First Round Picks…and BustsWhy Big Advances Can Be Bad

By PJ Parrish

I was thinking yesterday how much two of my favorite icons — Dan Marino and John Grisham — have in common. Stay with me on this.

I love the NFL. From the start of training camp in July through Super Bowl Sunday in February, I am in hog heaven. And the fact that my Dolphins and my auxiliary team the Lions are doing well makes things even better. But when football season is over, like many NFL geeks I resort to a sad substitute, The Draft. I read the magazines, check out the websites and listen to the talking jock-heads on ESPN. Will Oregon QB Marcus Mariota go No. 1? Will the Jets take another QB flyer on controversial Seminole Jameis Winston? Will my Dolphins go for tackle La’El Collins to beef up their O line?

Yeah, I know. I need a life.

On a recent Sunday, after the games were over, I turned to the New York Times. There I read about Stephanie Danler. (That’s her at left). She is a young waitress in a upscale French bistro in the West Village. One day, while serving Random House vice president Peter Gethers his steak tartare, she talked him into reading her manuscript about a young waitress who works in an upscale New York bistro. Gethers, used to getting hit on after 30 years in publishing, deflected her with a polite “have your agent sent it to me.”

I bet you know where this plot is going.

Gethers was smitten after reading 10 pages and, to make a long story short (click here to read it), Danler’s novel Bittersweet was acquired by Knopf for “a pre-emptive high six-figure two book deal.”

Now you’d think that with all the challenges traditional publishing is facing these days, that Danler’s dream deal is rare. It’s not. There has been a string of debut novel big deals lately. Random House recently paid $2 million for 25-year-old debut novelist Emma Cline’s The Girls. St. Martins just picked up New York Times reporter Stephanie Clifford’s debut novel Everybody Rise for over $1 million. And first-timer Imbolo Mbue got a seven-figure deal with Random House for her book about a West African immigrant who works as a chauffeur for Lehmann Brothers.

Which leads me to wonder: Are Knopf and Random House making shaky bets on future prospects?

Which takes me back to Grisham and Marino. Both were overlooked in their drafts. But both took rejection and turned it into a positive. Both turned out to be huge assets for their bosses. Marino was taken by the Dolphins with the 27th pick. That means 26 teams took a pass on the guy who became the first rookie QB to go to a Super Bowl and is a first ballot Hall of Famer. Five teams chose QBs ahead of him. The Colts drafted John Elway knowing they couldn’t sign him. Kansas City took Todd Blackledge. Buffalo took Jim Kelly. New England took Tony Eason. The Jets took Ken O’Brien.

Now let’s look at John Grisham. He struggled to write his first book A Time To Kill while working fulltime as a lawyer. Grisham was turned down by thirty-some publishers. “Everybody said no,” he recalls. After a year of rejection, his agent sold A Time to Kill to the tiny Wynwood Press. The book sold 5,000 copies, most of them by Grisham hawking them from the trunk of his car. Wynwood went bankrupt leaving Grisham with no one to publish the second book he had been laboring on, The Firm. But then a bootlegged manuscript of The Firm surfaced in Hollywood, and as Grisham has explained: “Some guy ran 25 copies, said he was my agent, and sent them to all of the major production companies. He got nervous when they started making offers. At some point he called my agent in New York, and the rest is history. It was an unbelievably lucky break, and I had nothing to do with it.”

But like Marino, Grisham did go on to have a rather long and productive career.

Traditional publishing is a lot like the NFL draft. Every year, there is buzz, hype and great hopes surrounding a handful of hot prospects. Is what goes on in the booths of BEA so much different than the machinations in the war rooms of the NFL, where team owners place multi-million-dollar bets on unknown kids in cleats? Is a publisher dazzled by a pretty face and a “media platform” any different than a scout besotted by a 4.4 and a good Wonderlick score? And is an editor any better at predicting which writer will have a sophomore slump than a coach is at foretelling which rookie will blow out a knee?

No coach can predict which guy is going to be the next sixth-round steal Tom Brady and which one is the next first-round dud Todd Marinovich. Likewise, no editor can predict who’s going to be the next J.K. Rowlings and who — despite all the money they throw around — is going to be the next John Twelve Hawks. (Remember him?)

Or how about Jonathan Littell? A couple years ago, Harper paid him a cool million for the rights to publish his first novel The Kindly Ones in the U.S. It was published in France first where it won prizes and sold well. But it’s 1,000 pages long, Michiko Kakutani hated it, and the book sold only 17,000 copies out of a 150,000 print run.

Then there’s Gordon Dahlquist. Bantam inked him to a $2 million two book deal but his debut thriller The Glass Books of the Dream Eaters sold only 22,000 copies of a 120,000 print run, earning the publisher about $851,500 back on its gamble.

Now, I am not suggesting that all big-buck debuts are bad. Two of my favorite books of all time were expensive debuts: Chad Harbach got $650,000 for The Art of Fielding. It was named a ten best books of the year by the New York Times, shortlisted for the Guardian first book prize, and almost made it to an HBO series. It sold 117,954 hardcover copies so it made back its advance. Another book I adore is Daniel Mason’s The Piano Tuner. He was 26 when he got $1.2 million advance for it. It was a bestseller and Werner Herzog optioned it for film.

But here’s the bottom line: According to Time Magazine 70 percent of novels do not earn back their advance, so the higher the advance the greater the sales expectations. And when a debut writer gets a huge deal and sales fall short, well, the writer is less likely to score a big second deal. I have a dear friend who found this out the hard way: She scored a seven-figure deal on her second contract and didn’t come close to earning out.  Her career never recovered. (Click here to read a good overview of the economics of book advances.)

Truth is, the people whose careers depend on drafting players and authors have no real idea how they’ll turn out, if they will be one-season wonders or if they’ll have a long and prolific career. Like my guys Marino and Grisham.

So will Stephanie Danler bring home the Lombardi for Knopf? Or will she just be this year’s Stephen Carter? I dunno, but if there were a fantasy league for writers, I’d be tempted to take a pass on this one and find a couple second-round gems with — as the sports cliche goes — a good upside. But what do I know?

*   *  *

And now, as my other favorite cultural icon Monty Python says, for something completely different:

Kelly and I got some great news Saturday morning. Our latest Louis Kincaid thriller HEART OF ICE won the Shamus Award for Best Paperback Original at Bouchercon. The award is given out by the Private Eye Writers of America and we are, to say the least, thrilled and honored. Especially since this book was Louis’s swan song as a PI.  Yup, he’s hanging up his gumshoes. (But returning in a new book with a badge again). What a great note to go out on.

Field Report From the E-Book Revolution #3: The New Equilibrium

James Scott Bell

I was all ready to lay down my binoculars high in my observation tower and note that a certain peace had settled upon the land of publishing. Battles fought a couple of years ago, full of fury and bile, seem largely to have quieted down to the level of a spirited discussion. Both sides, traditional and indie, had reached a tentative, though perhaps still wary, acceptance of each other’s existence. And then came the Hydra’s head (see #1, below). [UPDATE: Random House responded to the pressure and has modified its contract terms]

I have a lot to report today, so you might want to bring a snack. We begin with: 

1. Digital Only Contracts From Traditional Publishers

As part of their adaptive strategy, some big publishers are offering digital-only contracts. Thomas NelsonLittle Brown UK and Random House are three examples. I know a couple of authors who have entered into such contracts. Both were no advance and a 50/50 royalty split. The publishers offered an editor, publicist and all the prep work (cover design, formatting, etc.) However, these costs (which are at the sole discretion of the publisher) are borne by the author, deducted from the author’s cut of the revenue right off the top.

NOTE: These types of deals are not the same as “vanity publishing.” That’s a whole other can of sour worms. See, e.g., April Hamilton’s take on Simon & Schuster’s foray. But because the author is expected to pick up costs a traditional publisher used to cover, there’s a certain blurring of lines that is occurring in the new world order.

The natural question is, what is the advantage for the author? The answer has to be a combination of these three: a) the “prestige” of being published by a traditional house; b) the chance to be taken up to the “big leagues” for print and further push with serious dollars; c) some marketing advantage.

That last is the real kicker. Random House’s press release states, “For the first time in history, authors will be able to forge wide-reaching and long-lasting relationships with their audiences, and we at Random House can’t wait to explore and create new opportunities in the digital space. The possibilities are endless, and we’re excited to offer authors the best opportunities to take advantage of this growing marketplace.”

This is the rub that has yet to be proved: can the big publishers offer authors the “best opportunities” in the digital world? Is there some form of marketing they have that authors cannot replicate or surpass on their own? If there is, is it worth giving up a book for the “life of the copyright” (a term in one of the contracts) and half the net income?

The Science Fiction & Fantasy Writers of America issued the following note to its members regarding one of Random House’s imprints, Hydra, which is for SF:

SFWA has determined that works published by Random House’s electronic imprint Hydra cannot be use as credentials for SFWA membership, and that Hydra is not an approved market. Hydra fails to pay authors an advance against royalties, as SFWA requires, and has contract terms that are onerous and unconscionable.
Hydra contracts also require authors to pay – through deductions from royalties due the authors – for the normal costs of doing business that should be borne by the publisher.
Hydra contracts are also for the life-of-copyright and include both primary and subsidiary rights. Such provisions are unacceptable.

To this, Random House responded, in part:

As with every business partnership, there are specific costs associated with bringing a book successfully to market, and we state them very straightforwardly and transparently in our author agreements. These costs could be much higher–and certainly be more stressful and labor-intensive to undertake–for an author with a self-publishing model. Profits are generated once those costs are subtracted from the sales revenue. Hydra and the author split those profits equally from the very first sale.  . . .

[M]y colleagues and I would welcome the opportunity to meet with you at your earliest convenience to discuss the advantages of the Hydra business model, describe the program overall, and respond to any of your expressed concerns. Please let me know a good time for us to set up this meeting.

Unfortunately, there is very little to discuss. SFWA has determined to its own satisfaction that Hydra does not meet our minimum standards for a qualifying market, as its contract does not offer an advance. Additionally, your attempt to shift to the author costs customarily borne by the publisher is, simply, outrageous and egregious. The first of these things alone would disqualify Hydra as a qualifying market. It is the second of these things, however, that causes us to believe that Hydra intends to act in a predatory manner towards authors, and in particular toward newer authors who may not have the experience to recognize the extent to which your contract is beyond the pale of standard publishing practices.

You extol your business model as “different”; the more accurate description, we believe, is “exploitative.” We are particularly disappointed to see it arising out of Random House, a well-regarded, long-standing publishing firm. Bluntly put, Random House should know better.

2. The Continuing Decline of Physical Shelf Space

Barnes & Noble had a terrible quarter (ending January, 2013). Revenues fell 8.8%, to $2.2 billion, and net loss was $6.1 million. Much of the loss was Nook traceable:  $59 million in additional inventory charges because of unsold goods, $21 million in returns from partner retailers, $15 million in promotional allowances “to optimize future sales opportunities” and higher advertising charges.

James McQuivey offers a cool assessment of all this, including:

On the bookstore side, the big digital obstacle is the decline of the printed book, an inevitability that has to be faced no matter how warmly one feels toward the printed word. We’ve learned from CDs and DVDs that once a physical medium begins to slide, it slides rapidly. Even if readers initially lose only a tenth of their interest in buying physical books, they will end up coming to the store 20% less often, which will lead the bookseller to shrink inventory accordingly, causing even less commitment to physical books, and so on. Play that out several iterations and you end up with a business half the size of the prior business in short order. As happened to Borders, such a rapid decline usually leads to surrender. In that world, the retail unit would have to encourage foot traffic to the store with some other physical product that isn’t so easily substituted digitally. I wouldn’t be surprised if Barnes & Noble sells frozen yogurt in the future — whatever it takes to grab customers and keep them coming back often.

3. The Disappearance of the Midlist Author

This report, about author Mary Doria Russell, evidences the obsolescence of the midlist author. The trads need blockbusters and A-listers, and even if your books earn out, and receive prestigious awards, that may not be enough to continue the relationship.

Just as her new novel, Doc, was being released in 2011, [Russell] got word that her publisher [Random House] was not interested in any more books from her. She had been with Random House since 1996 and published five novels with the New York house. During that time, she had won an Arthur C. Clarke Award and an American Library Association Readers Choice Award. Entertainment Weekly had chosen The Sparrow as one of the 10 best books of year.

But that didn’t matter. Random House was done with her.

“There was no indication that was going to happen,” she said at the Howard County Library Gala on Feb. 23. “It was like having your husband throw you a 25th wedding anniversary party, and then serve you with divorce papers at dessert.”

So where does that leave the midlist author? See #4 and #5, below.

4. The Rise of the Entrepreneurial Author

Outside the walls of the Forbidden City you’ll find the encampment of a new breed of entrepreneurial author. Not just writers who are putting books up for digital sale, but those who are teaching themselves to think like a business and, as a result, are making a profit every month.

These authors know that any successful enterprise requires vision, planning and quality controls. And those who put those practices in place have a much greater chance to rise above the gurgling milk of indie sameness to become some of the sought-after cream.

Having run a successful law book publishing business, and a thriving self-publishing stream, I have put together a one-day seminar to teach these principles to authors. It’s on April 27, in Los Angeles.

5. The Emergence of the Business-Savvy Hybrid

And over here we find the author who is, or may soon be, trucking in both worlds, indie and traditional. And why not? It makes perfect business sense for a traditional publisher and an author who can deliver the goods to reach a mutually beneficial arrangement. There’s even a new literary agency, Foreword,blending the knowledge and skills of traditional publishing with the brash new opportunities engendered by digital publishing.”

What “mutually beneficial” means will vary according to circumstances, but there are three major areas for negotiation:

a. The digital royalty split. Should be up for discussion. Holding the line at an arbitrary 25% to the author is not reasonable. 

b. A meaningful and limited non-compete clause. No author should sign a traditional contract with an overbroad non-compete clause. On the other hand, no author should refuse a clause that restrains him from publishing a similar book that could directly compete with what the publisher is doing (e.g., similar form and genre). But the author should be free to publish other works (to be defined specifically) such as novellas and stories and perhaps even books of another genre. Further, the author owes the publisher his “best efforts,” and that means when you owe the publisher a book, you must give your full attention to that book over and above what you self-publish.

c. A definite term with benchmarks. Giving up rights for the “life of copyright” is a fool’s gambit for the author. Publishers need to see that there is room for creativity here. For example, the contract could be for three years with an option for more. That’s what startup Premier Digital Publishingoffers its authors, among whom are Alan Jacobson, Piers Anthony and the Stephen Ambrose estate.

Also, a contract ought to require a substantive minimum royalty to the author every six months or a reversion of rights is triggered. This is especially true with a risk-free (to the publisher) no-advance contract.

This is business. The author who is informed can come to the table with more than just his hat in hand. Be informed. Know the key terms of a contract. Search around at blogs like The Passive Voice and Kristine Kathryn Rusch’s archive of “Business Rusch” posts, and always check out the twice-weekly Ether columns by Porter Anderson.

In a story about Hugh Howey, the Wall Street Journal states: “Publishing houses that once ignored independent authors are now furiously courting them. In the past year, more than 60 independent authors have landed contracts with traditional publishers. Several won seven-figure advances. A handful have negotiated deals that allow them to continue selling e-books on their own, including romance writers Bella Andre and Colleen Hoover, who have each sold more than a million copies of their books.”

6. 99¢ to Become the New “Free”?

A lot of blogdom in the last couple of weeks had been taken up with the decision by Amazon to limit payouts to its affiliate sites who generate traffic by hyping free books (mostly by authors participating in the KDP Select program). Without going into all the details and consequences (which have yet to play out), many are saying the value of the free book for self-publishing authors (viz., discoverability) has been severely reduced.

I don’t know whether this is a good thing or a bad thing. I think the value of FREE has downgraded naturally over time because all pricing decisions have effects on consumer behavior. My feeling (and it is a feeling, I don’t have data) is that a certain wariness about free books has set in, some readers feeling “burned” by less than quality content.

So where does that leave authors? Well, why not make 99¢ your new “free”? I ran a special for book #1 in my historical series, “The Trials of Kit Shannon.” The first book is CITY OF ANGELS, priced at $3.99. Last week I priced it at 99¢ and got the word out. On March 3 its Amazon rank (at the regular price) was #64,857. The next day, at the special price, it shot up to #283 in the paid Kindle store and #1 in religious/historical. I popped in to check later and it was #112 over all. In addition, sales of all the books in the series received a nice bump.

A good time was had by all.

7. A Challenge to Amazon?

A consortium of German booksellers, plus the world’s largest publisher and one of the world’s largest telecomm companies, have banded together to mount a Euro-challenge to Amazon’s digital territory. As outlined in Digital Book World:

The bookstore chains Thalia, Weltbild and Hugendubel have partnered with Bertelsmann (Random House parent) and Deutsche Telekom, parent to T-Mobile and other huge firms, have partnered to form Tolino, a company that will produce the Tolino Shine e-reader and sell ebooks. It goes on sale on March 7 in Germany for €99 ($129).

Tolino’s stats are formidable. It starts life for sale in 1,500 retail locations around the country and will have 300,000 titles available for purchase at launch (Amazon’s German Kindle store has over 1.8 million titles, however). One of its backers is heavyweight enough to compete with Amazon – Deutsche Telekom had €58.2 billion in revenues last year compared to $61.1 billion for Amazon.

Such challenges in industry are faced with a couple of huge obstacles, not the least of which is being “late to the game.” Plus, Amazon is not the leader without reason. It’s done most everything right, from customer service to innovation. So only an opponent of Bertelsmann’s size, seeking to nab a chunk of territory (and expand later), can possibly make the attempt. But will it be enough? Note: Read Sun-Tzu’s The Art of War if you want to follow the battle plans. Or play a good game of Risk.

8. The Rediscovery of Stoic Joy

I recently enjoyed this book: A Guide to the Good Life: The Ancient Art of Stoic Joy by William P. Irvine. The Stoics were the first cognitive therapists. They said, Look, most of your troubles are in your mind. If you learn to think right, you’ll feel right. Their wisdom is basic and easily understood, but it’s also an art you have to practice. We are prone to worry and fretting over things we can’t control. When it’s not a “chemical” problem, thinking straight is most often the answer.

And so, dear writer, in this new age of publishing anxiety, I commend to you one Epictetus, Stoic philosopher born in the mid-first century, who said, “There is only one way to happiness and that is to cease worrying about things which are beyond the power of our will.”

You can’t change the tides of technology, consumer behavior, or industry by the power of your will. You can’t will your book to the top of a bestseller list. Nor should you bear ill will toward, or waste time envying, other authors.

What iswithin your power are the words you write and the discipline you bring to the craft. Put your mind to that, and forget the rest. After you’ve written your quota for the day, put on Doris Day’s rendition of “Que Sera Sera,” open up a nice Pinot Noir and laugh with someone you love. 

And tomorrow? Write some more. 

Self-Publishing in AUDIO

By Jordan Dane

Sorry for the delay in posting. I just got back from the trip from traveler’s hell. I had a speaking gig in the beautiful Madison, Wisconsin, but the weather on departure day resulted in our flight being cancelled. It took us two days to get back. I felt like I was in a John Candy & Steve Martin movie, without the trains.

For this post, I wanted to share my recent experiences with creating an audio book for my YA debut, In the Arms of Stone Angels. My publisher omitted audio rights from my contract, which gave me an opportunity to try Audiobook Creation Exchange (ACX), a site from Audible that I learned about through the International Thriller Writers (ITW). Others  using ACX are: Neil Gaiman, M. J. Rose, award winning voice talent Tavia Gilbert, Tantor Audio, and Random House (a key ACX launch partner). ANY narrator with a home studio (or access to a studio) can be listed as a voice actor and audition for work.

ACX provides a central location where authors, publishers, agents, narrators, studio producers, and other rights holders can match up projects to create an audiobook for distribution through Audible (and elsewhere) under two different royalty models.

Parties can create a profile of the project for others to see. Narrators can audition, audiobook publishers can express interest, producers can make offers, and rights holders don’t have to let their rights languish. Setting up a profile is easy. I started the project in July and listed my book. Within a short while I had narrators auditioning, but I waited to see if I could get an audiobook publisher or producer interested, since I had no experience with this.

Narrators can be their own producers. I could have been more aggressive about seeking narrators and sending them a message through ACX, but I waited to see what would happen. In October, Audible added a stipend incentive to my project, meaning they offered to subsidize a producer to create my book by giving them $150/finished hour (up to $2500) for a 10-hour completed project. This stipend flag brought more auditions and producers to my project. The stipend had a deadline so Audible could get my book by year end for the holidays.

Once I decided to be more proactive in pushing my project, I decided on a narrator who had experience, awards, and a solid producer to go along with her voice actor talent. The steps from there are all online. I extended the offer, based on a royalty sharing model with my narrator, so I wouldn’t have to shell out money. The Audible stipend helped entice the narrator and producer I chose. Royalty rates will vary depending upon whether you give Audible exclusive or no-exclusive distribution rights. You decide how this can work and set it up. For more details on how ACX works, click HERE. For FAQ, click HERE.

Once I extended the offer and the deadlines ACX wanted for the stipend, I got a standard agreement printed through ACX between the parties, and my narrator had her deadline for acceptance (up to 72 hours). I talked with my narrator on the phone to share my thoughts on my central character, to help her create the voice of my teen girl, sent my book in PDF for her to read, and a 15-minute narration came within 5 days for my approval. In 60 days, I will have a finished audiobook to approve, but Audible will also act as a quality control checkpoint. If you opt for Audible to be your distributor, your book will be set up for distribution through Audible, Amazon, and iTunes. If you don’t give Audible exclusivity, you can distribute your audiobook anywhere you want to go.

I’m very excited to “hear” the voice of Brenna Nash, my character, through my award-winning narrator, Michelle Ann Dunphy. ACX has been very easy to use and I like the control aspects I keep with this project. I’m working with my German cover designer to develop the audiobook cover now. ACX is self-publishing for audio.

If you’re an author, do you retain your audio rights? How many of you like to listen to audiobooks? I love them for long road trips and for camping, listening to a story over a blazing fire.