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Whenever the economy contracts -  and ours has definitely suffered a downturn - industries attempt to maintain their level of profit by any means necessary. That usually boils down to squeezing as much as possible out of their employees, while offering less in return. (After all, what CEO wants to give up their private jet?)

"Let them eat cake"

Squeezing employees - that is, requiring more output while reducing their pay (and benefits) -  has been the standard response to economic "corrections" since time immemorial. And, while writers may not feel that they fall in the category of "employee" they are certainly a resource that can be squeezed.

The Authors Guild, in their survey of 1,674 members, reports that since 2009 authors are feeling the crunch; 56% are now making below the poverty line. For a single person, the Federal Poverty Level is $11,770. For a household of two, it is $15,930, and for three it is $20,090. Most of the authors who answered the survey were older professionals (over the age of 50), so we may safely assume that many are married, and/or have children, which means nearly all of the respondents would fall below the poverty line.

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According to Publishers Weekly:

"the median writing-related income among respondents dropped from $10,500 in 2009 to $8,000 2014 in 2014, a decline of 24%. The decline came for both full-time and part-time authors with full-time authors reporting a 30% drop in income to $17,500 and part-time authors seeing a 38% decrease, to $4,500."

Who is hit the hardest?

In keeping with the (unwritten) policy of squeezing employees, professional writers, even those with decades of experience, saw a substantial decline in income. While authors with 15 - 25 years of experience lost nearly half their income, those with 25 - 40 years of experience experienced a devastating 67% drop.

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From the publishers' perspective, targeting experienced writers makes a certain amount of sense. Authors with track records are known quantities, and their income is something accounting departments can calculate against profits - just as the cost/benefit ratio of permanent employees can be calculated.

This increases the vulnerability of authors with established incomes, as those expenditures can be slashed according to market projections.

For full-time writers the dramatic loss of income may mean having to take on a second job, or even a third, precisely at a time in their lives when they are least likely to be hired.

Retraining for other professions is also difficult for an older population, which means authors may have to take on low-paying menial jobs to make ends meet.

Working as a Walmart greeter is not something a writer expects after 20 years in the industry.

Shifting costs onto the shoulders of writers

Not only are publishers paying their authors less. writers are being asked to foot the bill for their own marketing, which allows publishers to cut publicity costs (and lay off marketing personnel).

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Publishing contracts increasingly include clauses that require authors to build and maintain online platforms to promote their work. Some even require potential first-time authors to have a substantial platform before publishing, a stance reflected in the wish-lists of agents. This is a near impossibility for writers who are just breaking into the field, and places an enormous time burden on them. Social media marketing is also, to a large extent, fruitless - unless you are famous.




In the past, publishers took on the responsibility of marketing and promotion, for which they maintained scores of publicists. The media connections large houses maintained served to offset some of the disadvantages of signing on with a traditional publisher - namely low royalty rates.




Is self-publishing a way out?




The appeal of self-publishing for established authors is obvious. Writers with upwards of 15 years under their belts have experience, not just as writers, but with the industry. They know how the system works. They also have fans. There is no substitute for a loyal following, and any author with a fan base has a distinct advantage over a newcomer - even if both are launching websites, twitter accounts, and social marketing campaigns at the same time.




Fully one-third of the professional writers who took the Guild survey had self-published a book. The attraction of self-publishing has increased exponentially, not only because incomes have dropped, but because alongside the economic contraction, publishers are becoming less supportive of authors. In concrete terms, this means that publishers are imposing restrictions on authors' creativity in order to align their work more closely with what the publisher believes will sell. Publishers base those beliefs not on new, interesting ideas, but on what has sold in the past. No one with an ounce of creativity wishes to be restricted to following the well-worn tracks of previous authors.




What does this mean for new writers?




One of the most attractive things about being a writer is that for the majority of those who take pen in hand (metaphorically, at this point), income is not the motivating factor. People write because: 1) they have a romantic ideal in their head about the thrill of being an author, 2) they really must get a message out to the rest of the world, 3) they like to write. Few anticipate having a meteoric rise to fame and fortune. (Nor should they wish it. Nothing kills a young writer's career faster than early fame.)

Taking into account the dismal findings of the Authors Guild survey, writers must be realistic about their prospects. If publishers continue to cut back on what they offer writers, self-publishing may be the only viable option. Even if new writers don't make a lot of money from their self-published work, at least they don't have a publisher insisting that they cut whole chapters, remove any word longer than two syllables, or rewrite their characters to make them more appealing to 12-year-olds (all of which has happened to me).

There are other options, of course. Forming coops is one of them. Writers who band together have greater chance of success than when each one attempts to make it on his or her own. The cooperative model is one that has existed for decades in other areas of business, why not publishing?

What is abundantly clear from the Authors Guild survey is that something has to be done. Writers are indeed a resource, not just for the industry that profits from them, but for everyone. By reducing authors to penury, we are all the poorer.

 
 
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Last week, I received an email from the Authors Guild which struck a chord. The subject was royalties for electronic books, which, as AG correctly points out, have been dropping even as the market for ebooks is booming. 

When I got my first publishing contract in 1997, the ebook split was 50 - 50. By 2006, when I signed my contract with Random House, the royalty was 25% of retail, and zero on deep discounts. I have no idea how much I lost through that arrangement.

What AG has done is to calculate what authors have lost. While publishers are not gaining as much as they did in the first heady days of ebook expansion (before Amazon forced them to lower their prices), they are still gaining - at the expense of authors. According to AG, authors are losing up to half of their ebook royalties.

Read it and weep... (or, alternatively, read it and self-publish)
____________________

Authors Guild, July 9, 2015

We announced our Fair Contract Initiative earlier this summer. Now our first detailed analysis tackles today’s inadequate e-book royalties. At the heart of our concern with the unfair industry-standard e-book royalty rate is its failure to treat authors as full partners in the publishing enterprise. This will be a resounding theme in our initiative; it’s what’s wrong with many of the one-sided “standard” clauses we’ll be examining in future installments.

Traditionally, the author-publisher partnership was an equal one. Authors earned around 50% of their books’ profits. That equal split is reflected in the traditional hardcover royalty of 15% of list (cover price, that is, not the much lower wholesale price), and in the 50-50 split of publishers’ earnings from selling paperback, book club, or reprint rights. Authors generally received an even larger share than the publisher for non-print rights (such as stage and screen rights) and foreign rights.

But today’s standard contracts give authors just 25% of the publisher’s “net receipts” (more or less what the publisher collects from a book sale) for e-book royalties. That doesn’t look like a partnership to us.

We maintain that a 50-50 split in e-book profits is fair because the traditional author-publisher relationship is essentially a joint venture. The author writes the book, and by any fair measure the author’s efforts represent most of the labor invested and most of the resulting value. The publisher, like a venture capitalist, invests in the author’s work by paying an advance so the author can make ends meet while the book gets finished. Generally, the publisher also provides editing, marketing, packaging, and distribution services. In return for fronting the financial risk and providing these services, the publisher gets to share in the book’s profits. Not a bad deal. This worked well enough throughout much of the twentieth century: publishers prospered and authors had a decent shot at earning a living.

How the e-book rate evolved

From the mid-1990s, when e-book provisions regularly began appearing in contracts, until around 2004, e-royalties varied wildly. Many of the e-rates at major publishing houses were shockingly low—less than 10% of net receipts—and some were at 50%. Some standard contracts left them open to negotiation. As the years passed, and especially between 2000 and 2004, many publishers paid authors 50% of their net receipts from e-book sales, in keeping with the idea that authors and publishers were equal partners in the book business.

In 2004, we saw a hint of things to come. Random House, which had previously paid 50% of its revenues for e-book sales, anticipated the coming boom in e-book sales and cut its e-rates significantly. Other publishers followed, and gradually e-royalties began to coalesce around 25%. By 2010 it was clear that publishers had successfully tipped the scales on the longstanding partnership between author and publisher to achieve a 75-25 balance in their favor.

The lowball e-royalty was inequitable, but initially it didn’t have much effect on authors’ bottom lines. As late as 2009, e-books accounted for a paltry 3–5% of book sales. Authors and agents ought to have pushed back, but with e-book sales so low it didn’t make much sense to risk the chance of any individual book deal falling apart over e-royalties. We called the 25% rate a “low-water mark.” We said, “Once the digital market gets large enough, authors with strong sales records won’t put up with this: they’ll go where they’ll once again be paid as full partners in the exploitation of their creative work.”

E-books now represent 25–30% of all adult trade book sales, but for the vast majority of authors the rate remains unchanged. If anything, publishers have dug in their heels. Why? There’s a contractual roadblock, for one: major book publishers have agreed to include “most favored nation” clauses in thousands of existing contracts. These clauses require automatic adjustment or renegotiation of e-book royalties if the publisher changes its standard royalty rate, giving publishers a strong incentive to maintain the status quo. And the increasing consolidation of the book industry has drastically reduced competition among publishers, allowing them more than ever to hand authors “take it or leave it” deals in the expectation that the author won’t find a better offer.

The elephant in the room

And then there’s the elephant in the room: Amazon, which has used its e-book dominance to demand steep discounts from publishers and drive down the price of frontlist e-books, even selling them at a loss. As a result, there’s simply not as much e-book revenue to split as there was in 2011when we reported on the e-book royalty math. At that time, publishers made a killing on frontlist e-book sales as compared to frontlist hardcover sales—at the author’s expense—because, as compared to today, the price of e-books was relatively high.

When we analyzed e-royalties for three books in the 2011 post, “E-Book Royalty Math: The House Always Wins,” we found that every time an e-book was sold in place of a hardcover, the author’s take decreased substantially, while the publisher’s take increased.

Since 2011, we have found that publishers’ e-gains have diminished. But the author’s share has fallen even farther. Amazon has squeezed the publishers, to be sure. The publishers have helped recoup their losses by passing them on to their authors.

These were our calculations for several books in 2011. The trend was obvious. Compared with hardcovers, each e-book sold brought big gains to the publisher and sizable losses to the author when the author’s royalties are compared to the publisher’s gross profit (income per copy minus expenses per copy), calculated using industry-standard contract terms:

Author’s Royalty vs. Publisher’s Profit, 2011

The Help, by Kathryn Stockett
Author’s Standard Royalty: $3.75 hardcover; $2.28 e-book.
Author’s E-Loss = -39%
Publisher’s Margin: $4.75 hardcover; $6.32 e-book.
Publisher’s E-Gain = +33%

Hell’s Corner, by David Baldacci
Author’s Standard Royalty: $4.20 hardcover; $2.63 e-book.
Author’s E-Loss = -37%
Publisher’s Margin: $5.80 hardcover; $7.37 e-book.
Publisher’s E-Gain = +27%

Unbroken, by Laura Hillenbrand
Author’s Standard Royalty: $4.05 hardcover; $3.38 e-book.
Author’s E-Loss = -17%
Publisher’s Margin: $5.45 hardcover; $9.62 e-book.
Publisher’s E-Gain = +77%

What’s happening now? We ran the numbers again using the following recent bestsellers. Because of lower e-book prices, the publishers don’t do as well as they used to, though they still come out ahead when consumers choose e-books over hardcovers. But authors fare worse than ever:

Author’s Royalty vs. Publisher’s Profit, 2015

All the Light We Cannot See, by Anthony Doer
Author’s Standard Royalty: $4.04 hardcover; $2.09 e-book.
Author’s E-Loss= -48%
Publisher’s Margin: $5.44 hardcover; $5.80 e-book.
Publisher’s E-Gain: +7%

Being Mortal, by Atul Gawande
Author’s Standard Royalty: $3.90 hardcover; $1.92 e-book.
Author’s E-Loss= -51%
Publisher’s Margin: $5.10 hardcover; $5.27 e-book.
Publisher’s E-Gain: +3.5%

A Spool of Blue Thread, by Anne Tyler
Author’s Standard Royalty: $3.89; $1.92 e-book.
Author’s E-Loss: -51%
Publisher’s Margin: $5.09 hardcover; $5.27 e-book.
Publisher’s E-Gain: +3.5%[1]

Exceptions to the rule

It’s time for a change. If the publishers won’t correct this imbalance on their own, it will take a critical mass of authors and agents willing to fight for a fair 50% e-book royalty. We hope that established authors and, particularly, bestselling authors will start to push back and stand up to publishers on the royalty rate—on behalf of all authors, as well as themselves.

There have been cracks in some publishers’ façades. Some bestselling authors have managed to obtain a 50% e-book split, though they’re asked to sign non-disclosure agreements to keep these terms secret. We’ve also heard of authors with strong sales histories negotiating 50-50 royalty splits in exchange for foregoing an advance or getting a lower advance; or where the 50% rate kicks in only after a certain threshold level of sales. For instance, a major romance publishing house has offered 50% royalties, but only after the first 10,000 electronic copies—a high bar to clear in the current digital climate. But overall, publishers’ apparent inflexibility on their standard e-book royalty demonstrates their unwillingness to change it.

We know and respect the fact that publishers—especially in this era of media consolidation—need to meet their bottom lines. But if professional authors are going to continue to produce the sort of work publishing houses are willing to stake their reputations on, those authors need a fair share of the profits from their art and labor. In a time when electronic books provide an increasing share of revenues at significantly lower production and distribution costs, publishers’ e-book royalty practices need to change.

[1] In calculating these numbers and percentages for hardcover editions, we made the following assumptions: (1) the publisher sells at an average 50% discount to the wholesaler or retailer, (2) the royalty rate is 15% of list price (as it is for most hardcover books, after 10,000 units are sold), (3) the average marginal cost to manufacture the book and get it to the store is $3, and (4) the return rate is 25% (a handy number—if one of four books produced is returned, then the $3 marginal cost of producing the book is spread over three other books, giving us a return cost of $1 per book). We also rounded up retail list price a few pennies to give us easy figures to work with.

Likewise, in calculating these numbers and percentages for the 2015 set of e-books, we are assuming that under the agency model—which is reportedly the new standard in the Big Five’s agreements with Amazon—the online bookseller pays 70% of the retail list price of the e-book to the publisher. The bookseller, acting as the publisher’s agent, sells the e-book at the price established by the publisher. The unit costs to the publisher are simply the author’s royalty and the encryption and transmission fees, for which we deduct a generous 50 cents per unit.   

The Authors Guild | 31 E 32nd St | Fl 7 | New York, NY 10016 | United States 

 
 
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There is something fascinating about watching Amazon devour the book industry. It's like watching a snake wrapping itself around its mesmerized prey. From squeezing Random House to putting the screws on university presses, Amazon is the anaconda of the publishing world. The spectacle leaves us horrified, yet helplessly entranced.

Traditional publishers are hoping that Amazon will be distracted by selling nutritional supplements, or trade secrets to the DoD, but somehow I don't think that is going to happen.
______________________________________
DBW 2014: Amazon, Subscription and the Book Business

Publisher's Weekly, Jan 16, 2014

By Calvin Reid

Although the online retailer seemed to be the shadow topic behind most of the panels at DBW 2014, yesterday morning Amazon was front and center with presentations from Stone and Esposito—individually and in tandem—on the retailer's past and present business pursuits. Although most DBW attendees are familiar with the story, Stone took them on a trip through the recent past outlining Bezo’s aggressive pursuit of market share and Amazon’s expansions beyond books into streaming movies, toys, electronics and now, even fashion, filmmaking and TV shows through its Amazon Studio unit. It’s a story told quite well in Stone’s book: Bezo’s focus on customer satisfaction (fast delivery, great prices), razor-thin algorithm-driven profit margins and an ever-increasing enviable ability to exploit inefficiencies that Amazon seems able to identify before anyone else. It’s also the story of Bezo’s remorseless tactics and business culture—Stone noted Amazon’s notorious Gazelle Project that applied pressure on small publishers to get better discounts.

Stone said Amazon will “continue to be ruthless and self-absorbed” as it continues to disrupt new areas of the book industry and other media areas. Amazon has opened a new 44,000 square foot photo studio in Brooklyn to produce photographs for its apparel/fasion business. The retailer has a fast growing grocery business and both Stone and Esposito pointed to Amazon plans to launch its own TV set box. But these new ventures are unlikely to provide much solace to the book industry or distract Amazon from the book trade, both presenters said, because Amazon will continue its relentless pursuit of market share in the book industry. “If e-book sales flatten, they will look for new ways to boost them,” Stone said, “packaging books together,”—he cited Amazon’s Matchbook Project which bundles e-books with print—and there’s even the possibility Amazon will experiment with physical spaces, setting up its own showrooms to display books and other kinds of merchandise.

In other words, look for more of Amazon’s characteristic efforts to enter businesses and “build moats”—low prices and customer-stroking service built on tiny margins—around them that will continually feed its growth and discourage other companies from entering the same business category. Esposito (with a grant from Carnegie Mellon) has organized a university press research project to look at academic press book marketing.

Esposito outlined efforts by Amazon to squeeze ever-tougher terms from cash-strapped nonprofit university presses as well as its efforts to displace distributors like B&T and Ingram with cheaper prices and faster service. He even outlined a “supply chain paradox,” a case study of how Amazon orders titles from third-party distributors, gets them to ship books to libraries overnight packaged in an Amazon box—although paradoxically the same distributor would take longer to ship the title if the sale came to them directly. Esposito said Amazon has about a 10% share of the library market and is taking a growing share of overseas sales of academic titles, disrupting the roles of conventional distributors. “Amazon is thinking 3-5 years ahead and positioning themselves accordingly,” he said.

 
 
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This fascinating little industry tidbit (below) appeared in Publisher's Weekly a couple of weeks ago. Wattpad, for those of you who are not familiar with the site, features free chapters of self-published books. It boasts a readership in the millions. (Its Alexa ranking in the US is 2,553, which is very good.) This makes Wattpad an excellent platform for new writers, who generally care more about getting noticed than raking in the cash. (That comes later.)

Given Random/Penguin's recent launching of its various e-imprints, Loveswept among them, I was wondering how it was going to compete with the lure of Amazon's KDP Select, a program that has dominated the self-publishing scene for more than a decade. KDP Select allows writers to give away their books during 5 out of every 90 days in exchange for exclusive distributing rights. As a promotional tool. nothing beats giving something away for free, so Amazon, which has an immense reach, drew writers to it in droves.

Random/Penguin's strategy, apparently, is to give books away for free before they are released. Chapters will be published on the Wattpad site in serial form, another tried-and-true method for hooking readers.

The progress of Knox's novel, Truly, is something the industry will no doubt keep a close eye on. If Random/Penguin's strategy works, it will solve the pesky problem of how to build an online readership while undercutting Amazon's most successful marketing scheme.


Random House's Loveswept Partners With Wattpad

Publisher's Weekly, Aug 19, 2013

Thanks to a deal between Random House's digital-only romance imprint, Loveswept, and Wattpad, author Ruthie Knox will have her new series appear in serialized form on the online writing (and reading) community. Through the deal, Knox's novel Truly, which is the first title in a planned series, will debut on Wattpad as a free story in the fall, before being released as an e-book by Loveswept in August 2014.

Chapters from Truly will begin appearing on Wattpad on September 3, and continue to appear until the conclusion to the story is posted on November 4. Throughout the process, RH will invite Wattpad readers to take part in choosing the cover for the e-book. The effort, RH said, will also allow a high level of author access to Knox as readers will be able to use Wattpad's platform, which has mobile engagement, to contact her

Allison Dobson, v-p of business development and digital publishing at RH, said that Wattpad offers an "innovative approach to content creation and distribution," noting that the site already draws "millions of voracious readers" from all over the world.

 
 
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Last November, Random House announced the inauguration of three new digital imprints: Hydra for science fiction, fantasy and horror; Flirt for "new adults"; and Alibi for mystery and suspense. Random House, of course, has many imprints, but what was unusual about these imprints is that they were digital only. Even more unusual was the fact that authors could submit their manuscripts directly to Random House - without an agent. Major publishers have not allowed unchaperoned authors to enter their hallowed halls for decades.

The announcement, though welcomed by potential authors, was received with skepticism by those who knew better; In the publishing industry the deck is always stacked in favor of the house. The House, in this case, was offering "revenue sharing" in place of an advance. Random House was also requiring authors to foot the expenses of production, and, most onerous of all, demanding rights for the term of the copyright. (Why even have a copyright in that case?) John Scalzi called the Random House conditions "a horrendously bad deal" and advised authors to "run away" as fast as their legs could carry them.

Random House eventually bowed to pressure and offered a more traditional deal for writers. Apparently, that deal was sweet enough to attract several new authors. Of the six titles Alibi will release next year, five are by debut authors.

RH Imprint Alibi Announces Debut Titles

Publisher's Weekly, August 14, 2013

Alibi, the digital-original mystery and thriller imprint of the Random House Publishing Group, announced the acquisition of its first six titles. The new publishing program will launch with The Last Clinic by Gary Gusick, the first novel in the Darla Cavanaugh mystery series.

Alibi senior editor Dana Isaacson has also acquired the following titles, scheduled for release in late 2013 and throughout 2014: The Garden Plot, by Marty Wingate; The Final Age, by Pierre Ouellette; Maxwell Street Blues by Marc Krulewitch; The Travel Writer by Jeff Soloway; and A Penny for the Hangman by Tom Savage.

 
 
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I love getting letters from Random House! They spice up their communications with such truly inspiring phrases: "sacred trust," "supply chain," cutting-edge," "market analytics capabilities," and, most stirring of all, "penetration of emerging markets." (Be still my heart!) 

What does this letter actually mean? Nothing, really. For those who like to read between the lines, one could infer that RH/Penguin feels left out of the ebook market. (We don't feel their pain.) Unfortunately for them, Amazon moves faster and more efficiently than traditional publishers. What's more, Amazon has captured the hearts (and market) of self-published authors everywhere.

Run, Markus! Run!

MARKUS DOHLE
CHIEF EXECUTIVE OFFICER
MEMBER OF THE BERTELSMANN MANAGEMENT SE EXECUTIVE BOARD


July 1, 2013

To Our Authors,

Today, Random House and Penguin are officially united as Penguin Random House. For us, today is a beginning, and I very much want to reach out to you on our first day as a new company, because it all begins with you: you and the books you write and entrust to us to publish. For us, this is a sacred trust, one that before today Penguin and Random House have honored separately. Now it is a commitment and a privilege that unifies us.

Going forward, we will be defined by our mission for publishing with passion the books you write. In our author-focused, publisher-empowered culture, we respect that your most important day-to-day relationship is with your editor and your publishing team, and that will remain untouched at Penguin Random House.

Continuity within Penguin Random House will benefit all of us: The continuity of nearly 250 imprints and publishing houses worldwide, which will retain their individual identities and autonomy. The continuity of experienced, knowledgeable global and local leadership teams, drawn from both Penguin and Random House, who will fully support our publishers in realizing their objectives and your vision for your books. The continuity of vigilant protection of your intellectual property and copyrights.

Over time, as we gradually begin to integrate our companies, we will learn from one another and evolve to better serve you and your readers. With both businesses performing well, we can take our time with this process, to better understand and analyze the complexity and nuances of these important decisions.

One key development I am personally most excited about involves the future investments we will be making on a global scale for growing your readership in all markets. We will be strengthening our supply chain and our support services for physical booksellers while broadening opportunities in the digital arena. We will be developing more cutting-edge marketing tools and programs, further expanding our consumer insights and market analytics capabilities, and continuing to accelerate our penetration of emerging markets worldwide, all of which will allow us to maximize the number of readers we reach on your behalf.

The creation of our new company is the strongest possible affirmation of the future of trade publishing, and of the importance of maintaining strong and vibrant publishing companies, with diverse and innovative editorial teams. Our unprecedented alignment of resources and relationships is built on this foundation: the passionate belief that connecting authors and readers is at the heart of all we strive to accomplish together. On behalf of my colleagues, I deeply thank you for the opportunity to publish your books.

All my best,

Marcus Dohle
 
 
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Article first published as Random House Opens Its Doors to Self-Published Authors, Perhaps on Blogcritics.

Vanity of vanities; all is vanity

With a few famous exceptions, self-publishing, aka “vanity” publishing, is the kiss of death for writers. For aspiring writers hoping to take a seat in the hallowed halls of authordom, launching a novel with a self-published imprimatur was almost like having a scarlet A stitched onto your bodice – as far as the major houses were concerned.

Then, along came Fifty Shades of Grey, originally published as an ebook by an obscure “virtual” publisher in Australia. Within a year, Amazon announced that it had sold more copies of Fifty Shades than Harry Potter. The publishing world was shaken. An ebook, fan fiction no less, had outsold the top-grossing series of all time. Random House, still smarting from having turned down J.K. Rowling, leapt to its metaphorical feet and did the unthinkable. It picked up a self-published ebook. This was a first for the world’s largest publisher, an opening of doors that had, up until now, been almost impossible to enter. It was hailed as a turnaround for the industry. But was it?

Random House’s sudden epiphany - “there’s gold in them thar hills!” - was followed by yet another Eureka moment. Anybody can sell electronic books! Random House immediately threw its hat into the ring, and started its own digital imprints: Alibi (mystery), Loveswept (romance), Flirt (for “New Adults,” whoever they are), and Hydra, a sci-fi imprint aptly named after a multi-headed reptile which was so poisonous even its tracks were deadly. Notwithstanding the ominous association with Greek monsters, Random House held out the biggest carrot of all time: Authors could submit their works, even those “previously published,” directly to Random House, thus bypassing the almost insurmountable hurdle of snaring an agent.

 Naturally, there was a catch – or two.

The first catch was that authors would have to bear the costs of publication. This is also true for self-published authors, though now those costs would be exclusively determined by Random House. The second was that instead of receiving the traditional advance against publication, there would be “profit sharing.” The publisher and author would split revenues 50/50. As it turns out, “profit sharing” is simply a rebranding of the Subsidiary Rights clause of the standard Random House contract, in which proceeds of electronic books, audiobooks, translations, etc. are divided equally between publisher and author.

In short, by removing up-front payments to the author, while simultaneously eliminating all of its own expenses, Random House was imitating a vanity press.  But, unlike vanity houses, they would take half of the profits. Random House was hoping nobody could add.

The Science Fiction and Fantasy Writers Association (SFWA) not only added, they subtracted their members. In a scathing letter sent to its members on March 6, the SFWA stated that it had “determined that works published by Random House’s electronic imprint Hydra cannot be used as credentials for SFWA membership, and that Hydra is not an approved market.”

The reason? “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.”

Needless to say, there are serious ramifications from being blacklisted by sci-fi’s largest and most influential writer’s association. Random House was compelled to make an immediate rebuttal.

“We read with interest your posts today about the new Random House digital imprints and our business model,” wrote Allison Dobson, V.P., Digital Publishing Director. “While we respect your position, you’ll not be surprised to learn that we strongly disagree with it, and wish you had contacted us before you published your posts.”

The opening of this letter precisely mimics the simulated regret that politically correct parents employ when punishing their wayward children: We like you, but we don’t like what you did.

Sci-fi wrists duly slapped, Allison now proceeded to the spin, “with a profit-share model … the author and publisher share equally in the profits from each and every sale. In effect, we partner with the author for each book.” Allison describes this partnership as “an all-encompassing collaboration.”

(Translation: We are on your side. We’re really your friends.)

Addressing costs, Allison says, “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.”  

(Translation: You’re too young to handle this. Leave everything to us. We know what’s best for you.)

As a disciplinary device, this letter was nothing short of brilliant. It hit every aspiring author’s weak spots in a way that nobody could resist. But Random House has had plenty of practice at this game. These tactics are the stock-in-trade of publishing houses: shining promises, followed by intimidating jargon, followed by incomprehensible terms.

SFWA did not recant, and Random House was forced to comply with the usual standards of print publication. Authors submitting work to Random House’s electronic imprints are now offered a choice of the advance against royalties model, with a royalty of 25 percent of net receipts, and the publisher “will cover production, shipping, and marketing for all formats at 100 percent of cost.”

The day has been won by organized labor, but in reality nothing has changed. Authors still provide the raw materials (for a small percentage), and publishers provide the finished goods for the bulk of the profit. Whether it takes on a new guise, sports a new brand, or appears to adopt a new format, The thing that hath been, it is that which shall be; and that which is done is that which shall be done: and there is no new thing under the sun.

Get the details:

http://www.publishersweekly.com/pw/by-topic/digital/content-and-e-books/article/56244-rh-responds-to-sfwa-slamming-its-hydra-imprint.html

http://www.atrandom.com/eoriginals/index.php (New RH Imprints)

http://www.blogger.com/comment.g?blogID=17222280&postID=6545427618418573673&page=1&token=1364342448331 (Writer Beware blog)

http://www.digitalbookworld.com/2013/sci-fi-and-fantasy-writers-group-condemns-random-house-hydra-digital-imprint/


 

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