Publishers and Agents are Trying to Figure Out How to Skin Their Own Authors

This content has been archived. It may no longer be accurate or relevant.

Another good email on the publishing business from Dave Farland just arrived.

I’ve picked up a ton of new readers recently (Welcome!) who may not know about Dave. He’s a long-time prolific author and taught university creative writing courses for Stephanie Meyer and Brandon Sanderson and many other successful authors. Check the David Farland category on this blog for more words of wisdom from Dave.

It’s been interesting to watch the evolution of Dave’s thinking about traditional and indie publishing over the past few months. Originally, he was very wary of indieworld, but lately, he has become much more focused on Big Problems in Big Publishing.

Those who have read Dave’s emails over time will notice a much different tone in his latest than those of as little as 4-6 weeks ago.

Passive Guy is going to excerpt more than he usually would because what Dave writes is important and this email isn’t up on the blog where Dave’s emails usually appear. Links to everything are at the end, as usual.

Excerpts:

A couple of weeks ago I wrote about the future of publishing. I’m afraid that some people felt that I was too gloom-and-doom. I really do hope that you understand that I’m not predicting a gloomy forecast. I’m telling you that things look as if they are going to change dramatically and that there are great opportunities ahead, but you have to seize them, and you can’t blithely go down the same old path we’ve always used, or you’re going to run into quicksand.

However, there are those who argue against my predictions, and I can’t say that they’re wrong. As Yoda said, “Always in motion the future is.” One author (whose works and intellect I admire) disagrees strongly with my notions, and basically said, “To all those folks who argue for the rise of e-publishing, what are your data points?” He then reasoned against my beliefs—using very outdated information. As they say in computing: “Garbage in, garbage out.” If your data is bad, it doesn’t matter how well you reason.

So let me first just reiterate my position, and then let me talk about why I think we’re headed for a massive change. I said two weeks ago that I suspect that traditional publishing is going to dwindle over the next few years, facing some very tough times, and I said that authors should exercise extreme caution when looking for agents or publishers. Instead, you should look to e-publishing and enhanced books. Specifically, you need to figure out how to market yourself at a time when every other author is also going to be out publishing his own books, creating a massive amount of white noise. (It’s already happening. According to Bokwer’s the number of self-published titles last year rose from about 1.033 million in 2009 to 2.766 million in 2010).

. . . .

My friend argued, for example, that e-books were insignificant and made up only about 1% of sales. That data is way out of date.

Four years ago in January, electronic publishing did bring in about 1% of sales. Three years ago, it brought in about 3% of sales. In January 2010, that number rose to about 13% of sales, and currently, as of May of 2011, we’re at about 27% of sales. Now, that’s an estimate. The major publishers are claiming somewhere between 22 and 26% for fiction sales, but that doesn’t count the self-published e-books. Right now, Amazon.com says that for every 100 books they sell in hardback and paperback combined, they’re selling 105 books electronically. As of the middle of May, they say that e-book sales are exactly 300% higher than they were a year ago at this time. Do you see what’s happening on the bell curve?

. . . .

How many frequent readers need to buy e-readers before we lose half the market? Fewer than 60 million people in the US. How soon will that number of e-readers be on the market? By February of 2012, the heavy readers should have their iPads, Nooks, Kindles, and so on.

Now, as the market competition heats up, we’ll see prices on e-readers to drop, and more infrequent readers will begin to buy devices. Some schools began purchasing e-readers last year instead of text books. Why? Because it is cheaper. If you give a student an e-reader and purchase licenses from someone like MacMillan for all of the student’s textbooks, you’ll most likely get a “student discount” that will make the e-books cheaper than buying textbooks. These will be lighter of weight than regular textbooks, which gives the advantage that students no longer have to lug heavy books around, and the text can change each year to keep up with the newest trends in science, history, sociology, and so on. In short, students will be trained to read off of e-readers, beginning now.

Oh, and how will those students buy books? Off the e-readers that the school provides, of course! Kids want to save money, too. Expect the YA and middle-grade e-book markets to go ballistic in four years.

. . . .

What is the future of e-books? As more people switch to e-books, then publishing paper becomes a very dicey proposition. As publishers face higher returns, they will need to raise prices. Anyone for a $12 mass-market paperback, or a $40 hardcover novel? As prices rise, even just a little, readers will begin to wonder if they should be buying electronically. After all, book prices are much lower online, even for your favorite authors.

. . . .

So we’re facing some changes. I’ve already given the data points about how this will affect New York publishers. Last month, they got hit with a 40% decline in hardcover sales from just one month to the next. Now, part of that was due to the loss of a major chain. Another part was due to incursions by e-book sales. But there seemed to be other reasons. One publisher in England went so far as to say that it may have been reflective of a “weak publishing schedule.”

The publishers lost money that month. There’s no way around it. For their big titles, they most likely ordered their copies from printers in Korea or China some five or six months earlier. So now the books sit, unsold. Worse, the publishers have pre-ordered print runs ahead for the next four or five months already, and in some cases, the books are on the ships, making their way to US ports. A lot of money is going out the window.

. . . .

So the publishers are going to have to figure out how to stay afloat, and they’ll make grabs for e-rights. Look at the blogs for Kris Rusch and Dean Wesley Smith. They’re telling you some of the news about what is going on, and there is plenty of ugly information that we can’t share without violating confidentiality agreements. As I said before, the book stores are selling fewer books, and they can’t pay their distributors. The distributors can’t pay the publishers, and so the publishers are trying to stay afloat. The only way to do that is to try to get more money out of the authors.

With that happening, literary agents are doing the same thing. Lots of them are offering new plans, in which they publish your e-books. So they’re trying to figure out how to skin their own authors.

. . . .

Bill Gates became the richest man in the world because he was selling raw information. That’s what e-books are, a commodity with very little production costs and no shipping or handling fees. If you’ve already got the files for a book sitting on your computers, then producing the e-book is almost pure profit. Now, you might not sell tens of thousands of copies in a month, but what if a title sells just a thousand copies per month—for the next hundred years?

Every e-book is a potential goldmine, and every publisher is going to demand that they get the author’s e-rights. Some publishers have already simply begun the strip-mining process, putting the books online and selling them, even though the author’s rights reverted long ago. In other cases, the publishers are claiming that they own e-rights to any book that they’ve ever published.

. . . .

But your publisher is a company owned by a mega-corp that handles dozens of other companies—movies studios, television networks, record companies, book publishers, and so on. These are entertainment empires. The empire builders have their own way of thinking, and they don’t give spit about you. You are a manual laborer in their eyes. They just want to figure out how to make as much money as possible off of your sweat.

. . . .

Because of this, you have to be very careful right now in choosing an agent. Since the publishers are refusing to negotiate on e-rights, the agents are finding that their own power base is eroding. There are NO super agents like we had in the 1970s. They can’t do for you what they once did. The agents no longer have their own private contracts on file with the major publishers. Hence, many savvy writers are leaving their agents.

I’ve heard from a number of authors that many agents “aren’t even reading works by new authors.” They don’t see the point. I’ve heard from established authors that publishing agreements are “moving very slowly.” A book that used to sell in four weeks now takes six months. Checks that would have been cut in two weeks now take an additional six months. Advances for major authors are taking a nose-dive. All of this indicates heavy cost-cutting measures by the publishers.

Agents are losing both negotiating power and money in this fight, and we can expect that to continue.

. . . .

Your agent is not your publisher. Don’t give them 50% of your e-rights.

Your publisher doesn’t deserve all the money from your e-book either. If they demand it all, then maybe your publisher shouldn’t be your publisher. Having said that, I hope you realize that nearly ALL publishers are demanding your e-rights—every major publisher in New York.

Which is why I have to warn you that ANY publishing deal that requires you to give up so much of your e-rights is a terrible deal. It may well be that this is the time to walk away from the traditional publishing model altogether.

You can sign up for Dave’s free emails here.

Here’s a link to a website that usually puts up Dave’s email newsletters, but didn’t have the latest one excerpted above when I wrote this post.