Amazon, Crossings, and J. A. Konrath: Is This Week a "Game Changer"?

Sarah Weinman has a good post up at Daily Finance about two announcements this week from Amazon: first that they have made a deal to publish a new, original book by crime author J. A. Konrath in their Amazon Encores program, previously devoted to republishing older and out-of-print titles. Konrath, who has promoted his own work very effectively on the web and has blogged about how successfully he has sold his work at a very low price on Kindle, parted company with the trade house who had published his earlier books and now will sell his work directly through Amazon.  Weinman points out that, alongside the second announcement--that Amazon will start a wholly new publishing program called Crossings that will publish literature in translation (books formerly unavailable in the U.S.)--that the online retailing behemoth will now be competing directly with publishers, in an arena where Amazon has some powerful advantages. 

With an admirable trace of hesitation at trotting out the buzzword of 2010, Sarah calls these developments "game changing" and quotes the ever-brainy Mike Shatzkin in support of the statement. Meanwhile the also-savvy MJ Rose has a great post at her blog making a seemingly contrary statement: she says there are no game changers any more.  So has the game changed, or not? 

At the risk of saying "everybody's right," I have to take a different point of view: I agree with Weinman and Shatzkin that it's a momentous development if Amazon is really going to start competing head to head with publishers. They have already started picking off the backlist of major authors like Stephen Covey and Paulo Coelho, and if they are now going to get into the frontlist business things will get more interesting. But if you look at the larger picture, it's this: EVERYTHING is changing. So many elements of the industry as I've known it are in play that the one thing we can be sure of is, the game is going to be different five or ten years from now. But I think it's way too early to know whether this particular play of Amazon's is going to be decisive in their favor. Here are some things we don't know that will bear on the answer:

The market for books in translation (as Mike S. points out) has historically been pretty small. Can Amazon's retailing power make it much bigger? If not, the Crossings move may be less significant. 

Will Amazon really want to be in the editorial business? It's one thing to find worthy or marketable backlist titles or new books by authors who have proved themselves. Seeking works undervalued in the current marketplace--like translations--is a logical next step. But to truly compete with publishers, Amazon will need editors--people who find new books and attempt to choose ones that will connect with readers. This process is inherently unpredictable and therefore risky and inefficient--very different from their algorithm-driven business of selling existing books, even obscure "long tail" titles. I suspect Amazon Crossings will find, even with the company's unique ability to reach, say, "readers who bought French novels by women in translation," that some titles on their list do much better than others. 

How big a share of the e-book market can Amazon retain as e-readers proliferate? This question is complicated by the fact that you can read Kindle books on devices beside the Kindle, but whether authors are willing to give Amazon exclusivity on their e-books will surely depend on how much of the market they risk giving up.

Or, will Apple decide to compete with Amazon in the same way? The explosive growth of the iBooks store is going to give Apple similar power to Amazon's in presenting authors to readers. So far they have taken a very different approach, dealing only with the biggest publishers and a few aggregators. But they deal directly with thousands of suppliers in the App Store, and may well move in that direction once iBooks are well established.  

How will contract terms shift between authors and publishers in the coming years? Konrath points out that he makes more money self-publishing via Kindle for $2.99 a copy than he might have in a conventional print deal with a major house, Hyperion, at $14.99. If author/publisher deals evolve, as they are likely to, will the marketing and distribution power of a big publisher become less easy to give up? 

How many authors will be able to replicate Konrath's success at marketing himself? Amazon didn't pick Konrath to sign up just because of the quality of his writing. He has been a creative and assiduous promoter of his work, as Jason Pinter observes in a HuffPost piece. In my experience only handful of authors have the marketing savvy and drive Konrath has shown. If you're already a bestselling author, or a celebrity, you may not need Konrath's smarts. But the model that works for Konrath or Covey may not work for a majority of authors. (This of course still leaves the danger for publishers of Amazon creaming off the most profitable books at the top of the sales curve.) 

How will the role of agents affect the way all this unfolds? I'm not the first person to notice that if there's a danger to publishers in disintermediation, there's a real risk of it for agents too. If all an author needs to do to make $400 a day is upload titles to the Kindle store (as Konrath says he's doing), does she need an agent for that? There's a disincentive for agents to move toward a world where they can't auction projects to Random, Hachette et al. Will they push authors in a different direction, and how many authors will value their agents' advice more than the revenue the agents carve off the author's income? 

I realize I'm much better at asking questions on this blog than at giving answers. But my point here is that with the book marketplace in flux in so many different directions (the above are only a few), it's not even totally clear what "game" we're playing, much less whether even big news like this week's has "changed" it. 

Illustration: Matrix Chessboard, via Wikimedia Commons

When the Publisher Gets the Last Word, It's Often "Goodbye"

In my last post discussing why publishers, in general, don't fact-check their authors' work, I mentioned that it's accepted in the business that the author has ultimate say over the text. While an editor may request, urge, pester, or cajole an author to make a certain change (I have done all of the above), the author gets to say yes or no to it. But as one reader, Judith Ingracia, pointed out, that's not the whole story. 


Publishers have one final recourse if the author refuses to make a change we think is critical: we can refuse to publish the book. Boilerplate contract language requires the author to deliver a manuscript that is "satisfactory" to the house. So if the author digs in her heels, and refuses to revise something that the editor feels will make the book unmarketable--or perhaps, may make it libelous or otherwise legally questionable--or again, let's say, untruthful--the author and publisher may simply part ways. 


Judith asked, 

the book belongs to the author, but if the author wants a *published* book, he/she better listen to the publisher, at least that's what I gather. Am I mistaken in this view? 

Good question. My answer is, you're not mistaken, but the threat of cancellation is almost too blunt an instrument to use as a tool in editorial negotiations. canceling a book amounts to using the "nuclear option," laying waste to the whole project and vaporizing the time everyone has invested in it. (Quite likely vaporizing the publisher's money, too, as on-signing advances can be difficult to recoup.) I'm happy to say this situation has arisen very few times in own experience, but it has happened--it's very unpleasant for all parties involved. 


In general, editors will sigh and let an author get away with some pretty misguided writing before they try reject a manuscript--threatening termination is so traumatic to an author that I at least rarely mention it unless it's a real possibility. In fact, with nonfiction, one would rarely cancel a book for mere differences of editorial opinion: it would most likely be over issues of veracity, accuracy, or legal liability. 

(National Lampoon cover from January 1973, 

photograph by Ronald G. Harris from a concept by Ed Bluestone)

Should Publishers Trust Their Authors? or, Hiroshima Mon Cul

[Thanks to the Huffington Post, which ran this piece on their lively Books page today. You may see future posts of mine there from time to time.]

The kerfuffle of the week has been the news that an acclaimed new book, The Last Train from Hiroshima by Charles Pellegrino, had to be withdrawn by its publisher following the revelation that important details in it, including the testimony of a supposed eyewitness source, were apparently fabricated. 

As happened in earlier cases of authors doctoring the truth, some readers have raised questions about "quality control" problems in publishing, and asked, don't publishers fact-check their products?

Well, no, actually. A major difference between book and magazine or newspaper publishing is that publishers don't have fact-checkers on staff, and never have. This is not, as some cynics might suppose, because book publishers don't care about accuracy as long as a book sells. It's partly because, unlike those media where advertisers support (or used to) a large editorial staff, book publishing has been a far leaner enterprise (or as some would say, a cottage industry).  But a more important reason, I believe, is that in book publishing, unlike journalism, the content has traditionally belonged to the author, not to the house.

This is reflected in book contracts, where copyright is typically retained by the author; more to the point, it's firmly established in publishing culture that you never make editorial changes without an author's consent. As an editor you may lean pretty hard on an author to make revisions you feel are necessary (Gordon Lish's interventions with Raymond Carver being the extreme example)--but ultimately, "the book belongs to the author," and to change it or not is his or her prerogative. With that prerogative goes, inevitably, a greater responsibility for the quality of what you write.

Now, any good publisher wants to produce the best books possible. While we don't have fact-checkers, we have copyeditors who go through manuscripts with a fine-tooth comb, after the editor has already worked with the author to get the book in shape. I have done my own fact-checking from time to time when an author's statement seemed questionable, and the best copyeditors will frequently check sources as well as spelling and punctuation. Furthermore,  any manuscript that might raise issues such of defamation or privacy goes through a careful legal review. In the end, though, we have to trust our authors.

I don't take on a work of nonfiction, especially a controversial or even unconventional one, without satisfying myself, perhaps just at gut level, that the author is presenting the truth responsibly. But I have to recognize that I can be fooled. Reading about the case of Charles Pellegrino, who supposedly produced--or at least, said he had--documentation of his bogus souce (who was a real person, but apparently not present at the event he claimed to witness), I suspect I might well have accepted the author's account.

Once we have decided to trust an author, we usually give him or her the benefit of the doubt on matters of fact just as on matters of style or argument. Of course, this leaves us vulnerable. But in book publishers' defense, the impulse to trust the people you work with is a hard one to overcome. Look at the cases of Janet Cooke, Stephen Glass, or Jayson Blair, whose fabrications sailed through the presumably gimlet-eyed fact-checking operations of the Washington Post, New Republic, and New York Times respectively.

(Photo of the Bocca della Verita, or Mouth of Truth, at the Church of Santa Maria in Cosmedin in Rome, via Wikimedia Commons. It's said that if you tell a lie with your hand in the mouth of the sculpture, it will be bitten off. Maybe every publisher needs one of these?)

Two New Approaches to Publishing: Notes from Digital Book World

I’m just back from attending the Digital Book World conference. I thought briefly about attempting to give an overview of  the whole thing, but there’s way too much ground to cover. For what might be called the strobe-light account, I recommend searching Twitter for #dbw, where many participants tweeted updates from the panels. And Publishers Lunch has posted summaries of most of the key sessions.

Out of many informative and sometimes provocative presentations—and unfortunately I missed several because I could only be in one room at a time—two new “business models” that people talked about yesterday especially intrigued me. One might be called an attempt to fix what’s most broken with the traditional big-house trade publishing business. In that sense it’s backward rather than forward-looking, but a smart and promising way of addressing our problems. 

First, the profit-sharing model of HarperStudio, as explained by founder Bob Miller, where instead of traditional advances and royalties (he reports), the publisher pays a small advance, but splits all revenue, minus direct costs (but not overheads) evenly with the author. The beauty of this approach is not only that it drastically decreases the house’s unearned advance risk, but that it aligns the interest of publisher and author more closely throughout the process.

Marketing budgets and strategies, for instance, can come out of a conversation between publisher and author, not the kind of negotiation where the author and publisher haggle over whether to spend on a book party or a publicity tour.  Bob’s account of the warm fuzzy feelings between HarperStudio and its authors sounds almost too good to be true, but as someone who has always tried to make the author part of the publishing team, even with a more conventional contract, I think there is a lot going for his program. (Roger Cooper’s Vanguard Press, which also offers authors less money up front, more later, plus a guaranteed marketing budget, is a similar and also appealing consultative approach.)

If HarperStudio and Vanguard are smart attempts to fix what’s broken in Big Publishing, Richard Nash’s Cursor is an attempt to “skate to where the puck is going to be,” in Wayne Gretzky terms. Looking forward to the likely future (see my post from Monday) when general-interest publishing is a relic and the publisher’s relationship with a community of interest is its key asset, Cursor envisions selling those dedicated readers not just books, but a variety of ways of interacting with authors—expensive, deluxe editions; 99-cent e-books; even classes or other forms of in-person access. As Richard noted in his presentation, paying $25,000 for an MFA, as thousands in our country do annually, is really a very expensive way of buying access to established writers.  Also novel is his plan to make contracts with three-year terms (and no advances), in the belief the publisher should earn the author's ongoing loyalty rather than aking him  (His session, too featured some other innovative models, Eoin Purcell’s Greenlamp and Angela James’s digital-first Carina Press at Harlequin. Cursor seems to me the most ambitious of the three.)

These ventures have been much written about already,  and in truth it's too early to say how well the results will pan out over the long term.  But they look to me like really welcome developments which, if they work, could point the way for publishers large and small to follow. I wish them all success and will be following them closely.

E-Books: Do I Smell Another Rights Battle Brewing?

I don't know about you, but I can hardly bear to hear any more about e-books for a while, after a couple of weeks of hearing various experts' predictions for the future of publishing; hearing about the cornucopia of new e-readers being shown at the Consumer Electronics Show; and the incessant drumbeat of rumors about the Apple tablet, aka Unicorn. But a new wrinkle in the e-book rights tussle occurred to me as I was pondering Jonathan Galassi's New York Times op-ed that argued why e-book rights to backlist titles like William Styron's Sophie's Choice should remain with Styron's hardcover publisher, Random House, even though their contracts were written before e-books existed.

As I have written here before, there is legitimate (and spirited) debate about that assertion. But what I'm wondering about now is books whose contracts were drafted more recently. In the early 1990s, when the internet was starting to happen and books on CD-ROM were the hot new thing, publishers sensibly began revising their contract boilerplate to include electronic book publication among the rights granted by the author.  However, this new language drew a distinction between what's usually called "verbatim text"--i.e. the display of the author's words via some electronic device--and what was often called "multimedia"--i.e. something that included video, sound, or interactive elements (John Waters' Odoroma, perhaps) along with the written text. And in a large majority of contracts--I'd guess almost all contracts where agents were involved--multimedia rights were reserved by the author.

Most agents back then concurred with the general notion that the publisher ought to control any version of the book that involves reading it as you would the print edition. But most all of us, agents and publishers alike, thought of "multimedia" as something different from "book." (As I said in my last post, it is different from a conventional book and requires a different level of investment in content and editing.) Several agents also maintained that movie studios--agents had wrested movie rights from book publishers decades earlier--would refuse to acquire book properties unless they hoovered up anything multimedia-ish in the deal.

So from that day right up until now, most book contracts  grant "verbatim text" rights to the publisher and reserve multimedia versions to the author.

Are you seeing the problem here? Today, publishers are eager to publish "enhanced" e-books, and the enhancements include, say, author interviews on video. One company, Vook, has launched a business specifically to create versions of print books that include pictures, film clips, hyperlinks and so on.

This may not be an issue for new titles, where the enhanced edition is conceived when or before the contract is drawn.  But it's going to be very tricky for the last 15 years' worth of books. Unlike the situation with authors from the 50s or 60s, where publishers can argue the author's general grant of book rights included a form not yet invented, we're talking about contracts that explicitly do give the publisher the right to a Kindle-type, text-only e-book, but not to a Vook-type, text-plus-video/audio/Odorama version.  Even if the "enhancement" is a two-minute Q&A with the author, filmed with a Flip cam, one could argue that's multimedia.

I still believe e-book rights should stay with the original publisher, but we will have to revise our definitions of e-books and our boilerplate language to avoid a situation where the publisher could find his author issuing a competing e-edition on the grounds it's a "multimedia adaptation."

It won't be the main theater of operations, but this could be a new front in the e-book wars.

How to Make a Small Fortune in Publishing, or, A Bit More on the E-Book Wars

Whew. As I might have expected, last week’s posts on the E-Book Wars (part 1 here and 2 here) attracted a lot of lively and thoughtful comments. They expressed several points of view but two opposing themes can be seen.

One group of commenters asks: Who needs publishers? In a digital marketplace authors can readily reach readers directly. Sure, editing is important but, wrote one, “what’s to stop authors from forming consortiums that hire editors?” Instead of settling for a big publisher’s split of royalties, you could distribute the book yourself and keep 100 percent of the profits, or use a service like Smashwords that offers an 85 percent share. This commenter continued, “Right now the business model is that writers are the suppliers of publishers. But it is conceivable that it could become the other way around.”

Another group sticks up for publishers. In defense of Random House’s claim to control e-book rights, these commenters noted that “Books are words in a precise order and meant to be read,” and ask why an e-book is any different. They also point out “the amount of time, effort and money [involved in] making what goes between the two covers of a traditional book.” They ask, not unreasonably, shouldn’t the publisher be entitled to a significant share of income from an e-book whose value is enhanced by the careful editing, copyediting, proofreading, and so on that go into it?

Both groups have legitimate points to make. The book business looks from one perspective like publishers “buy” content from authors and then resell it. But from another perspective, we’re providing a service—enabling the author to reach readers (and collect money for his content). Around Bloomsbury we sometimes say “the author is our customer.” In a sense we are selling the services of editing, design, printing, marketing, distribution and so on. Could a group of authors do the same things themselves? Yes. Of course, then in effect they’d become….publishers. An authors’ co-op might produce more money for writers than a conventional publishing contract, but I don’t know if it would make either writing or publishing radically more lucrative.

As old hands in the business like to say, “If you want to make small fortune in publishing, start with a large one.”

Much ink and many pixels have been spilled on the Random House e-rights issue discussed here last week, and I don’t think I’ll wade into that still-unsettled question again now. I would observe here that although I raised questions about Random’s position on backlist contracts, I agree with them, and most every other publisher, that e-book rights should not be separated from print rights.

Reading a book is reading a book, whether the item being read is a hardcover, a Kindle, or a PDF on a laptop. Amazon and other e-vangelists argue that e-book sales are additional to print sales—that e-book lovers wouldn’t be buying print copies if they weren’t reading them on their Kindles. I’m sure that is true for some books and some readers, but to some extent we know e-book sales replace print sales. It’s clearly essential for a publisher to control all versions of a book that their readers might want to buy. That much is widely accepted by both houses and agents, though there is still debate about what royalties should be paid.

I also agree that those who want to chop down publishers’ share of e-book royalties are often neglecting the big picture. Not only do publishers enhance the value of an author’s work by editing, proofreading and performing those other tasks that go into producing the product you find in a bookstore. They perform a range of other functions that contribute materially to that value. And one of the most important things that publishers do to market electronic books is—sell printed books! I’ll talk about this more in a future post.

(illustration: Grub Street, later known as Milton Street, from Chambers' Book of Days)

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)

The E-Book Wars Have Really Begun

It seems quite likely that we will look back on this week as the moment when the e-book wars officially began. We may have forgotten it, but electronic books of one kind or another have been with us for a couple of decades (beginning with ill-fated ventures into books on CD).  For most of that time, the actual market was negligibly small. In the last few years the e-book market became significant, but although it generated vast amounts of chatter—ranging from dark mutterings by publishers to utopian visions from technophiles—a sort of uneasy calm prevailed at the frontier where authors and agents, publishers, and Amazon and its competitors eyed each other warily.  There were occasional skirmishes and plenty of saber-rattling (over matters such as Kindle prices or Digital Rights Management) but no party seemed ready to make a move aggressive enough to start a real fight.

But that has now changed—inevitably, because the e-book market has exploded and digital books are the hottest (perhaps the only) growth area in the industry. The calm is over, and real punches are being thrown. You might say the first jab came from three houses (Simon & Schuster, Hachette, and HarperCollins) who announced they were going to delay releasing e-books of their titles until several months after hardcover publication. I agree with the analysis of Mike Shatzkin that these houses are not so much concerned over pub dates as trying to find some leverage to use with Amazon over the pricing issue. 

But the timing kerfuffle was minor compared to the dustup that broke out on Friday when Random House CEO Markus Dohle declared, with chutzpah one can only admire, that the house controls e-book rights for thousands of backlist titles whose contracts made no mention of such rights. This was drawing a line far out in the sand.  Dohle’s bold assertion is, essentially, that e-books are just another kind of “book,” so the contractual language that gives Random exclusivity over all editions of a work includes e-books—even though they had not been invented at the time most of these contracts were signed. 

It’s hard to believe Random can make this claim with a straight face. They went to court with this argument years ago and didn’t get very far. But you can see why they’re trying it on. At stake is potentially millions of dollars in backlist revenue that the house could lose out on if authors take e-rights of their old titles elsewhere.  Even though Random’s argument may be legally weak, by making a show of defending this territory they are presumably hoping to discourage authors from battling them for it. Agent Richard Curtis, who is himself a an e-publisher, observes at his blog, "Someone would have to have a lot at stake to be willing to spend hundreds of thousands of dollars to go up against Random House in court.”

Random may be betting that for individual authors, it won’t be worth the fight. But now that we are seeing explosive growth in e-book revenues, I believe there’s too much money at stake for authors not to contest this ground. The Authors Guild has already blasted back at Dohle, calling Random’s position on the backlist a “retroactive rights grab.”

The Guild also points out that Random House rewrote its contract boilerplate in 1994 and specifically added language to cover e-book rights, which wouldn’t seem to be necessary if they were already bundled in with the rights acquired. I worked at Random House at the time, and well remember sitting in meetings where we discussed the new contract language. I certainly don’t remember anyone saying, “well, we already have these rights, but let’s throw in some extra language about them just to make sure.” The conversations I recall were much more like, “Hm, our old contract language didn’t say anything about electronic books so we’d better make sure we get them from now on.”

In the end, just as the fight with Amazon over pub dates is largely about pricing, the fight over who owns backlist e-rights is largely about royalties. After all, Random House is a hugely potent marketer of books and content; to an author, it’s not clear there’s any company out there that’s going to do better selling your backlist title, and there’s clearly an advantage to marketing print and e-editions together. But Random is paying an e-book royalty of 25% of net receipts, while others offer a 50-50 split or better. That’s a lot to leave on the table.

And that brings us to the second roundhouse blow landed this week. I’ll talk about that in tomorrow’s post. 

(illustration: The Taking of Lone Pine  by Fred Leist) 

Kerfuffle of the Week: E-Book Royalties

One hot topic in publishing this week was Macmillan’s announcement that their new boilerplate contract, across all their trade imprints, will feature a standard royalty of 20 percent of net receipts. This is 5 percent less than the rate offered by some major houses such as Simon & Schuster, Random House (and my own, Bloomsbury). Some houses have paid royalties as high as 50 percent of net.

Here’s an area where, as I've said in an earlier post, we see how our industry has gone from a mature one—where basic contract terms were well established, virtually universal across houses—to what’s almost a state of nature free-for-all as we thrash out how the new, electronic pie is going to be divided.

The 50 percent royalties I just mentioned were blithely agreed to by many publishers back when e-books were mostly hypothetical and e-book receipts were basically zero. For that matter, many agents agreed to rolling them back to 25 for the same reason—it was 25 percent of nothin'.  Now there’s real money flowing in the door and if you’re giving half, or even a quarter of it, to an author, it’s a significant chunk off your bottom line.

Some people make the argument that "e-books don't cost anything to produce," so e-royalties should be correspondingly higher. There are at least two problems with this position:

1. There are many costs that go into creating a book beyond those of printing the physical volume. These might be a lot smaller if we only produced e-books. But as long as we create print books we're paying for jacket designers, typographers, warehouse staff, review copy mailings, etc. None of those costs go away just because you sell a book on Kindle. (For more on this see Bob Miller's post and the comment thread on HarperStudio's blog.) Maybe what publishers should say is, we’ll pay you a 50 percent net royalty as long as you don’t mind that an e-dition is the only one.
2. Publishers are also concerned because we don’t know how much the sales of e-books are cannibalizing p-books. It’s one thing if, as e-vangelists maintain, e-book sales are expanding the market and that revenue is additional to print sales. It’s another if the e-book, quite possibly at a lower price, is replacing the sale of a printed book. Again, in that case, the publisher is probably earning less money on the e-book. Its bottom line will suffer unless it can claw back some of the revenue from the author’s share. And right now publishers are more anxious about their bottom lines than ever. 

I can’t tell whether Macmillan is, as the British say, trying it on, or whether they’re drawing a line in the sand here. They are sure to get intense pushback from agents. But I think the skirmishes around this line will get more intense as e-book revenues grow, which they are doing rapidly.

P.S. Agent and e-publisher Richard Curtis has a typically smart and opinionated post on this at ereads.com. He suggests, and I agree, that maybe the bigger news in the new Macmillan boilerplate is their increased focus (and better royalties) on direct-to-consumer sales. The next frontier for publishers is selling books right to readers instead of being dependent on Amazon and the bookstore chains. How to do this while supporting independent booksellers, which is also vital, is a tricky one, but will have to be a subject for future posts.