Publishers and authors: Behind the scenes

Do you really think publishers have authors’ best interests at heart?

willpublishforfoodMost writers don’t make a lot of money. Forget the James Pattersons, Lee Childs and J K Rowlings. They’re outliers; the exceptions. 99% of writers only make a pittance from their work and are dependant on daytime jobs or grants or university tenures in order to be able to afford to write. So when you hear of a Big Five publishing house deliberately setting out to rip off its authors, paying them only a few cents per book sold, it’s sickening.

Back in 2012, Ann Voss Peterson wrote a guest blog for Joe Konrath. Author of 25 books for Harlequin, with copies in all the book stores, an office overflowing with foreign editions from countries she’d never visited, and around three million books in print, Peterson couldn’t afford to write for them any more.

“Let me share with you the numbers of a book I wrote that was first published in January, 2002, still one of my favourites. My life-to-date statement says this book has sold 179,057 copies so far, and it has earned $20,375.22. That means the average I’ve earned is a whopping 11 cents per copy.”

It seems that Harlequin leased authors’ ebook rights to a company it also owned, effectively reducing their royalties from 50% to 3% for contracts signed between 1990 and 2004.

Here’s Peterson’s original breakdown:

This is how the numbers break down when Retailer X lists the ebook for $4.00 (doesn’t matter what they sell it for).

Retailer – $2.00 (any discounts are taken from this amount)
Harlequin’s related licensee – $1.88
Harlequin – $.06
Author – $.06

So Harlequin makes a total of 1.94, and I make .06.

A few months after her blog posting, three Harlequin authors filed a class-action lawsuit against the company, and four years on, Harlequin — now owned by HarperCollins — settled out of court to the tune of US$4.1 million.

Not that the company admits any wrongdoing, of course:

“The Settlement does not mean that any law was broken or that Defendants did anything wrong. By settling, Defendants are not admitting any wrongdoing or liability. Defendants continue to deny all legal claims in this case. Plaintiffs and their lawyers believe the Settlement is in the best interests of all class members.”

In her original post, Peterson said she loved writing for Harlequin:

“I had four editors during that time, and all of them were great to work with. The senior editor [had] a strong vision for the line … and Harlequin throws the best parties in all of publishing, hands down.”

All of which brings to mind a line from the classic 1975 film Dog Day Afternoon. Trapped in a bank by the cops during a bungled robbery attempt, Al Pacino’s character, Sonny Wortzik, is offered unconscionable surrender terms by Sergeant Moretti:

Wortzik: Kiss me, man.
Moretti:  What?
Wortzik: Kiss me. When I’m being fucked, I like to get kissed …

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The collective insanity of the publishing industry

“Publishing is about she who writes and she who reads.
Everyone else can lend a hand or fuck off.”
Hugh Howey

Gene Doucette has a few things to say about the collective insanity of the publishing industry …

Gene Doucette on publishing insanity In 2014, there was a drawn-out dispute between Amazon, and Hachette. The latter is one of the largest publishers in the world, and Amazon is a company that sells things, such as books.  The essence of the dispute was that Hachette—and all the other publishers we affectionately refer to as ‘the Big 5’—wanted more control over the list price of their e-books on Amazon.

That sounds thoroughly reasonable, and it sort of is, but please let me explain because the crazy is in the details.  What was happening was that Amazon was discounting the price of the ebooks, and it may seem like this is something the Big 5 would want to stop, except the markdown was coming off of Amazon’s end.  In other words, if Hachette wanted to charge $15.99 for an ebook, and Amazon marked it down to $9.99, Hachette was still paid their cut of the full price of the book.

More people will buy a book at $9.99 than at $15.99, so essentially, the Big 5 was coming out ahead in this arrangement in every conceivable way.  They collected royalties at an unreasonably high price point while moving the number of units that corresponded to a lower price point.

So of course that had to be stopped right away.

Hachette fought for, and won from Amazon, the return to something called the Agency Model, whereby they set their price and Amazon wasn’t allowed to reduce that price.  So that $15.99 book stayed at $15.99 until Hachette decided to change it.

Soon after that contract was signed, the other Big 5 contracts came due, and they all asked for the same Agency Model arrangement.  Thus, the finest minds in publishing—or one might assume—negotiated themselves out of an arrangement whereby they sold more units at a lower cost without suffering the financial impact that comes with a lower unit cost.

On purpose.

This isn’t even the crazy part.

After securing the right to price their ebooks unreasonably high and having those prices stick, the first thing the collective brain-trust of the Big 5 did was raise their ebook prices even more.  Often, the prices were higher than the price of the print edition, which is just fundamentally insane.

It should come as very little surprise to you that after jacking up the prices of their ebooks at the start of 2015, the Big 5 sold fewer ebooks.

Now here’s the fun part, the part that just makes me shake my head and giggle and wonder how I can live in such extraordinary times.  After six months of depressed ebook sales, the Big 5 announced that the ebook market was slowing down.

Not: “we priced ourselves out of the market and stopped selling as many books”. No no no.  The ebook market!  Is slowing down!

This was celebrated!

I mean it.  One article after another, from the New York Times on down came news pieces declaring that print was making a comeback at long last, and the long national nightmare was over.

All it took was the biggest publishing companies in the world deliberately murdering their own share of the market.  And it wasn’t even true.

 

The Wall Street Journal highlighted declining sales last September with the headline “E-Book Sales Fall After New Amazon Contracts. Prices rise, but revenue takes a hit.” In January, with the annual figures in, The Bookseller positively gloated about it:

… we can without a shadow of a doubt say that e-book volume slid for the Big Five publishers for the first time since the digital age began, collectively down 2.4% to 47.9 million units last year.

 

But what they failed to mention was where those sales went. Here’s what Hugh Howey, co-author of the quarterly Author Earnings Report has to say (his bolding):

more than half the market is now in ebooks, and half of what’s left is online print sales. 75% of your market is online, and publishers are willing to nuke your career in order to protect historical relationships with the 25% that’s left. We have this in their own writing. This is not speculation. Even industry insider Mike Shatzkin has blogged about this strategy and how it has backfired.

 

So the Big 5 are celebrating lower sales and therefore reduced income for their authors. Hugh Howey again:

I’m still pro-author and pro-reader above everything. If Amazon and the Big 5 all go out of business tomorrow, all I’ll care about is whether and how writers and readers can commune. The middlemen are only useful in how they serve these two parties.

Publishing is about she who writes and she who reads. Everyone else can lend a hand or fuck off. According to our data, publishers are mostly doing the latter. I hope they turn that around.

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Two more ways publishers shaft writers

contractThe latest posting on Writer Beware
looks at the arbitration clauses buried in almost all publishing contracts. These clauses say that in the event of a dispute between author and publisher, the matter will be dealt with by an independent arbitrator — which at first sight seems reasonable enough, except that;

  • Arbitration clauses are binding, and supersede your right to go to court.
  • Going to arbitration is NOT like appearing before a judge. Arbitrators are “largely at liberty to determine how much evidence a plaintiff can present and how much the defence can withhold.”
  • Arbitrators are supposed to be impartial, but aren’t necessarily.
  • Arbitrators’ decisions are hard to challenge. Courts are reluctant to reverse them, even where they are obviously unfair.
  • Arbitration can cost you, even beyond any judgement that may go against you. In addition to travel and filing fees, you may have to pay the arbitrator.
  • Christian organizations sometimes require Christian arbitration. Prayer and scripture may be given preference over law and evidence.
  • Some arbitration clauses include bans on class actions. “By banning class actions, companies have essentially disabled consumer challenges to practices like predatory lending, wage theft and discrimination. … Once blocked from going to court as a group, most people dropped their claims entirely.”

Meanwhile, The Passive Voice, highlights deep discount clauses in many publishing contracts that let publishers offer titles to booksellers and wholesalers at big markdowns while disproportionally marking down the author’s share.

The original posting comes from the US Authors Guild which says:

We’ve seen these discount double-crosses applied for sales to book clubs and book fairs, for “special sales” in bulk outside the usual book trade, for large-print editions, for export editions. Let’s say the publisher sells our sample book in bulk for just $2.00. The discount double-crossed author would get one thin dime per copy, a royalty cut of an astounding 93%—even though the net to the publisher would decline by less than 33%.

Even crazier, some reductions can apply even to direct sales from publishers to readers, despite the fact that the publisher gets to keep the share of the transaction that would normally go to a retailer or wholesaler. If anything, an author’s royalty rate on such direct sales should be higher than normal.

Passive Guy, (a lawyer himself), notes:

Standard publishing contracts from large traditional publishers stand out in the constellation of business contracts for their one-sidedness and, in some cases, outright duplicity for anyone who fails to read them very carefully. The way that Randy Penguin and its cohorts write their standard contracts is not the way that Apple, Microsoft, Morgan Stanley, Bank of America, Disney, Intel, Hewlett-Packard, American Express, Merrill Lynch and similar entities write their contracts.
 
PG doesn’t agree with many initiatives undertaken by the Authors Guild, but he’s pleased to see their latest efforts to shine a light on some of the most abusive contract provisions routinely employed by Big Publishing.
 
However, the cynic in PG holds little hope that AG’s efforts will bring about any meaningful reform. Treating authors badly is too much a part of the corporate and cultural DNA of traditional publishing to change. These dinosaurs will die before they evolve.

And in the Comments section, author/publisher Kristine Rusch (AKA Kristine Kathryn Rusch, Kristine Grayson and Kris Nelscott) adds:

It’s really ugly in trad pub contract and royalty land these days. That’s why I continually tell writers who want to be trad pubbed to hire a LAWYER to negotiate their contracts, not an agent (even if it were legal for an agent to do it, which it is not. [sigh]). But do these writers listen? Nope.

 

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