PG’s Thoughts

U.S. Romance Readers Outnumber Gun Owners

27 June 2015

From  author Giulia Torre:

Did you know they stopped counting?

The last time anyone counted the number of romance readers in America was 2005, when marketing research group Corona Insights conducted a nationwide telephone survey for the Romance Writers Association (RWA).

The conclusion was that in that year 64.6 million Americans read at least one romance novel. In 2002, it was estimated at 51.1 million romance readers in America. In 1998, 41 million readers.

Ten years later, I predict that number has increased, based on the rise of self-publishing, the advent of the eBook, and the explosion of the erotica market. It’s been a big decade for reading in general, and romance has been a principal in the revolution.

Corona’s figures at the time were extrapolated by a definition of romance that adapted to readers. According to Kevin Raines, the CEO and founder of Corona who worked on the 2005 survey, although RWA had a strict definition of ‘romance’, survey respondents were allowed to self-identify the genre.

. . . .

From 1998 to 2005, according to Corona’ s figures, the US population of romance readers saw an average annual 8% growth, a number too large to apply going forward at liberty.

In fact, based on revenue alone, RWA claimed in 2005 that romance fiction generated $1.4 billion in sales. However, that reported number has since dipped, with RWA reporting $1.08 billion in revenue in 2013, a 22.8% drop.

. . . .

Guns are a lot like romance novels. People advocate on their behalf. Collect them. Buy them with variable frequency. Sometimes lie about the number they own. And, like romance novels, most guns don’t need to be registered.

Somehow, in spite of these vagaries, credible numbers are reported.

According to University of Chicago’s General Social Survey, the number of people who reported having a gun in their home in the 1970s averaged about 50 percent, the 1980s averaged 48 percent, the 1990s at 43 percent and 35 percent in the 2000s. Now, numbers are being reported at an all-time low of 30%. By my count, that’s 72.8 million American adults.

. . . .

Based on the most recent numbers we have, and the arguable trend upwards in romance consumption and the reported trend downward in gun ownership, romance readers by now may actually outnumber gun owners.

That’s good news.

Link to the rest at Giulia Torre and thanks to Christopher for the tip.

Here’s a link to Giulia Torre’s books

PG says this is an interesting hook for a blog post about romance readers. It hooked him.

He will make a couple of observations:

1. A lot of romance readers are also gun owners.

2. He believes that survey respondents substantially underreport their gun ownership due to social attitudes towards guns.

In the US, if a person wants to purchase a firearm through a licensed firearm dealer, he/she fills out a form which dealer submits for a criminal background check by a division of the FBI. The firearm can’t be sold unless the FBI reports confirms that the purchaser has a no criminal record.

While the number of background checks understates the total number of gun sales because not all sales require a background check, the relative number of background checks is a generally reliable proxy for the increase or decrease of gun sales over time.

The FBI keeps track of the number of background checks it performs. That number increased every year from 2002-2013. In 2002, a total of 8,454,322 background checks were performed. In 2013, a total of 21,093,273 background checks were performed so it was more than a minor increase over 10 years. There was a slight drop in background checks in 2014 to 20,968,547. (See the 2014 Background Check System report from the FBI for much more information)

Ms. Torre cites the University of Chicago’s General Social Survey for the proposition that fewer people report having guns in their homes now than in past decades.

While PG has no doubt that the University of Chicago is accurately reporting its survey results, but its information is based on answers given to survey questions in face-to-face or telephone interviews.

In the 1950’s and ’60’s gun ownership was common and held no particular social significance. PG purchased a shotgun when he was 12 years old and, other than having his father accompany him to the hardware store, no formalities were necessary, no records kept. He needed a license to hunt pheasants, but no license to own or carry a gun.

During this era, more than a few homes had military rifles and pistols that had been brought back to the US by returning World War II veterans. When he was about 10 years old, PG went deer hunting using the standard military rifle used by the British Army during the war. He shot the rifle once and it almost knocked him over. No deer came close to being harmed during this exercise.

Over time, gun ownership became subject to more and more disapproval in certain segments of society and gun regulation, both federal and state, grew much more stringent. Strong and well-funded anti-firearm organizations were created.

The net effect of these changes is that a growing segment of gun owners stopped talking about their guns to anyone other than friends and fellow gun owners. PG suggests that today, a significant portion of gun owners answering questions from a stranger about guns in their home would be inclined to lie based upon the belief their guns were nobody’s business.

In addition to the growing increase in FBI background checks for gun purchases, since the election of President Obama, who supports increased restrictions on gun ownership, US gun and ammunition manufacturers have enjoyed booming sales and wonderful profits.

Rapidly-growing gun sales are reflected in rising stock prices of publicly-held gun manufacturers, Smith & Wesson Holdings, up 150.1% in the last five years, and Sturm Ruger, up 370.6% in the same period. The stock prices of large publicly-held retailers with significant gun sales have also boomed, Dick’s Sporting Goods and Cabela’s, up 168.7% and 423.1% in the same five years, respectively.

PG definitely does not want to start a comment war over gun ownership and regulation and he strongly favors ever-increasing sales of romance novels. He doesn’t, however, believe that romance sales and gun ownership are inversely related to each other.

Barnes & Noble looks to boost sales with revamped website

26 June 2015

From ZDNet:

Retail bookseller Barnes & Noble is hoping that a scheduled website redesign will help bolster the struggling chain’s omnichannel efforts, as sales of its Nook e-reader continue to slip.

During a post-earnings report conference call Thursday, Barnes & Noble CEO Michael Huesby said the company’s customer engagement focus is shifting beyond brick-and-mortar and toward e-commerce.

“I am pleased to announce that we are launching our improved BN.com website next week, which has better search capabilities and improved user experience, and is expected to increase sales and yield cost savings,” Huesby said. “We expect the website to be a valuable resource for customers, whether they choose to have their orders shipped to home, or made available for in-store pickup.”

The contrast between physical Barnes & Noble bookstores, which were just treated to a year-long merchandising effort, and the digital BN.com storefront is certainly stark. While the company’s brick-and-mortar locations feature cozy accouterments and wafts of coffee and paperbacks, the BN.com website is dated, clunky and uninviting.

The company doesn’t break out e-commerce sales, they’re instead lumped in with sales from the physical bookstores, but given the redesign and website’s current form, it’s unlikely digital did much to move the needle.

Link to the rest at ZDNet and thanks to Dave for the tip.

PG will state categorically that the people in charge of marketing at Barnes & Noble don’t understand how to sell products and services online. Should anyone with real aptitude for ecommerce have mistakenly wandered into a job at Barnes & Noble, they’ve left for greener pastures. Just about any place other than Barnes & Noble is a greener pasture.

Unfortunately for Barnes & Noble, their primary competitor is the best ecommerce company in the world.

Amazon doesn’t announce launches of an “improved website” because it is constantly studying and improving  the performance of its website. Few that aren’t actively reviewing Amazon’s website will notice the ongoing improvements, but if you were to carefully examine Amazon’s website of a year ago (sorry, but the Wayback Machine won’t catch much about how the site has functionally changed) and compare it to today’s site, you would see many, many changes.

And there are at least ten changes you don’t see behind the scenes for every change that shows itself to a visitor.

Serious ecommerce websites are never “done.” Each minute, each hour, each day provides additional information that allows smart website operators to make their sites even better.

And that’s only one aspect of Amazon’s operations. Robots in the warehouses, new product development, etc., etc., etc. contribute to Amazon’s overall excellence.

Barnes & Noble vs. Amazon in ecommerce is like a Pop Warner team lining up against the Green Bay Packers. The competition is so one-sided, it’s not even interesting to watch.

If PG were a shareholder of Barnes & Noble, he would suggest that Barnes & Noble avoid wasteful spending by shutting down its ecommerce website and focus on figuring out how to keep from closing physical stores.

Publishing’s Swiftian future

23 June 2015

From Futurebook:

Publishing has a new question to ponder this week: what could Taylor Swift do for us? Swift’s triumph: she got a tech giant to change its mind.

In an open letter to Apple, Swift said she was withholding the record, 1989, from Apple’s new music streaming service, Apple Music, because she was unhappy with the three-month free trial offered to subscribers. “I’m not sure you know that Apple Music will not be paying writers, producers, or artists for those three months. I find it to be shocking, disappointing, and completely unlike this historically progressive and generous company,” wrote Swift. “Three months is a long time to go unpaid, and it is unfair to ask anyone to work for nothing.”

The blog prompted the following response from Eddy Cue, Apple’s senior vice president of Internet Software and Services,

“#AppleMusic will pay artist for streaming, even during customer’s free trial period”

“We hear you @taylorswift13 and indie artists. Love, Apple”

. . . .

Speaking to Billboard magazine Cue said they had already been been hearing “a lot of concern from indie artists about not getting paid during the three-month trial period” before Swift spoke out. Apple had sought to ameliorate the three-month royalty free window by paying a higher rate after the initial period. Now it will pay artists during the free period, and retain the higher fee afterwards. Still, Apple can afford it.

Could a little bit of Swiftian kick-back help the book business too? It is worth contrasting Apple’s manoeuvre with the changes Amazon made to how it will pay indie writers signed up to its all-you-can-read Kindle Unlimited (KU) and the Kindle Owners Lending Library (KOLL). The change (in brief) is that from 1st July authors with books in those schemes will no longer be paid their percentage of Amazon’s pool of money once 10% of a book has been read, they will now be paid based on what the number of pages read, after the Amazon-mandated “Start Reading Location” (SRL).

. . . .

Much will be written once the impact of the change hits. However, what I have read less about is how, in altering its payment terms, Amazon itself was responding to artist feedback. As the company noted: “We’re making this switch in response to great feedback we received from authors who asked us to better align payout with the length of books and how much customers read.”

In his two blogs about the subject Hugh Howey notes his own influence: “We have different degrees of leverage. I’ve tried to use my leverage to win concessions for all authors. A number of the bestselling authors have done this. We ask for pre-orders for everyone as soon as possible. Better reporting. More categories. All kinds of stuff. I pressure Amazon to extend the 70% down to 99 cents for shorter works, which I think is fair. I give them hell about the exclusivity requirement every chance I get, from the bottom of the ladder to the top.”

There is something intriguing about the growing power of individual artists or collectives—like Howey, Swift claims to be speaking up for those who don’t yet wield the same power as her, “This is not about me. Thankfully I am on my fifth album and can support myself, my band, crew, and entire management team by playing live shows. This is about the new artist or band that has just released their first single and will not be paid for its success.”

. . . .

Similarly, one wonders how indie authors outside of the elite group feel about Amazon’s change in terms. Many were co-opted into Kindle Unlimited without prior request because Amazon felt compelled to move against Scribd and Oyster, and though writers can opt out, the fund from which Amazon generates payments (though it has risen month on month) is still entirely made-up. Now how writers get paid has changed too—and without any sense of their being any negotiation. It is an extreme scenario, but not one we should feel entirely comfortable about.

. . . .

A more pertient question book publishers should be asking, is not what could Taylor Swift do for them, but how the music business got into a position where it had to rely on a single artist to run its negotiations for them.

Link to the rest at Futurebook

PG isn’t an expert in the music business, but does know enough to wonder which industry treats its artists worse, music or publishing.

It’s not hard to treat authors better than Big Publishing does, so Amazon can consistently do so without breaking a sweat.

For example, PG doesn’t think the Authors Guild project to improve publishing contracts has attracted enough attention or analysis.

The list of contract provisions AG wants traditional publishing to change is an indictment of the industry’s horrible treatment of its authors. Even prisoners in the Soviet Gulag were released from oppression when they died. Under life-of-copyright contract terms, the maltreatment of authors continues down to their heirs.

As PG has mentioned before, in his experience with American business contracts across a wide variety of industries, no other group of (supposed) competitors offers such one-sided agreements whose terrible terms are so uniformly applied as does New York publishing. One might suspect collusion was occurring.

To make one point of comparison, which major New York publisher has provided any explanation of changed contract provisions impacting how authors are paid as Amazon has with its KDP Select Global Fund announcement?

Amazon treats authors as business partners. No one will contend that the partners have equal power, but with actions such as paying authors on a monthly basis, providing all authors with detailed sales information in close to real time, allowing authors to opt out of some royalty programs and choose which countries in which Amazon can sell their books, Amazon is miles and miles ahead of Big Publishing in the “authors are our partners” race.

If Taylor Swift were a megastar author, she would be condemning Big Publishing for underpaying authors at least as vigorously as she attacked Apple for underpaying musicians.

The Recent Tintin Ruling Offers a Valuable Reminder that Creators Need to Understand the Contracts They Sign

18 June 2015

From Ink, Bits & Pixels:

How well do you know the contracts you’ve sign?

In the case of the Belgian cartoonist Herge (or rather his estate), the answer is not very well.

The Comics Reporter and Artnet reported last week that the Herge estate has lost an important copyright lawsuit over Tintin, the famous Belgian cartoon character. The estate had sued a Netherlands-based Tintin fan club in 2012 over its use of the original copyrighted images in newsletters sent out to club members. The estate sued the club in a Belgian court, and after three years of legal wrangling the judge ruled in favor of the club.

And here’s where things get interesting.

The fan club won the case not because of fair use (as I would expect) or because the estate didn’t own the copyright (it still did). The estate lost this case after lawyers working for the fan club found and submitted an old contract which showed that Herge had assigned the publishing rights to his publisher in 1942. The court has ruled that 73-year-old contract was still valid, casting a legal shadow on all rights contracts for Tintin.

. . . .

Between the book rights, movie and tv rights, and most importantly the merchandising rights, the Tintin decision just upset contracts worth millions of dollars a year – no joke.

Link to the rest at Ink, Bits & Pixels and thanks to Michael for the tip.

PG says you should think long and hard before you commence litigation. In the nature of lawsuits, any relevant contracts are examined much, much more carefully after a suit is filed than they likely were before they were signed.

In PG’s litigating days, the local Legal Aid office asked him to represent an indigent client who was being sued by a large bank in connection with the repossession of the client’s auto by the bank.

Essentially, the bank loaned too much money on the auto and, following repossession, couldn’t recoup the full amount of the loan balance by selling the vehicle. They sued PG’s client for the deficiency.

PG told the bank’s attorney that the man had no money (you had to be indigent to qualify for Legal Aid assistance) and, even after the bank succeeded in the lawsuit (an almost certain thing), there wasn’t property or income available to pay any meaningful portion of the amount owed.

The bank’s attorney insisted on a trial because PG’s client had signed a contract and contracts were sacrosanct, dammit.

During his trial preparation, PG discovered the bank had made a basic error in drafting its form auto loan documents. PG had no obligation to disclose his discovery to the other side and he decided it would be interesting to surprise the bank’s attorney with this news during the trial.

The bank’s big attorney brought two little attorneys with him to court and PG brought his briefcase (in later times, he would bring his computer, but this is an old story).

The bank presented its slam-dunk case and PG pointed out that the document the bank had required his client to sign referenced a specific statute number as its basis for repossession. That statute number referred to nothing. There was no statute with that number. The bank couldn’t enforce a non-existent statute against PG’s client.

The bank’s lawyer said that the bank clearly meant to reference another statute number that did exist. The little attorneys frantically paged through stacks of papers.

PG responded that the bank wanted to strictly hold his client to the detailed provisions in the loan documents and, in fairness, PG thought the bank ought to be held to the specific language it had included in documents PG’s client had signed. Contracts were sacrosanct, dammit.

Darned if the judge didn’t rule in favor of PG’s client.

The bank’s lawyer was very upset and said the bank would appeal. PG pointed out that, since this was a standard bank form, the bank had probably used the same document for thousands of auto loans. (It was a very big bank.)

An appeal would be a higher profile affair than a trial in a small courtroom with no one other than the parties and their attorneys in attendance. Did the bank want additional publicity about its defective documents and their imaginary statute?

Shortly thereafter, the bank dismissed its suit and released PG’s client from any claims.

So, there’s one war story about unanticipated consequences that can arise during a lawsuit.

 

 

Disruption in Publishing

12 June 2015

Lots of comments were generated by the post regarding his latest industry predictions from veteran publishing consultant Mike Shatzkin yesterday.

Among the comments to that post, Felix J. Torres said:

The biggest disruption is well on its way: the diminished importance of the BPHs. Best highlighted by the recent Nielsen fiasco.

And the only reason he doesn’t see the big guys bolting (yet) is because the decline has only now starting to hit their pocketbook.

But even when they do start to defect, that won’t be the kiss of death. The kiss of death has already been administered. It’s a slow acting poison but will kick in over time.

The BPH killer isn’t losing today’s Bestsellers, it’s losing tomorrow’s best sellers.

And no, they still don’t see that.

Perhaps PG has missed it, but he hasn’t seen anyone in legacy publishing acknowledge that authors are among the “customers” of traditional publishers. Of course, bookstores are also customers, but in the world of disruptive innovation, customers aren’t just people who pay you money for whatever physical stuff your business shovels out the door.

Traditional publishers would never think this way, but authors are their “customers” because authors are seeking someone to provide the service of replicating their books and effectively moving those books into the stream of commerce.

If Mike would learn about disruptive change, he would understand that disruptions often start with non-customers of the business being disrupted, then move on to the least-profitable customers and work their way up the food chain. One reason established businesses so ofen dismiss the dangers of disruptive change is that begins with customers the establishment doesn’t care about.

The mega-selling 1% of authors are the most profitable customers for the services provided by publishers. They will be the last to go in part because, like the best customers of any business, they get the best deals.

The financial arrangements bestsellers receive are much different than those included in standard publishing agreements. In standard agreements, the author receives a small portion of the money the publisher receives for the author’s books. A big publisher’s top-selling authors receive a significantly larger portion of the money the publisher generates from sales of their books, often in the form of a large advance, so large that it will almost certainly never earn out.

Treating their best and best-selling author-customers so well makes sense because those customers create so many highly-profitable sales for the big corporate media conglomerates. The only financially justifiable purpose for taking on a new author is the possibility that the new author might provide bestselling books. But, as in other industries, most new products fail, so publishers try to minimize the amount of money they spend on new authors because such authors are unprofitable or low-profit customers.

As Felix commented in yesterday’s post, publishers are primarily relying on the bestsellers they discovered yesterday for their profits and continued existence.

More and more of the bestsellers of tomorrow are indie publishing, utilizing Amazon, editors the authors hire, etc., to provide the “service” that publishers have historically provided. These indie publishing services are much less expensive for authors  than the competing services of traditional publishers paying traditional royalties.

In terms more closely related to disruption theory via Wikipedia:

In low-end disruption, the disruptor is focused initially on serving the least profitable customer, who is happy with a good enough product. This type of customer is not willing to pay premium for enhancements in product functionality. Once the disruptor has gained a foothold in this customer segment, it seeks to improve its profit margin. To get higher profit margins, the disruptor needs to enter the segment where the customer is willing to pay a little more for higher quality. To ensure this quality in its product, the disruptor needs to innovate. The incumbent will not do much to retain its share in a not-so-profitable segment, and will move up-market and focus on its more attractive customers. After a number of such encounters, the incumbent is squeezed into smaller markets than it was previously serving. And then, finally, the disruptive technology meets the demands of the most profitable segment and drives the established company out of the market.

PG found The Innovator’s Dilemma, the first of many books on the subject written by Harvard business professor Clayton M. Christensen to be quite readable. He suggests it is a crystal ball for the future of Big Publishing.

Up the Amazon with the BS Machine

1 June 2015

From author Ursula K. Le Guin via Book View Café:

Amazon and I are not at war. There are vast areas in which my peaceful indifference to what Amazon is and does can only be surpassed by Amazon’s presumably equally placid indifference to what I say and do. If you like to buy household goods or whatever through Amazon, that’s totally fine with me. If you think Amazon is a great place to self-publish your book, I may have a question or two in mind, but still, it’s fine with me, and none of my business anyhow. My only quarrel with Amazon is when it comes to how they market books and how they use their success in marketing to control not only bookselling, but book publication: what we write and what we read.

Best Seller lists have been around for quite a while. Best Seller lists are generated by obscure processes, which I consider (perhaps wrongly) to consist largely of smoke, mirrors, hokum, and the profit motive. How truly the lists of Best Sellers reflect popularity is questionable. Their questionability and their manipulability was well demonstrated during the presidential campaign of 2012, when a Republican candidate bought all the available copies of his own book in order to put it onto the New York Times Top Ten Best Seller List, where, of course, it duly appeared.

If you want to sell cheap and fast, as Amazon does, you have to sell big. Books written to be best sellers can be written fast, sold cheap, dumped fast: the perfect commodity for growth capitalism.

The readability of many best sellers is much like the edibility of junk food.

. . . .

I believe that reading only packaged microwavable fiction ruins the taste, destabilizes the moral blood pressure, and makes the mind obese. Fortunately, I also know that many human beings have an innate resistance to baloney and a taste for quality rooted deeper than even marketing can reach.

. . . .

But you can’t buy and read a book that hasn’t been kept in print.

Consistent in its denial of human reality, growth capitalism thinks only in the present tense, ignores the past, and limits its future to the current quarter. To the BS machine, the only value of a book is its current salability. Growth of capital depends on rapid turnover, so the BS machine not only isn’t geared to allow for durability, but actually discourages it. Fading BSs must be replaced constantly by fresh ones in order to keep corporate profits up.

. . . .

Once it’s less read and talked about the BS is no longer a BS. Now it’s just a book. The machine has finished with it, and it can depend now only on its own intrinsic merit. If it has merit, reader loyalty and word of mouth can keep it selling enough to make it worth keeping in print for years, decades, even centuries.

The steady annual income of such books is what publishers relied on, till about twenty years ago, on to support the risk of publishing new books by untried authors, or good books by authors who generally sold pretty well but not very well.

That idea of publishing is almost gone, replaced by the Amazon model: easy salability, heavy marketing, super-competitive pricing, then trash and replace.

Link to the rest at Book View Café and thanks to Loretta for the tip.

PG has read several of Ms. Le Guin’s books and enjoyed them, but must observe that “in print” is becoming less relevant by the day.

Indie authors don’t presently have and, PG believes, are unlikely to experience any problems keeping their books “in print.”

The only authors PG encounters who can’t find their books (or their royalties) are those yoked to traditional publishers whose minions regularly generate circumstantial evidence of substance abuse or dementia.

If you want to find what’s working, vibrant and innovative about the book world today, you’re advised to look toward Seattle rather than New York.

John Scalzi, Science Fiction Writer, Signs $3.4 Million Deal for 13 Books

26 May 2015

From The New York Times:

John Scalzi, a best-selling author of science fiction, has signed a $3.4 million, 10-year deal with the publisher Tor Books that will cover his next 13 books.

Mr. Scalzi’s works include a series known as the “Old Man’s War” and the more recent “Redshirts,” a Hugo-award-winning sendup of the luckless lives of nonfeatured characters on shows like the original “Star Trek.” Three of his works are being developed for television, including “Redshirts” and “Lock In,” a science-inflected medical thriller that evokes Michael Crichton. Mr. Scalzi’s hyper-caffeinated Internet presence through his blog, Whatever, has made him an online celebrity as well.

Mr. Scalzi approached Tor Books, his longtime publisher, with proposals for 10 adult novels and three young adult novels over 10 years. Some of the books will extend the popular “Old Man’s War” series, building on an existing audience, and one will be a sequel to “Lock In.” Mr. Scalzi said he hoped books like “Lock In” could draw more readers toward science fiction, since many, he said, are still “gun-shy” about the genre.

Patrick Nielsen Hayden, the executive editor for Tor, said the decision was an easy one. While Mr. Scalzi has never had a “No. 1 best seller,” he said, “he backlists like crazy.”

. . . .

 He said Mr. Scalzi sells “a healthy five-figure number of his books every month,” and that he “hasn’t even begun to reach his full potential audience.”

Link to the rest at The New York Times and thanks to Karen and several others for the tip.

PG did a little arithmetic (always a dangerous thing).

$3.4 million is a lot of money, but divided between 13 books, it translates into an advance for Scalzi of about $222,700 per book after deducting his agent’s fees. Again, after agent’s fees, over ten years, he’s looking at $289,000 per year. Not shabby, but not breathtaking.

PG would have no difficulty naming a significant number of indie authors with higher annual incomes. Tradpub multi-book contracts typically divide a significant portion of the advance payments (sometimes all of them) into per-book payments as each book is published or accepted for publication, so, in terms of annual income, Scalzi is likely to average pretty close to  the $289K annual number over the course ten years of advance payments.

Tor says Scalzi sells “a healthy five-figure number of his books every month.”

Let’s look at a couple of possibilities for “healthy” and see how Scalzi would do if he sold a less-than-healthy five-figure number of books every month as an indie author.

If each of Scalzi’s 13 new indie books sell 1,00o ebook copies per month, that’s a total of 13,000 copies each month. (PG’s getting better at math all the time). Again, PG would have few problems naming a significant number of indie authors with much less name recognition than Scalzi who consistently average sales of more than 1,000 copies per title each month.

To make the math easier, we’ll assume that, instead of taking the Tor contract, Scalzi indie pubs his 13 ebooks and sells them on Amazon for $2.99 each.

At 1,000 books per title per month, these sales would generate about $327,000 per year in indie royalties for Scalzi (no agent necessary). If we increased the sales of these 13 books to a more-healthy five-figure annual total based on 2,000 copies per title per month, Scalzi would be looking at $653,000 per year in royalties. And, unlike advances, which will cut off after the last book is published, that $600K+ per year won’t fall off a cliff after ten years.

Now certainly Scalzi’s indie income would start smaller and serious indie income would be back-loaded while presumably the advance income he will receive from Tor will be more front-loaded with Scalzi receiving payments from Tor before the books are sold. Performing any sort of front-loaded vs. back-loaded analysis is definitely beyond PG’s meager math skills.

However, if “healthy five-figure monthly sales” are 40,000 or 50,000 or 60,000 per month, indie royalties blow past the Tor advance like a buttered bullet.

The Scalzi/Tor advance was big enough to generate an article in the Sunday New York Times, but compared to the earnings of similarly-talented indie authors, PG says it’s not very impressive.

To be clear, PG bears no animus toward Mr. Scalzi and wishes him the best of luck and booming sales with Tor. However, having recently discussed royalties with a number of successful indies who don’t have Scalzi’s name recognition, PG says the indie path is far more lucrative.

 

Debunking the Discovery Problem

28 April 2015

From BookBusiness:

Ever since ebooks gained traction the publishing industry has obsessed with what’s typically referred to as “the discovery problem.” The common wisdom is that discovery of the content will lead to fame and fortune.

I believe digital content’s main challenge is more about efficiency, less about discovery, and my inspiration for this point of view comes from a totally unrelated business: the coffee industry.

A recent Businessweek article noted that single-serve pods (e.g., Keurig) have eliminated coffee’s biggest consumer: the kitchen sink.

. . . .

It turns out that with Mr. Coffee and other drip systems a great deal of product ends up going to waste. The net result is that as the single-serve devices gain momentum we’re creating a climate where total consumption is lower and excess inventories are leading to lower prices for coffee beans.

In short, the article notes that while Americans still drink a lot of coffee, they do it more efficiently. Each cup in the single-serve model is more expensive but in total we’re consuming and wasting far less coffee now.

What in the world does this have to do with digital content?

I don’t think anyone would argue with the fact that we have an excessive amount digital content today. A great deal of it is being produced but in many cases nobody is reading it. This has led to an overabundance of free and cheap content which is being both professionally published as well as self-published.

Wasted coffee goes down the drain but wasted content simply goes unread.

. . . .

Just as nobody walks into a bookstore asking for the latest book from Macmillan, nobody is sitting around saying, “Gee, I wish I could discover more content.” What we really need is more efficient delivery of content that’s highly relevant to our specific needs and interests.

. . . .

At some point content efficiency will improve. I’ve referred to this before as the need for a “content concierge”, resulting in much better recommendations, tailored content streams and, yes, it will come at a higher price, just like the single-serving coffee pods.

Link to the rest at BookBusiness

For PG, Amazon does a great job as a “content concierge” for ebooks and a lot of other stuff. And it comes with lower prices.

Plus word-of-mouth is floating all over the internet and groups of readers enthusiastic about any type or genre or sub-sub-sub-sub-sub-sub-genre of book (or power tool or videogame) abound. Providing information about books is a service better performed by enthusiastic amateurs or (sometimes) ad-supported professionals than by someone charging for book recommendations.

The disruption of the book business by ebooks and ecommerce means that a lot of legacy players are struggling to find a value-add that will justify their commercial existence.

Barnes & Noble is closing stores because readers have been and will continue to decide that the price of buying books there (in dollars, time and travel) is higher than buying books on Amazon. Barnes & Noble isn’t adding enough value with its in-store environment for an increasing number of readers to pay for its book-selling services.

Publishers are losing authors (or never signing them in the first place) because authors are concluding that the price of doing business through a publisher (in low royalties, time and hassle-factor) is higher than the value the publisher is adding via access to physical bookstores.

Judge wants $10 million set aside for possible award in Fifty Shades lawsuit

28 April 2015

From the Fort Worth Star-Telegram:

A state district judge wants $10 million in cash or investments to be set aside for a potential award after a Tarrant County jury ruled earlier this year that an Arlington woman was cheated out of royalties from the blockbuster novel Fifty Shades of Grey.

. . . .

A Tarrant County jury in February ruled that Hayward defrauded Pedroza out of the financial windfall created by the erotic New York Times bestseller which also inspired a movie by the same name.

. . . .

Pedroza sued Hayward last year, contending that she conned her out of her rightful partnership interests in advances and royalties.

Pedroza and Hayward, who lived in Dural, a Sydney suburb, were partners in The Writer’s Coffee Shop, which started out as an online blog in 2009, along with Waxahachie resident Jennifer McGuire. Visitors to the fan-based website discussed books and wrote “fan fiction” stories.

McGuire did design work for the blog, Pedroza uploaded contributors’ writing, and Hayward worked with the authors, court records show. Later, Christa Beebe, another Arlington resident, joined and helped with marketing and distribution.

By 2010, Pedroza and Hayward had the Coffee House operating as a publishing house. And in 2011 it published Fifty Shades of Grey, a romance novel by E.L. James, a British author, as an e-book and print-on-demand full-length book.

The company published the sequels, Fifty Shades Darker and Fifty Shades Freed, in 2011 and 2012. The Fifty Shades of Grey trilogy became an online sensation, selling 250,000 copies through e-book and print-on-demand, with another 20,000 print copies.

In 2012, Random House made a deal with Hayward and James to publish the books. Pedroza received a one-time payment of $100,000 after the Random House contract was signed, but she was never told of the full terms of the transaction. Random House was not named in the lawsuit.

The lawsuit acknowledges that the two Texans — Pedroza and McGuire — and Hayward never signed a prepared partnership agreement. But in 2011, The Writer’s Coffee Shop filed a partnership income tax return, naming Pedroza as a general partner, it says.

Pedroza contended in her suit that Hayward in 2012 secretly converted the Coffee Shop into a company she alone owned. The jury determined that there was a partnership between the women. Beebe settled her claims in December in a confidential agreement.

Link to the rest at Fort Worth Star-Telegram and thanks to Suzan for the tip.

As a general proposition, if two or more people start and operate a business together, the presumption will be that they have created a partnership unless they have an agreement signed by everyone to the contrary. The presumption can be rebutted, but the individual(s) who don’t want a court to find that a partnership existed have the burden of proving the business was something other than a partnership, that a person was an employee, for example, and not a partner.

Absent evidence to the contrary, all persons who are partners are entitled to a share of partnership profits.

When there’s no partnership agreement, the way the business was run, who was paid how much, statements the parties made about the business, emails,  tax returns, etc., will be used to determine who is entitled to what percentage of partnership profits. The default presumption is that partners will divide partnership profits equally.

Partnership agreements can be very simple documents. However, without such an agreement, signed by everyone, resolving disputes over who gets the money can be very expensive.

How to Spot a Rights Grab

25 April 2015

From The Book Designer:

Writers see the warnings all the time. Watch out for rights grabs, those contracts that transfer all rights to the writer’s work to some less-than-reputable publisher or self-publishing company. Without realizing it, the writer has given away the right to publish his or her book in print, ebook, audio, app, and all future formats, in all languages, worldwide, for the life of the copyright. Heartbreaking.

. . . .

The answer, of course, is read the contract before your hit Submit.

Daunting? Not if you know where to look. Instead of starting at the beginning of the contract, go straight to any paragraph called Grant of Rights, License, Permission, or Permitted Uses, and look for these Danger Words: Assignment and Exclusive.

If you see these Danger Words, you may not need to read any further.

Assignment

Legally speaking, a publishing contract is a license, meaning permission to use. The writer continues to own the copyright. In contrast, an assignment transfers complete ownership. It is rarely appropriate in publishing or self-publishing, except for a freelance or ghostwriting project if you understand upfront you are transferring all your rights and ownership in the work.

. . . .

Section 3. Assignment. Author does hereby irrevocably assign to Company and its successors all right, title, and interest throughout the world, in and to the Approved Entries, including without limitation, any copyrights and other proprietary rights in and to the Approved Entries in any media now known or hereinafter developed, and in and to all income, royalties,damages, claims and payments now or hereafter due or payable with respect thereto, and in and to all causes of action, either in law or in equity for past, present, or future infringement of such rights.

. . . .

An exclusive license can be as bad as an assignment.

As I said, a license is permission to use only; you, the creator, retain ownership of the copyrighted work.

Licenses may be worldwide or geographically restricted, short-term or perpetual, royalty-free or royalty-paying, limited to particular media such as audio books, print, e-books, or to a particular language, and most importantly, exclusive or nonexclusive.

If you grant a non-exclusive license, then you may grant the same rights to others at the same time. If you grant an exclusive license, you are agreeing not to transfer similar rights to anyone else.

A license is similar to a lease. Imagine you are a landlord of a shopping center, and you lease shops to various tenants. Their rent is based on how much they sell. Each shop lease is like an exclusive license granted to only one user. Other licenses, such as the right to use the parking lot, are non-exclusive.

Link to the rest at The Book Designer and thanks to James for the tip.

The OP does a good job of describing typical pitfalls.

PG will reiterate Joel’s advice to read the entire contract before accepting it. Yes, it’s no fun and will take some time, but, if it’s a contract for the life of the copyright and you agree to it, you’ll be living with that contract for the rest of your life.

You don’t need to read the entire contract in order to reject it, however. You should read it before you agree to it because the whole contract needs to be right or you should reject it. In an online situation where there is no negotiation of the contract terms, you’re looking for reasons to reject the contract, not accept it. If you find a reason to reject the contract, you’re done with your reading.

Online contracts are usually easy to search if you’re reading them in a browser. You might want to search for words like exclusive, copyright, irrevocable, grant, assign, royalty-free and license. You’ll need to read what you discover to see the context of those words. If you find something you don’t like, post an online warning to your fellow writers and go back to working on your book. You don’t need to read the rest of the contract.

If this technique doesn’t raise any red flags (it’s definitely not a fool-proof solution), you’re stuck reading everything.

 

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