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) 

A Book-Lover's Stocking Stuffer

There are all sorts of momentous topics I could be writing about, like the battle instigated by Random House this week over e-book rights to backlist titles. But let's lighten up for a moment. With Christmas approaching, let me recommend a new offering from my colleagues at Bloomsbury that has made me laugh every time I opened it. If you're looking around for Christmas presents for your bibliophile friends--especially anyone in or around the publishing game--get your hands on a few copies of Do-It Yourself Brain Surgery, and Other Implausibly Titled Books. I can do no better than quote the catalogue description of this work:

The Diagram Prize is awarded by the Bookseller magazine each year to the book with the oddest title. Since its creation at the Frankfurt Book Fair in 1978, the Diagram has had some worthy winners, including Bombproof Your Horse, How to Avoid Huge Ships, and People Who Don't Know They're Dead.

And though these titles may seem like surefire winners, each year of this ingenious contest has seen stiff competition across all genres: fiction (Fabulous Small Jews, 2003); instructional (Knitting with Dog Hair, 1994); and even erotica (The Big Book of Lesbian Horse Stories, 2002). Last year's competition featured I Was Tortured by the Pygmy Love Queen—which came in second. Here, collected for the first time, are the fifty best entries the Diagram has ever seen. Presented complete with their (equally outlandish) jackets, these books are memorable, perplexing, and riotously funny. A perfect gift for a book lover or anyone in need of a laugh. 

For some more of the goodies contained in this volume, see this post at the Los Angeles Times's Jacket Copy blog.

The Value of Prepub Reviews, or Why We're Going to Miss Kirkus

There was some wailing, and some gloating, at the news announced today that Nielsen, parent company of Kirkus Reviews, was closing the publication. Kirkus was one of the four sources of "advance," or prepublication, book reviews (along with Library Journal, Booklist, and Publishers Weekly). Those who gloated, like ICM agent Esther Newberg, noted that Kirkus was the prepub review most likely to be negative: in fact it was often kind and sometimes effusive, but it's true that the other three prepubs were less willing to slam a book.

Ironically, consumers at large often think that Kirkus or its kin are puff machines, simply because the only time the "reader in the street" sees a quote from Kirkus or PW, it's on a book jacket. All the prepubs are capable of a stern critique, but of course when Kirkus says a novel is "jejeune" or your bio is "boring," you don't see that on the back cover.

The truth is, it's precisely because they are sometimes negative that the prepubs have value. With thousands of titles being published every year, book editors, news producers, movie scouts--anyone trying to make sense of the tsunami of books--are desperate for anything that can help them weed through it.  Chip McGrath of the New York Times said, almost plaintively,
"At the very time that we're inundated with stuff, that's the moment when you also need some gatekeepers, tastemakers, guides. Not that any of these are foolproof, but without them, it's just sort of chaos. How do you get your head around it at all?" Booksellers and others commenting on the web and Twitter today had similar sentiments.

The former managing director of Kirkus wonders "whether the industry still needs advance reviews the way it used to. Like it or not, they’re worth less every day in a world where everyone’s sister’s friend has a handle or a blog like Readermommy or Bookluvah."

It seems to me that is exactly the point. Because there is such a cacophony of voices out there, where it could be the author's "sister's friend" touting a book, we need more services like Kirkus, not fewer. Especially because so many other trusted venues, such as newspaper and magazine book reviews, have also disappeared. I published a book--an excellent one, if I say so myself--this year that received only one single review. Yes, it was from Kirkus.

I'm honestly a bit surprised that, in this age of information overload, a viable business model can't be found for a service that provides quick, pithy, trusted reviews of forthcoming books. We keep hearing that the skill of "curation" and "filtering" is what is most in demand in a limitless marketplace. That's what the prepubs do. Kirkus may have been idiosyncratic or even unkind from time to time, but how is that different from any other reviewer?

I suspect that even those who have shed no tears for Kirkus Reviews may find they miss it when it's gone.

(Illustration: Hokusai, The Great Wave of Kanagawa)