Royalties

You can’t buy that! The great e-book royalty war

28 March 2014

From Salon:

A recent lawsuit brought before the U.S. District Court in New York offers readers a glimpse into a battle raging behind the scenes in traditional publishing. The dispute, between authors and publishers, has been going on for several years and there are times it affects which titles you’re able to get as e-books.

Much of the e-book market is for new titles, but by no means all. The first e-books I wanted to load onto my new tablet were classics I hoped to reread but found too bulky to lug around in print form and old favorites I wanted to revisit.

. . . .

However, if I wanted to reread the 1973 YA classic “Julie of the Wolves” on my iPad and I was shopping before 2011, I would have been out of luck. The author of that novel (about an Eskimo girl who runs away from home to live with a pack of wolves), Jean Craighead George, could not come to terms with HarperCollins, the longtime publisher of “Julie.” Like most large, traditional publishers, HarperCollins insisted that George accept a 25 percent royalty on digital sales of her book, a cut George considered too small. Instead, George opted for Open Road Integrated Media, a company founded with the express purpose of bringing backlist titles to the e-book marketplace. Open Road offered George a deal in which she received half of the proceeds from the sale of “Julie of the Wolves.”

HarperCollins then sued, claiming it retained the right to publish “Julie” as an e-book, and — because of the wording of George’s 1970s contract — they won. But the results (and the rather complex finer points) of that particular case are less important that the essence of George’s choice: 25 or 50 percent. At one time, several publishers allowed 50 percent royalties on e-book sales, but today, the five biggest book publishers are holding the line at 25 percent.

Authors and their agents are fighting tooth and claw to move back that line. Their argument, as expressed by Susan Golomb, agent for such writers as Jonathan Franzen and William Vollmann, is that, with an e-book, “all the hard costs of publishing have evaporated. No printing, binding, warehousing, shipping. They have no costs.” Many authors are willing to hold out on agreeing to the publication of e-books until publishers’ terms improve.

. . . .

While literary agents tend to be vocal on this topic, the publishers I contacted, with the exception of Dennis Loy Johnson, publisher of Melville House Books, were unwilling to speak on the record. As a small press, Melville House pays even smaller e-book royalties than the majors: 20 percent. However, Johnson says that e-books constitute such a tiny part of the company’s sales that this has not been a great bone of contention. “Showrooming is real,” Johnson said, referring to book buyers’ habit of browsing in physical bookstores to find out about interesting new titles, then going online to purchase an e-book at a lower price. “In a way, the print book is an advertisement for the e-book and the e-book royalties subsidize the expense of getting those print books out to the stores where people can discover it.”

. . . .

Publishers also argue that the money they make on backlist titles like “Julie of the Wolves” funds the risks they take in publishing new authors. They see it as a model a bit like that of a health insurance company, where the contributions of people who use fewer services even out the costs of the people who use more.

Link to the rest at Salon and thanks to James for the tip.

Spread ‘Em Wide

27 March 2014

From an agent via Brillig:

One of the reasons I have spoken a lot this week about royalties:  well, information is the mother’s milk of literary representation, and along with the quality of the book itself, the three most important pieces of information we can use to sell an author are (1) the author’s bibliography and biography (2) reviews (3) sales history.  Furthermore, if you want to gauge how much the market might pay for an established author you have to have a handle on actual expenses for printing books vs. actual revenue from selling them rather than royalties paid. And how do we figure out what an author’s sales history is or how much revenue and expense the publisher has in printing and selling books, in both print and electronic forms?  Well, we gather that information from royalty statements.

And I learned early in my career at Scott Meredith that sales information isn’t well kept by stacking piles of paper in a filing cabinet.  Those Penguin statements I was telling you about, that told you only the quantity of books “sold” in any given six month period — well, back then we had many Ellery Queen books available in Penguin doubles, and if someone wanted to figure out how many Ellery Queen novels were sold, it meant collecting years with if little sheets of paper and manually adding up columns and columns of figures.

Suffice to say when I finally had a computer at my desk in the early 1990s, things changed.  I could at least put the figures into a word processing document so they could be added without having to retrieve little pieces of paper from the filing cabinet.  Eventually that gave way to tables within the word processing program, and eventually to tables in a spreadsheet.

And for a variety of reasons, not just out of habit, we continue today to process every incoming royalty statement on to our computers, just like I started to do over 20 years ago when I first had a computer on my desk.

. . . .

Publishers make mistakes.  It doesn’t hurt to check their math, and spreadsheets enable us to do this.  Assuming, of course, that we set up the spreadsheets correctly.  There is this tendency to trust that the computer generated very official looki royalty statements the publishers provide always have the correct royalty rates.

As discussed in my previous post on current royalty statements, most are still seriously lacking in cumulative information on copies shipped and copies returned, and it’s still very 1989 in needing to track that information someplace other than on piles of paper hiding in a file drawer for years or decades.

. . . .

Each publisher’s royalty statements are different, and the royalty scenarios can be different within a publisher for mass markets, trade paperbacks, hardcovers, audios and e-books, so we have to have lots of different spreadsheet formats.

The benefits are invisible.  The company that is doing the Mistborn video game needs to go to its bankers and needs information on Mistborn copies sold for Brandon Sanderson, or the screenwriter with an option on Elizabeth Moon’s Remnant Population needs some information to present to producers with her screenplay, or we want to rough out a profit & loss statement to try and guess how much money DAW books can pay for the new Jim Hines, and we can do those things quickly and easily because we have impeccable spreadsheets.  But it is very easy to separate out those benefits from the time, heavily concentrated during the twelve weeks of royalty season, when it seems like we do nothing all day but spreadsheet royalty reports.

. . . .

High maintenance.  The information doesn’t flow up-hill on its own, so every time a publisher comes out with a new edition of a book we have to set up a new table and then plug the information from that table into at least one location in a summary table.

Link to the rest at Brillig

Yet another way Big Publishing is stuck in the Seventies. In the 21st century, friends don’t make friends key numbers into spreadsheets.

They’re not fancy, but Amazon provides monthly royalty reports in the form of spreadsheets. You don’t have to be much of a numbers guru to set up a master spreadsheet that will update all sorts of analyses, complete with graphs, when you load another month’s worth of sales data from Amazon.

Then suck those numbers into a database where you can really rock.

Update on Norilana Books

17 March 2014

A few days ago, a post about a bizarre IndieGoGo campaign to raise money for a publisher to pay royalties which she had spent on other things generated a lot of comments on TPV, most of which were highly critical.

Here’s a new post from that publisher on Facebook:

IMPORTANT – I have made the decision to shut down the Indiegogo campaign.

I have also just contacted all my authors that I will be cancelling their books by April 1, 2014. This is to give them time to transfer titles if needed into their own or other publisher LSI accounts.

As for royalties owned, I will be working now to repay them all.

Meanwhile Norilana Books will only publish public domain and my own work.

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

PG has received several emails suggesting that IndieGoGo shut down the campaign due to complaints of fraud.

When PG wrote this, the IndieGoGo campaign is still appeared to be up, however, with the following new announcement by the publisher:

I have made the decision to CANCEL this campaign. ALL contributions will be refunded to everyone by Indigogo.

Vera

********************

In Brief…

 

I screwed up.

I take full responsibility, and it is all my fault.

 

Please Help Me Pay My Wonderful Authors the Royalties Owed Them!

15 March 2014

From IndieGoGo:

I am Vera Nazarian, two-time Nebula Award Nominee author, award-winning artist, publisher of Norilana Books. In 2006 I singlehandedly started a small independent press Norilana Books, with about 300 paper print POD (Print-on-Demand) titles in print, mostly classics of world literature (about 90% of the complete catalog), and a few of my favorite contemporary genre authors.

. . . .

Things were going well the first few years, and I was promptly and happily paying royalties to all my wonderful authors, and releasing handsome paper print editions of their works in hardcover and trade paperback. And then the economy crashed, while at the same time, a series of personal misfortunes struck.

Within a very short period of time I was faced all at once with the cancer of my mother, death of my father, the loss of my home to foreclosure, bankruptcy, a cross-country move from California to Vermont, and having to start my life over on a severely reduced income, after having to undergo major life-saving surgery myself.

At the same time, the publishing industry started to change rapidly, with the advent of ebooks and ereaders, and paper print sales dropped considerably, so that my already inadequate income was reduced to about one third of what it had been.

. . . .

But this fundraiser is not about me…

It’s about the wonderful Norilana Books authors who need to be paid their long overdue royalties. As months went by and I was struggling just to survive, I was no longer able to pay my authors the royalties owed them.

My authors have understood my dire situation and have waited patiently throughout all this—are still waiting. All rights to their books are theirs, and some of them chose to exercise their reversion, while others are still with me and my tiny press because they prefer for their books to stay in print in their current editions.

Regardless, they all need to be paid as soon as possible—all the back royalties, down to a cent.

Link to the rest at IndieGoGo and thanks to Devin for the tip.

Allow PG to translate: “I spent all the money that I should have paid to authors and now I would like the nice people who come to IndieGoGo to give me more money so I can pay the authors (unless something else comes up in the meantime).”

PG strongly recommends that if you want to help any of the Norliana Book authors, you track the author down and send them a payment directly rather than trusting someone who has already stiffed the author to make that payment.

At least in the US, if a publisher runs into financial problems, authors stand at the end of the bankruptcy line with other unsecured creditors, likely receiving little, if any, of the royalties owed to them. To add insult to injury, the authors’ publishing contracts may be purchased for a pittance by some third party who may not be any better at paying royalties than the bankrupt publisher was.

The most common early danger signs are delayed royalty payments caused by “accounting problems” or “bank errors.”

Unfortunately, with the shakeout underway in traditional publishing, PG predicts more publisher collapses in the future. Small publishers are like other small businesses – some are very well managed and others are not. Large publishers are like other large businesses – some are very well managed and others are not.

Unfortunately, in the middle of a major technology disruption like ecommerce and ebooks, even well-managed businesses can be taken down.

Two indie authors are making 8 figures annually

27 February 2014

From Joe Konrath and another commenter via the comments on Joe’s blog:

Joe Konrath said…

I think media generally will be microscopically fragmented.

I agree. And it’s a smart prediction.

But while we’ll have fewer blockbusters, and more of the niche artists sharing that pie, there will still be 80/20 rules and bell curves and occasional big hits.

And we do have some self-pub authors making 8 figures. I’m on the low end of the KDP bestselling author lists.

. . . .

Anonymous said…

Anon BB here again:

Joe said, “And we do have some self-pub authors making 8 figures.”

With the greatest respect (and you know we’ve known each other for years) … really? Plural? My ear is as close to the ground as anyone’s, and I know this business backward, and I have dozens of clued-in friends in the KDP community, and I have as many – or more – friends in certain Seattle offices as you, and that’s the first such claim I have ever heard.

The thrust of the OP was all about how authors should have accurate information. Is that really accurate? If you can’t provide links, have the person or people e-mail me privately, and I’ll retract right here in bold capitals.

. . . .

Joe Konrath said…

really? Plural?

Two is plural. So yes. :)

Keep in mind that while you’re privy to what the best of the best NYT bestsellers are making, I’m privy to what many of the top self-pubbers are doing. Many of them have contacted me directly.

But it isn’t my business to reveal their names, any more than I’d reveal your name.

It’s also fine if you don’t believe me. Prior to www.authorearnings.com, there were a lot of people that didn’t believe how big this shadow industry was. Some see the figures and still don’t believe.

Link to the rest at A Newbie’s Guide to Publishing and thanks to Tony for the tip.

The B&N Report

25 February 2014

From Author Earnings:

In our first two reports, we concentrated on Amazon’s e-book sales. We analyzed the top 7,000 e-books in three bestselling genres [link]. Then we followed up with a look at all 54,000 ranked bestselling e-books on Amazon in a single day snapshot [link]. We now turn our attention to the next bestselling book and e-book retailer, Barnes & Noble. The methodology is the same. Barnes & Noble’s online store lists overall ranking for their e-books, and as with Amazon, current rank generally correlates with daily sales.1 We determined sales rates based on the sales of our own books and from data gathered from other authors. In all cases, the rates we collected were within 20% of each other. Adjusting rates even beyond this margin of error does not alter the percentages of market share shown in our pie charts — it simply adjusts the overall size of the pie.

Last year, Barnes & Noble reported that 25% of the Nook market was made up of self-published works [link]. We were curious to see if this meant 25% of the bestselling titles were self-published, 25% of the sales came from self-published e-books, or if self-published e-book sales accounted for 25% of the gross dollar market. As always, our primary concern here is where authors are doing better, sale for sale. It doesn’t help authors to say that 70% of the book market is in print if only a small fraction of that money ends up in authors’ pockets [link]. What we want to see is the combined effect of royalty rate, sales volume, and sale price. These three factors combine to give us a true picture of comparative earnings, as shown in our pie charts. Let’s see what our spider gathered as it snared 5,400 of Barnes & Noble’s top genre e-books in its digital web:

a1

 

Just as we saw in Amazon’s store, indie titles make up a very large percentage of the bestseller lists. More than half, in fact.

a2

 

Indie titles make up almost a third of Barnes & Noble’s e-book sales as well. The extent to which self-published content dominates Barnes & Noble’s e-book store is even more starkly apparent when the market shares of the Big-5 publishers are shown individually, rather than lumped together:

a3

 

a4

 

The Big-5 publishers still rake in the lion’s share of Barnes & Noble publisher dollars, as shown below:

a5

 

However, publisher revenue is far less meaningful to authors than authorrevenue. And in Barnes & Noble’s e-book store, just as in Amazon’s case, we see that indie authors and small publishers are earning almost as much as all of the Big-5 combined:

a6

. . . .

Far from being an Amazon-only or Amazon-created phenomenon, the market dominance of indie authors can also be seen here at the second-largest e-book retailer, Barnes & Noble. As some have opined, this reflects a much larger consumer-driven economic reality at work. Retailers and industry middlemen no longer dictate to readers what they should be reading. Readers now vote with their wallets, and everywhere we have thus far looked with our spider, readers are choosing self-published works at a higher rate than those by any other publishing entity.

. . . .

Publishing’s print retailers, print providers, and other businesses in the print supply chain clearly have reason to expand and simplify print distribution options for self-published authors. By doing so, they can increase their profitability and ability to serve consumers, while giving consumers the full range of quality content they demand. In fact, looking at the above chart might give Barnes & Noble a reason to reach out to indies for merchandising opportunities, and also to readers in order to promote these works.

. . . .

[A]t Barnes & Noble, just as with Amazon, best-selling indie content is better rated on average than best-selling traditionally published content. Our initial speculation about price correlating to average review score has since been disproven by others, who looked at our data more closely. We may be left with the conclusion that self-published works are outselling every other publisher by dint of readers simply liking them better.

Link to the rest at Author Earnings

PG says, given the generally poor placement of indie books on the Nook Store and its poor search capabilities, it’s interesting that indie book sales patterns for the Nook are so similar to those on Amazon.

The Author Earnings report also raises the widely-circulating, but never confirmed (at least to PG’s knowledge) report that the Nook Store sells top spots on its bestseller lists to Big Publishing’s books.

PG hasn’t commented on the paid bestseller spots before, but, if the reports are true, it reflects one of the dominant reasons why Nook is losing so badly to Amazon.

Customers, particularly online customers, particularly heavy readers, use bestseller lists to help them locate books they will like.

A customer-centric organization would never tamper with bestseller lists because doing so would not improve the customer’s shopping experience and satisfaction. If a customer is less likely to find a book he/she likes, that customer is less likely to buy in the first place, to return as often as he/she would if the store made it easier to locate desirable books or to return at all.

Smart ecommerce companies treat customer visits like gold. They never want to waste a single visit or send a customer away unsatisfied.

However, Barnes & Noble is a creature closely tied to Big Publishing and in Big Publishing, you can work your way onto the New York Times and Barnes & Noble bestseller lists without actually outselling books that aren’t listed. In Big Publishing, what’s best for the customer takes a backseat to generating cash in pay-for-play schemes.

One of the behaviors of traditional publishing that never fails to puzzle PG, regardless of how often he sees it, is that publishers don’t treat authors as exceptionally valuable partners – customers for publishing services, if you will.

Sweet talk often ends as soon as the forever publishing contract is signed. Marketers treat authors like cheap labor with clueless social media exercises. Authors are constantly blamed for poor sales regardless of the failings of the publisher. Royalty reports are a semi-annual insult, not just for the size of the royalty payment, but also for the impenetrable mass of numbers designed to obscure, not enlighten.

On the other hand, Kindle Direct Publishing explicitly regards indie authors as customers for its epublishing platform.

When customer-centric organizations compete with those which aren’t, guess who wins?

Here’s a hint: What would happen if the Seattle Seahawks played the Bayonne High School Bees?

Bombshell ‘American Idol’ Lawsuit Claims Sony Stiffs Carrie Underwood, Kelly Clarkson

21 February 2014

From The Hollywood Reporter via Yahoo Movies:

For twelve years, American Idol has been one of the biggest success stories in the music industry. Even as the reality singing-competition series experiences some signs of aging, there is no doubt that the show has provided an immensely influential promotional platform for undiscovered talent and a sanctuary from some of the industry’s post-Napster blues.

But as shown by a new lawsuit filed on Thursday by 19 Recordings against Sony Music, the story of how the industry has leveraged American Idol into one chart-topper after the next is not without allegations of greed and corruption. The complaint filed in New York federal court and obtained by The Hollywood Reporter also explores some cutting-edge issues on the digital side of the business.

. . . .

19 Recordings was founded by American Idol creator Simon Fuller and is now controlled by the show’s owner, Core Media Group. In the lawsuit, 19, and by extension all of the artists — including Kelly Clarkson, Clay Aiken, Carrie Underwood and Chris Daughtry – who have entered into deals as part of their participation on Idol, claim that Sony Music has been systematically robbing them of millions of dollars in royalties. The lawsuit, seeking at least $10 million in damages, was filed after 19 exercised the right to audit Sony’s books pursuant to recording agreements, and the parties couldn’t come to any settlement.

. . . .

Sony is among the larger music entities that have forged licensing deals with streaming services run by Spotify, Google and Apple.

But the lawsuit says that Sony is accounting for the exploitation of master recordings here as “sales” or “distributions” rather than as “broadcasts” or “transmissions.” The distinction might sound like semantics, but it is nevertheless important. By treating streaming music as sales, Sony is essentially saying that such deliveries are no different than downloads purchased on Apple or Amazon. And with that, Sony would be forking over significantly less money under the terms of the company’s recording agreements — the difference between a 50 percent royalty share for a “transmission/broadcast” versus a fraction of that for a “sale/distribution.” The plaintiff says the discrepancy has resulted in at least $3 million in damages.

Link to the rest at Yahoo Movies and thanks to Eric for the tip.

2013: A Learning Year: Managing Expectations

14 February 2014

From author Jessica Spotswood:

I saw Rachel Hawkins tweet earlier today about how 2012 was a Learning Year for her, but 2013 has been awesome, and I decided to adopt the term. It sounds better than saying that even though some good stuff happened and some really hard stuff happened to me and The Playwright in 2013, in my heart of hearts, this year feels like it sucked and I can’t wait for it to be over.

But then I thought – if I’m calling it a Learning Year, what exactly did I learn? What am I taking away from this?

For the last three years I have been able to write for a living, to support my family with my words. That’s not what I set out to do. When BORN WICKED went out on submission, after my first manuscript had to be shelved, I just wanted someone to buy it. I wanted to see it on bookstore shelves, all book-shaped. I hoped that, maybe, after a few books, I’d be able to work part-time at my admin assistant job at the university where I’d been working for almost 10 years.

Then it sold in less than a week, in a pre-empt, in a major deal. I got to quit my day job entirely. There were a bunch of foreign sales and Penguin rushed bound galleys for reps at BEA and sent out a fancy ARC mailing. It got published 11 months after it sold. There was a pre-publication bookseller dinner tour and a 12-day Breathless Reads tour. It was in Walmart and grocery stores and airports. I’ve blogged a little about the weight of all that expectation. I haven’t written about what happens when the expectations come crashing down.

What happens when you get all those things for a first book….and then the book doesn’t perform to expectations, and that stuff stops? I suspect this happens more often than I think, because publishing is often a total gamble, and people understandably don’t talk about their failures as much as their successes. Possibly I shouldn’t, either. But I’m tired of feeling sad and embarrassed about it, so here we go…

What happens when you get a big book deal, and then your sales are good – really good for a debut, totally solid, with a starred review and good reviews overall – but they are not good enough? They are not bestseller numbers?

. . . .

You begin the hard work of adjusting your expectations, which got wildly inflated by all that lovely optimistic talk at the beginning. But once you get certain things – even if they aren’t even things you wanted at first! – you want to keep having them. It hurts your feelings when they stop happening, even though you tell yourself that this is a business and feelings should not matter. There isn’t really anyone to be angry with – you do not feel entitled to these things, exactly – but it is hard not to conflate your books’ sales with your own self worth. It’s easy to go from your sales are not good enough (What would be good enough? You do not actually know) to your writing is not good enough to you are not good enough.

. . . .

When you don’t get reviewed, or get the marketing that you took for granted on the first book, or sent anywhere, or end up on end-of-year lists – you feel like a disappointment. A failure. Your family and non-writing friends only know about publishing from your experience, and they ask you all the time when you’re going on tour for your next book and where you are doing events and how are your sales and why the new book isn’t in Walmart. You try to explain that most authors don’t do that and most books don’t get that and you were really lucky that first time.

. . . .

The craft – the writing itself – is the only part that is still all mine. The finished product belongs to my readers. The business worries belong to my publisher. But when you’re happy with the writing, no one can take that away from you.

Link to the rest at Jessica Spotswood and thanks to Bill for the tip.

Some Economic Straight Talk: The Economics of Frugality, Abundance, and Creativity

14 February 2014

From author Robin LaFevers on Writer Unboxed:

When I was growing up, in addition to avoiding the traditionally forbidden topics of sex, politics, and religion, my family added money to that list. I suspect my family was not alone in this.

The thing is, it’s nearly impossible to make solid, informed decisions about our careers when so much of the financial realities are clouded in uncertainty or hyperbole. There has been a lot written recently discussing the earning potential of self published authors, but what do the earnings of a slow build, mid-list, traditionally published author look like?

. . . .

Real, solid numbers and info on advances and traditionally published earnings information can be hard to come by, in part because few people like to discuss their finances in so open a manner, but also because of the nature of publishing. Many contracts preclude the author discussing their advance, and even if it’s not forbidden, many are hesitant to do so, afraid they will dispel the romance and mystique of their actual place in the publishing pecking order.

Since my own experience is with middle grade and YA, that is what I am most familiar with. If there can be said to be any averages in publishing, then the average kid lit advances look something like this:

Middle grade (ages 8-12) advance $4,000-$10,000

YA advance $7,500-$25,000

. . . .

Which brings us again to the question of what those numbers might translate into over time. Well, Dear Reader, they probably look something like this . . . (prepare to be underwhelmed)

I sold my first book in 2002, and my writing income over the years has been as follows:

2002 $ 5,187

2003 $ 8,353

2004 $27,500 (Yay! Sold a trilogy)

2005 $ 4,142

2006 $ 12,841

2007 $15,282

2008 $28,470 (I had to augment that writing income with 2nd job because we had two kids in college that year. Ouch.)

2009 $58,516 (This was a BIG school visit year and I sold a second series. I also quit that second job.)

2010 $ 47,590

2011 $ 64,579

Link to the rest at Writer Unboxed and thanks to Bill for the tip.

7 royalty cheques that’ll make you lose your faith in the music industry

13 February 2014

From AUX:

You shouldn’t need us to tell you that the music industry—namely, how it chooses to monetize songs—is hopelessly broken. Despite the fact that vinyl sales are increasing, the traditional ways that artists made money (namely, by selling records and touring) are yielding less and less.

. . . .

How little does the music industry pay artists? Shockingly little. Spotify, the dominant streaming music source in the U.S., is leaking money. They reportedly dole out 70 per cent of their revenue to royalties, and while that number seems high, consider this: each song stream pays an artist between one-sixth and one-eight of a cent. One source claimed that, on streaming music services, an artist requires nearly 50,000 plays to receive the revenue earned from one album sale.

. . . .

Darkest Hour guitarist Mike Schleibaum recently posted this photo to Facebook with a cheque for a single penny. It would’ve cost more to print and ship the damn thing. “This is what we call, “BIG TIME!,” he wrote on Facebook. “Don’t worry..big news is coming but for now..we got to spend all this cash!”

a1

Link to the rest at AUX and thanks to Nick for the tip.

As some authors know, many publishers avoid embarrassing photos like this by not paying any royalties until they total $25 or more.

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