Thursday, December 17, 2009

The E-Book Wars Have Really Begun, Part 2

Yesterday, in Part 1 of this post, I wrote about a flurry of events that suggest the phony war over digital publishing is over and live ammunition is now flying. First, three big houses tussled with Amazon over “windowing,” or delaying publication of e-books relative to hardcovers. Then, more momentously, Random House attempted to put barbed wire around e-rights to its backlist.

Next, the most aggressive move yet: mega-bestselling author Stephen Covey—who has long published with Simon & Schuster—announced he had made a deal with Amazon to sell Kindle editions of two of his biggest titles via another electronic publisher.  This, of course, is exactly what big publishers have feared and what Random House’s bluster is trying to forestall. To the extent that e-book sales of Covey’s books supplant sales of their print editions, that’s vital backlist revenue disappearing from S&S’s p&l, not to mention potential growth the house is losing out on. Covey will apparently be releasing some of his new titles through Amazon exclusively, so S&S won’t see those dollars either.

What I don’t understand is why Simon didn’t pre-empt this move by issuing their own Kindle edition: they have already released e-books of several other Covey titles so you’d have thought the terms of an arrangement were in place. You’d also have thought S&S would hustle to get the Kindle edition of a backlist leader like The Seven Habits of Highly Effective People into the market-especially given that Amazon reports Covey stands 13th on their all-time bestseller list. 

I can only assume there are other issues in play or that some negotiation between S&S and Covey broke down--quite possibly over royalties: the author is apparently receiving more than 50% of the net proceeds from his e-publisher. (Adding piquancy, the e-publisher who’s handling Covey’s Amazon title is RosettaBooks, the same one Random House sued over backlist e-rights in 2001.)

This creates an interesting situation.

Simon & Schuster has not conceded that they don’t control e-book rights to backlist titles; they say it’s “their intention” to publish those books digitally. They probably don’t want to pick a fight with Stephen Covey, one of the biggest authors on their list. He says he is happy with them, and they are surely hoping to publish new Covey titles in the future. But if they let him walk away with e-rights to backlist bestsellers, how do they hold the line with other authors? They may suddenly find the whole backlist vanishing.

And if that happens, it will leave Random House—and the other Big Six publishers--in a very awkward position, trying to cling to electronic rights that one of their biggest competitors has given up. 

In short, it looks to me like the free-for-all we have long been expecting has begun. 

(Illustration from "The Seven Habits of Highly Effective Soldiers, Starring Sgt Rock," at Chris's Invincible Super-Blog)


Anonymous said...

I also worry about the publishers who are now scrapping their boilerplates and lowering their ebook royalty rates for authors. Lowering!! What is the rationale for this? By doing this, this publisher is actually commodifying the ebook in a way it hadn't been before. All of a sudden 3rd party ebook publishers begin to look very attractive with a 50/50 split. Had publishers just moved to a 50/50 split to begin with, why would the authors look elsewhere and take the risk with a young unproven start up to distribute their ebook? But hell, for 50%, it looks pretty enticing. I will not be surprised if agents start trying to reserve ebook rights en mass the way audio rights are reserved.

Dovetail Public Relations said...

How about an 85/15 split, author/e-publisher. This is what Smashwords has been doing from day one.

Peter Ginna said...

I'm not aware of major publishers who are lowering their ebook royalty rates, but as I've said before, the whole landscape is in flux, and we have certainly not settled on an industry standard. I presume Random House would make the argument that by all the marketing and exposure they get for the print book, they provide a value (and incur a lot of costs) that an e-book only publisher does not--which is part of the justification for the royalty they offer.

With no disrespect to your innovative business, Mark, Smashwords offers a much more attractive split than Random House--but Random House, or Bloomsbury if I may say so, delivers a lot of publicity, store placement, advertising and so on that Smashwords does not attempt to provide. And we also often offer significant royalty *advances,* which are more important to many authors than the the royalty *rates.*

As has been noted in comments to another post, for very entrepreneurial authors, taking control of their own publishing via businesses like Smashwords offers exciting and even lucrative possibilities. But what traditional publishers supply still has enormous value.

Anonymous said...

Here's the link in case you want to have a peek:

Peter Ginna said...

Anonymous, I stand corrected! Interestingly, the coverage I saw here of the Macmillan announcement focused on their plan to release "enhanced" e-books and ignored the royalty rate issue. Well, as I said, this is a free-for-all. Pricing, scheduling, royalty rates, enhancements--everything is being contested. Stay tuned.

Anonymous said...

Fiction writers are the sweatshop workers of the publishing industry. Most work other full-time jobs to pay the rent. I hope when the dust settles on this "transitional time in publishing" that will have changed.

Peter Ginna said...

Unfortunately, it has always been the case that, except for a tiny percentage of authors, fiction writing does not pay the bills. I fear that this is not likely to change much, whatever shape the brave new world takes. I believe most fiction writers--and many other authors--write because they can't *not* write.

Ernest Hemingway is said to have given this advice to an aspiring novelist: "If anything can stop you, let it."

Terry Stonecrop said...

Wise words from Ernest.

Anonymous said...

Fiction writers should be satisfied to take their pay in applause. It's what we've always been told. But what if new technologies allow competent writers and interested readers to find each other in new ways?

Here's hoping the restructuring of the industry results in fiction writers enjoying a fair share of the fruits of their labors.

Peter Ginna said...

I certainly didn't suggest that fiction writers "should be satisfied" with applause rather than payment for their work. It would be wonderful if the new marketplace allowed them to make more money--and I even think that is possible.

However, I don't think that the problem has been a failure of writers to receive "a fair share of the fruits of their labors."
It's simply a fact that the audience for most fiction, especially outside of genre fiction, has not historically been large enough to provide a big income stream for many authors--or for their publishers.

The margins on publishing any trade book, fiction or otherwise, are just not very large, unless the book becomes a bestseller. In that case both author and publisher profit. More often, neither of them do.

Actually, you could make the argument that advances on fiction so often go unearned that the publishers are often doing worse than the authors are!

Anonymous said...

But why do so many advances go unearned? Could it be that publishers have become so accustomed to the "salmon spawning" approach to marketing that they've let writers and themselves go unrewarded for the massive amounts of time and labor invested in producing a specific book?

Can publishers really afford to continue with this "lay bunches of eggs and hope enough survive the threats of sea, bears and fishermen for the business to continue" approach?

Writers have traditionally had very little control of what happens to their product once it leaves their hands. So if writers aren't earning back their advances, whose fault is that?

Some claim it's the whims of fortune. That was probably true at one time, but in this modern era of marketing it's a notion that's becoming less and less convincing.

Publishers are going to have to re-invent themselves if they want to move robustly into the future. Treating writers as valued partners rather than easily replaceable resources seems like a good strategy to me.

Note: I am not implying that you in any way treat writers as disposable, Peter. I am just musing on the general industry.

Peter Ginna said...

I agree that there are problems with the way publishers approach marketing. And I agree 100% that publishers have to re-invent themselves. Nor was I blaming authors for not earning back their advances. I was merely pointing out that, given that--for whatever reasons, and rightly or wrongly--publishers often have unearned advances or indeed lose money on fiction, it's misleading to suggest that fiction writers have been denied a fair share of the revenue from their books.

That publishers have not always marketed fiction as well as they could have, anyone who knows the business would concede. On the other hand, marketing fiction is really, really hard--harder than it may look to those outside the business.

Anonymous said...

Successful marketing is very hard. That's one of many reasons writers would prefer to continue to write and let publishers publish.

Anonymous said...

In a world without contracts (and non-compete clauses), I would imagine that yes, the prospect of an Author just simply retaining ebook rights in their contracts and then turning around and licensing to some 3rd party ebook publisher would be ideal. What Publisher would even permit an author to reserve ebooks at all, let alone permit them to go publish elsehwere in naked competition with a Publisher's print edition? This Covey thing has got me perplexed.

Peter Ginna said...

You ain't the only one that's perplexed! I will not be suprised if the Covey case, or a similar one, ends up in litigation.