Category Archives: royalty rates

Perseverance

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By Jordan Dane

For my last post in 2011 with TKZ, I found a Wall Street Journal article on self-publishing that offered something a little different. We’ve all heard the big blockbuster sales of a precious few who have seen sales of more than a million books, but who can really relate to that? We can all hope lightning will strike and we’ll be the one benefiting from that good fortune, but I picked out the elements of this article that addressed the digital trend, growing successes that have not gotten much highlight, and what one author—Darcie Chan—did to grow her self-pub sales.



Many have heard about Amanda Hocking and John Locke’s stories of hitting it big. These stories represent a miniscule fraction of independent authors, but success is still being found. According to Amazon, 30 authors have sold in excess of 100,000 copies of their books through Amazon’s self-pub Kindle program and a dozen more have seen sales of 200,000+ — a program started in 2007 that allows authors to upload their own books, set prices, and publish in multiple languages. Barnes & Noble have their own version for their Nook readers.


Self-published books have fueled the surge in digital sales from $287 million in 2009 to $878 million in 2010, according to the Association of American Publishers. Analysts speculate that e-book sales will pass $2 billion in 2013. We’ve all seen how the publishing industry (authors, agents, publishers, stores, etc) are scrambling to figure out how to capitalize on this exploding trend.


So here is one author’s story about how she stuck to her dream of writing a book she believed in and took the plunge.


It took Darcie Chan two and a half years to write her book during the hours she wasn’t working her day job of drafting environmental legislation. After getting feedback from friends and family, she sent queries to more than 100 agents, but since it was a cross genre story (with elements of romance, suspense and mystery), it didn’t fit neatly on retail book shelves and got rejected as a “tough sell.” She eventually landed an agent who submitted her book to over a dozen publishers, they all rejected it for the same reason, so the book of her dreams landed in a drawer and Darcie got on with her life. FIVE YEARS LATER, she read about the rise in e-book sales and self-publishing and decided to do something about her dream. Here is what she did:


She made her own cover for THE MILL RIVER RECLUSE (about an agoraphobic philanthropist) from a photo her sister had taken of an old mansion and added Photoshop graphic elements to make it look gloomy.


She uploaded her book into the Amazon Kindle self-publishing program and sold a trickle of copies. A few weeks later, she loaded it onto Barnes & Noble, Smashwords, Apple’s iBookstore, Sony, and Kobo.


Her first royalty check was $39. That’s when she noticed that popular e-books were priced at $0.99 and immediately dropped her price from $2.99 to $0.99. (That cut her royalty percentage under Amazon rules from 70% on books priced at $2.99+ to 35% for novels priced below that threshold.) But sales picked up immediately for her and she found new readers who liked her book.


During the first month at her lower price, she sold 100 copies. She was thrilled with this, but by the end of June, her book got mentioned on a site called Ereader News Today, that posts tips for Kindle readers. Over the next two day period, she sold another 600 copies, giving her hope that she could drive her own sales.


She spent $1,000 on marketing, buying banner ads on websites and blogs devoted to Kindle readers and also bought a spot on Goodreads.com with its more than 6.6 million members.


She also learned that self-published authors could pay to have their book reviewed by some sites. She paid $35 for a review on IndieReader.com (who no longer offers paid reviews) and she paid $575 for an expedited review from Kirkus Reviews, a notable book review journal and website. (The Kirkus review service, launched in 2005, gives self-published authors the option to review privately if the review is negative. Darcie opted to have her book reviewed on Kirkus’s website and Kirkus called the novel “a comforting book about the random acts of kindness that hold communities together.” Darcie used quotes from the review and other reviews on Amazon and B&N for publicity purposes, to encourage more reviewers to try her book.


By July, she had sold more than 14,000 copies and got her noticed and featured on two of the biggest sites for e-book readers, which generated more sales. In August, she had sold more than 77,000 copies and had hit the New York Times and USA Today e-book bestsellers lists—and later she landed on the Wall Street Journal’s list too. In September, it sold more than 159,000 copies and 413,000 copies have sold to date.


Darcie and her agent have since offered her book to traditional publishers, but none have matched her royalty rates of 35-40% that she gets from Amazon and B&N. (Average print royalties range 10-15% with digital royalties usually set at 25%.) Simon and Schuster offered to distribute the book—as is—but Darcie wants the book professionally edited and marketed. So as of now, she is staying the course, content with how well her book is selling. She made an estimated $130,000 before taxes PLUS she’s getting a steady royalty check every month.


And from her success, she’s seeing interest from other parties. Foreign rights and audio book publishers have made offers and six movie companies have inquired about film rights.


Bottom line is that Darcie didn’t give up, even when everyone told her “NO.” No matter how you’re published, I think we can all learn from this woman’s perseverance.


This is my last post for 2011 since TKZ will be on our 2-week hiatus starting Dec 19th—the day my virtual tour starts with YA Bound. Happy holidays to our TKZ family and have a great 2012.

Writers Tackle the Future – Agents as Publishers?

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Writers Tackle the Future – Just as publishing houses are trying to capitalize on the “new frontier” of ebook publishing and redefine their business models, so too are agents. Most recently, Bookends announced its intention to offer ebook services, following suit with Dystel & Goderich Literary Management. Undoubtedly more literary agencies will follow.
Can a literary agent who represents the author (in theory) also be that author’s publisher? Is there a conflict of interest in this arrangement? If you read Bookends and DGLM’s announcements (see links above), they present their case as simply a value added service their agency would offer. Existing clients who wish to navigate the new frontier (without doing it themselves) can delegate the details to their agency for their backlists, short stories to promote upcoming releases or epub works that might not be as marketable. They offer their expertise in editing, marketing, and packaging for their usual 15% fee.
Yes, that’s 15% of all book/unit sales. And since there is no “print run” on a digital novel, this could mean 15% forever if that’s not defined by contract. Authors who have looked into self-publishing know that an author can hire one or more contractors to coordinate the effort of packaging their book with formatting, editing, cover art, and uploading said book into the retail outlets who will offer the work online. They don’t have to do it themselves. (I’ve heard cost figures of $1000 – 2000 per book, but since some of you have gone through this process, please weigh in and share your experiences on costs, level of difficulty, and what you “farmed out.”) If advertising is involved, that’s something an author always has the ability to pay for and do on their own.
If that’s one alternative, that an author hires the work done by third parties, what specifically does the agent bring new to the table in this regard? Arguably, an author can hope their agency brings years of industry experience to package the best product, but beyond their opinion (which they would bring if they represented the author as agent anyway), what value can they add to improve sales without the promo dollars of a publisher’s budget (traditionally only offered to a select few authors or book projects)? What kind of promo is required for ebook sales outside what’s already made available through Amazon, Barnes & Noble, Smashwords, etc.? Yes, it would be nice to have the promo budget of James Patterson, but how realistic is that for the average author?
On top of the question of value derived for an agent’s 15% fee, who retains the rights for the work? Yes, typically the publisher would retain rights for a specified time, but if the agent is the publisher, who would be the advocate for the author if the agent representing their interest is now the publisher? And with no print run to determine when an author can ask for their rights back, how will the author ever reclaim their work? Who is protecting the rights of a new author who may not be aware of the pitfalls? Normally that might be the agent, but if they are now the publisher, who then?
Anyone can have an opinion about this. Realtor’s have laws regarding their representation conduct, for example. I worked in the energy industry where third party energy marketing arms had to be totally separate on paper and physically housed apart from its affiliate, the regulated utility. Operating practices had to be auditable and employees had to sign ethics agreements annually that could be grounds for termination if this code of conduct was violated. Enron became the prime example of conflict of interest that defined many of the laws that are in place today.
If this trend continues where agents become publishers, I see much harder issues ahead on contract terms, sub-rights negotiations, fiduciary obligations, and better conflict of interest policies where ebooks are concerned—and AAR must weigh in with specifics since it’s obviously not clear. In the ever evolving world of ebooks, agents becoming publishers is another strange twist. Is this the shape of things to come—another nail in the coffin of traditional publishers—or merely literary agencies struggling to be relevant in a new age?
I’ve had talks with my agent and we’ve addressed strategies going forward. We both see ebooks as a new opportunity for authors, but we recognize that the way deals are negotiated now, that will most likely change. New questions must be explored open-mindedly—for example:

1.) What’s a fair ebook royalty rate? Is 50% a more acceptable industry standard or should it be subject to negotiation deal to deal?

2.) Can a book deal be done where an author retains ebook rights to be leveraged by an agent? Would 15% agent fee be warranted then?

3.) When can an author get rights back in a digital world—from a publisher or an agent?

4.) Should any publisher get only a limited time period to said rights? If so, what royalty value would that have and is the term of the arrangement variable and negotiable?

With the future changing as fast as it is, agents can still add value and provide a real service with regard to foreign sales, audio, film and negotiating print rights on ebooks. I’ve never been much of an advocate for an agent editing a book before an editor gets their input. I hire an agent to be my advocate and negotiator. I don’t want their attention focused on a multitude of revisions with their clients that dilutes their effectiveness in the marketplace, which should be their primary concern. Some agents give editing advice as part of their representation deal, without charging a fee. Below is article 8 of the Association of Author’s Representatives (AAR) Canon of Ethics.

“The AAR believes that the practice of literary agents charging clients or potential clients for reading and evaluating literary works (including outlines, proposals, and partial or complete manuscripts) is subject to serious abuse that reflects adversely on our profession. For that reason, members may not charge clients or potential clients for reading and evaluating literary works and may not benefit, directly or indirectly, from the charging for such services by any other person or entity. The term ‘charge’ in the previous sentence includes any request for payment other than to cover the actual cost of returning materials.”

According to their announcement, Bookends explains that their 15% fee provides their editing expertise as a part of the package. “For the work we are doing with them we are getting paid a 15% commission… we also provide revisions and edits for those books that might not have been published before.” How is this different than a vanity press? And how is this in keeping with AAR’s Canon of Ethics as stated above?

Bookends and DGLM’s announcements justify their 15% agent fee with a list of services that can easily be obtained elsewhere by third parties who aren’t also charged with advocacy on the author’s behalf. In an effort to sound forward thinking, these agencies are ignoring the potential for conflict of interest and undermining the relationships they already have with publishers by competing with them.
Another concern I have are the people querying agent/publishers who are desperate to be represented. If Bookends, DGLM or other agents, find a marginal book that would be a tough sale to a traditional house, they can “offer their services” and take money from people who don’t know better. The countless folks in a slush pile become a gold mine, the gift that keeps on giving. And if there is no a delineation in who offers these services—with a definitive separation of companies—an agent’s existing author clients could get ignored because an agent is too busy cashing in on people bent on being “represented” by a real agent.
On the subject of conflict of interest, agent Jessica Faust in a comment to her Bookends blog post stated, “My feeling is that whether or not it truly is a conflict of interest comes down to how a situation is handled by the agent, and in many ways, that’s for the agent and the agent’s clients to determine.”
What do you think? Should a conflict of interest be done by consensus between an agent and client? Or should more definitive guidelines be established by more objective parties, without a personal stake in the answer?