Royalties

Signing a Publishing Contract

11 October 2014

What to Do Before Signing a Publishing Contract

Column by Brandon Tietz at LitReactor

Writing a novel is damn hard. Selling one to a publisher, in its own distinct way, is even more difficult because you’re essentially convincing a company to gamble on you and your work. This is part of the reason self-publishing is booming right now. Searching for a publisher is both a hassle and a blizzard of heartbreaking rejection, so when you actually do get an offer, it’s a huge moment. So euphoric that emotion can often blind the writer to those important details on what’s on the actual contract. It amazes me how many authors took their time working on their novels only to sign a contract after skimming it once. It’s not an iTunes update, guys…read the damn thing. Here are some key things you should know before signing on the dotted line.

Who Are These People?

I will go on record and say that I have scared away authors from a publisher I went through because it was a sub-par experience. They’re out of business now, if that tells you anything. What I’m saying though is that you should know the publisher before you sign any sort of contract that binds you to them. Now I don’t recommend asking authors whether they do or don’t like the publisher while you’re querying, but after you get the offer, feel free to reach out and get a feel for how they’re handling their business. Unhappy authors are usually a good indicator that you should tread lightly.

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Conclusion

Don’t be blinded by your contract. Signing a bad one can be the thing that ends up screwing you over for the life of the novel. Do your research, ask questions, and for the love of God, don’t be afraid to ask for changes if you don’t like something. If three author copies sound low—ask for more. If you don’t want your book assigned to a certain designer—ask for an alternative. A contract is an agreement between two parties…not one party telling the other how it’s going to be.

Read the rest here.

From guest blogger Randall

15,000 Harlequin Titles + Scribd = ?

6 October 2014

From Jane Litte at Dear Author

Harlequin has signed a deal to provide exclusive subscription access to 15,000 backlist titles to Scribd subscribers

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Monthly subscribers to Scribd can now find titles from a variety of Harlequin imprints:
• Harlequin Series Romance (including Harlequin Presents, Harlequin Desire, Harlequin Superromance, etc.)
• HQN Books
• MIRA
• Carina Press

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Scribd is offering a free 3-month subscription.

From Guest Blogger Randall with a thanks to Shelly for the tip.

See Shelly’s books here.

Randall can’t help but wonder what affect this will have on authors attempting to get their titles back from Harlequin.

Is Amazon responsible for the Ellora’s Cave fiasco?

3 October 2014

From Sal Robinson at Melville House

Ellora’s Cave, publisher of erotica, was for a long time a great success story of the electronic publishing age. Founded in 2000, they published stories and novels that contained material that was more explicit than mainstream romance publishers would touch. And because this was the pre-ebook age, they published them as PDFs, emailed to readers. Their audience turned out to be huge and undaunted by the format, and their revenues grew accordingly.

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Posts like the one by Kayelle Allen, founder of the site Marketing for Romance Writers, give a sense of what’s going to come out when these stories start being told: Allen published a novel with Ellora’s Cave in 2013 and was faced with, first, having to hassle the publisher just to get a royalty check (which, when it came, was for $17) and then a series of disturbing developments, like learning that her editor was being let go, that executives were leaving, and that many, many other Ellora’s Cave authors had also had problems with missing royalties.

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Each story adds to a larger picture of a company in dire straits. Which is weird. Because the perplexing thing about Ellora’s Cave (as Litte pointed out in her original post) is that as the ebook market has matured, the fortunes of the company — so good at ebook publishing they ruled it even before there were actual ebooks —have gone the opposite direction.
Growth stagnated. In 2010, it was revealed that EC’s revenues were $5 million but a reported $6.7 million in 2006. How on earth was a digital publisher’s income declining in the biggest boom period of digital books?

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Well, funny you asked. Because in a story that doesn’t appear to be about Amazon (and we only let ourselves write stories that aren’t about Amazon when swayed by a) dogs and b) Satan), this tracks back at least partly to everyone’s favorite purveyor of pet sweaters.
Earlier this year, Ellora’s Cave saw steep declines in their Amazon sales. Calvin Reid reported on it for Publishers Weekly:
[CEO Patty Marks] said Ellora’s Cave sales via Amazon have dropped by as much as 75%. “We’re talking to Amazon and trying to figure out why this is happening,” Marks explained, noting that Amazon is the biggest sales channel for the digital-first erotic-romance publisher.
According to Marks, the issue is likely related to a change in Amazon’s search algorithm. Many of Ellora’s Cave’s bestselling authors and titles simply don’t show up in the Amazon search engine anymore. She pointed to one of the house’s most popular authors, Laurann Dohner, whose books are New York Times bestellers, noting that a search for her titles on Amazon initially retrieves only free giveaways.

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Or it could be about money—discussions on romance messageboards describe the high prices of EC titles on Amazon, compared to buying the books through the company’s website, and it’s mentioned that Ellora’s Cave refused to give Amazon the discount they were asking for, which meant that prices were sometimes double on Amazon versus the EC site. Could Amazon have retaliated by making the Ellora’s Cave titles harder to find? Or was it a misjudgment of their strength on Ellora’s Cave side? A commenter on Litte’s post suggests the following explanation:

They’d been almost the only place that people could go to for that type of product for so long, that when competitors opened and started actually competing for authors and readers, and when Amazon became the third party seller powerhouse, it was like EC threw a tantrum, like, “No, *I* want to be the only one!” and packed up its toys and hoarded them, instead of trying to find a way to be part of this new way of selling books.

In any case, whether the house’s troubles are due to their own decisions or to outside factors, they’re a stark example of how much publishers are dependent on Amazon, and how much of the market it controls. When those sales disappear, all the abs and cowboy hats promised at Romanticon – EC’s annual conference, happening next week in Canton, Ohio – aren’t going to change the picture for authors.

Read the rest here.

From Guest Blogger Randall

Finally, a Big 5 publisher raises digital royalties

3 October 2014

From Laura Hazard Owen at GIGAOM

Digital royalties have been one of the major sticking points in the debate over traditional vs. self-publishing, with many people (even from the traditional publishing world) arguing that big publishers should raise digital royalties on ebooks to at least 50 percent. Nonetheless, until now, publishers’ standard royalty on new ebooks has been stuck at 25 percent.

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“While our first priority is to sell books through as many different retail channels as possible, we are pleased to provide this platform for our authors who want to sell directly,” Brian Murray, HarperCollins president and CEO, said in a statement. In a veiled reference to the ongoing dispute between Amazon and Hachette and/or foreshadowing of similar disputes between Amazon and HarperCollins, he said, “Our authors can also be certain that their books will always be available to consumers through HarperCollins, even if they are difficult to find or experiencing shipping delays elsewhere.”

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Nonetheless, it’s a step and it’s not difficult to imagine it expanding. Now let’s watch and see whether other big publishers do the same thing.

See the full article at GIGAOM

From Guest Blogger Randall

Speaking in the third person (as is tradition he thinks) Randall says 35% was still less than 70% last time he checked.

The mysterious case of the missing royalty checks from Ellora’s Cave

18 September 2014

From author Evanne Lorraine:

Three years ago Ellora’s Cave contracted Warriors’ Woman and I was thrilled. They went on to publish two more of my books. I loved my editor, thought their cover art was brilliant and was very fond of the regular royalty checks.

Yesterday I deleted those covers from my website., which makes me want to sob.

I still adore those stories, but Ellora’s Cave isn’t paying me. I sent them formal notice requesting payment and the reversion of my rights. I received an automated response to both emails stating they’re overwhelmed with requests.

. . . .

Please don’t buy my Ellora’s Cave titles.

Link to the rest at Evanne Lorraine

P.E.A. Films cites bad accounting practices as a reason to terminate contracts on classic films

12 September 2014

From The Hollywood Reporter:

The latest spaghetti western will be settled in a New York federal court after licensor P.E.A. Films filed a lawsuit that seeks to terminate Metro-Goldwyn-Meyer’s contracts pertaining to The Good, The Bad and The Ugly, For a Few Dollars More and Last Tango in Paris.

. . . .

The plaintiff is upset with MGM’s “failure to send to PEA honest and accurate statements together with timely payments,” according to the complaint, specifically mentioning that the defendant has asserted more than $10 million in unsupported fees and expenses.

. . . .

The first lawsuit came in 1990. Three years later, the parties settled, and according to the latest lawsuit, MGM agreed then that for home video, it wouldn’t “charge any distribution fees as an expense before calculation of PEA’s share of gross receipts, but could only charge certain defined expenses.”

PEA sued again in 1996 with audit claims. It took another three years for the parties to reach a detente

. . . .

“As can be discerned from the factual pattern above, since at least 1990, MGM has not paid the proper amounts to PEA in a timely fashion, but rather has sent to PEA statements and payments which did not truthfully reflect the amounts due to PEA,” says the complaint filed by attorneys Ronald Taft and Howard Schwartz. “The delays between the time honest and accurate statements and payments were due, and the cumulative times until the 2004 Settlement, the 2007 Settlement, and the 2011 Settlement is between an astonishing 8 to 14 years.”

PEA suspects MGM’s method of accounting is no accident, asserting the defendant is engaged in a “‘Hollywood accounting catch me if you can’ process designed intentionally to keep for itself money rightfully due to PEA.”

Link to the rest at The Hollywood Reporter and thanks to BS for the tip.

On #RoyaltyWatch

11 September 2014

From author Avril Ashton:

It’s that time again, when I’m searching high and low for my check.

Here’s the thing: Most will ask why I gotta talk about it. Why I gotta take it outside the office, put the business all up in the streets. I’d like to ask those same authors how their rents got paid this month. Because you see mine? Hasn’t been paid yet.

I’d like to ask them what they told the gas company and the light company when they called looking for their money? Do you think they’ll accept the excuse “my publisher hasn’t paid me yet, but it’s all good, cause I know they’re good for it. So I’m good for it.” Yeah?

This isn’t gonna be one of them keep quiet and toe the line type of joints. I’m going to say that once again Ellora’s Cave isn’t paying royalty checks.

. . . .

I do not give a damn about saving face. It ain’t my face that needs saving. I don’t care about burning bridges. The instant you stopped paying me you burned that bridge, I’m just here sweeping the ashes to the side. I don’t get why NO ONE seems willing to say that Ellora’s Cave is holding their money hostage. Why. Because they’re big and bad and it’s just little old us so they can come after us? It’s not a lie if it’s true. It’s not slander if it’s true.

Link to the rest at Avril Ashton and thanks to India for the tip.

When Not “Earning Out” is a Good Thing

5 September 2014

From author Steven Pressfield:

Here’s how big shot literary agents make a compelling living.

A client brings an idea to the agent who advises the client about its commercial possibilities. It’s important to note that this advisement traditionally means whether or not the agent thinks he will be able to sell the project to a major publisher for a compelling advance against royalties. Not whether there are actual people out there willing to pay money to read such a book idea.

The way the best sale works (meaning to the best advantage of the writer and agent) with a major publisher is to make sure that the publisher’s advance guarantee exceeds the amount of royalty that the writer will actually earn.

For the life of the book.

. . . .

[After detailed calculations showing books sold and royalties earned]

So Ms. Bestselling Writer has earned $4,250,000 but has been guaranteed $5,000,000. So her book does not “earn out.”  She’ll never get a royalty statement with a check in it.

So the publisher lost money on that one, right? Not by a long shot.

The publisher has made a major return on investment even though it has paid $750,000 more than the book earned. How did that happen?

. . . .

[After more detailed calculations showing how much the publisher earned]

So the bottom line for the publisher is gross revenue of $16,550,000 minus the $5,000,000 guarantee to Ms. Bestselling Writer, minus the $2,800,000 to print and ship the physical books. Or a total of $8,750,000 ($16,550,000 – $5,000,000 – $2,800,000) to their bottom line.

Even though the book never “earned out.”

Everyone wins.

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How far would a publisher be willing to dip into their pool of revenue to overpay for a book? This is the question literary agents enjoy contemplating.

. . . .

The big books from big name writers (who don’t bleed red ink, but don’t earn out either) are the coveted ones for agents. Although it may be apocryphal, agent Andrew Wylie has been credited with having once said, “If my client’s book earns out, I haven’t done my job.”

But here’s the thing…

When I began in publishing in the 1990s, there were at least 20 “major” houses to submit a book proposal or novel. Today there are only 5 major corporations that control the trade book market. Sure, you’ll hear that there are tens of different publishing imprints within the major corps that “compete” with each other for properties. But when the time comes to put money on the table in a book auction, only one of those imprints from each of the five will end up bidding. The most big bids you’ll ever get as an agent today are 5.

And you can never discount the power of negative commentary around a book on submission.  Book publishing is so connected that if an editor at Random House didn’t care for a submission, you can count that an editor at HarperCollins who also received the submission will get that information before his having to make his own decision.  No one likes being the only one to like something.

. . . .

If only there were a way for writers to do their work, find people who like it, and then offer the book to them directly through free distribution networks as well as their own…  Instead of having to curry favor with a big shot literary agent, then hope the literary agent is able to drum up enough interest from the Big Five to make a good deal, and then wait 12 to 15 months for their work to reach the public and then another month to learn whether the book “worked” or not and then hope that their next book will be embraced by their publisher, all the while never knowing who actually bought their book or why…

Link to the rest at Steven Pressfield Online and thanks to Keith for the tip.

Here’s a link to Steven Pressfield’s books

Authors receive higher royalties on new HC website

4 September 2014

From The Bookseller:

Authors who have e-books sold through the HarperCollins website will receive a higher net royalty than if they were sold through another site, the publisher has confirmed.

HarperCollins unveiled its new site last week, which features a direct-to-consumer function, allowing visitors to the site to download e-books to read through a free HarperCollins app.

. . . .

The publisher has confirmed that authors will earn more through direct e-books sales through the site. A spokesperson said: “I can confirm that authors’ net royalty is higher on e-books sold through our website because we don’t have to share a commission with a third party.”

However, HarperCollins would not say what the exact rate was.

The new website offers a range of discounts on titles, although Amazon offers a higher discount on those titles.

Link to the rest at The Bookseller

Under a typical New York publishing contract, the author receives 25% of the net revenues received by the publisher for ebook sales.

For an ebook sold through Amazon at a 70% price level, this translates to about 17% of the sales price of the ebook before agent’s fees.

PG assumes that ebook sales through the HC website will pay the author a 25% royalty based on the discounted price for which HC sells the ebook.

This should be the case for direct sales by almost every major publisher, except Harlequin, which generally pays less because sells through an affiliated HQ company instead of directly through the corporate entity named in the publishing contract.

A Hybrid Author Busts the Myths: Should You Self Publish?

18 August 2014

From The Huffington Post:

Yesterday, I gathered with a group of diverse writers for the Haverhill Public Library Authors Fair. My table was situated between Kristin Bair O’Keeffe, an author who publishes traditionally, and Connie Johnson Hambley, a self-published mystery writer.

This was the perfect place for me: I’m a hybrid author who has jumped from a traditional publisher (Random House) to indie publishing and back to a traditional house again. As I start my fourth novel to be published by New American Library/Penguin Random House, I have no contract for the next one. This means that I’m revisiting the all-important question for many writers: do I want to go solo when I publish my next book, or stay where I am?

. . . .

1. Publishers are Out to Screw Authors

MYTH. Publishing companies are businesses that compete in a global marketplace. Their job is to make money–and, in so doing, they will make money for you.

With a traditional publisher, you will get royalties from your books–typically about 25 percent of ebook sales. This is much less than the percentage of royalties you’ll get if you self publish. Rates vary, but with self publishing, you’ll reap about 65 percent of a book sale as your royalty rate.

However, with a traditional publisher, you receive an advance against royalties–anywhere from $5K to $45K for most first-time novelists, though of course there are some pie-in-the-sky whopper deals. You will also get–for free!–an editor, publicist, marketing team, designers, sales people, etc. Your team at a traditional publisher will help you whip your book into shape and get it into the hands of readers.

People who self publish don’t get advances, obviously. In addition, they must shell out money in advance to designers, editors, copy editors, publicists, advertising venues, reviewers, etc.

Bottom line: Yes, I have friends who self publish and make buckets of money. However, the only self-published authors who really make a solid profit are those who are willing to write several books a year; have deep pockets to get the whole business of branding started; and most likely write romances, mysteries, or fantasy novels in series. Most say it takes them four or five books before they start seeing a solid, reliable annual profit.

. . . .

2. You Have More Control as an Indie Author

SOMEWHAT TRUE. Everything–and I mean everything–is up to you as an indie author: writing, editing (or hiring editors), design, marketing, promotions, etc. You can decide everything from what kind of brand you want to create to how you want to promote that brand. Nobody can tell you, for instance, that you can’t write a paranormal book because your last book was a romance. You call the shots, and it’s a great feeling.

There is also a great deal of transparency. Your sales are visible nearly to the minute, and you can tell with some degree of accuracy whether certain ads or blog posts have caused upward tics in sales. If you’re with a traditional publisher, you probably won’t have any clear idea as to how many books you’ve sold until you get your royalty statement six months after your book is published, because traditional publishers have agreements with bookstores about returns–i.e., the books you “think” you’ve sold might actually be returned, so the publishers don’t want to tell you how many have gone out until they’re sure the books won’t be returned.

. . . .

As you’re polishing up that manuscript, consider these two key questions: Do you want to invest money up front and build your brand as an indie author, basically running your own business as you go? Or would you rather take more time and try the traditional route first?

For me, traditional publishing is still the place I want to be. But your situation is unique. Weigh your pro’s and con’s carefully, and don’t rush into anything. This is your book–you want it to be the best one possible.

Link to the rest at The Huffington Post and thanks to Toby for the tip.

While it’s up to each author to determine whether he/she prefers self-publishing to tradpub, PG believes every author should understand the royalty math of each option. It appears the HuffPo author doesn’t understand how the math works.

The standard tradpub deal pays the author 25% of the amount the publisher receives for ebook sales, not 25% of the retail price of ebooks. Amazon pays 70% of the retail price of ebooks if a KDP author prices between $2.99 and $9.99.

Here’s how the math works out:

Retail Sales Price $9.99
Tradpub
Publisher receives 70% $6.99
Author receives 25% of
what Publisher receives $1.75 17.50% of sales price
Less Agent’s Commission $0.26
Author’s Net Income $1.49 15% of sales price
Indie Author
Author receives 70% $6.99 471% of the amount the tradpub author receives

So, the rule of thumb is that an indie author earns almost five times as much as a traditional author from each ebook sold.

Or, to flip things around, if a tradpub author sells four times as many ebooks as an indie author does, the indie author still makes more money.

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