that any lawsuit will take a year or more (courts are slow). ARe might settle; they might not.

. . . .

Guessing now, purely guessing.

ARe had run ahead of their money since they started. They used today’s money to pay yesterday’s bills. They had no profit. So they were floating money—payments to authors, payments to creditors, payments like website and rent.

That’s why ARe’s technology grew antiquated, why they weren’t keeping up with the times, why payments in some cases were late or impossible to get. They probably got a line of credit too late or they didn’t have one or they were borrowing off credit cards.

This fall, book sales went down. I discussed some of that after the election, but I’ll be discussing it more and in a different way later in January. Like its authors, ARe was counting on a certain level of revenue. That revenue went down, starting in July (maybe sooner), and continued downward all fall.

ARe paid writers and publishers 45 days after the close of the quarter. So they had to have made the Q3 payments by early November. That probably used most of their capital. They figured the holiday season would save them, along with holiday ad buys.

I’ll wager those were below what ARe expected—significantly below. So, they tried the 2017 ad buy the week before Christmas, hoping that would save them.

Link to the rest at Kristine Kathryn Rusch on Patreon and thanks to C.G. for the tip.

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

As usual, Kris’s advice is sound. If you’re involved in the ARe matter, you’ll want to read her entire post.

In a past life, PG represented lots of people in lots of civil litigation. He spent a great deal of time in court.

In some cases, litigation is a necessary part of solving a dispute. The parties are unable to agree, so a judge or jury must decide the matter.

On the other hand, litigation takes a financial and emotional toll on the parties. In some cases, the tangible and/or intangible rewards of litigation outweigh the financial/emotional costs and in other cases they do not.

PG was once involved in finally settling a lawsuit over the validity of a will that had lasted 13 years. He’s comfortable in saying that the costs outweighed the rewards for the litigants in that case.

PG says it is almost always a bad idea to entrust your business or personal welfare to the outcome of litigation.

You can move on with your life without a lawsuit or sue and move on with your life. The moving on with your life part is always the most important.

Patreon

23 December 2016

From Kristine Kathryn Rusch:

I finally started a Patreon account for this blog. Many of you had asked, but every time I looked at Patreon, I froze.

Part of the problem is Patreon’s guide for writers. It’s rather lame. I’m not interested in doing anything they suggest.

Part of the problem is me as well. I looked at the Patreon’s for some of my favorite writers. I love that Judith Tarr gets over $1,000 per month for her horse musings and her wonderful fiction.  I’m rather gobsmacked that Seanan McGuire can get $7,000 (roughly) whenever she produces a short story or N. K. Jemisin receives about $5,000 per month from her supporters.
Let me clarify my surprise: My surprise does not come from the quality of the work offered. These women are excellent writers. N.K. Jemisin writes wonderful stories and novels. I’ve published Seanan McGuire in Fiction River. I’ve read and loved Judith Tarr’s work for years and years, and have included her in some Storybundles I’ve curated. All three women deserve every dime and more.

Here’s what surprises me: I’m surprised that these three writers (and dozens more) are willing to have Patreon accounts for their fiction. I’m such a delicate flower that I worry about having anyone involved in my fiction-making process. That I think Patreon support is reader involvement is clearly my problem, but I can’t get that thought out of my head. If I had a Patreon that promised me $7000 every time I finished a short story, I would write novels. Seriously, I am that contrary about my fiction. And it’s been a part of my process since I was a teenager.

So, every time I tried to sign up for a general Support Kris on Patreon! account, I backed away.

. . . .

I had to start analyzing why I couldn’t pull the trigger on a Patreon account.

It came back to what I could comfortably ask for–and what I wanted the account for. Searching other people’s Patreons only confused me. Everyone had great ideas and did great things, but I couldn’t see myself doing things like that for long. Or if I did, I could see those things consuming me and my time.

However, the whole Jazz24/OPB comparison made me realize that my publishing blog was a different entity than my fiction was. I had always treated my blog that way. I put a donate button on the blog from the very first post in April of 2009.

I even wrote my Please donate pitch in what I consider to be my radio voice. I’ve done reader/listener supported nonfiction my entire life. That’s a place where outsiders fit into my writing. My nonfiction writing is better for the reader/listener participation. I could ask for nonfiction support, and it wouldn’t bother my delicate flower self.

Once I had that goal in mind, I decided to set up Patreon. I tried and tried and tried to do a video, with me on camera, asking for support. Have you ever seen the public radio people show up on the sister public television station during the TV station’s on-air fundraisers. The TV people are relaxed. They know where the camera is. They look like…well…like TV people.

The radio people look like someone just released them from a three-day camping trip that no one wanted to go on. Their eyes are wild, their hands go every which way, and their clothes aren’t ready for prime time.

Welcome to Kris trying to do a video about Kris. I didn’t just look dorky. I sounded hesitant and reluctant and slightly crazed…because I was.

. . . .

I would feel obligated to the patrons if I got paid thousands for every short story I finished. If a group wanted me to write a fantasy novel next, I would write that fantasy novel, until I ground down because fantasy wasn’t what I wanted to write. And then I would blow up the whole experiment. I don’t write fiction on demand.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

PG’s not entirely sure what he thinks about Patreon. He’s always in favor of authors and other creative folks being paid for their work but when he checked out Patreon not too long after it became a thing, it didn’t really click for him.

However, PG long ago learned that what clicks for him is frequently not what clicks for others. For example, PG is really loving

For example, PG is really loving Absolute War, which describes the conflict on the Eastern Front, fought between the Soviet Union and Nazi Germany between 1941 and 1945 in great detail, including information from many sources which only surfaced after glasnost opened a whole lot of Soviet-era archives.

Mrs. PG (who knows a great deal about central and eastern Europe already) has banned any Eastern Front discussion over lunch.

Because PG is concerned that he may have missed something interesting about Patreon, he would be interested in the thoughts of others on this topic (or the Eastern Front, your choice).

The Hybrid Learning Curve

16 December 2016

From Kristine Kathryn Rusch:

 Recently, my husband and writer Dean Wesley Smith ran a series of excellent posts on his blog about following your muse versus writing to market. Whenever one of us writes about this topic, writers come out of the woodwork to tell us that we’re wrong. Those writers, all of whom have been in the business less than five years, state that they understand the market, they have been writing to market, and they make way more money than we do.

Um…sure. Yeah.

They base their assumptions on Amazon sales ranks of a handful of our titles, not realizing that between us, we have over 600 titles in print, and we make money all over the world (and the spectrum) on subsidiary rights. For example, I’ve spent much of the past month (since the election, oddly enough) negotiating four new Hollywood projects, as well as finalizing some details of a movie that’s in development.

None of those projects, all of which started as novels, was written to market. Not a one. They were all written because I was following my muse. And traditional publishing repeatedly told me (back in the day) that one of those projects—the one that has currently earned the most in subsidiary rights, including Hollywood—was completely unmarketable.

. . . .

Dean has always answered this by noting that he spent about ten years writing to market, and it burned him out. He wrote tie-ins and ghostwrote dozens of books, none of which he owned the copyright to. He will always respond to those writers who contact him by telling them the latest royalty amount he made on those books in the past six months.

This time? It was (I believe) $12. Yep. $12, on all of those projects. For six months. Yep, made him rich writing to market did, writes Kris, channeling Yoda. Am I making a lot of money off the single Star Warsbook I wrote now that the new movies are out?

Well, I’m making more than I did a few years ago. I think my last six-month total on that book was $50. The contract was atrocious. Believe it or not, the publisher still has a reserve against returns. On the ebook. Which didn’t even exist when the contract was written.

Yeah, I’m making a fortune off those books I wrote to market as well. Not.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

A Real Book Contract

1 September 2016

From Kristine Kathryn Rusch:

[O]ne of my readers forwarded me an article from Locus Online about Hachette suing one of their bestselling authors. It seems that for some reason, Seth Grahame-Smith did not turn in the second book of his contract with Grand Central for the follow-up book after Abraham Lincoln: Vampire Hunter.After two extensions of his deadline, and a threat from Grand Central, Grahame-Smith turned in something that Grand Central found terribly unacceptable. They claim he appropriated a 120-year-old manuscript as part of the book.

Considering Grahame-Smith also wrote Pride and Prejudice and Zombies, a book substantially based on a 203-year-old novel, I kinda had a yeah-so? reaction to the 120-year-old manuscript thing. So I went and read the lawsuit, and realized a few things.

First, the deal was made in 2010, before a lot of the major changes in traditional publishing occurred. The handwriting was on the wall, but back then, this Pride and Prejudice and Zombies thing was hot, so Grand Central ponied up a four-million-dollar advance, paid in $500,000 chunks.

Grahame-Smith received at least 1.5 million of those chunks, maybe as much as 2.5 million before the relationship soured.

Grand Central’s parent company Hachette is suing Grahame-Smith for $500,000, the advance on that second book of this contract.

Figure this: The publisher believes it’s better to sue the author than it is to leave that $500,000 outstanding. There are several reasons that Hachette could have made the decision to file suit.

For example, the time has long past for the second property to ever earn what the first properties did.

. . . .

By 2016, it’s really clear that Hachette will lose money on this second book. Better to file suit and ask for the $500,000 plus interest than it is to pay out an additional 1.5 million owed through the contract. Legal fees won’t equal that amount, even if the case makes it to court.

The case is a pretty standard breach-of-contract suit, and from my glance, it looks winnable for Hachette. Even if it’s not, the contract will be canceled, and Hachette won’t owe Grahame-Smith another dime.

It’s pretty much guaranteed that Hachette wouldn’t have accepted a manuscript from Grahame-Smith for any reason in 2016. Hachette was looking at a major financial loss on the second book in this contract.

Expect more of these kinds of suits in the future. If the writers who got huge advances do not meet their obligations with the publishers, the publishers will cut their losses and run as fast as they possibly can.

. . . .

I’m going to tell you a few things.

  1. This is an agent-negotiated contract. However, the agency that negotiated the contract is William Morris. I can tell you from experience that William Morris has lawyers on staff. In theory, those lawyers advise the agents. So, in theory, William Morris had lawyers who talked to Grand Centrals lawyers while negotiating this contract.
  2. I don’t care what entity negotiated for the writer. Whoever the hell it was did a piss-poor job. I have had better contracts for novels paying me $10,000 than this multimillion-dollar contract. I have to admit: I’m shocked by this contract. It’s a midlist writer contract (for a writer with no clout) dressed in million-dollar clothing.

I scanned, but I didn’t see anything I would expect in a multimillion dollar contract. No escalators. No protections for the writer. Low royalty rates. Bad discount clauses.

Half the stuff I listed as dealbreakers in this series are better than many of the terms in this contract.

. . . .

And then…and then…oh, my God, and then!

The agent clause (p. 19-20). It is the worst agent clause I have ever seen. Worse than the ones I warned you about. It has this lovely addition, which is new to me:

The provisions of this paragraph 25 shall survive the expiration of this Agreement and are specifically included for the benefit of the Agent which is hereby named as a third-party beneficiary.

Wow. Just—wow. Go back to the agent clause post I did, and scroll through the comments. See what the lawyers who responded said about the duties of agents and how these clauses are most likely illegal.

From one of the lawyers answering a question on the post: “Yes [the agent clause] is illegal. (1) “Agent” is a legal term for someone empowered to act on behalf of another person. (2) A conflict of interest occurs when a person acting as an agent benefits from the transaction. If a lawyer did this, the lawyer would be [disciplined]….”

. . . .

[R]ealize that this contract isn’t the worst I’ve seen, and it certainly isn’t the best. It’s a really crappy multimillion dollar contract—the author should have received protection from his representatives, but we all know how good that representation is. (Or, at least, you folks know if you’ve been reading my blog.)

Then realize that traditional publishing is not really giving these big advances any more. The big-advance books aren’t earning out. Which is why Hachette is cutting its losses here.

So your chance of getting this kind of advance is pretty slim. And even if you do, did you notice the lovely clause about promotion?

The Publisher shall have the sole discretion to determine what, if any, promotional services the Publisher may perform for the work…

(I added the bold for emphasis here and below.)

That’s clause 8(d) (p.14) and while there are other clauses that apply to promotion, the operative phrase here is “if any.” It means all those other clauses are wasted typing. If the publisher doesn’t want to promote these books, the publisher doesn’t have to. Ever.

. . . .

[T]here’s another scary clause that favors the publisher in this contract, a clause that I had never seen before. The royalty statements don’t have to be accurate. It says so right in the contract. It uses a phrase I’ve never seen in any contract before.

It says:

The Publisher shall render semi-annual statements of “estimated net sales” and net licensing revenues…

“Estimated net sales.” That’s new to me. The Publisher then defines “estimated net sales” as “sales less actual returns and less a reasonable reserve against returns of the Work…”

“Reasonable reserve” is not defined, and if the author wants to know what the publisher actually is withholding, the writer has to ask, in writing, for that information. The writer also has the right to audit the publisher—at the writer’s expense, of course.

Oh, and—there’s no cap on returns, and no time limit on the reserve.

I had the misfortune of mis-negotiating a reserve on returns twenty years ago on a work-for-hire project. I still get royalty statements—on a book published in 1995—in which reserve against returns continue to be withheld. Even now! Twenty-one years later.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like an author’s post, you can show your appreciation by checking out their books.

PG will note that the lawyers on staff for the William Morris Agency work for William Morris, not the author. William Morris lawyers were likely the ones who crafted the agency clauses that Kris rightly criticized as totally unfair to the author.

PG was not and is not involved with this matter in any way. Looking from the outside, he wonders if counsel for the author is considering a suit against William Morris for failure to properly advise the person who was supposed to be their client.

Agent Agreements

22 August 2016

From Kristine Kathryn Rusch:

We’re almost to the end of the contracts/dealbreakers series. I can’t tell you how pleased I am about this, because I feel dirty just looking at some of these contracts and agreements.

Most of you indie writers tuned this series out long ago, because you believed it didn’t apply to you. And yet, I read all the time about indie writers who sign with an agent to sell the print versions of an ebook and to sell foreign rights and auxiliary rights.

Bad move. Really, really, really bad move.

First, you’re signing traditional publishing contracts if you sell your paper book rights. You’re also signing traditional publishing contracts if you sell foreign rights. And I’m not even going into Hollywood options or movie deals or TV deals—

. . . .

Think about that for a moment: this writer hired an agent to represent all rights in the book, including movie and TV rights, and the agent had the writer sign a shopping agreement with a third party. Right there, that’s suspect. Because the agent should already have representatives from the agency (or a partner company) shopping the property.

This shopping agreement had no termination date, allowed the third party to shop the book to anyone who might make a film, a game, anything that moved, in technology developed or not yet developed, in territories around the world and the universe in perpetuity. For the duration of the agreement, the third party and the agent controlled all of those subsidiary rights in the project.

And the kicker? No money exchanged hands. The writer lost control of all subsidiary rights in her book project for no money and no reason, in perpetuity. All because her agent told her to sign the damn agreement. And the writer did.

And then she sent it to us as an example of the agent doing a good job.

. . . .

At first glance, these agent agreements, as they’re called, seem pretty benign. Most are no more than 3 pages long, and seem to be written in English. In fact, most of them are written in chatty language, usually in the form of a “letter,” so the writer thinks they’re signing something informal, when really, they’re signing a contract.

The worst one I’ve seen comes from a huge, very famous agency, whose chairman (and lead agent) apparently figured he could save money on legal fees, and cobbled an agreement together himself.

It looked like it was made of spit and glue, and had many unenforceable clauses. I’m sure it’s been revised since by lawyers, because I know two writers who challenged the thing in court.

But the version I have gave the agency 15% of the copyright in every project the agency represented. It said so flat out in the agreement. (I’m sure the updated version says the same thing, as well. I’m sure it says all the same things, except in better legalese.)

The agency also decided to cover its tushy by adding some version of this:

The writer agrees to follow any agent clause in a publishing contract to the letter.

In other words, that agent clause in your traditional publishing contract, the clause we discussed last week, the clause stuffed full of things that benefit the agent? Well, if you had no agreement like this with your agent, that clause is toothless.

If you have an agreement saying you will abide by the clause in that traditional publishing contract, then suddenly the clause has teeth. And so does every version of that clause you signed from the beginning of your relationship with the agent.

. . . .

The agreement I have before me, from a long-time agency, founded by one of the big name agents of the mid-20th century, has an agency agreement that looks like the chatty letter-type agreements I saw in the 1980s.

Until you read it.

And then you find clauses like this (the emphasis in bold is mine):

You hereby irrevocably assign to us and we shall be entitled to retain a sum equal to fifteen (15%) percent of all gross monies and other considerations paid to you or on your behalf with respect to any and all contracts negotiated and concluded under the terms of this agreement…

Well, you can delete the word “irrevocably” and the clause isn’t that bad, right? If they negotiated something, then they’re entitled to their percentage, right?

Um, the clause doesn’t stand by itself. Combine it with this baby:

This agreement is effective immediately and continues in effect until terminated by either party…We will continue to function as your agent and to receive our commission on all contracts negotiated and concluded during the term of this agreement, or within six (6) months following termination, if negotiations were commenced during the term hereof, and any modifications, replacements, extensions, and supplements of such contracts regardless of when made or by whom negotiated or when payments were received

So imagine this: you fire the agency because they screwed up your negotiation. Say, maybe, they tried to give a free option to a big name actor, or something stupid like that.

You do the negotiating yourself on the deal (with a lawyer back-stopping you), get a movie option for six figures, that’s then made into a film for seven figures, plus the book the movie is founded on stays in print, and becomes a bestseller, and you renegotiate the contract and, according to this stupid agreement, you still have to pay the f***-up agent her 15%. The agent you fired because she was bad at negotiating.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

The Agent Clause

15 August 2016

From Kristine Kathryn Rusch:

So, you decided, even after last week’s post, that you need an agent. Maybe you were one of the people who found a way to dismiss the post because of my hyperbole in the beginning, figuring I don’t know what I’m talking about. Sure, sure, your agent would never do such things. Ever, ever, ever.

. . . .

[I]n case you’ve forgotten it, you hired that agent. They work for you. (In theory. Generally, in practice, their interests align with the publishing company, but that’s another blog.)

So what this means is that you have or you will sign contracts with your publishers that reference your agent. And you will sign an agreement with your agent, creating a document that governs your relationship with them.

Writers rely on their agents to negotiate contracts, which means that agents will negotiate things into those book contracts that benefit the agent.

. . . .

Because writers who rely on their agents to negotiate book contracts generally sign agreements with the agent or the agency which the agent is attached to without negotiating that agent agreement at all.

. . . .

This week, let’s deal with the clause that agents insert into your book contract with your publisher.

. . . .

Agents have been abusing this clause for years now. Agents, not publishers, even though this clause is in a publishing contract between the writer and her publisher.

Once upon a time, publishers paid the writer directly and the writer paid the agent. Which is, frankly, how it should be. After all, the agent is someone you hired, not the publisher.

However, some brainy publisher got the idea that if Agent A has 20 clients with the publishing house, it’s easier to write one check to Agent A than it is to write 20 checks to the writers. Agents liked this because that meant they didn’t have to browbeat their writers to get the commission.

If the contract is between the publisher and the writer, the publisher cannot just pay the agent. That’s illegal. The author can’t just say, “Oh, pay my agent,” because that’s not legally binding.

If the author wanted to the publisher to pay the agent directly, it had to say so in the writer-publisher contract. So some lawyer came up with the way to do this. That was the origin of the agent clause, which was, in reality, a payment clause.

Back when this started, the clause looked like this:

The Author hereby authorizes the Author’s agent, Agent A, to collect and receive all sums of money payable to the Author pursuant to any of the provisions of this Agreement.

And that’s it. That’s all. Really simple, right?

The net effect was this:

Checks sent to Agent A (at such-and-so address) counted as payment to Writer Z, and thus fulfilled the contract. That’s all. If the writer signed the contract, then the clause became activated, and all payments went to Agent A.

The problem with this is, if you fire Agent A, you need an addendum to the contract, so that payment would go either directly to you or to Agent B, who is now your representative.

Well, that might screw Agent A out of money that you might owe him. So the agent started adding words like “irrevocable” to the agent clause which, of course, he negotiated with the book publisher.

Then things went crazy. Agents started adding all kinds of things to the agent clause which are in the agent’s interest, but no one else’s. The agent would add things like “the agent represents the author on this book, and all foreign sales of this book” and so on.

. . . .

I’m not assigning anyone anything “irrevocably”—certainly not someone I can fire for cause. Especially if my money goes through their account first. I will not “fully empower” anyone to act for me.

(Some agents go so far as demanding legal power of attorney—which is something you should never give anyone. What that means is that they then have the right to be you in all legal matters. No. Do not give legal power of attorney to anyone without good cause—like you’re dying and need someone to handle your accounts [and even then, it might not be a good idea].)

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

Protecting Your Content and Your Name

29 July 2016

From Kristine Kathryn Rusch:

Back when I was writing a lot of tie-in novels for Pocket Books’ Star Trek division, a brand-new editor asked me to help him rescue a short story anthology. It seems that the main writer on the project had quite unexpectedly. The writer had outlined the story, and the outline had been approved by Paramount, which was a major hurdle. What the editor needed from me was an actual draft of the story.

In other words, none of the characters were mine. The plot, setting, and theme were not mine. The editor needed my style as a writer and my name on the cover. That was it.

I had never worked with this editor before. My usual Star Trek editor advised me to stay clear. But, I figured, it was just a short story. What could it hurt?

Well…it didn’t exactly hurt. But it was perplexing. I wrote the 6,000 word story as requested from a 2,000 word outline. Turned the story in on time. Got an acceptance, and the ridiculously high acceptance payment.

Then I got the copyedit.

Which wasn’t a copyedit. The editor himself had rewritten every single sentence of the story. Every single one. Sometimes adding passive voice. Sometimes making the meaning unclear. Always dumbing down the content and the voice and the point of each sentence, let alone each paragraph.

I looked at that, glanced at my contract, and realized that even though this short story was written as work made for hire, I could make a huge stink about this. I could pull my name or pull the story or cause all kinds of grief.

In the end, I decided to leave it alone. If you look up this short story now, you’ll see the most poorly written thing ever published under my name.

. . . .

That is the only time in my recollection that I can recall allowing an editor’s or copyeditor’s full rewrite of my work to get into print. I’ve had worse rewrites in my career, including a copyeditor who changed every single piece of punctuation in one of my romance novels, but I never let those go through under my name.

I cited contract terms, refusing to allow the changes. I pulled books from publishers because of shenanigans like this. I got copyeditors fired. Repeatedly.

I defend what I write. My writing in some story or novel or nonfiction article might be awful, but it’s mine. If I put my name on it, guaranteed—except for that one short story—every word in the piece is a word I wrote or approved. Every single one.

. . . .

I told you that most writers check their traditional book contracts for the advance, the payout, and the due dates. They don’t look at anything else. Writer after writer, and editor after editor, have told me this.

I always look toward the editing clauses first. Because if they’re ugly, the rest of the contract usually is as well.

This applies to all kinds of writing for traditional markets, especially for nonfiction and short fiction. I’ve seen terrible editing clauses in those contracts, and what’s ironic is that those clauses often seem to be the most innocuous.

What you want is complete control of the content of your work. In every single short fiction contract I sign, I change the publisher’s right to “edit the Work” to “copyedit the Work.” I always add a line that ensures I must approve any changes, including those copyedits, to the Work.

If I don’t like the copyedit, my version stands. If my version isn’t going to stand, then the story doesn’t get published. Period, end of story.

. . . .

The British publishing company has the right—if the publisher deems that right necessary—to completely rewrite my article. They could change everything. They could add stuff I find objectionable—political points of view, for example. They could libel someone through careless writing or even deliberately. They could take a piece in which I say I love something, and change it to say I hate it.

They can do all of that, because I would have signed that right away. Then I would have waived my right to remove my name as the author of the piece. So they could write all this stuff, and claim I meant it, because my name is on it.

. . . .

Oh, and one that drives me as batty as the editing clauses: they have the right to my name. Not just to use my name in publicity. I “empowered” them to use my name in any situation they “considered necessary.”

My name.

I see this clause a lot. Writers give up the right to their own names to a corporation for a few thousand dollars and the publication of a novel.

. . . .

She wrote back, refusing to change the editing clause, and then said this:

I’m afraid the moral rights clause is not one that I am able to make any alterations to. It is a standard clause across all of our contracts and our lawyers will not accept changes to it. As you say, this is a clause that relies somewhat on trust; I can only assure you that we will not act unreasonably, as it would not be in our interest to do so….

I kid you not. She wrote “Trust us. We won’t hurt you.”

. . . .

Make sure the editing clauses in your contracts—from short story contracts to article contracts to novel contracts—limit what the publisher can do to your work. You essentially should allow them to change some things to house style (like whether or not you put a capital after a colon). You should have the right to review a copyedit—and to have the final say on that copyedit.

You also need a clause that limits revisions. When there’s a clause in the contract that says that the finished book must be “accepted” by the Publisher, then you have to define what that means. If it means revisions, then those revisions should be limited to no more than two or three before the contract terminates.

I’ve known writers who rewrote their books for years before the books finally were tossed back as unacceptable by the publisher. One author I know rewrote her book every year for ten years for a textbook publishing house I worked for. When my boss left, and the next editor took his place, that editor saw this continual revision, and canceled the contract. the writer had to repay her entire advance.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

Regarding responses such as our lawyers will not accept changes [to a standard contract provision], PG says that the lawyers work for the publisher, not the other way around.

If a publisher tells its lawyer to modify a contract provision to reflect a request from an author, the lawyer will do so. The lawyer may advise the publisher not to make the change for this or that reason, but if the publisher instructs the lawyer to make the change anyway, the change will be made.

Other Evil Clauses

22 July 2016

From Kristine Kathryn Rusch:

Writers tend to go through their business life like Pokémon Go players, looking for something that isn’t there, hoping to score a magic number of points, and not seeing what is there.

It’s impossible to show you all the bad contract terms. I’ve delineated several that you need to watch out for. I’m going to go through some important ones quickly in this blog post, and then look at a few more major terms in the next few weeks before we go to agents and attorneys.

After that, folks, you’re on your own.

. . . .

Definitions: Make sure all of the important and dicey terms in your contract come with an attached definition. And make sure that definition is in your favor, extremely clear, and very narrow. The biggest and most important definition in modern contracts is the definition of the word “net.”

Most contracts leave out the definition of the word “net” altogether. Those contracts assume, apparently, that we all agree on what the word means.

Here’s the thing about contracts, folks. Contracts create their own language and their own definitions. So if the word “net” is undefined, it means whatever someone wants it to mean.

If the publisher does define the word “net,” the publisher often does so in a way that benefits them. (Horrors! They don’t do that in other things…oh, wait, never mind.)

Publishers have moved to “net” in royalty payments at the same time as the rise in ebooks. But that’s not why publishers did it. They did it for the same reason that they have discount clauses in the contract, such as the ones we discussed in last week’s blog, to make sure the writer gets almost no money for the books the publisher sells.

If the publishing contracts end up defining the word “net,” then the clause usually looks something like this:

As used herein, the term “Net Receipts” means monies received by the Publisher on the sale or license of the Work after all discounts, fees, and returned copies have been deducted, and before addition of freight charges and/or handling charges.

It’s all very, very loosy-goosy. Monies received by the Publisher. I suppose you can audit for that, but there’s lots of room for dispute in that language. And lots of room for abuse.

. . . .

Basket Accounting: speaking of screwing the writer, let’s look at this old favorite, that has existed since the 1970s. Basket accounting refers to the fact that the publisher throws all of the books in one contract into the same “basket” before paying out royalties.

So if you have a three-book contract, and book one sells 5 times its advance, but books two and three never earn out, you probably won’t see a dime in royalties.

If each book were accounted separately, then you’d receive royalties for book one, making you significantly more money.

The clause is not called the “basket accounting” clause. Every contract does it differently.

And I have to tell you: in this modern world, it’s a lot more probable that you’ll get a basket accounting deal if you have a multiple book deal with a publisher. That publisher will guarantee that you don’t see a dime in royalties by underpublishing at least one of those books.

The best way to avoid this?

Have a one-book contract. Never ever ever sign a multiple book deal, no matter how much they offer you.

Traditional publishers and agents will tell you it’s in your best interest to sign a multiple book deal. After all, you’ll get money for years, and you’ll know how much. But you won’t necessarily get actual money for years, especially if there’s an “acceptance” clause in your contract. (Meaning your book is not considered publishable until the publisher deems it “accepted.”) And there’s no guarantee, in this publishing environment, that your publisher will be around five years from now.

Besides, if you have a one-book contract, and your book is successful, then you have the opportunity to negotiate a better contract for book two. And with the rise of indie publishing, if you can’t get a contract for book two, who cares? You can publish it yourself.

. . . .

Time limit on publication.

This one is sneaky. It caught me on my very first novel. What you want here is for the clause to read in your favor. Something like:

If the Work is not published within two years of the date of this contract, the contract terminates, and all rights revert to the author.

Usually this clause isn’t quite so writer-friendly. But something like this clause is in most good publishing contracts.

The contracts that leave it out—well, the publisher never has to publish the book.

. . . .

Why have the audit clause? Because right now, you’re going on faith that the publisher will be honest with you. They have no reason to accurately calculate your royalties and payments. Publishers have never been accurate in their royalty calculations. Never. Why should they start now?

So, get an audit clause on your book. Be prepared to use that clause, especially if you have royalty clauses in your contract that are different from the norm. Because publishers might “accidentally” default to the old way of doing things, and only shape up if you prod them.

An audit clause prods them.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

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