Royalties

Spotify Seeks to Fine-Tune Music Rights as It Gears Up for IPO

25 August 2016

From The Wall Street Journal:

As Spotify AB gears up for a potential initial public offering next year, the music-streaming service is missing one key component in its pitch to investors: rights to play the music in years to come, according to people familiar with the matter.

Spotify is now operating on short-term extensions of its old contracts with all three major record companies, having been on a month-to-month basis with at least one of the labels for nearly a year. It is negotiating new deals that would make its finances more attractive to investors.

Spotify, which saw its net loss increase to roughly $200 million last year even as revenue doubled to more than $2 billion, wants to pay a smaller share than the nearly 55% of its revenue that it currently pays to record labels and artists, according to people familiar with the matter.

It pays roughly an additional 15% to music publishers and songwriters.

But some major label executives want Spotify to pay them as much as 58% of revenue from both its free and paid tiers. That is what Apple Inc. pays for Apple Music subscribers who aren’t on free trials, people familiar with the matter said. Apple has more than 5 million users on free trials, they said.

. . . .

The licensing disagreement highlights the tricky relationship between Spotify and the major record labels, which all took minority stakes in the Swedish outfit as part of their initial licensing deals. As investors, the labels have a direct interest in seeing Spotify succeed, while they are also counting on subscription streaming in general to make up for a long decline in record sales. Paid services yield far more per user than ad-supported ones, and Spotify is the world’s biggest subscription service, with double the 15 million paying subscribers that one-year-old Apple Music has.

But the labels and Spotify don’t see eye to eye on some fundamental issues. In addition to what Spotify should pay for the music, record companies and their artists have also butted heads with Spotify over its practice of making its entire 40 million-song catalog available to both free and paid users at the same time. Pop star Taylor Swift, British singer Adele and rocker Gwen Stefani are among the artists that have withheld albums from Spotify because they didn’t want to make them available on the free tier, where users can listen to entire albums, playlists or artist catalogs in a random order they can’t control.

Link to the rest at The Wall Street Journal (Link may expire)

What’s a masterpiece worth?

1 July 2016

From Amadis of Gaul:

When Garci Rodríguez de Montalvo wrote his version of Amadis of Gaul, he probably wasn’t thinking of payment. In medieval times, writing was either a gentlemanly avocation or a vocation sponsored by a gentlemanly patron. Books were hand-copied, so literature couldn’t be commercialized. Montalvo was a gentleman whose occupation was managing the city of Medina del Campo near Valladolid.

But only a century later, the printing press had come into being and had turned books into an affordable mass commodity. Miguel de Cervantes wrote Don Quixote de la Mancha, a parody of books like Amadis of Gaul, for money. Writing had become a profession, and professionals got paid.

What did Cervantes earn for Quixote? We don’t know, but we have enough clues to try to guess. Cervantes was poor before it was published and poor after it was published, so it wasn’t a huge amount of money. Everyone agrees on that.

. . . .

Don Quixote de la Mancha was published in two parts, the first in 1605 and the second in 1615. Cervantes didn’t plan on a second part, but after another author wrote a continuation, he decided to write his own.

In 1604, Cervantes was 50 years old and living in Valladolid. He had written a short story about Don Quixote, and he presented the idea of a novelization to publisher Francisco de Robles, who agreed and urged Cervantes to get it ready fast. Then the book was hastily edited (which explains the many errors in the text), printed on cheap paper with worn type, and rushed to the market.

Probably no one considered it a universal masterpiece at first, but the first edition of 1,000 copies sold well — in fact, it was immediately pirated in Lisbon. Cervantes had already won notice as a playwright, and this book cemented his reputation as a major writer.

He had received a 10-year royal privilege to print Don Quixote, which he sold to Robles for an unknown amount; the paperwork was lost. But he had sold an earlier novel, La Galatea, to Robles’ grandfather for 1,336 reales, of which he eventually only received 1,086.

Nieves Concostrina, a journalist with Radio Nacional de España, reported in the series Acércate al Quijote that he received no more than 100 ducados (which equals 1,100 reales or 37,500 maravedíes) for the copyright, which she estimates is worth only about €200 today.

Daniel Eisenberg, the former editor of Cervantes, the scholarly journal of the Cervantes Society of America, wrote that he probably received 1,500 reales (51,000 maravedíes), which he says would have been worth 500,000 pesetas in 1992, or €5,503.72 today. That’s better, but no J.K. Rowling.

Link to the rest at Amadis of Gaul and thanks to MKS for the tip.

On the True Costs of Bargain Books, Or Guilting Readers Because Authors Signed Bad Contracts

10 June 2016

From The Digital Reader:

James Mayhew has taken up the cause of trying to guilt, harangue, or otherwise convince readers to overpay for books from legacy publishers.

About a month ago (I just now found it) Mayhew published a post where he argues that fans should not buy bargain price books because an author’s royalties are slashed as the price drops.

So how does it all work? Authors get paid royalties, which are a percentage of the book price which you may (or may not) earn from books sales, usually around 5-10% of the price, but very often less; most books are discounted in any case, and the royalty shrinks accordingly. In simple terms, you would expect to get between 50p and £1 for each hardback book sold (and less on a paperback). This is completely normal, and I have no complaints, although it’s often a shock to people.

What happens when books get discounted further? Subject to contractual terms, the royalty may shrink on cheaper books. So you end up getting a tiny % of an even smaller amount. We are talking pennies. Once upon a time there was a system called the Net Book Agreement, limiting the extent to which books could be discounted. But that was abandoned in favour of a “free market” years ago. The result? books can be reduced to next to nothing.

But increasingly, publishers broker cold, hard, cynical deals with these people and then print to order. The publisher is complicit in the arrangement and sells books at extremely low prices (less than 50p per book) to the discount catalogue (but not at a loss to themselves) who then sell them on at a very nice profit – usually £1 per book. Tens of thousands of copies. And the author? I get less than 4p a book, while the discount company makes millions every year. …

. . . .

Authors and publishers might see things differently, but what I see here is an author who is trying to guilt readers over the price they pay for books.

That is a pretty obnoxious behavior, but it gets worse when we look at it sideways. That’s when we realize that the real issue here is not the price of the books but the contract terms Mayhew agreed to. He’s trying to make readers responsible for his, and other authors’, bad business decisions.

Link to the rest at The Digital Reader

That’s just the strategy for attracting more book buyers – make them feel guilty for doing so when books are discounted.

PG suggests that when indie authors are talking to readers, in addition to thanking them for buying the author’s books, it might be a good idea to let the readers know that when they buy indie ebooks on Amazon, in many cases, most of the money goes directly to the author. That’s why Amazon is such a great friend to authors and readers.

Les Misérables: gloomy French writers face crisis as incomes plummet

22 March 2016

From The Guardian:

French writers have never felt more badly paid, undervalued or under pressure, according to a new survey that shows more than half of established authors earn less than the minimum wage.

Many are so depressed by the state of the book industry that they are considering giving up altogether, according to a new report that canvassed more than 100,000 authors of fiction and non-fiction.

“Authors have a high social status but almost empty bank accounts,” said Marie Sellier, president of the SDGL, one of the five writers’ and publishing groups behind the study.

. . . .

Established writers with years of relative success behind them struggled to make a living, with their median annual earnings of €17,600 ($19,800), less than three-quarters of national average.

The most staggering statistic of all in the report, which was backed by the ministry of culture, is that six out of 10 published writers make less than €1,500 a year.

. . . .

The survey of writers as well as poets, illustrators and translators found they were they “generally worried, disenchanted and discouraged”.

“Many were asking themselves whether they should diversify into other work or stop altogether,” it concluded.

Link to the rest at The Guardian and thanks to Dave for the tip.

PG was reminded that France is the home of  the Lang Law (named after a long-departed Minister of Culture). In a nutshell, under the Lang Law:

  • The publisher decides on a price for its book and prints it on the back
  • Booksellers are not allowed to sell a book for a discount of more than 5% below the publisher’s price.

Sounds like this law may be fine for publishers and bookstores, but not so much for authors.

Publishers should pay authors as much as their other employees

14 February 2016

From The Guardian:

Writers and publishers are in it together, I tend to feel. Not always in a cuddly way. Sometimes more in a screaming-down-the-mineshaft way. But in one critical respect the partnership feels increasingly strained.

. . . .

The Society called for publishers not to hold on to rights that they don’t actively exploit, not to add crippling restrictions on writers’ other work and to stop insisting that authors contractually indemnify them against all risks. It also wants ebook royalties to rise from 25% to 50%, to fairly reflect the lower cost and risk of digital publication.

No writer has a right to be published. If you’re an avant garde poet, good luck to you – you’ll need it. The issue is when the publisher makes money out of a book and the author doesn’t; when contracts exploit the desperate asymmetry of the parties’ negotiating strength.

. . . .

Responding to the Society’s campaign, the then chief executive of the Publishers Association, Richard Mollet, wrote that “publishers share the frustration of the author community” that it is increasingly difficult “to make a decent living” from writing.

“Decent” is a dream. Authors are traded according to perceived value, so few ever admit publicly how little they actually earn. But a 2014 survey by the Authors Licensing and Collecting Society found that professional full-time authors typically earned £11,000 – a median down 29% on 2005. Of course, a few writers make fortunes. But talk privately to authors – including well-known, much-loved and “bestselling” authors – and you’ll find many in financial distress and professional despair.

Richard Mollet felt the source of the problem lay not in “contractual relations” but in “deeper market factors”. Margins are indeed “being squeezed across the whole supply chain” – yet publishers’ profits have not, on the whole, tumbled by 29%. As for “there simply being more writers”, as he also claimed, quality has always been hard to find, even in a buyers’ market.

. . . .

Publishers pay printers. They pay rent – often for staggeringly high-value London commercial properties, despite those squeezed margins. And they pay salaries.

Rates for lower-ranking editorial staff are shocking. £16,000 for a graduate? In London? And yes, unpaid and low paid internships are rife, despite the damage they do to diversity. (A recent survey by the Society of Young Publishers found that 38% of respondents got their first job through internships – half of them unpaid.) But even the lowliest shuffler of proofs gets more than £11,000 a year.

. . . .

So when a publisher tells you he “shares your frustration”, ask him how much he earns – and quite how little he’d pay his lowest paid editorial assistant before he felt he was exploiting the vulnerability of their position. Before he felt he was endangering the long term sustainability of his business.

Link to the rest at The Guardian and thanks to Scath and others for the tip.

PAY THE WRITER—Pirates, Used Bookstores & Why Writers Need to Stand Up for What’s Right

31 December 2015

From Kristen Lamb’s Blog:

All righty. I’d vowed to take off for the holidays but *laughs hysterically* sure. Like THAT was going to happen. No, seriously, I’m working on resting more. I’m also working on learning to shut up. Clearly those two goals are getting re-slated for 2016 resolutions because the whole “Inside words stay inside…”

Not working out for me. So why not leave 2015 with a bang? Haters gonna hate.

To quote the great Tywin Lannister, Lions do not concern themselves with the opinions of sheep.

Today I’m going to say something that could quite possibly be grossly unpopular, but whatever. It’s for your own good. I’m feeding y’all broccoli to offset all that fudge and alcohol you’ve consumed during the holidays.

There’s a trend that just makes me see red and I’m calling it out today because if we do not address this 500 pound used paper elephant in the room, then it’s going to be really, really hard for you guys to reach your dreams, which I assume is to work as a full-time PAID writer.

For those of you who do NOT want to be PAID to write? The following does not apply. If you are content to work a full-time regular job AND slave over a manuscript as a second job and your ONLY reward is simply nice reviews, compliments, hugs, cuddles, and the joy your stories might create in the hearts of others?

I am NOT talking to you.

. . . .

Yesterday, I was on Facebook and it would have been one thing to see one writer post this link. But I saw like TEN writers post this link and they were excited…as if this Washington Post article were announcing a GOOD thing for our profession.

In an Age of Amazon, Used Bookstores Making an Unlikely Comeback.

Here’s the deal. I don’t care about bookstores. I care about writers. In fact, readers should care about writers more than bookstores because no writers? Well no real point in bookstores now is there?

Want to support the arts? Pay artists. Want to support books? Pay writers. It is simple.

. . . .

Often, we blog for free (though if you do it the way I teach you actually DO get a return on that investment). Once we are published? We do interviews and guest posts for…FREE.

So please. Do not expect to ALSO get our books for free. We are frankly DONE with free.

How can a writer get PAID?

. . . .

So happy you asked.

Digital pays writers the best. Then print copies. NEW ones. Buy on-line or in a bookstore or at an event in person. We writers get a royalty. Depending on the contract, writers can even get paid if a book is checked out of a library. That library PAID for the book and the writer was then, in turn, paid a royalty.

Upon so many times checked out? The writer is then PAID again for a new “copy” of the book.

Want to support a writer in the new year? BUY BOOKS.

Writers are NOT PAID for the purchase of used copies. So while I LOVE used bookstores I want to make a point here. Writers MAKE NO MONEY.

. . . .

To be clear, I do not mind used bookstores. What I mind is the attitude that somehow digital is bad and Amazon is bad whereas “paper” and used bookstores are “cultural” and therefore GOOD and preferable for writers.

. . . .

Want to support civilization? Buy old books. Want to support a writer and his/her family and career? Buy new ones or e-books.

Encourage and educate readers to do the same. Because here is the deal. If we writers go around cheering how AWESOME used bookstores are? How the heck are readers going to know they are benevolently gutting our careers?

They (readers) see us posting the links. They ASSUME we are benefitting. They have no idea how we get paid. Why not direct them to places where we might make money?

Link to the rest at Kristen Lamb’s Blog and thanks to Scath for the tip.

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

A children’s tale that will have adults moved to tears too

13 December 2015

From The Daily Mail:

Somehow it seems both entirely fitting and slightly surreal that I’m sitting with Julia Donaldson and Axel Scheffler discussing how knowledgeable Father Christmas is.

Julia is the slightly eccentric former busker who’s become the fourth biggest-selling writer in British history – despite only publishing her first book when she was 45 – and the first author to record UK sales of more than £10 million for five consecutive years, while Axel is the illustrator who brings her stories to life.

. . . .

 Although the book is aimed at a pre-school audience, parents seem to adore it too. She doesn’t bat an eyelid when I tell her Stick Man’s happy ending is so touching it used to make me weep when I read it to my children.

. . . .

 Like so much of Julia and Axel’s work, Stick Man came about by accident. It was pure chance that Julia started writing books in the first place – she was working as a songwriter when a publisher asked if she could turn her song A Squash And A Squeeze into a book. Axel was the third illustrator she approached, which in itself turned out to be a happy accident for him.

. . . .

 ‘I can’t make the figures tally,’ she says. ‘Axel and I get about three per cent each per book – probably less once you count the foreign sales or the books that are sold at a discount. But even then I still can’t work the figures out. I certainly don’t receive as much as you might think. I’m not complaining but I imagine people think we’re billionaires; that’s certainly not the case.’

Link to the rest at Daily Mail and thanks to Mike for the tip.

PG is moved to tears by these royalty payments.

End the Discount Double-Cross

16 November 2015

From The Authors Guild:

In our last installment of the Fair Contract Initiative, we detailed how publishers’ outdated accounting practices consistently delay and minimize authors’ royalty payments. But that’s not the end of the story. In another common practice, publishers routinely use contract provisions to slash authors’ royalties to mere pennies per copy sold.

Standard trade royalties are based on a percentage of the publisher’s list price. But publishers have come up with a variety of clever methods to base royalties on the much lower net amounts they actually receive from booksellers and wholesalers. Then they add insult to injury by cutting the royalty rate itself by as much as two-thirds. When an author gets paid on less than half the list price, that’s bad enough. When an author gets paid only one-third the normal rate on that reduced price, the word “pittance” seems appropriate.

So-called “deep discount” clauses let publishers offer titles to booksellers and wholesalers at big markdowns. They stipulate that a publisher’s sale at a discount of over 55%, for example (a number that appears to be the new standard), the author’s royalty suddenly drops from, say, 15% of list price to 15% of the far smaller amount the publisher actually receives. A standard deep discount clause looks something like this: “On copies of the Work sold by the Publisher at a discount of greater than 55% from the publisher’s retail price through channels outside of ordinary retail trade channels, the author will be paid a royalty of 15% of the Publisher’s net proceeds.” (Many smaller publishers, which pay royalties on net proceeds to begin with, often slash the royalty rate in half on discounts from 50–70%, and by 2/3 for greater discounts.) Thanks to that drop in royalty payments the publisher makes out like a—well, the word “bandit” springs to mind.

It seems fair that when a publisher sells a book at a deep discount, the author’s take might be reduced proportionally. But there’s no proportionality in many standard “deep discount” clauses.

. . . .

We’ve seen these discount double-crosses applied for sales to book clubs and book fairs, for “special sales” in bulk outside the usual book trade, for large-print editions, for export editions. Let’s say the publisher sells our sample book in bulk for just $2.00. The discount double-crossed author would get one thin dime per copy, a royalty cut of an astounding 93%—even though the net to the publisher would decline by less than 33%.

. . . .

Even crazier, some reductions can apply even to direct sales from publishers to readers, despite the fact that the publisher gets to keep the share of the transaction that would normally go to a retailer or wholesaler. If anything, an author’s royalty rate on such direct sales should be higher than normal.

. . . .

The documented decline in authors’ incomes stems in part from these unconscionable reductions in royalty payments. Unless publishers begin to see authors as partners rather than patsies, many authors will no longer be able to afford to deliver publishers the quality work the industry was built on.

Link to the rest at The Authors Guild and thanks to Jacqueline for the tip.

PG says some authors get excited when they see their books in Costco. Unfortunately, it’s almost certain that their Costco sales will fall under the deep discount royalty structure, generating only tiny royalties.

Then, there are publishers who sell virtually everything at “deep discount” so the author never receives the royalty rates that are listed first and most prominently in their publishing contract.

PG has mentioned this before, but perhaps it bears repeating. During PG’s legal career, he has helped clients with a wide range of business contracts, including agreements prepared by many of the largest and most successful companies in the world.

Standard publishing contracts from large traditional publishers stand out in the constellation of business contracts for their one-sidedness and, in some cases, outright duplicity for anyone who fails to read them very carefully. The way that Randy Penguin and its cohorts write their standard contracts is not the way that Apple, Microsoft, Morgan Stanley, Bank of America, Disney, Intel, Hewlett-Packard, American Express, Merrill Lynch and similar entities write their contracts.

PG doesn’t agree with many initiatives undertaken by the Authors Guild, but he’s pleased to see their latest efforts to shine a light on some of the most abusive contract provisions routinely employed by Big Publishing.

However, the cynic in PG holds little hope that AG’s efforts will bring about any meaningful reform. Treating authors badly is too much a part of the corporate and cultural DNA of traditional publishing to change. These dinosaurs will die before they evolve.

PLR rate to increase by 1p next year

11 November 2015

From The Bookseller:

The British Library Board has proposed an increase in Public Lending Right (PLR) payment made to authors next year, following a decrease in the estimated number of book loans.

The board has recommended the PLR rate should increase from 6.66 pence to 7.67 pence per loan in 2016, a rise of 1.01p, which the department for culture, media and sport (DCMS) intends to accept.

Following the proposal, the Society of Authors c.e.o Nicola Solomon has written to Dominic Lake, deputy director of arts, libraries and cultural property at the DCMS, urging the government to ring-fence the PLR fund and “protect and maintain the library service which is under serious threat.”

Lake said: “The proposed increase has been possible in part due to efficiency savings and increased income, and in part as a result of a reduction in the estimated number of loans of books registered for PLR. The DCMS notes the British Library Board’s recommendation that the 2016 payments are made at an increased rate per loan of 7.67 pence and propose to amend the PLR Scheme accordingly.”

. . . .

“PLR continues to be an important source of earnings for authors and we would urge the government to ring-fence the (already meagre) PLR Fund in any future spending review,” Solomon said. “We are sad to note the decrease in the estimate loans of books registered for PLR, caused, no doubt, by the cuts in library services and the exclusion of some volunteer-run libraries from the scheme. We urge the government to include volunteer-run libraries within the PLR scheme so that true figures for library lending can be recorded and remunerated.”

She went on to say: “We understand that the government is considering plans to bring in PLR payments for remote e-lending. Libraries now remotely lend a significant number of e-books and it is only fair that authors should be remunerated for these. Publishers have been reluctant to ensure that authors receive a fair share of licensing revenues for remote lending. We believe that an author’s receipts from e-book lending should equate to the total earnings the author would have received on a physical copy over the lifetime of the book from the combination of royalties on sale and PLR on every loan. The same considerations apply to the remote lending of digital audiobooks.”

The PLR payment is made to authors by the government each time their books are loaned through the public library system. The amount due to each author is based on a rate per loan, calculated on the basis of the size of the fund available and an estimate of the total number of loans of their registered works, obtained by way of a sample of public libraries in the UK.

Link to the rest at The Bookseller

America’s Most Surprising Six-Figure Jobs

17 October 2015

From Forbes:

Think all of the country’s six-figure salary professionals are confined to corner offices? Think again.

Each year, Forbes examines data from the Bureau of Labor Statistics (BLS) to find some of the country’s most surprising six-figure jobs, using data from the Occupational Employment and Wage Estimates released annually for more than 800 occupations, refined by geography and industry.

. . . .

Highly-trained stargazers–those who “observe, research, and interpret astronomical phenomena to increase basic knowledge or apply such information to practical problems”–can earn as much as $162,630, with California paying the most for analysis of its skies. As a group, the more than 1,600 astronomers in the U.S. earn a mean annual salary of $107,140.

. . . .

Some writers and authors–even those without a bestseller to their name, as yet–also bring in annual earnings that might raise a few eyebrows. The mean annual salary for preparing “scripts, stories, advertisements, and other material” is $67,870 with the top 10% earning an average $114,820, annually.

Link to the rest at Forbes and thanks to Meryl for the tip.

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