more BS from Amazon

Dear KDP Author,

Just ahead of World War II, there was a radical invention that shook the foundations of book publishing. It was the paperback book. This was a time when movie tickets cost 10 or 20 cents, and books cost $2.50. The new paperback cost 25 cents – it was ten times cheaper. Readers loved the paperback and millions of copies were sold in just the first year.

With it being so inexpensive and with so many more people able to afford to buy and read books, you would think the literary establishment of the day would have celebrated the invention of the paperback, yes? Nope. Instead, they dug in and circled the wagons. They believed low cost paperbacks would destroy literary culture and harm the industry (not to mention their own bank accounts). Many bookstores refused to stock them, and the early paperback publishers had to use unconventional methods of distribution – places like newsstands and drugstores. The famous author George Orwell came out publicly and said about the new paperback format, if “publishers had any sense, they would combine against them and suppress them.” Yes, George Orwell was suggesting collusion.

Well… history doesn’t repeat itself, but it does rhyme.

Fast forward to today, and it’s the e-book’s turn to be opposed by the literary establishment. Amazon and Hachette – a big US publisher and part of a $10 billion media conglomerate – are in the middle of a business dispute about e-books. We want lower e-book prices. Hachette does not. Many e-books are being released at $14.99 and even $19.99. That is unjustifiably high for an e-book. With an e-book, there’s no printing, no over-printing, no need to forecast, no returns, no lost sales due to out of stock, no warehousing costs, no transportation costs, and there is no secondary market – e-books cannot be resold as used books. E-books can and should be less expensive.

Perhaps channeling Orwell’s decades old suggestion, Hachette has already been caught illegally colluding with its competitors to raise e-book prices. So far those parties have paid $166 million in penalties and restitution. Colluding with its competitors to raise prices wasn’t only illegal, it was also highly disrespectful to Hachette’s readers.

The fact is many established incumbents in the industry have taken the position that lower e-book prices will “devalue books” and hurt “Arts and Letters.” They’re wrong. Just as paperbacks did not destroy book culture despite being ten times cheaper, neither will e-books. On the contrary, paperbacks ended up rejuvenating the book industry and making it stronger. The same will happen with e-books.

Many inside the echo-chamber of the industry often draw the box too small. They think books only compete against books. But in reality, books compete against mobile games, television, movies, Facebook, blogs, free news sites and more. If we want a healthy reading culture, we have to work hard to be sure books actually are competitive against these other media types, and a big part of that is working hard to make books less expensive.

Moreover, e-books are highly price elastic. This means that when the price goes down, customers buy much more. We've quantified the price elasticity of e-books from repeated measurements across many titles. For every copy an e-book would sell at $14.99, it would sell 1.74 copies if priced at $9.99. So, for example, if customers would buy 100,000 copies of a particular e-book at $14.99, then customers would buy 174,000 copies of that same e-book at $9.99. Total revenue at $14.99 would be $1,499,000. Total revenue at $9.99 is $1,738,000. The important thing to note here is that the lower price is good for all parties involved: the customer is paying 33% less and the author is getting a royalty check 16% larger and being read by an audience that’s 74% larger. The pie is simply bigger.

But when a thing has been done a certain way for a long time, resisting change can be a reflexive instinct, and the powerful interests of the status quo are hard to move. It was never in George Orwell’s interest to suppress paperback books – he was wrong about that.

And despite what some would have you believe, authors are not united on this issue. When the Authors Guild recently wrote on this, they titled their post: “Amazon-Hachette Debate Yields Diverse Opinions Among Authors” (the comments to this post are worth a read).  A petition started by another group of authors and aimed at Hachette, titled “Stop Fighting Low Prices and Fair Wages,” garnered over 7,600 signatures.  And there are myriad articles and posts, by authors and readers alike, supporting us in our effort to keep prices low and build a healthy reading culture. Author David Gaughran’s recent interview is another piece worth reading.

We recognize that writers reasonably want to be left out of a dispute between large companies. Some have suggested that we “just talk.” We tried that. Hachette spent three months stonewalling and only grudgingly began to even acknowledge our concerns when we took action to reduce sales of their titles in our store. Since then Amazon has made three separate offers to Hachette to take authors out of the middle. We first suggested that we (Amazon and Hachette) jointly make author royalties whole during the term of the dispute. Then we suggested that authors receive 100% of all sales of their titles until this dispute is resolved. Then we suggested that we would return to normal business operations if Amazon and Hachette’s normal share of revenue went to a literacy charity. But Hachette, and their parent company Lagardere, have quickly and repeatedly dismissed these offers even though e-books represent 1% of their revenues and they could easily agree to do so. They believe they get leverage from keeping their authors in the middle.

We will never give up our fight for reasonable e-book prices. We know making books more affordable is good for book culture. We’d like your help. Please email Hachette and copy us.

Hachette CEO, Michael Pietsch: I HAVE REMOVED THIS EMAIL

Copy us at: readers-united@amazon.com

Please consider including these points:

- We have noted your illegal collusion. Please stop working so hard to overcharge for ebooks. They can and should be less expensive.
- Lowering e-book prices will help – not hurt – the reading culture, just like paperbacks did.
- Stop using your authors as leverage and accept one of Amazon’s offers to take them out of the middle.
- Especially if you’re an author yourself: Remind them that authors are not united on this issue.

Thanks for your support.

The Amazon Books Team

P.S. You can also find this letter at www.readersunited.com


MY FIRST RESPONSE

Dear Nathan:

If I am going to cc Amazon on an email to Michael Pietach, you will surely agree it is proper to cc Jeff Bezos directly.

Could you get me his functional Amazon address for that purpose?

And then send it to every KDP author as well? 

Or even just settle for sending us Russell Grandinetti's.

There are a lot of things you can do in a war.  Sending thousands of people the email address of a CEO of a major company shouldn't be one of them.

Every one of you should feel some measure of personal disgust to work for such a company.

This is not right.  You should be ashamed.  

Joshua Bilmes, President

JABberwocky Literary Agency, Inc.

(someone in the comments mentions that a jeff@amazon.com email address was given out, but it has been an open secret for years that this was Jeff Bezos' address once upon a very long time ago, but has long been staffed by customer service people.  It isn't his working email address, but rather the one you use to feel empowered when you complain.  The one Amazon gave out, to the best of my knowledge, is, and Hachette does not have a massive customer service staff like Amazon does.)

Battle of the Ebook Superstars

Haven't done a blog post in way too long…

On the subject of Hachette vs. Amazon of which too much has been written, let me make a few points:

When Amazon says that e-book sales will grow if only they are priced cheaper, I consider this to be bullshit.

John Scalzi is much more polite.  He disagrees by saying that he thinks it might well be a true statement for Amazon, but that it might not be true for everyone else, or for the broad publishing ecosystem in general, but that he has no reason to think Amazon is making up the numbers for Amazon.

I don't feel like being that polite.

Amazon's argument is essentially an updated variation of the famous "Laffer Curve" which Ronald Reagan used to justify the argument that lower taxes meant higher revenues.  Which if it is true at all is true only at certain high extremes of tax rates, because after a point you just can't keep getting more by charging less, whether it's e-books or government or chewing gum.   It also isn't accurate to say that you always get more by pricing something more expensively.  I don't believe e-books should all cost $29.99.  In pretty much any market, there is only so much demand to go around.  The number of readers is finite.  The number of books they have time to read is finite.  The budget they have for buying books is finite.  At the margins, you can occasionally pick up an added sale or get a little more money spent on books than on something else, but not forever or indefinitely.  As an example of this, look at all of the added casinos that have been built in the US with the argument that we'll keep the casino dollars here and people will spend more at casinos.  Nope; not forever.  Casinos are starting to close.  Tax revenues are starting to fall short.  You can't keep getting enough more revenue to support endless casinos by building more casinos, and you can't keep getting more e-book money by cutting e-book prices.

Here's a question which I'm asking Amazon right now, and can't wait for the answer:  What do their studies show about dropping prices from $14.99 to $12.99?  Or $12.99 to $10.99?  What is the exact magic that all e-books which are $14.99 should be $9.99?  Very few e-books by our clients have ever carried a $14.99 price tag, actually.

The marketplace should determine what the right price is for any given e-book based on lots of people competing to sell goods through lots of different places.  It shouldn't be set at $9.99 because Jeff Bezos has a divine revelation when the Kindle was launched that the price should be $9.99.

While I disagree with Amazon on certain things, I also admire them on others.

Their battle with Hachette has been waged much more skillfully and artfully than a few years ago when they were battling with Macmillan.  The Macmillan fight with the buy buttons removed was very aggressive and in-your-face and visible.  WIth Hachette, they've done all sorts of things to make it difficult to buy Hachette books, but they've never actually stopped anyone from buying them.  Yeah, you can't preorder them.  And no, you can't get them tomorrow.  But you can get them.  A good tactician learns from the battles of the past, and Amazon has learned its lessons well.

HarperCollins isn't my favorite publisher to deal with.  They are much more set in their territorial ways than other publishers.  But I am quite pleased to see that they now have a website that sells e-books direct to customers.  Publishers need to have that tool in reserve in order to strengthen their position when negotiating terms with Amazon, B&N, and their other big customers.

Here's my takeaway:  A healthy marketplace should determine e-book prices and compensation, and we don't have a healthy marketplace in e-books.  And both Hachette and Amazon are part of that unhealthy marketplace.  Amazon has too big a share of e-book sales, and the self-published authors who instinctively side with Amazon don't realize that this will not end well for them.  But Hachette is in a highly concentrated industry like the airline industry is, where all the big players tend ultimately to be very much alike, doing as little to compete as they can get away with.  Just like one airline seats by rows and another windows in, one publisher pays an export royalty based on a smaller percentage of cover price and another based on a higher percentage of net receipts.  Especially since not every publisher wants every book, we don't often have much choice on where we sell books to, just like we have little choice on how to sell an e-book if we don't sell it through Amazon.  It's not a healthy market, neither Hachette nor Amazon are 100% saint or 100% sinner, and however their battle plays out it still won't be a healthy market.  But there is one thing that we at JABberwocky have in common with Hachette and not with Amazon.  We are a "single play" company.  We make money by having people buy books, and only by having people buy books.  Not by selling them memberships.  Not by selling toasters.  Not by selling cloud computing services.  Hachette has more of an interest in having a healthy overall marketplace for books, while Amazon can survive very nicely without a prospering book industry, which is a much bigger thing than selling books through the Kindle store.

I Want You To Want Me, I Need You To Need Me

In the final of my current series of posts about the e-book business, we're going to talk about the food chain a little bit.

The average run-of-the-mill self-published e-book author is kind of at the bottom of the food chain.  This person goes on-line, accepts the terms of service, the KDP or Nook Press contract, and away they go.

We at JABberwocky, I must admit though I hate to do so, are not that much further up.  We get to be in something called the Kindle White Glove program for agents.  We represent many authors, we have the ability to put up books by multiple published authors, we have people we can talk to.

Above us, I'd probably put small publishers that may be able to provide a few thousand titles, that may have dedicated legal teams to negotiate with Amazon, that may have have a few core titles in a particular category that would be important for Amazon to sell.

Then you've got Open Road or Rosetta Books, dedicated e-book publishers with lots and lots of titles, backers with deep pockets, publishing players running them.  They have multiple major programs from multiple major authors or estates.

And then, the Big Five.

From my experience, I think that the fiercest advocates of self-publishing don't always recognize what it means to be toward the bottom of the food chain.

Let me explain a little bit, what it means:

The Kindle White Glove program goes only so far.  If there is a search algorithm that is screwed up that makes it hard for people to find our books, we have someone we can complain to directly, but this person will not generally do anything to overrule the computer.  Because we are in the White Glove program, our books are nominated for Kindle Daily Deals, but the odds that we will ever get one aren't very good, in part because there isn't a mechanism to explain why it might be particularly appropriate to have a KDD at a particular time.  We can complain about how royalty statements are formatted, and our concerns will be taken seriously, and addressed over a two or three year time frame, maybe.  Just like any KDP author, we'll get treated a little bit better if we do things with Amazon exclusively.  We sign the same KDP contract at the end of the day that anyone else does.

Let's talk about Kindle Daily Deals a bit.  

We recently arranged with Open Road for them to publish six of our Simon R. Green titles as part of a package that will include a Simon R. Green short story collection that will come out this summer.  Within a few weeks of Open Road taking over, they got a Kindle Daily Deal for Simon R. Green.  I couldn't have gotten that.  I have someone to talk to, my titles are in the running, but I don't have a realistic chance at this.  All the people that are higher up on the food chain than me have that chance.  Open Road probably provides slates of nominees for Daily Deals as do the big publishers, with dedicated talk-to-Amazon people at the publisher talking to dedicated talk-to-Open-Road people.  It wouldn't surprise me if there are more Daily Deal slots over the course of a year that go to people lower down on the food chain as examples, models, inspirations, whatever.  Kind of like not too many people actually win the lottery, but you want to have winners to get people to play.  I don't have the scope or the scale to seriously compete for one of only 365 Kindle Daily Deal slots over a year, and I'd have to compete with all the other literary agencies in the White Glove program.

Let's talk about contracts.

We are not sure what to do with Barnes & Noble.  As part of the transition from their PubIt program to their Nook Press program (and why is there a transition, anyway; what is the underlying advantage of making everyone migrate from one platform to another, which there has to be...) we notice, which we hadn't paid as much attention to when our e-book program first started up with PubIt, that B&N isn't as helpful on e-book territoriality in their Nook Press contract as other vendors are.  This is now important to us.  We have more books from our partner agency, Zeno, in the UK, where we may have rights to sell a book only in the US and Canada.  Maybe we'll want to do e-books only in the UK for authors who seem likely to sell something there but don't have a UK publisher.  No vendor promises absolutely for sure that they will sell books only in the territories we say to sell them in, but B&N promises less of an effort.  Not a commercially reasonable effort or a best effort, but not much of an effort at all.

Interestingly enough, if we move from a Nook Press contract to a publisher contract, they will agree to pay more attention contractually to territoriality.  And their price for doing so?  A smaller royalty rate than everyone else offers.  

There are other issues as well, maybe four or five things where B&N's Nook Press contract offers language that is inferior to other people in the e-book space.  I haven't fully joined the battle and am not sure where it will all shake out at the end, but I am 99.99% certain that we are having problems negotiating our contract that wouldn't exist for people higher up in the food chain.  I can't imagine that a Big Five publisher has to take a smaller royalty rate in order to have B&N respect territoriality.  Another of the clauses we are fighting about, I know we don't have the provision B&N wants from us in most of our contracts with Big Five publishers, so those Big Five publishers can't be agreeing to what B&N wants us to agree to.  If the publisher doesn't have it from us, they can't give it to B&N.

I had lunch with an editor this week.  I mentioned how our last couple of checks from Kobo were bigger than our last couple of checks from Apple.  In fact, we just got our biggest ever Kobo check.  Not big, but twice or more what we were getting from Kobo two years ago.  The Big Five publisher this editor works for is doing a much bigger percentage of their business with Apple. We think, this editor and I, that the difference is almost certainly a marketing difference.  The Big Five publisher can get books promoted in different places on the iBooks store where we cannot.  Impulse buyers can find their authors and titles more easily than they can find ours. 

We would like to sell our books via Google, but in order to do so we would have to set up entirely with self-serve via their on-line system without any human intervention.  I'm not willing to do that; I think I'm big enough and important enough that I should have someone to talk to.  Nook and Kobo don't have White Glove programs, but we do have people we can e-mail, and get responses from.  I am 100% certain that the Big Five publishers can talk to people at Google, while for me, selling books on Google is supposed to be as automated and inhumane a process as trying to get human help for using Blogger or Gmail.

And finally...

Rather quietly, Audible just announced that they are reducing royalty rates for self-published audio books done through their ACX program.  Audible is an Amazon company.

What leverage do the authors have?  None, really.

The bigger you are, the more attention you get.

The bigger you are, the more you can go "mano a mano" with the Amazon lawyers.

The bigger you are, the more marketing you can get.

And the bigger you are, the less likely it is that you'll be forced to take a cram-down on your royalty rates.

And there's a reason for this.  

Amazon and the Big Five publishers may argue with one another from time to time.  Amazon removed all the "Buy" buttons from Macmillan titles.  There was a time a few years ago when Penguin stopped providing new releases to Amazon, including things like a #1 bestselling Sookie Stackhouse title.  But at the end of the day, Amazon can get away for a short while not selling Brandon Sanderson's Words of Radiance when it comes out next week, but they can't go for an extended period of time not selling major #1 bestselling books from major authors.  Over time, there are lots of other places to buy e-books, but only one publisher in the US to sell Words of Radiance.  Amazon wasn't entirely incorrect to declare in a statement at the end of the Buy Button Battle with Macmillan to declare bitterly that Macmillan had a monopoly.  But for the JABberwocky e-book program, I don't really have a program if I'm not selling through Amazon somehow or other.  I might have a program without selling through B&N, but I don't have one not selling through Amazon.  

So what will we do if Amazon does ever do with Kindle royalties what it just did with ACX royalties? Will we all decamp to selling only on Kobo, B&N and Google? Will Hugh Howey use his self-publishing fortune to set up a site for selling e-books direct to consumers that will be an open platform for anyone wishing to sign the HHDP publishing agreement? Or do we just have to suck it up?

There is no guaranty, no tablets from Sinai, no fine print in the contract, no law, no nothing, that says that we shall always receive a 70% royalty as the sellers of independently published e-books.  There is more room for that rate to go down than for it to go up.  And if Amazon wants it to go down, the Big Five publisher that has a monopoly on selling Words of Radiance next week has a big advantage in holding the line over the agent that represents the book or the run-of-the-mill KDP published author.

Much as I love the ability of any author to publish their own e-books, I am also self-aware of what I can and cannot do as a provider of e-books.  Heretical as it might seem to say this, I believe on the most holistic global level that the bigger publishers add value to the publication and sale of e-books, because they are bigger and have clout and can get marketing and go mano-a-mano with Amazon and Apple.  And I can say this and say at the same time that their royalty rates are too low; it's simple math that I don't believe the value they add is equal to the percentage they take.  It's also simple math that makes me want to stick with the JABberwocky e-book program, to give us leverage to get those royalties up and because globally I can do better across the full range of JABberwocky clients by offering e-books from a full range of our clients.  Individual results may vary.  Some authors are going to be better off being self-published.  The math may change, if publishers offer a higher royalty rate or if the big companies we deal with to sell e-books make it easier to do business with them just like the Big Five do. 

Prior posts on this subject from recent weeks:

Analyzing the Hugh Howey survey results

Marketing and e-books

Ebook-olution in action

Two interesting developments in the e-book marketplace in recent days.  One of which shall be used as a springboard today, this being the announcement that Richard Curtis has sold his e-Reads business to Open Road.  Like myself and several other leading agents in sf/f, Richard is an alumnus of the Scott Meredith Literary Agency, around twenty years prior to my time there.  He started e-Reads in 1999 when the e-book business was barely in existence, and interestingly, I've traveled in some familiar circles with agents with an interest in the e-book business.  My boss for 15 months at Scott Meredith after Scott died was Arthur Klebanoff, who founded Rosetta Books a couple years after Richard founded e-Reads.

The reason Richard Curtis gave in the press about the sale was that there was a perceived need to do more marketing of the e-Reads list, which would have meant stepping up the investment in the business, and that it seemed better to find a company that could do that rather than to make that investment or seek the investors that would make that investment feasible.

In some ways, Richard Curtis' decision has no bearing on what JABberwocky does with its e-book program.  e-Reads was a separate enterprise from Curtis' literary agency, publishing books by authors who weren't all Richard Curtis clients, designed to make money as a separate entity.  JABberwocky's e-book program is a service to JABberwocky clients, where we take our standard commission of 15% on most of the books in the program (we only take 50%, which is the Open Road model, if the author wishes to have us pay all conversion costs and limit us to recouping those costs solely from within the e-book program) rather than the 50% cut that often prevails with smaller e-book publishers or the 75% cut that often prevails with larger.

And one of the biggest limitations to our e-book program, though not to ours alone, is that we under-market it.  We have one staff person who devotes a good chunk of time to the e-book program, and especially as we have vastly increased the number of books in the program, most of that time has been spent on dealing with authors on sign-up issues, with the conversion house on the file conversions, with our cover artists and cover copy writers, actually getting the books up, and dealing with vendors.  (The vendor issue is a second limitation, which we will look at in another blog post.)

Since we are taking such a small cut, smaller than pretty much any other e-book publisher, I can forgive myself the under-investment in marketing, but it is nonetheless my hope that eventually we can devote more time and energy to this, either by re-tasking as we slow the pace of new books into the program or as part of an overall expansion at JABberwocky.

These are things our marketing person might do:

Send out review copies of our books.  Many of our titles predate the explosion of websites dealing with sf/fantasy, and those sites might cover our releases more or even review some of the books, which came out long before the websites themselves started.

Coordinate more sale pricing, including analysis of the effects of sale pricing.

Help willing authors (and not all are willing to put too much promo energy into their twenty-year old books) to do guest blog posts.

Maybe set up a separate Twitter account or other social media devoted to the e-book program.

Improve the website we have for the e-book program.

Have a small budget to begin experiments with on-line advertising using Google AdWords, Facebook, or other programs.

Videos.

There's lots more that could be done, and I could easily spend close to $50K a year on salary, benefits, and other expenses for a full-time marketing person, even at entry level.

Absent making that marketing investment, our e-book program generally relies on reflected marketing for its success.  Simon R. Green, Tanya Huff and Jack Campbell all do very nicely with reverted backlist and/or collections of short fiction that are included in our e-book program. That is almost certainly because they have books being marketed and distributed by Big Five publishers, have had this for many years, and can rely on an audience that comes along from the Big Five books to discover ours.  In the next tier would be Rick Shelley, a deceased author who had fifteen books published by a Big Five publisher and who writes in an established sub-genre, military sf, that has loyal core readership.  Thereafter, the success of our e-book authors kind of tracks the success of their print books, and considering the nature of our program this isn't a surprise.  But it is limited; we don't have a good way other than word of mouth or reflected marketing to bring someone to a higher place.

Clearly, marketing would be a good thing!

But where is that marketing money going to come from?

Forget about what the JABberwocky cut is, but the total annual royalty revenue from our entire e-book program is under $100K.  Even if you say that we could increase overall revenue by 50% if we had better pricing, and then by another 50% if we had better marketing, the total royalty revenue might just scrape past the $200K mark.  No matter how you look at it, we'd be spending an enormous percentage of gross royalty earnings for the e-book program on the marketing, so where's it going to come from?

If I took a poll, I wonder how many authors in the JABberwocky e-book program would choose to give me another third of their income in exchange for having dedicated marketing, and would feel like they would come out ahead in that process.  Their sales would need to increase by 70% in order for them to break even.

And for the authors at the lowest end of our earnings scale, would it be worth their time and energy to self-publish their own e-books?  We make their decision to have us do it a little easier by taking a small cut of their earnings.  But a lot of our e-books earn less than $20 per month in gross royalty revenue.  How much time do you want to take to self-publish your e-book to save $250 or less over a year vs. having someone else do it?  Can all of those authors even find someone else to do it when the cost of setting a book up for an e-book can be $400, which can take several years to recoup?

Even though I want to spend more on marketing, it is magical thinking to say it will automatically pay for itself.  You can see why Richard Curtis would say he wasn't up for doing that.

From the perspective of the aspiring self-publisher, you must reflect on the fact that marketing expense is a real expense that comes from somewhere.  I am sure we can find examples of self-published authors who managed to succeed by word of mouth alone, just like we can find examples from Big Five publishers of little under-the-radar novels that went on to become something big.  But otherwise, someone has to do the marketing, and it has both a cost and an opportunity cost (what else you could be doing with the money).  When you realize that many people have day jobs, have children, have family or social or volunteer obligations, you can see why many people don't want to do that.  They want to have a publisher put some time and money into marketing their work.  Even if it's going to be one of those Big Five publishers that is very likely to under-market, it will likely be better than they can do on their own.

From the perspective of even the very successful author, let's look at a JABberwocky client like Brandon Sanderson.  He self-publishes his own e-books, and has the staff and support capability to do it.  At the exact hour of this writing, his self-published Kindle edition of The Emperor's Soul and of Legion are both in the 5000s on Amazon.  He makes real money at this.  Before we placed print rights with Emperor's Soul with Tachyon we had a long talk on the cost-benefit of different publication models.  We did this for his Hugo-winning novella The Emperor's Soul, we did this before selling two new Mistborn novels to Tor, and we will continue to do that.

Because even though Brandon Sanderson is underpaid for his e-book royalties, as all authors with the Big Five are, the low royalty rate isn't the only thing the Big Five offer.

Let me demonstrate this very clearly:

In 2013, Brandon Sanderson had two major NY Times bestsellers published, The Rithmatist and Steelheart, and these were among the things that his Big Five publishers did to support those books: outing to the Random House sales conference; major events at BookExpo America including booth signings, official autograph sessions, and the audio tea; national author tours; ads in magazines like Entertainment Weekly, and not just a couple but in a dozen or more; a reciprocal campaign with DC Comics; tens of thousands of books put into mass merchandisers like Walmart, Costco and Target; books on the most prominent "stepladder" displays at Barnes & Noble; other placements in endcaps, section tables and elsewhere that have been running for one book or another almost non-stop for the past nine months and with the release of Words of Radiance in two weeks may end up running for a year or more; a major promotion at dozens of Hudson Books travel locations.  I don't know the exact costs for many of these things, but can any of us doubt when you look at all of this that the publishers have spent well into six figures marketing Brandon Sanderson over the past year?

So we chose a hybrid model for The Emperor's Soul.  Tachyon Press doesn't offer the size of marketing spend that the Big Five can do, but it markets very heavily toward a different part of the sf/f audience than the usual Brandon Sanderson crowd.  And this was a very successful book for Tachyon, even without having e-book rights.  Brandon Sanderson has something for his self-publishing pipeline.  We send a message to the Big Five that we have alternate ways to do some things, and gives us some leverage there.  But should Brandon Sanderson test what would happen if he withdrew from the Big Five ecosystem entirely, and never had a year like 2013 with all that third party marketing investment behind him and his work?

Even though I love marketing and want to do more of it, I am extremely dubious of the Open Road business model.  When I look at the cost of marketing vs. the likely return for my own little e-book program, how can Open Road justify itself?  As they say on their website "Open Road creates connections between authors and their audiences by marketing its ebooks through a new proprietary online platform, which uses premium video content and social media."

To be sure, Open Road can gain benefits of scale in its marketing.  If I have a marketing person who markets 100 books by 20 authors and Open Road has 4200 books by eight hundred authors...  At the most basic level, any website they are in contact with for marketing or any social media anything they have for marketing can be used for many more authors.  It doesn't take much more time to us an email to Pat's Fantasy Hotlist to pitch ten giveaways instead of one or two.  Another benefit of scale:  shortly after we transferred several Simon R. Green titles to Open Road, they were able to get a Kindle Daily Deal for Simon, and in all likelihood we at JABberwocky could not have.  Amazon pays more attention to Open Road because Open Road is bigger, has deeper pockets, many more prominent authors.

However, you also start to come up against limitations of scale.  The acquisition of e-Reads will bring Open Road's catalog to over 4,000 books.  If they scale up their marketing by 30% because e-Reads scales up Open Road, they can.  But ultimately, the marginal cost of hiring an additional publicist, an additional sales person, an additional whomever, is going against the marginal author and the marginal book.  So they have to make choices just like the big publishers do.  Even at JABberwocky, we have to make choices.  When I first went to London Book Fair in the late 1990s, I could include every JABberwocky author in a catalog that I could put together myself, and which was a few dozen pages at most.  The current layout for our 2014 catalogs is over 100 pages divided between a main catalog, YA/middle grade catalog, and special mini-catalogs for our two biggest clients.  How can we feature important backlist which we feel is undersold in the translation markets, major #1 bestselling authors, ongoing bestselling series a level or two down, deserving new clients, and still have room to mention the books we sold in 1997 that are now long out of print?  The bigger we make the catalog, the less impactful it becomes for everyone, and the added expense of going from 100 pages to 120 pages would be allocated against the books we sold in 1997 that are now long out of print.  The expense cannot be justified.  I and the Big Five and everyone else could choose to allocate things differently and say to ourselves the new marketing spend is dedicated to the top of our eco-system, but that isn't how economics works when trying to run a profitable business

The bigger Open Road gets and the more selective it has to become, the more it becomes like the Big Five publishers, only with a better e-book royalty rate.

So we will look closely at how well the Simon R. Green titles do, because we are very curious to see what happens to the sales revenue for those titles.  If Open Road can't increase sales revenue by at least 50% from what we can do on our own, there isn't any good reason to consider having other of our books with Open Road or with other third-party vendors rather than keeping as much by our clients within the JABberwocky program.  If Open Road can increase sales revenue considerably, then we want to have more books with Open Road or other vendors.

But that creates another problem.  Third party vendors will exercise more selection over the books they choose to include.  They will happily take our best and most successful authors, but the JABberwocky e-book program then becomes a little like the health insurance marketplace, subject to adverse selection risks.  We have fixed costs that now have to be allocated against our least successful titles only.  That makes it hard to justify even as a service, and ultimately could force us to stop offering the service for the authors who could most benefit from it, or to increase the subsidy.  (Or, to turn it into e-Reads, scale it up as a separate entity, and be able to offer it as a package.)

This blog post has come rather far afield from a discussion just of e-Reads or just of the marketing of e-books, but I've also tried to approach it with some real rigor, and to give an understanding of how an easy real world question like "JABberwocky should spend more on marketing" which is a simple and inarguable truth, just like it is for all the Big Five publishers we deal with, gets very complicated very quickly when put into the real world.  Not just for us, but for all the authors we deal with, who have many options themselves for publishing and marketing their books.  You'll also see, or I think you will, that I'm not asking and answering these questions from a pre-conceived agenda that there is only one way to do things.  The goal is to go where the evidence leads.  But it takes a lot of trial-and-error with different approaches for different sorts of authors and different sorts of books going down different paths to find all that evidence, so even the search for the best way to make money doing this ends up being a costly one.

I've hinted above at some of the benefits of scale which an Open Road offers vs. JABberwocky, and that is the thread I'll pick up on in my next post on these topics.

The Missionary Impulse

So if all of the people who are so committed to the idea that the whole wide world of writers should be self-publishing their books on Amazon would devote just a wee bit of their energy to getting some more of the developers near our current office to shovel the sidewalks of their development sites so my employees don't slip and fall on ice sheets, I'd be very happy.

Where does one begin to dissect this incredible piece of self-publishing "science" by Hugh Howey...

First, the science doesn't rest on actual figures of how much anyone is making.  Rather, the starting point is to look at a list of Amazon bestsellers, and to determine the future from this list, and this list alone.  Ugh!  I had my first experience with bestseller list quackery in 1990, when a book that I knew wasn't selling very well in hardcover somehow managed to appear on the Locus bestseller list for multiple months.  More recently, Myke Cole has been aiming for the #1 bestseller in the Space Marines category for a book with no Marines in it.  I've seen books appear on the NY Times bestseller list with very little correlation, especially on the mass market side, to their hard sales numbers as reported on Bookscan.  So any article that starts out with breathless promises of answering all questions by analyzing a trove of Amazon bestseller information is looking a little dubious to me.

Then, there is a very beautiful chart putting the average review score of a book next to the average price for the book, with little bars based on whether the book comes from a big five publisher, an indie publisher, etc.

Even assuming that we want to consider Amazon reviews the be-all and end-all of qualitative analysis, this data is questionable.  For one, how do you categorize the many books that are currently from one type of publisher but used to be from another?

But Amazon reviews don't correlate necessarily with quality.  There are the one-star reviews because the e-book costs too much.  There are the one-star reviews because the book that says "graphic novel" in the description is a graphic novel.  I didn't know for sure until I got the manuscript, but I was a lot less surprised than a lot of the one-star review givers that Sookie chose Sam, because the vampires -- hate to break it to anyone -- weren't exactly princes of kind-heartedness and generosity when dealing with Sookie.  Yes, there are some cases where I'd like to take a client of mine, point them in the direction of their Amazon reviews, and say there are some lessons to be learned, but there are way too many cases where the Amazon reviews are not indicative of anything.

The article then jumps from there to saying that the better average reviews for books priced less expensively suggests that readers are grading on a curve and perhaps giving better reviews to cheaper books from self-published authors because e-book prices are too high.

There is a logical fallacy here.  One second, it says Amazon reviews are reliable.  The next second, it says Amazon reviews are graded on a curve where readers are more inclined to be generous to books that offer better value.  A reliable review shouldn't be given on a curve.  It shouldn't have the moral relativism of a politician that likes filibustering judges until either the majority party in the Senate or the party affiliation of the President changes, when all of a sudden night is day and day is night.  The logic is circular, fallacious or both.

Also, ebook prices are not too high.  Compare the value of reading a book to multiple other entertainment options.  The average price of a movie, of an album, of a magazine, of a ticket to a concert or a show -- all of these things are more expensive than books, and usually of shorter duration.  Yes, there are some things like getting Netflix for a month that are cheaper than the price of a book, but on balance, a book give solid value for the money in whatever format you buy it in.

Another thing to keep in mind -- this study basically starts out by saying e-book prices are too high without any underlying rational, other than to say that cheaper e-books get better Amazon reviews.

So we move on to Act Two of the essay.

A chart shows us that Big Five publishers account for just over a quarter of the bestseller days for the most popular e-book categories.  One thing I can agree with -- romance, sf/f and mysteries are among the most popular categories for e-books.  The chart shows that the Big Five publishers account for just over one-quarter of the bestseller days, that this is under-representative, and suggests that the Big Five publishers are therefore under-publishing in the most popular genres.   I might agree with this.  It would be good for my business if there were more sf/f markets, that's for sure.  But the implication that publishers aren't doing anything with this data is flat-out wrong.  In the UK, multiple new sf/fantasy imprints have started up in recent years, we have several clients who are selling in the UK only on account of those new options and imprints, and the e-book business to be had by doing sf/fantasy has to be the motivating force for those imprints, because it sure can't be the Bookscan sales for print editions of these books, which are often below 1,000 copies for the home market.

The next conclusion drawn is that publishers should lower e-book prices.  Which isn't a conclusion that follows automatically from anything else.  Maybe that is why I have seen publishers react to this news by publishing more sf/f in the global English marketplace, but not by lowering their prices.

Next chart.  Daily unit sales by category of publisher.  Again, the category of publisher is a hard nut to crack.  Every book published in the JABberwocky e-book program was once published by a bigger publisher.  I will concede that it is possible to get an approximate sense of sales by looking at Amazon rankings, but it is only approximate.  As an example, being #5 on an Amazon bestseller list on December 23 means more than being #5 on that same list on August 23.  There is then the "eye-popper" of a revelation that indie authors are outselling the Big Five.  Is this an eye-popper?  The Big Five aren't big because of the volume of titles they publisher, they are big because of the revenue they generate for the titles they publish.  In 2013, Simon & Schuster had sales over $800 million.

Then more breathless reporting of news that isn't news, which is that e-book sales in the major e-book categories are higher than the overall sales percentage for e-books.

Run this by me again.  You have one number that is an average, then you have the people that are above average, and you are shocked to find out that the above average people are above average.  This is like breathlessly reporting the discovery that the average GPA is a 2.5, and the Phi Beta Kappa students have a higher GPA than that.

This isn't a secret.  I don't take out ads in the NY Times, but I think I have mentioned in blog posts or on twitter or on panels or in conversation with people that e-book sales were reaching parity, then at parity, then surpassing.  Which isn't to say that plenty of people studying up on the e-book business won't find this to be newsworthy, but it isn't news, or isn't a secret.

From there, Hugh Howey's blog post goes on to discover that big publishers make more profit from e-book sales than print news.  Not news.  Hugh could have read a blog post entitled "Do The Math" that reported this news two years ago.  Two years ago.

After a lot of fuzzy math and bad statistics that occasionally intersect with the truth, Howey comes up with this conclusion:  "Our data suggests that even stellar manuscripts are better off self-published."

Sorry, Hugh.  There is absolutely nothing in your blog post that justifies that conclusion.  This is not the same as saying that your conclusion is wrong.  Maybe it's right.  But if it's right, it's not because of anything -- anything! -- in your blog post.

Your post fails to look at the revenue big publishers can generate from sales other than e-book sales.

It fails to look at the opportunity cost for the writer of having to self-market books rather than have a publisher do so.

It fails to look at the present value of a guaranteed advance vs. royalty money that may or may not come along down the road.

Your advice to publishers is for them to (a) lower e-book publishers (b) give a bigger share of their lower revenue to the authors they publish.  Obviously, the publishers are not going to take this advice.  There is no business model for them in taking in less money while simultaneously giving more to the authors.

I don't say these things because I am in bed with the major publishers.  I fight with the major publishers all the time, including fights to get reversions of rights so the authors can self-publish or utilize our e-book program to publish those same books.  JABberwocky offers e-book services to our clients in part because we want to demonstrate that there are alternative publishing models, and hope that those alternative models will lead to higher e-book royalties.  But that certainly won't happen if the publishers also price every e-book at -- well, what price?  The entire Nightside series by Simon Green is available for $5.99 per book.  Myke Cole's just-published Breach Zone is $5.99.  The entire Mistborn trilogy by Brandon Sanderson, under $14, and his Way of Kings $8.  Should that be $2.99, $4.99, what lower price?

And what then happens when everyone has lowered prices as you suggest?  If every e-book is $2.99, what price does the self-published author go to in order to present as a bargain?  $1.99?  $.99?

How elastic is the demand for books?  Yes, at the margins, you can increase sales some by lowering prices.  But after a point, that stops working.  There are only so many people who like to read with only so many hours in the day to do it.  You can't have a never-ending price war.

Comparisons to the music industry don't help.  The publishing industry has offered a wide range of products at a wide range of prices, and most of those prices reasonable.  The music industry tried to sell $14.99 albums to people who wanted $1.49 singles.  But most people want full novels, not the A side or the B side of the single.  And even in 2014, a typical paperback book costs half or just over what a CD cost in 1989.  Also, authors can't tour.  Unless readers want to go to pay-by-the-panel conventions, authors are stuck making most of their money from writing, so if the publishing business ever does become like the record business, authors are cooked.  All the $1.99 e-books in the world won't be able to keep the typical author going.

More e-book posts to come...

What does the sale of Richard Curtis' e-Reads to Open Road say about the e-book business, e-book marketing, and the costs and benefits to the e-published author.

The Night Shade Writers of America

Usually I try and refrain from posts that will ruffle too many feathers, but I can't tell everyone else we should be talking about the dissolution of Night Shade in public and then not do so myself.

For those of you who don't know, Night Shade Books is a highly regarded -- well, artistically highly regarded -- publishing company specializing in sf, fantasy and horror.  It has published many excellent authors, with beautifully packaged books, published with great love.  It was a company that I wanted to be in business with very, very much.

Unfortunately, the company was poorly run. In 2010, this became public knowledge.  There were issues with late royalties, and with e-books being published by Night Shade when their contracts did not give them e-book rights.  We were aware of those issues already, and we had stopped submitting to Night Shade.  It wasn't just that they were so often late, but that we never felt entirely comfortable with the excuses or forthrightness of the people who ran the company.  But we hadn't gone public.  Authors don't like to admit they aren't being paid, and what high-powered literary agency talks about not being paid?  You wonder: Do they just not want to pay us?  We don't have the clout and everyone else is getting paid?  

In fits and starts over the past few years Night Shade would occasionally make some payments and seem to be making progress, but never went a few royalty periods in a row without having problems.

And now, Night Shade has sent out a letter, the opening paragraphs of which can be found here.  They can't continue as a going concern.  Saviors have been found in Skyhorse Publishing and Start Publishing LLC.  Not to actually purchase the company, but to maybe buy assets if enough people agree to sell them.

So the first thing to notice is that the letter starts with a sentence that, um, nightshades the truth:  "Night Shade Books has had a difficult time after the demise of Borders."

Let's be clear.  For all the artistic contributions Night Shade has made to sf literature, it's had problems paying royalties that go back five years.  For those five years, they have repeatedly promised better things, adding new staff or new systems.  I can't call this opening sentence a lie, because Night Shade has certainly had a difficult time after the demise of Borders.  But since Night Shade's authors have have problems with royalties that long predate the final days of Borders, it is disingenuous.

Even though the e-mail which sent me this letter and the letter itself don't contain any confidentiality language, everyone is acting like it's a secret.  They shouldn't, and these are highlights of the terms and conditions (Scribd is hosting a copy of the letter.):

Your print royalty will become 10% of net proceeds.  This means an effective royalty rate that is likely at or a little under 5% of cover price.  This is not an unusual royalty rate for publishers outside of the orbit of the major NYC publishing companies.  But it is for many Night Shade authors half or less the royalty rate on their current contracts.  It is also an across-the-board rate for all formats.  All publishers usually offer higher royalties on hardcovers than paperbacks.  I can't imagine there are many Night Shade authors that are better off with this royalty rate.  Most are worse off; how much worse depends on publication formats and specific details of current contracts.  Skyhorse handles your print books.

If Night Shade has e-book rights (for some books, it does not), those go to Start Publishing.  The royalty rate is given as the current industry standard of 25% of net receipts.  I am told but have no first-hand knowledge that some Night Shade contracts had offered more.  I'll go off the agent's reservation here, and say no one can complain about this provision by itself.  Authors and agents have often insisted on having re-visit provisions if e-book royalties go up, and if here someone has to reduce a royalty that is above the current industry standard, how upset should you be?

Regardless of what your contract currently says, you have to give Skyhorse and Start the audio rights and second serial rights to your Night Shade book, unless you have sold or are about to sell those rights yourself.  This is significant, because these rights have value.  Even if the underlying print book is caught up in a bankruptcy proceeding, these rights may still have value.  Any author who gives up these rights has to weigh that value against the value of royalties to be paid when signing this letter, and that has to be part of the overall evaluation of the proposed assignment.  The meaning of audio rights is very clear, but I'm not clear if "second serial" is intended to include only "serial" rights as narrowly defined, selling to magazines, or related rights, like selling an excerpt from your novel or a short story from your collection to an anthology or for use on a reading comprehension test.  Without knowing that, it's hard to say if a client with a short story collection is giving up a lot or a little in potential future revenue. Revenue from these relinquished rights would be split 50/50.  The standard practice is that the author's share will be applied against any unearned advances, and because of the lower royalty rates, your advance will earn out more slowly.

If you agree to this, and if enough other authors agree to this, you get paid your current royalties owed. Which is a good thing, but one that has to be weighed against what you relinquish in future royalty rates and other rights granted.

Author Michael Stackpole has an excellent post going through the above provisions and others in very good detail; keep in mind that he is opposed to the agreement, and as he says in his post, he can afford to be.

The alternatives:

If not enough authors agree, Night Shade goes into (probably Chapter 7) bankruptcy.  The contracted rights for your book are tied up in the bankruptcy.  Who knows when or if you get paid royalties and advances currently owed, or how long it will take to resolve.

If enough authors agree, the authors who agree are now with their new publishing companies and get royalties currently owed in exchange for granting new rights and for accepting a (most likely) substantially reduced royalty on future sales.

If enough authors agree but you do not, the rights to your book remain with the partners in Night Shade.  Will they subsequently liquidate/go bankrupt?  Who knows?  None of us are being told how much is being allocated to pay off other creditors, and we have no way to determine whether books left behind will be tied up, or reverted, or in purgatory.

Author by author,  it isn't for me to say if this is a good deal or a bad deal.

For one of my clients it's clearly a bad deal.  The audio and second serial rights to be given up have more prospective value than the present value of anticipated royalties.  For another author, maybe you've already sold audio rights so that doesn't weigh down on the equation, or maybe your unpaid royalties for 2011 are so much bigger than likely future royalties that it is more important to get full payment for the past than to worry about the reduced royalties in the future.

But even if I had a client who might benefit from the deal, I'd have a long hard talk with myself and with my client if any of my clients should sign off on this.

Most important, the deal is structured in such a way that authors who might benefit have to start arm-twisting to get authors who shouldn't sign to sign anyway, to be sure the mysterious unknown threshold of authors is met.  This isn't a hypothetical.  I am told but haven't seen for myself that this is already happening, with authors who want this getting on other authors who do not.

To put this another way, the deal is structured to encourage authors to band together to take what is for some of them clearly a bad deal, rather than to band together to get a better deal for all.

Also implicit in the structure of the deal:  Night Shade authors get to spend the rest of their lives looking at one another, wondering who's gotten the better deal in this process.  There's a mysterious process by which there is this rumor that some authors are going to Skyhorse and negotiating changes, but is anyone willing to tell us whom they've spoken to and what changes have been agreed to?  Tony Lyons isn't responding to my e-mails yet.  Is he too busy?  Is the book I want to talk about not important?  Will the company be willing to offer global changes based on comments it is hearing in these side negotiations?

Authors are being enlisted to fight against one another, but without knowing what constitutes a win. Is the acceptable number of assignments received based on number of authors, number of books, percentage of Night Shade's sales billing?  A book like Paolo Bacigalupi's The Windup Girl, which won every award in the field and sells well, is clearly worth more in this process than any Night Shade book by a JABberwocky client, but I don't know if or how that is reflected in determining if the deal goes through.

The "or else" to the process: The alternative is a bankruptcy proceeding where authors might get pennies on the dollar and have their work tied up for years.

This is quite true.  Authors are unsecured creditors, and are at or toward the back of the line in a bankruptcy proceeding.  Some publishing bankruptcies have dragged on for years and had unpleasant outcomes.  Here is an article from a while back about an author caught up in the Stein and Day bankruptcy that inspired a jeremiad about the process from one of the owners.  This was a poster child for a bad publishing bankruptcy in my early years in the business.

I am not a bankruptcy attorney and don't know how a Chapter 7 might differ from a Chapter 11 (the kind big public companies, which Night Shade is not, go through, which we read about in the news) or other kinds of bankruptcy.

But any bankruptcy is a public filing, and it goes before a judge.  Creditors are put into classes.  Writers might be unsecured creditors and somewhere back in the line to get paid, but our interests would be represented as a class.  It might also be possible for authors to group together as a class to hire attorneys to represent us as a class.

The current process is a private free-for-all with no supervision, and we are relying on the same people who've had challenges paying us royalties for several years to now do the right thing for all of us in the private sale process.  If you wonder why this concerns me, you can check out Staffers Book Review which has a "what went wrong" about Night Shade business practices.  Where that post overlaps with my personal experiences, I can concur with everything that's said.

We would also know in public how much Night Shade owes to unsecured authors vs. secured creditors, to authors vs. the printer or other non-author creditors, how much it owes in total vs. its assets.   Nobody is volunteering and nobody is asking for any of these important pieces of information to be provided to us in this private process.  These are important questions.  Sometimes a bankruptcy proceeding drags down the benefit to creditors.  In going bankrupt, Borders was able to pay far less to its creditors than suggested by the straight-up asset/liability calculation because the assets were liquidated in going-out-of-business sales at fire sale prices and a lot of expense was incurred just to go through the process.  But it's still helpful to know in evaluating just how deep the hole is.

With the current process, it is very difficult if not impossible for another bidder to emerge.

The Science Fiction and Fantasy Writers of America (SFWA) has been on Night Shade for the past three years, since their issues became public in 2010.  The organization can be a forceful advocate for writers.  Just a few weeks ago, SFWA got a lot of good press for putting public pressure on Random House (each word there is a different link; I want to make it very clear how much well-deserved good press SFWA got here) regarding the contract terms for some new e-imprints that Random House had started up.

If SFWA thinks this is a good deal, it should be willing to be as public in its support and its discussion of the terms being offered as it was in sharing the terms of the Random House e-imprint contract that was provided to it.

But with this Night Shade situation, SFWA is communicating to members or a subset of members known to be published by Night Shade like this:  "The purpose of this report is to answer some of the questions we have been receiving from you. We ask that you not share this report outside the membership."  Their annotated version of the Night Shade assignment letter is hidden in a non-public area of their website.  And most of what they do say is always accurate as far as it goes, but it's what they choose to say or not say that tilts the entire conversation.  All the risks of saying "no" are prominently highlighted, all the risks of saying "yes" are obscured.  SFWA makes it abundantly clear that there are huge risks in bankruptcy and you may get pennies on the dollar and have your book tied up for years, but the best it can do on the print royalties is say (paraphrasing) "maybe it's better, maybe it's worse" when I suspect the typical author will see a considerable reduction.  It tells us that the 50/50 split on audio and second serial rights which you relinquish is industry standard, but it doesn't say with similar clarity that you are giving up control and one-half of potentially valuable rights in order to get your royalties currently owed. SFWA is right to add the "talk to your agent" disclaimers, but why in this instance vs. almost every other instance is SFWA not informing its members regarding the best right questions to ask when having those discussions.

Another example:

The secret SFWA e-mail says "The branch of [Start] involved here is the publishing subsidiary, headed by Jarred Weisfeld. They indicate they are acquiring Night Shade’s assets specifically because the owner of Start has a passion for science-fiction and wants to be in this genre."  Wouldn't it be preferable for SFWA to ask about and actually identify the owner of Start, instead of only telling us about the mystery owner's passion for sf?  Is SFWA aware that Jarred Weisfeld is also a principal in a literary agency, Objective Entertainment, and is this information that SFWA might wish to provide?  As another example, if you look at the books from Start Publishing that are for sale on Kobo, it appears that their current publishing program is public domain work.

With regard to Skyhorse, the sf/fantasy genre isn't currently represented on the company's website.

None of these things are, prima facie, bad things.  Perhaps: (a) The mysterious owner of Start has been practicing with public domain waiting for a moment like this to have a strong list of copyrighted titles.  (b) The owners of Skyhorse recognize the sf/f genre is an important one where they need a presence and have a plan for entering the genre successfully.  (c) The objections in the sf/f community to having literary agents as publishers have died down for good reason in the 30 years since SFWA objected to having Scott Meredith run an sf/f program for Baen Books, and Richard Curtis has run eReads for many years now.

But why is SFWA leaving me to do the research?  Why aren't they informing authors of relevant facts so authors can make good decisions in consultation with their agents, representatives and IP attorneys?

Since SFWA was aware of the process, does SFWA know if Night Shade was approached by these two companies, or if Night Shade did a vigorous search for other buyers before concluding that these two companies were the best or only alternative to bankruptcy?  Does SFWA know why Skyhorse and Start are splitting the assets, when Skyhorse can publish the e-books itself?  There might be details that would violate confidentiality, like other potential buyers who kicked the tires on the Night Shade car, but total silence leaves me queasy.  If you've ever read a formal SEC filing from a company asking for merger approval, it includes a history.  Written by management, likely self-serving, but with this kind of information presented.

I'm not a big fan of this deal.  But I have tried in this blog post not just to rail against it.  Rather, I'm trying to suggest questions we deserve answers to, either collectively or to grapple with in making our individual decisions. How rigorous a sale process was there?  If bankruptcy puts us at the back of the line, how long is the line?  What is the value of receiving my current royalties in full vs. the reduction in my future royalties, or the value of my current royalties against having full control of my audio rights?  If such a thing could be found would it be better to have a buyer purchase the whole company instead of select assets, even if it meant secure royalties moving forward but a hit on current royalties owed, rather than getting all royalties owed today in exchange for future concessions?

Last but not least, to what extent should my decision on the deal itself be influenced by the structure of the arrangement, the effect it has on the community of sf/f authors as whole?

AN UPDATE:

Jeremy Lassen, one of the partners in Night Shade, has replied to critics of the deal.  You can find that via Charlie Jane Anders at io9.  Jeremy's main argument is this.  "This deal is the last chance I have to keep my promise. This is the last chance I have to make sure that ALL OF MY AUTHORS GET PAID ALL OF THE MONEY THEY ARE OWED. Right now the deal is in the hands of the individual authors, and their agents. I am asking you. Please. Sign off on this deal. Help me make sure all my authors get paid."

One comment I will make:  You can't be so fixated on one specific goal in life that you lose track of the big picture.  The goal of Night Shade here is admirable.  Who wouldn't want every Night Shade author to get the royalties they are owed.  But as I've discussed above, every author needs to evaluate the benefits of getting paid what they are owed today against the costs of this tomorrow.

FURTHER READING:

This post by literary agent Andrew Zack fills in, very nicely, some gaps in my own post.  He knows the people at Skyhorse better than I, and asks directly why, when as he puts it:

In a sense, this entire deal seems to me to be:

Bottom-feeding
Extortionist
I recognize that these are terms that both publishers might find offensive, but surely they must understand how offensive this deal is to the authors involved.

the publisher doesn't want to step up to the plate and be proactive in making people feel more comfortable.

And something Jeremy Lassen would disagree with, also in Andrew's post:

The fact that they want to change the contracts and get extra rights seems to me an attempt to ensure they have jobs when this all gets wrapped up, but if authors are going to lose money in the form of lower royalties and new rights granted, shouldn't these guys lose something, too?  Where is their skin in this game?  If this all goes through, they are in a better-than-ever situation, it seems:  free of the burdens of administration, free of debt, employed, and walking tall.  That hardly seems fair, does it?

Recaparama

I guess it's that time of year when we talk about the year that was...

On the business end of things:

When you're a literary agent, your work often comes ahead of the reward.  With the time lag between a book selling and the royalty reports coming along, a book that sells in January might not bring a royalty until November or with reserves against returns until the following May.  So in 2009 and 2010, we were getting paid for when there were 8 or 9 Sookie Stackhouse books on the bestseller lists in 2008 and 2009.  We were getting paid a lot.  It was also a bit like a one-legged stool, a bit unstable because so much of the income was coming in just a couple checks each year.

In the years since, the business has become more stable.  The Charlaine Harris business is still huge, not as big as when there were 9 books on the bestseller list but still big.  Other authors have gotten bigger in the past few years, Brandon Sanderson or Peter Brett or Jack Campbell.  Not so much bigger as to totally make up for that whole "not having 9 books on the bestseller list at once" thing, but bigger.  So even if my total income is down, I'm happy because the overall business is somewhat more stable.

But 2012 and 2013 are definitely inflection years.  The business is more stable, but because the income isn't just from two checks a year.  So 2012 starts with me, Eddie and Jessie still working out of the living room of my old apartment.  By February we are looking for a real office.  By May, we are in one.  By June, we have added another person to the staff with Brady McReynolds on board to handle foreign rights.  By September or October it becomes obvious we don't have enough people to do everything we need to be doing and we end the year with two 2-day part-timers.  New office, new staff, all of these things cost money, and we're making less of it in 2012 than in 2011.

But we've also had multiple clients move over from other agents to JABberwocky.  Ari Marmell with Jessie, the Ellery Queen estate which Joshua had to leave behind when he left a larger agency to start his own in 1994 is back in the fold.  TC McCarthy and Marie Brennan.  And Ben Parzybok.  The year ends with Joshua getting an offer on a first novel.  We sell audio rights to upwards of 300 titles.  The e-book program grows, and by putting some of the audio money to use on conversion and cover costs it may double in title count in 2013.  Brandon Sanderson doesn't have a new book-length work come out but he has two novellas appear, we sell two new YA series, Rithmatist and Steelheart, that will come out in 2013, and he starts work on the 2nd Stormlight Archive book, so what seems like a quiet year for Brandon is actually a very important one.  Peter Brett turns in The Daylight War, which goes on sale in six weeks and is going to be a major international bestseller in the New Year.  The first of the YA/middle grade novels that Eddie has sold start to appear in stores, I'm a little disapppointed that the brilliant Chasing the Skip by Janci Patterson was so under-published by the people who grabbed it in a pre-empt with such excitement (everyone reading this post should read this book, everyone) but Adam-Troy Castro's Gustav Gloom and the People Taker is launched to good success.  Even though it will never be 2008/09 for Sookie Stackhouse, the series conclusion in May 2013 will be one of the major publishing events of the year.  All of these things feed on themselves, without Brady on board Eddie maybe doesn't have time to take on the new clients Eddie is taking on.  So even though I am spending more money (money to update the databases that I thought we'd nicely updated not so long ago...) while my top line revenue is going down, I feel content.  I will not be content if we're doing all this work and adding all this staff and not seeing some top-line year-over-year growth in 2014 vs. 2013, but that's for two years from now.

Idle thoughts on the business:

Do I mind that Charlaine Harris is winding down the Sookie Stackhouse series?  No!  One of the reasons Charlaine is so successful is because she's always stopped writing a series when she thinks it's run its course.  I'm very excited about the new Midnight Pawn series she's working on now, about the Cemetery Girl graphic novel she and Christopher Golden are working on.  And that's not just agent-speak.  For all the success of the Sookie novels, my mom won't read them because they have vampires in them.  Charlaine is ending a series that has done phenomenally well, in part because it appeals across genre lines, but there are also a lot of people like my mom out there.

I've said over the course of the year that I didn't think the e-book business would continue jumping up by leaps and bounds, that e-readers were cheap enough a year ago that the biggest book buyers probably for the most part had an e-reader in their hands by January 1 2012.  There are signs that this is correct, publishers are saying digital growth is starting to moderate.  However, we're still feeling our way to an e-book future with a lot more change to come from this transition.  All of us can see Barnes & Noble, as an example, where growth in the Nook business is slowing when they want it to be growing because of saturation and the transition from e-readers to tablets.  Their best locations are at risk because they can't pay the rent that others can pay (interestingly enough, Borders had longer leases on their stores which hurt them when their business soured, but now the generally shorter lease terms for B&N are a risk) while their lesser locations are at greatest risk of becoming unprofitable even with smaller drops in sales.  Less obvious to readers but of crucial importance to writers and agents, the actual ability to sell English-language books in the US, the UK and Australia is still heavily driven by the commitment of a local publisher to publicizing books locally, but the growth in e-books and the power shift from local retailers to Amazon may make it harder and harder to sell books locally instead of to large conglomerates intent on a global strategy.  There've always been little dust-ups over territoriality that end up not amounting to much at the end, this may be a little different.

And just to mention again in a year-end wrap-up, 2012 was clearly a year in which we could see the ability of the internet to sell books, NPR for Tobias Buckell, iO9 for EC Myers, general blog touring for Myke Cole.  I was once worried about how people could find books without physical bookstores to find them in, but I am comforted to see that it can be done. New thing in 2012 that I've never done before, calling some clients about cover reveals that their publishers have offered for the client websites and kind of ordering them never never never ever never to do such a thing, if you know anyone in the internet besides yourself you find a good third party location to do reveals where they will be discovered most readily by people not already your fans instead of doing them within your own community, they may want to have an exclusive for a day or an hour after which you can do whatever you want on your website, but let someone else present you to the world.  Some publishers are better than others about arranging third party reveals on their own (and in general I find UK publishers to be ahead of US in this regard), authors seem to get it when I explain but often don't understand it instinctively on their own.

I never expected this to happen, but I've virtually stopped visiting bookstores.  I don't like Barnes & Noble very much, so many of their stores now have such awful selections, and they bore me.  Indies often don't have sf sections.  Just in general, if I could justify making a trip to a DC suburb to visit a B&N and a Borders and maybe a lingering mall store, I can't justify an hour or more of round trip transit time to spend 10 or 15 minutes visiting just a B&N.  So much of our business is now coming from e-book sales instead of sales in actual bookstores.  There's logic to it, but it leaves a bit of an empty pit in my heart.  It's as recently as ten or fifteen years ago that I could spend a day visiting bookstores, spending a half hour more more in each Borders and feeling something special about it.

On a personal front:

Which means, since I'm not visiting bookstores, that I have time to do other things, but it's a struggle for me to spend that time productively, or to think of the excuse when I'm visiting a new city to get out and see the world.  When it works, finding time to do a first-time walk on the Custis Trail to get out to West Falls Church for a dinner instead of taking the Metro, it's nice, but too often I can feel like I'm stretching for a reason/excuse to get out of the routine.

But the big news in 2012 was to have my parents moving back north, from a retirement community in south Florida to an assisted living facility in Connecticut.  My mother had a very bad health scare in the spring, bad enough that I spent my first days in London ahead of London Book Fair wondering if I might be leaving an empty spot at our tables.  It got to be as bad as it did because it was difficult for my parents to deal with it on their own, and once they got some help to get the process going it wasn't a difficult thing to treat.  But I and my four siblings had to have an intervention, as good a word as any, and tell my parents that things had to change.  Not an easy conversation.  Once my parents took the (not so subtle) hint they ended up moving within a few months.  Happily, my parents are now complaining about everything.  Why happily?  They are eating better and have more energy.  They have a zest and thirst to be doing more than they are.  In Florida, they were doing less and less and not really noticing it.  I'm very happy I have four siblings, with four of them the transition cost me around two weeks out of the office spread in bits and pieces over the year and we were all able to do different things at different times.  I don't know how anything would have happened if there'd been just one or two children to help out with things.

During Sookie's peak years, I was able to buy a very nice apartment which should be affordable come what may, short of all the wheels coming off everything.  I've taken advantage of the space to start hosting regular games events for people to play old-fashioned word games like Scrabble and Boggle and new-fangled things like Carcassonne or Ticket to Ride.  I can't tell you how much pleasure I get out of this.  I enjoy playing the games, having people over, the people who come seem to have a good time, I've always gone to conventions and looked enviously at all the intriguing games in the games room, now I own some of them or have friends to bring them and actually get to play them.  I still have insecurity issues, and I worry with each games event that I schedule that it will be one of those embarrassing things where it will be me, Eeyore, and one other person.  I'm also always very insecure that all my clients will leave, after 25 years without too much of that happening maybe I shouldn't, but that insecurity does drive me to keep trying and doing my best.

The apartment also has a large walk-in closet.  A few years ago I discovered Express sold these brightly huged crew-neck Ts that looked so much nicer than the typical tee-shirt for summer wear or as part of an ensemble.  This year they started selling brightly-hued jeans that look decent on me even though I'm heading toward 50 and struggling not to go up a waist size.  But then the more hues of jeans they have, the more hues of Ts I want.  And then I want brightly hued shirts to go along with the jeans and the shirts.  I'm starting to feel like Imelda Marcos with the shoes as I fill the available space in the closet.   As recently as 2004 and 2005, I was making less money than what I now pay any of my full-time employees, in the early years of JABberwocky in the late 1990s I was a little embarrassed to admit to myself that I was making less running my own literary agency than if I were an editorial assistant for a small publishing house.  So I know there are times you don't have money to spend.  But if you don't have to do Old Navy, just to say I've been much happier going to fancier stores, the ones they have at the "good mall" like Kenneth Cole or Armani Exchange, and hunting in store or on-line for the things that are on the sale rack.  And the thing that annoys me is that I could have maybe started buying better stuff on sale for $40 over lesser stuff for $20 years before I actually started doing it. Right now with sale items and a coupon I have three really nice snazzy pair of pants in my shopping cart at Express for $65 total, which is not much money for three nice pair of pants.  Bottom line, I enter 2013 feeling like I have the wardrobe I should have, spending less than even I might think.  Alas, I then decided to splurge on a really nice designer label suit to end the year, I don't think it's something I could have done for $200 at J Crew, it certainly cost more than that.

So let's leave it at that.  I think I've covered the major events for 2012.

touting that horn again

Back in 2011 I did a blog post about some controversy I didn't entirely understand regarding Harlequin's broad efforts to add in or update e-book royalties on some older contracts.  One of the things I discussed was Harlequin's ability to play around some with e-book royalties by self-dealing with various of their international subsidiaries.  And now, lo and behold, Publishers Weekly reports on a lawsuit about just that...

This comes not long after Google and publishers announced a settlement of a lawsuit on pretty much the exact terms I'd suggested might be nice.

My stopped clock has now been right its two times in a day, but maybe it will be right again anyway!

Bragging Rights

Some time back I did a blog post about the controversial and eventually overturned settlement between Google, the Authors Guild, the major publishers and others about the Google project to scan zillions of books and make them available.

Read that post here.  http://brilligblogger.blogspot.com/2009/04/google-settlement.html

This week, the major publishers settled their case with Google, you can read the Google press release about that settlement here. http://googlepress.blogspot.com/2012/10/publishers-and-google-reach-agreement.html

Just to say, I called this one.

The main part of the settlement here is that the publishers get Google's file for their use.

Which is exactly what I said was missing from the larger agreement.

If they had done that same thing three years ago for the broad settlement, our ebook program would have long ago had a lot more books, our clients would have been making a lot more money all along the way.  Instead, the Authors Guikd is still spending how much money on who knows what in the case, while the publishers and Google have now recognized where the fairness is.  Let Google do what it wants in search, so long as it lets you do what you want to sell your book.