Category Archives: publishing industry

Beating Free

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monk

February 1973 was a month of uncertainty for me. I was ready to graduate from college in a few months and had absolutely no idea what I wanted to do when I “grew up” (a state of mind which continues, verily, to this very day!). I somehow found myself being interviewed by the head of an insurance firm, a very nice guy who sensed almost immediately, as I had, that putting me in his office would be inserting a round stick of dynamite into a square…well, office. We had a cordial conversation anyway, and at the conclusion of it he showed me a blocky machine that was hooked up to a television. “This,” he said, “is the future.” He picked up a rectangular object that looked like an audio cassette on steroids, inserted it into the machine, and turned on the television so we could watch a gentleman nervously give a lecture about actuarial tables and premiums and whole life insurance and the like. What I was being shown was something called a VCR in U-Matic format, the forerunner to Betamax and VHS and the grandparent to DVDs and yes, streaming. I was assured that within a few years there would be one of these machines, or something like it, in every home in the country. My new friend probably had no idea how that machine, and its descendents, would change things. I didn’t either, but I felt that ground move. This thing was a game changer.

I had the same feeling, and not in a good way, when I was wading through my emails yesterday and found a news release about a company named CzurTek (pronounced “SEE-zer Tek”) which has developed a relatively high-speed book scanner called “Czur” (just like Julius) which it appears to intend to sell for around $169.00 and which it is attempting to bring to market by crowd-sourcing.

czur scanner

The video of it is impressive, for sure; Czur does involve some human interaction, but nothing that a semi-sober fraternity brother couldn’t handle. There is a lot of talk about algorithms and the like that I didn’t understand but the legal part of me got went on high alert: the bad kind. I remember what happened, and is still happening, to the music industry, when CD players and copiers started appearing as basic equipment on home computers. “RIP AND BURN!” became the catchphrase of the day. It used to be that if you wanted to have a bestselling album you had to sell a million copies or more in a week. A lot of people did that, too. Now, not so much. You can hit the top of the charts on some weeks by bringing home unit sales of five figures. People don’t buy a lot of music anymore; they go to peer-to-peer sites or they stream it but they don’t buy a lot of it. It’s tough to beat free. It didn’t happen overnight, but it happened fast enough that no one knew what was happening. I think that we are about to see the same thing happen, and with books this time. And it comes at a time when the industry, including the publishers and authors, can’t take the hit.

The folks at CzurTek know exactly what they are doing. The video I have linked you to above seems benevolent enough — there’s talk of copying rare and delicate manuscripts to preserve them, for but one example — but when you go to their Facebook page the 800-pound bear in the room is too much to ignore. Witness this, taken from the August 30, 2015 post off of CzurTek’s site, which infers that the idea for Czur sprung from the high cost of textbooks:

Normally one textbook is more than 100 dollars, and sometimes a professor will ask us to buy 6 or 7 of them.

In order to solve this problem, some of my schoolmates would buy second-hand books, or photocopy them. I once borrowed my roommate’s camera to take pictures of an entire book. It was really tiring, and hard to get high-quality pictures when the pages are curved.

Two years later….

in Shenzhen, we decided to have a go at solving this problem. After several attempts, we found that digitizing the books seemed to be the best approach. However, a book scanner costs tens of thousands of dollars, which is beyond the reach of ordinary people. So we decided to create one ourselves! Over the past 3 years, in the course of visiting numerous factories and testing our algorithm hundreds of times, we have turned ourselves into specialists in this area.

Now….

In other words, if a book is too expensive, just copy it. If it’s due back at the library and you’re not done with it, copy it. If the books are too darn heavy, copy them. Edit the text and put it in your essay! The CzurTek website even talks about building your own library for free, of course.

I’m not without sympathy, up to a point. College textbooks are extremely expensive. There are reasons for this, particularly with respect for those dealing with higher mathematics, biology, and physics, but that’s a topic for another time. But does the cost — or that they’re too heavy, or due back at the library — make it okay to steal them? Just copy them.

This isn’t the future. It’s already here. There are a bunch of book scanners on the market right now that don’t quite do the job well, but have the basics down. If Czur isn’t the gamechanger it appears to be, someone else will make one that is, and make it soon. The issue then becomes whether you want to spend a year of your life creating something that gets copied and probably illegitimately disseminated as soon as it is published, with no compensation to you. To go back to the music business: musical artists have found other revenue streams, such as licensing their music to film projects, tee-shirts, bumper stickers, tours, and the like. Their music? The newbies give it away, in the hope that someone will come to their concerts and buy merchandise. What are authors going to do? Tours? Please. Do you really think that someone is going to buy a ticket to listen to (fill in the blank) read or give a talk. Tee-shirts? C’mon.

I’ve prattled on a bit too long on this, and I apologize for that. I see this, however, as a significant problem. Am I Chicken Little? Or am I Dr. Miles Bennell? If I’m right, what are we — you, me, and the publishing industry — going to do about it? You tell me. And as for you folks at CzurTek…how would you feel about someone reverse engineering Czur, and giving it away for free? Sound good?

 

Literary Agents in the Digital Age

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Gray-eyed Athena sent them a favorable breeze, a fresh west wind, singing over the wine-dark sea. – Homer, The Odyssey
My friend, literary agent Wendy Lawton, recently wrote an intriguing post wondering about her own obsolescence. It is an honest and open look at the current state of affairs in traditional publishing and what that could mean for agents in the future.
This prompted a few musings of my own, from a writer’s point of view. To begin, I dip into the realm of myth.
The traditional publishing industry has long been a Forbidden Kingdom. Writers on their journey toward publication had almost no hope of entering the gates alone. They had to find someone willing to show them the way, someone with influence within the walls.
Enter the agent as mentor. That word comes from a character in The Odyssey who guides Telemachus through the dark world. It turns out later that Mentor is really the goddess Athena in disguise. She has special powers to help, and so do agents seeking to get writers their own set of keys to the Kingdom.
But here is the question: what if a new kingdom is discovered by Telemachus? And what if access to this kingdom is open to all? Does Telemachus need his Mentor anymore?
If he still wishes to enter the Forbidden Kingdom, the answer is yes. But there have been reports flown out via carrier pigeon that this Kingdom is in turmoil. There is chaos and infighting and confusion and bonfires. At the same time, word is that in the new kingdom a revolution is underway. It has no walls or gatekeepers. Writers are dancing through tulips and earning gold sovereigns all by themselves.
Why should Telemachus tarry outside the forbidden walls when he can join that dance on the other side of the river?
This is the question of the moment for writers: pursue the “forbidden kingdom” of traditional publication? Or go join the rebels?
If the former, which is certainly a free and legitimate choice, you need a mentor, a guide. You need someone who: knows who is buying what, can brainstorm a project with you, can negotiate a contract, can collect your money, can buck you up when you’re down, can feed you valuable information about the industry.
If you decide to go solo, you will need to fill your own gaps in “quality control,” and believe me, you’ll have them. You’re on your own, and not every adventure into the forest ends happily. Start the journey with your eyes wide open.
As e-books continue toward becoming the primary delivery system (you no doubt saw that Amazon sold four times the number of Kindles on Black Friday this year than they did last year). agents become crucially important in the negotiation of contracts. For example, the agent should fight against draconian option and non-compete clauses. There should be real give and take with a publisher, keeping the long view and the writer’s best interests in mind.
But as we all know the traditional publishing industry faces challenges of major proportions, and that has affected agents. Advances are low and not as many deals are being struck. Thus, some agents have become de facto publishers, which has raised concerns about conflict of interest. Others are actively seeking to secure the best e-rights options for their clients.
Agents are human. Not all of them are good. I’m fortunate in that my own agent, and the agents I know personally, are superb professionals. But there are lemons out there, so know this: having no agent is better than having a bad agent. And the best agents will see the value in the author having a platform-building presence on the indie publishing side of the valley.
Like everyone else in the publishing game, agents are going to have to explore ways to adapt to the increasing rate of change. But they will continue to have a role to play because traditional publishing still exists.
What do you think the future holds for agents? 

Publishers Trying Stuff

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We’ve been all over the e-book revolution here at TKZ. Last month I asked what the publishing industry would look like in six months. We’re starting to see some things taking shape.
First, the news. The publishing industry’s first quarter stats are in, and here’s the headline:
E-book sales are up 159.8%. Adult hardcover and mass market paperback sales are down 23.4%.
If you were an American car manufacturer and you saw that sales of Japanese made cars were up 158.8% and sales of American cars were down 23.4% in the first quarter, what would you do? I’ll tell you what you would do. You would run to the federal government and ask it to bail you out.
Traditional book publishers can’t do that. (Well, I guess they could try, but it would be a tougher sell than a Charlie Sheen self-help book.)
So what should they do? Try stuff. Innovate. Move fast.
There’s a problem, though. It’s not easy for major industries to change. Publishers have been operating under a model that is a hundred years old. But the market does not care. It is merciless. So adapt or be left in the dust.
This week one of the major Christian book publishers, Tyndale, announced a “digital first” imprint. They are going to bring out four fiction titles in July that are e-book only, by new authors. Then they’ll add non-fiction titles. If a title performs well, they will consider giving the author a print run.
Tyndale issued a press release that read, in part:
Lisa Jackson, Associate Publisher explains, “The world of publishing is shifting rapidly, and it’s important that we as publishers deliver content in as many ways as possible. The Digital First project allows us to get fresh, new voices into the marketplace more quickly and efficiently than ever before.”
“I am very excited about this new initiative,” says Ron Beers, Senior Vice President and Publisher. “Tyndale has always been known for its innovation. Now we are working hard to be at the leading edge of the digital publishing revolution and to use that creativity and expertise to most effectively launch new voices into the marketplace. We are one of the few houses that has invested heavily in in-house digital expertise and this has allowed us to be more nimble yet strategic in bringing digital content to market.”
***
Looking at this from a business angle, this seems like a solid move. Whether this will be a net positive for the bottom line cannot be predicted. There are too many variables and the landscape changes almost daily. But it’s proactive and “outside the box,” and that’s what it’s going to take to survive. Plus, it lowers the risk of finding new authors the old way, via advance and print runs and hoping to sell through. It’s like a farm system.
Now, what about the writers? How is this deal for them? I have not seen an actual contract, but I have heard informally that we’re talking very low advances with a higher percentage on the back end, between 30 – 50% royalty.  IOW, shared risk and reward.
Seems like a win-win.


Yet the stats above indicate that print is in a downward trajectory. So will being “in print” mean the same thing a year from now? Will there be enough shelves for the new writers to occupy?

What do you think? 

What Will Book Publishing Look Like in 6 Months?

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There’s an old joke about a guy who goes to see his surgeon. The surgeon has bad news: they’re going to have to operate. The guy says he can’t afford the operation. So the surgeon says, “No problem. For a hundred bucks I’ll touch up the x-rays.”
Right now a lot of people think touching up the x-rays is the way to save traditional publishing. They know that major surgery is required but have no idea where to cut, what to look for, or how to make it better.
It’s really no one’s fault. Stuff happens. In this case, the stuff is e-publishing/reading, and it has exploded faster than most thought possible. And big industry is not built to change on a dime. It’s not even built to change on an open road, especially when there are all sorts of trails and byways it has never explored, or even been equipped to explore.
Meanwhile, a bad business spiral only increases in speed.
Bookstores are closing. Revenues for print books are way down. That means fewer books published on paper. Even those that are P-published have fewer places to go. They sure ain’t going to Borders.
The trend line for print is not good. According to the American Association of Publishers, in January of this year hardcover sales were down 11.3% and mass market paperbacks down 30.9%.
Further, the old way people used to find books –- browsing and being hand-sold by trusted folks in physical bookstores — is over. Gone. Finito.
Forever.
The big publishers didn’t want that to happen. 
But it has.
And we have to acknowledge the reality and not get out the Sharpies to cover spots on the x-ray film. (see also, “Sand, Ostrich Head In”)
The ever insightful Mike Shatzkin sums it up:
I take no pleasure in the big publishers’ pain. It is a matter of professional pride to me to not allow my preferences to color my predictions. I love bookstores and libraries and consider the top management of the big trade houses to be intelligent, ethical, and creative people. I consider many of them friends. The fact that the transition from reading and distributing print to largely reading on screens and distributing print online makes much of their skill sets and business models obsolete is not their fault. Nor is the fact that preserving their old business, and the cash flow it still yields, sometimes interferes with inventing the new one.
The next 4 – 6 months are critical for the survival of traditional publishing in some form. It will not look like it does now. And it will never again be “the only game in town.”
Meanwhile, writers write. We know there is money to be made in self-publishing e-books. I’m experiencing that now with WATCH YOUR BACK.    
This pleases me, because it is the most elemental of transactions, just like when Og the caveman got a year’s worth of fox furs from the tribal chieftain for telling stories about heroic fights with the killer mastodons. We can go directly to readers, who can download us directly to their devices. 
There are many, many things traditional publishers do well, and have for a long time. But that is a bit beside the point. Typewriters did many things well, too.
Here’s the $64 billion question: Which traditional publishers will turn out to be like Apple and which like Underwood? What will the new industry standard look like? 

Brainstorming on the Beach

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The Novelists, Inc. conference Brainstorming on the Beach was held at St. Pete Beach on Florida’s west coast. It is the first writers conference I’ve attended where no one handed out promo materials, dropped their bookmarks on a promo table, or talked much about their work. That’s because all of Ninc’s members are multi-published career authors. So you don’t come to this conference to promote yourself. You come to learn and schmooze with fellow authors about issues affecting us all.

This year’s conference brought in many illustrious speakers, pundits in the publishing industry. Here are some of the highlights of what I learned in no particular order:

    *      Everyone will be reading on their mobile phones in the future. What will this mean for the art of writing? Smaller paragraphs, shorter books, scenic descriptions perhaps replaced by video.

    *      Ebooks will be the next mass market.

    *      Think global. People in other countries want to read our work and they want these stories to take place in the U.S. so they can read about our lives here. The demand will continue to grow exponentially. This is a huge potential market.

    *      Many pirate sites originate overseas where English language content is unavailable. How to combat piracy? Cost and Convenience. Make our work cheaper and easier to obtain.

    *      Be prolific to build your brand.

    *      Don’t think of writing as draining your mental energy so you need to refill the creative well. Think of writing as recharging your batteries so that the more you write, the more you’ll want to write. It’s harder to restart the engine so keep it running.

    *      Publishers need to step up to the plate and provide authors with editorial, distribution, promotion, and product if they’re to be viable in the future. The most important role of publishers continues to be as a gatekeeper for a quality read.

    *      Social networking is crucial for authors to establish a platform.

    *      Reviews still drive book sales, and bloggers are the new reviewers.

    *      Indie bookstores still have tremendous influence. They may still be around after the chains go out of business. Establish a connection with your indie booksellers.

    *      Writers with a backlist have many different avenues to explore to make their books available to readers again. This is an exciting time because we can bring our stories directly to readers ourselves.

Many of us authors are struggling to define our roles in this new publishing climate, to understand where the industry is headed, and to define our limits for social networking. The beauty of Ninc is that we know we’re not alone. For more details on each panel presentation from the conference, please visit my personal blog.

Konrath & AmazonEncore strike a deal

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by Michelle Gagnon

I’m a huge fan of Joe Konrath‘s ‘Jack’ Daniels series (written under “J. A Konrath”). So it was with tremendous excitement that I read this news:

Amazon.com, Inc. today announced that AmazonEncore, Amazon’s publishing imprint, will release the newest book in bestselling author J.A. Konrath’s Jacqueline “Jack” Daniels series, “Shaken.”

This is a huge step forward, both for Joe and for Amazon’s imprint, which traditionally has only published reprints of self-published books by new authors, not original titles from known authors.
Clearly Amazon is now throwing the gauntlet to the traditional publishing houses, starting with a writer who has already carved out a name for himself by publishing over a dozen books using Amazon’s Digital Text Platform (in addition to his success in the traditional publishing milieu).

Joe played coy regarding the actual details of his advance with AmazonEncore, saying only that he received a very favorable contract. The digital version of the book will be available on Kindle four months before the print version.

So what does it all mean? It brought to mind an interview a few weeks ago with a Newsweek editor. Responding to the news that Newsweek had been offered for sale, he said that he felt they’d been doing things backward in recent years, compiling a weekly magazine while simultaneously offering daily articles on Newsweek.com. In the future, he thinks the most viable model will be to start with the daily articles, compiling the most popular into a print edition at the end of every week for readers (such as myself) who prefer reading in print form.
In other words, the online content will drive the print content, not vice versa.

Coming on the heels of my post last week about the recent uptick in digital vs. print sales, this was big news. I’ve felt for a long time that if Amazon got their act together by offering Kindles at a lower price point (which hasn’t happened yet, but must be on the horizon), they could easily position themselves to dominate the industry, effectively cutting out traditional publishing houses. They already have massive marketing and distribution resources at their disposal. All they’d have to do was hire a team of editors, and offer the mainstays of the industry (Patterson, King, Child, Steel, etc) a larger percentage of the royalties. As Konrath says in his press release, “[This] company can email every single person who has every bought one of my books through their website, plus millions of potential new customers. I’ve never had that kind of marketing power behind one of my novels. I’d be an idiot not to do this.”

As with the music industry, what I suspect will end up happening is a consolidation of the various houses into a few major players (with, most likely, Amazon, Barnes and Noble, and Apple among them). A few months ago the industry seemed to wake up to this threat, leading to the “agency model” battles between MacMillan and Amazon. (The “agency” model is based on the idea that the publisher, not the vendor, is selling to the consumer and, therefore, setting the price.)

I think that in the end what the publishers need to fear is not that Amazon will set the prices for their new releases, but that they’ll take them over entirely.

I’m not saying this is good news for writers-it remains to be seen if this will lead to a larger publishing base, or a more narrow one. But it does appear to be the first volley over the decks in the coming battle.

The iPad: Is it really all that?

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by Michelle Gagnon

ibooks_hero_20100403.jpgI’ll start by saying that I don’t completely understand the Apple mystique, in fact I’m a little perplexed by their cult following. I appreciate my iPod and iPhone as much as the next person (although AT&T easily takes the prize for the worst network). But in my experience, some of the Apple products leave much to be desired. My husband finally convinced me to switch from a PC to a Mac last year–which has absolutely been a mixed bag. Some of the programs, like iPhoto and Scrivener, I love. Yet I can’t fathom why there isn’t a blogging program for Macs that holds a candle to Live Writer. On the plus side: fewer viruses and crashes. But I sorely miss Microsoft Outlook.

So with all the hoopla surrounding the release of the iPad, I was skeptical. It looked big, for one thing. What I like about the Kindle and the Sony Reader is that they manage to mimic the experience of reading a book. You open something, hold it in both hands. In comparison the iPad appears unwieldy, roughly the size of a dinner plate. I couldn’t imagine holding this big flat thing and reading off it.

But then a friend brought one over for me to test drive. Wow. It has all the features of the Kindle, Nook, and Sony Reader. It’s light and comfortable to hold. The pages actually appear to turn, which is a neat trick. And that’s just the beginning.

There’s been a lot of chatter about eBooks and what they mean for the industry. Most of the debate has centered around issues like the recent Amazon/Macmillan pricing standoff, and what kind of ebook rights authors should be getting. There are those who claim that within a decade print books will be a rarity, limited editions published exclusively for collectors. Others say that’s an exaggeration, books are here to stay.

What’s been lost in the debate (because until now it was largely irrelevant) was how books and the entire reading experience could change. The Kindle and the Sony Reader were great, but they basically just enabled a reader to experience a book the same way they always had. The main benefit was that the font size could be adjusted, and the reader could hold a full library. Neither offered true interactivity, a bridge between books and other media.

That bridge is exactly what the iPad provides.

Check out this video of the iPad version of Alice in Wonderland (but be forewarned, it’s a little frenetic. I’d advise against clicking on the link if you’re prone to seizures).

Wow. Seeing that, I finally grasped the iPad’s potential. For one thing, it could revolutionize children’s books (although I’m hard pressed to name a parent who would hand a relatively fragile $500 device over to their child). And for graphic novels, this is a complete game changer. aliceforipad041610b.jpg

On my book tour for THE GATEKEEPER, I assembled a PowerPoint display of real-life settings from the book and other materials to provide a frame of reference for readers. Just imagine if that information could actually be incorporated into the text itself.

It reminded me of reading The Da Vinci Code while vacationing in Costa Rica. I found it maddening that when so much of the plot was focused on specific paintings and statues, there were no images included in the text. With the iPad, a book could include those, plus links to video interviews with the author, related sources- really, the sky is the limit.

I’ll save a discussion of other iPad features for another day, including apps (movies look amazing on it, though, in case you’re curious). But I have to say, I’m a convert. I’ll probably wait for the inevitable price drop. When that comes, (and I suspect we’ll be seeing a huge decline in prices for eReaders across the board soon), Apple could corner the publishing market the same way that they basically appropriated the music industry. And along the way, they might end up changing what constitutes a book.


ISHTAR II and the Slush Pile

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Almost from the beginning of words chiseled in stone, there has been a slush pile—literally the mountain of unsolicited manuscripts that accumulate in the offices of publishers. And for decades, it was the hope and dream of unknown writers to have their hidden gem plucked from the pile and go on to be a bestseller. Despite the ishtar odds, which are slightly worse than Dustin Hoffman and Warren Beatty remaking ISHTAR, there have been a few slush-pile hits, or at least career starts. My friend Kris Montee tells me that she got her first break in 1984 when her manuscript THE DANCER was plucked from the Ballantine slush pile. Kris and her sister Kelly went on to become NYT bestselling authors as P.J. Parrish.

In a recent WSJ article by Katherine Rosman, she noted that CARPOOL by Mary Cahill was the last book published by Random House that originated from their slush pile. That was back in 1991. Today, most major publishers have a strict policy of not accepting unsolicited manuscripts.

There are a number of reasons for the death of the slush pile, the biggest being shrinking budgets. Now you’d think that having an unending supply of material at your disposal without even asking for it would be a plus, right? No. First of all, the publisher has to pay employees to weed through the slush. They simply can’t afford it anymore. The rare chance of finding a winner is greatly exceeded by the waste of time reviewing unpublishable work. Let’s face it, there’s usually a good reason why unsolicited work goes unpublished.

Another reason for the demise of the slush pile is the fear of being accused of and having to defend against allegations of stealing someone’s work. Again, it’s all about money. Why even take the chance.

And believe it or not, the anthrax scare after 9/11 became a major reason no one wants tons of unsolicited mail sitting around their offices. Even with no shrinking budgets, money can’t defend you against toxic death.

So how can a new writer hope to get their toe in the door? Get an agent. Next to writing the best book you can, it’s crucial that you find a literary agent. With few exceptions, publishers will only consider material sent to them by an agent. The agent is the primary filter and first line of defense for the publisher. And in some cases, it not only has to be an agent, but one they already know and have an established relationship. Today, there’s much more responsibility placed on the writer/agent than ever before.

A bit of good news: despite all the drawbacks to the slush pile, publishers are of a belief that a diamond might still be hidden among the mountain of coal. As long as there’s even a slight chance, there needs to be a way to find it. So some publishers are creating virtual slush piles. For instance, HarperCollins introduced a website called Authonomy that allows writers to upload a manuscript. Visitors can read the work and vote on their favorites. The HC editors will then review the five highest scoring submissions each month with an eye for publication. How are your chances? Over 10,000 manuscripts have been uploaded so far with 4 bought.

We should be seeing more of these virtual slush piles popping up as time go on, especially with the public doing all the work and only the overhead of the site being the primary cost.

So how did you get your start? Did you submit cold or acquire an agent first. If you aren’t published yet, have you ever sent in an unsolicited manuscript? What was the result?

BTW, anyone know when ISHTAR II will be released?

Embracing Change

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by Clare Langley-Hawthorne

New year! New decade! and 100 years since the date I set my first book (yes, that would be 1910)… So I’m figuring it’s probably a good time to consider embracing change – not that I’m a stick in the mud (like Winston Churchill I believe there’s nothing wrong with change so long as it’s in the right direction) but I do like to know how things turn out (which, of course, is impossible). I’m a great one for worrying about the not-so good changes (pointless I know), so this year I’m going to throw off my shackles and embrace uncertainty and change in all aspects of my life (yes, really…)
I met most of last year’s resolutions after all – I did grow my hair long (and then cut it all off in horror at what I looked like); I learned how to ride a bike (my husband bought me one for Christmas so my fate is sealed) and I did lose weight (although after eating my way through the holidays my bum is now exponentially larger…sigh). My writing resolution (put the writing first!) fell a bit by the wayside – but then with twin five-year old boys I guess what else can I expect! I completed two books and am three-quarters of the way through a third…so not too bad…(though on the publishing end of it, 2009 was bit of a dud).

I’m reminded of a quotation from Washington Irving that I think I may adopt for the year:

“There is certain relief in change, even though it be from bad to worse! As I have often found in traveling in a stagecoach, that it is often a comfort to shift one’s position, and be bruised in a new place.”

I know that 2010 is going to be year of change – and so I am going to focus my efforts on trying to adapt as best I can. I shall shift my position in the stagecoach and see how it feels:)
I have ideas for lots of new books (even I need a break from Edwardian England sometimes) and I am completing a short story as well…so maybe I’ll even foray a few more times into this medium (or maybe not…let’s see…)
So forget resolutions – let’s just accept the inevitability of change and fess up – what kind of change will you be embracing this year?

The eRights Grab

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by Michelle Gagnon

So to end the year, I thought I’d close with yet another issue confronting the publishing industry: eBook rights. Ten years ago, these were rarely included in contracts, since the prospect of reading books in this format was still fairly far off on the horizon.

But we’re about to enter a whole new decade, by the end of which I suspect at least half of all books will be enjoyed on some form of eReader (and that’s a conservative estimate). Which makes the move by Random House last week pertinent to all of us, especially authors who have backlist books where eRights weren’t spelled out.
Here’s what happened, as detailed by the Author’s Guild:

“On Friday, Random House CEO Markus Dohle sent a two-page letter to many literary agents regarding e-books. Much of the letter is devoted to Random House’s efforts and investments to market traditional and electronic books.

On the second page, Mr. Dohle gets to the point. After noting that most of Random House’s backlist titles grant the publisher electronic book rights (we agree, since most backlist titles are from the past ten years, a period in which authors have generally licensed electronic rights in tandem with their print rights), he writes that “there have been some misunderstandings concerning ebook rights in older backlist titles.” He then proceeds to argue that older contracts granting rights to publish “in book form” or “in all editions” grant electronic rights to Random House.

The misunderstandings reside entirely with Random House. Random House quite famously changed its standard contract to include e-book rights in 1994. (We remember it well — Random House tried to secure these rights for royalties of 5% of net proceeds, a pittance. We called it a “Land Grab on the Electronic Frontier” in our press release headline.) Random House felt the need to change its contract, quite plainly, because its authors did not grant those rights to it under Random House’s standard contracts prior to 1994.

A fundamental principle of book contracts is that the grant of rights is limited. Publishers acquire only the rights that they bargain for; authors retain rights they have not expressly granted to publishers. E-book rights, under older book contracts, were retained by the authors.

There’s no need to take our word for this, however. A federal court in 2001 examined this precise matter in Random House v. Rosetta Books. Judge Stein of the Southern District of New York was unequivocal in his 10-page decision: authors did not grant publishers the e-book rights in the old book contracts at issue. Judge Stein specifically dismissed notions, raised by Mr. Dohle in his letter to agents, that the non-compete clauses of these old contracts in some manner acted to grant Random House electronic rights to the works, saying that this “reasoning turns the analysis on its head.” The court pointed out that the license of rights comes solely from the contract’s grant language, not from the non-compete clause, and that non-competition clauses, to be enforceable, have to be narrowly construed. Using the non-compete clause to secure future rights is unsustainable. An appellate court affirmed Judge Stein’s decision.

We are sympathetic with the difficult position the publishing industry is in at the moment. The recession has been tough on book publishing, as it has been on many industries. And everyone with knowledge of the dynamics of the industry properly fears that Amazon’s dominance of the online markets for traditional and especially e-books will give it a chokehold on industry profits. Difficult times, however, do not justify this attempt at a retroactive rights grab.

It’s regrettable and unhelpful that Random House has chosen to try to intimidate authors and agents over these old book contracts. With such a weak legal hand, it would be well advised to stick to its strength — the advantages that its marketing muscle can provide owners of e-book rights. It should also start offering a fair royalty for those rights. Authors and publishers have traditionally split the proceeds from book sales. Most sublicenses, for example, provide for a 50/50 split of proceeds, and the standard trade book royalty of 15% of the hardcover retail price, back in the days that industry standard was established, represented about 50% of the net proceeds of the sale of the book. We’re confident that the current practice of paying 25% of net on e-books will not, in the long run, prevail. Savvy agents are well aware of this. The only reason e-book royalty rates are so low right now is that so little attention has been paid to them: sales were simply too low to scrap over. That’s beginning to change.

If you have an old book contract in which you haven’t granted e-book rights, patience is likely to pay off. The e-book industry is still young — there’s no need to jump in. And we strongly suspect e-royalty rates are at a low-water mark.”

I feel the same way- can a publisher really justify a 75/25 split when the costs involved with bringing an eBook to market are dramatically less than those incurred by a mass market paperback? The fact that initially 5% was offered is almost laughable- clearly someone saw the writing on the wall. The question is, with the entire market beginning to shift in this direction, how can authors protect themselves? How do you prevent your backlist from being exploited? Since eBooks tend to retail for $5-$15, a more equitable distribution of the royalties means that even with this seismic shift, writers could still manage to earn a living from their work.

It’ll be interesting to see how this issue in particular shakes out. No matter what, I think that despite all the doom and gloom, this is an exciting time to be involved in the publishing industry. The world is changing rapidly, and the publishing industry is now being dragged into the modern millenium. It’s impossible to foresee exactly what the future will bring, but no matter what, the times they are a changin’.

Happy holidays to all of you. Thanks for taking time out of your lives this year to rant, discuss, and debate with us. I’m looking forward to more of the same in 2010.

Best,

Michelle