The Other Evan
on Jul 15th, 2010
@ 7:56 am: 

I would agree that primary electronic rights are not subsidiary rights (duh).

That being said, there’s nothing unreasonable about a 50/50 split for electronic rights. They may be primary rights, but the per-unit costs of e-book sales are actually ridiculously low compared to per-unit costs of print books.

Furthermore, it should be noted that the 50% royalty would be presumably based on net receipts and not the list price of the e-book. I’m sure most agents and authors would be delighted to receive a 25% royalty based on the list price of an e-book than a 50% royalty based on net receipts, especially now that most publishers have moved to an agency model in which the list price of a book is fixed and expenses are absorbed by the retailer.

Of course, pigs will fly before that happens.

I also find the assertion that “ebooks are competing with print books for readers” highly dubious.The numbers don’t provide any evidence to suggest that e-book sales are cannibalizing print sales. Print sales aren’t declining any faster than they were before publishers began releasing e-book editions, yet e-book sales have nearly doubled every year for the past three years.

Electronic publishing represents the only significant growth in the publishing industry in recent memory, so it’s no surprise that publishers want to have their cake and eat it too when it comes to compensating authors for electronic sales.

I would agree that agents and authors are being shortsighted, but only in the respect that aren’t asking for more from publishers with regard to electronic sales. They should be asking for more transparency in royalty reporting for electronic books, they should be asking for a royalty based on list-price, and they should be asking for escalating royalties for e-book sales.

[Reply]

Evan Reply:
July 15th, 2010 at 8:15 am

As to the (duh) – its not clear to most as witnessed by how many retweets highlighted that line. Even in your own argument that ebooks aren’t decreasing print sales you may be providing an argument that they may well be a sub-right, as they aren’t taking away from a primary right channel.

As to dubious numbers I am not sure why $10 – $15 ebook sales increasing and $25-$35 hardcover sales decreasing is a net growth! Furthermore, with some exceptions, most folks will buy an ebook and read it – and therefore NOT buy another version… so if i buy a Kindle and start buying ebooks on it, i dont buy the print. What is dubious about that assumption?

Finally, publishers are putting up front huge amounts of money for trade books and on the back end the game is changing from shipping 100,000 units at $15 net (which we count as income) to now shipping 75,000 and selling ebooks one at a time at net $10 with no up front payments. That trend is continuing and soon we will be shipping 50,000 of a like title. Are advances going down? No. Are authors getting close to par print royalties on ebooks? Yes. Publishers aren’t looking for cake, we just want a morsel of bread!

[Reply]

Scott Nicholson
on Jul 15th, 2010
@ 9:04 am: 

This argument is increasingly less interesting when Amazon, B&N, and Apple will pay me 70 percent of gross proceeds for my work. That’s about as staright as my face gets.

Scott Nicholson
http://www.hauntedcomputer.com

[Reply]

Evan Reply:
July 15th, 2010 at 11:33 am

Good luck marketing, selling, promoting, an publicizing your own work – really, its a snap to build an audience. Oh, and those editorial choices you made in chapter 2 dont work and you have used 3 different tenses all throughout the book – but i am sure you will figure that out at some point….

[Reply]

Eoin Purcell
on Jul 15th, 2010
@ 10:12 am: 

Evan,

I find myself in agreement on much here.

It is clear that ebook sales are competing with print sales. What portion of the print market they impact is yet to be determined, is it paperback or hardback or both? The question remains unanswered but there is clearly some effect. Believing otherwise is, I think, just wishful thinking.

I think it is fair to say that ebook rights ought not fall under the subsidiary rights and are clearly a primary right.

Where I part ways with you is your contention that division of primary rights leads to an overall poor outcome for authors. There is no reason to believe this to be the case, especially if the process is well managed by author and agent.

That it hurts publishers (if it does which I remain divided on but on balance I’m leaning towards “it does”) is simply a symptom of the ongoing impact of digital change on the industry.

This change is weakening the publishers position vis-a-vis the author and creating the opportunity for authors to take a larger share of the pot. Publishers don’t have to like it very much, but I’m not sure it is avoidable.

It is entirely possible to see a situation emerge where one publisher sells only print and does so effectively while another sells only digital and does effectively. This need not hurt the author or either of the publishers.

Over time I’d expect to see the advances paid by print publishers decline where they don’t also acquire digital rights and the advances paid by digital only publishers to rise to reflect the increased share of the market they hold.

If print publishers wish to retain the digital rights then they will maintain their current level of advance and allow a greater share of royalties for authors, not because it is fair or logical, but because they wish to retain the author.

Eoin
—
On an aside the division of english language rights by territory has helped authors as much as hurt them (though I’d like to see a full analysis of this before I commit fully to either side).

[Reply]

Evan Reply:
July 15th, 2010 at 11:35 am

One quick point – in the print world I ALMOST understand territorial rights – in digital, it is a DISASTER!

[Reply]

The Other Evan
on Jul 15th, 2010
@ 10:29 am: 

Libraries have been taking budget cuts, I think that’s a larger contributing factor to the decrease in their inventories than the rise of e-book lending.

[Reply]

Steph
on Jul 16th, 2010
@ 1:48 am: 

Great explanation Evan. The other thing to note when comparing print and ebook pricing from the UK standpoint at least is that ebooks at VATable whereas print books are not, meaning that 17.5% (20% from January 2011) of the RRP goes to the government, not the rights holders, so ebook revenue is lower than print from the outset.

As to Scott Nicolson’s comment re: getting 70% by dealing direct, in addition to the points you made about what publishers do to help create, market and sell books, he should also check the fine print – 70% of what? In the case of Amazon for example, the conditions for the DTP scheme set a maximum list price of $9.99 and the royalties are based on the consumer facing sale price not the $9.99 price, net of delivery costs and in the US only.

[Reply]

grim
on Jul 16th, 2010
@ 12:18 pm: 

You write:

“The publisher responded, in a state of incredible frustration, that the author’s agent had withheld UK rights in order to try and extract an additional deal for the UK. This strategy backfired, no one bought the rights in the UK without corresponding US rights, and the author and the publisher were harmed in the process.”

“Extract” is a sanctimoniously antagonistic word for the same process by which you, a US publisher, extract the commodity you require to make your profit: a book to sell. Your implication that either by tradition or fairness the US publisher is entitled to control overseas rights is erroneous. In the cases of some books – - about American football, say, or cookbooks – - no US publisher will take those rights. As an agent I’ve either retained overseas rights or granted them to the US publisher as befits the negotiation or the project. The imputation that avarice is the only reason an agent might wish to withhold those rights is reversible.

The following anecdote simply makes no sense. “[N]o one bought the rights in the UK without corresponding US rights, and the author and the publisher were harmed in the process.” It’s hard to know where to begin. If no UK publisher will buy a book “without corresponding US rights” then no UK publisher would ever buy a book under contract to a US publisher from anyone SINCE THE US PUBLISHER WOULD CONTROL THE “CORRESPONDING US RIGHTS.” Even tautologies can be untangled; I’m not sure how to categorize this.

You can see that what you’ve written has put me in a state of incredible frustration. Worst of all is the pedal point innuendo that selfless publishers are somehow more benevolent to authors than agents, who are best compensated only when their author is best served.

[Reply]

Evan Reply:
July 17th, 2010 at 2:01 pm

I have clearly gotten a bit under your skin – my instinct is to apologize, but I am not exactly certain about what i would be apologizing.

The anecdote I told was absolutely true and it was about a UK PUBLISHER with a small US publishing operation. The publisher was denied UK rights even though it is a UK PUBLISHER…. Naturally the author assumed his publisher had global English language rights and complained when no copies could be found in London… only then did he learn his work wasn’t sold to a UK publisher. Imagine how frustrated that publisher felt knowing the author assumed that it had global rights!

I agree that extract was antagonistic if you saw this as typical American arrogance (as opposed to British arrogance!) But I deny sanctimoniousness as I do not have a platform I am trying preaching. All I was trying to do was address the issue of divide and conquer negotiations that have permeated book publishing to great harm, in my opinion. The ability of publishers to do what they should be doing – creating global value for the works they are deeply invested – is hampered by disjointed rights ownership.

A very good argument can be made that a good agent will pull together a package of best of breed rights holders to the ultimate benefit of the author, I feel strongly that in the end this creates an albatross around the rights holders, limiting their marketing and experimentation to the narrow confines of what they are allowed to purchase. (It doesn’t help our frustrated state that these rights were once assumed to be part of what a publisher purchased – but now are on a laundry list of ala carte purchasable items.)

You are absolutely right that many works are best served by different publishers in different markets – but as digital becomes more dominant, those territorial demarcations will be rendered meaningless. We need to start thinking about how to buy works so that all rights can be explored by publishers – as long as they have the capacity. Denying those rights based on garnering additional advance money isn’t strategic – its short term and harmful.

[Reply]

Morning Links 19 July 2010 | The Digital Reader
on Jul 19th, 2010
@ 3:18 am: 

[...] Pass the Gestalt, Please In the past two weeks I have heard forcefully stated pronouncements by agent Andrew Wylie and chair of the Society of Authors, Tom Holland, regarding ebook royalty rates.  A 50/50 share between author and publisher is the only possible outcome they can accept, citing the tired and somewhat old argument we have heard before: [...]

Jesse
on Jul 19th, 2010
@ 6:52 pm: 

Now while I fully appreciate and agree with the fine vintage sarcasm you display regarding Scott Nicholson’s attempts to build an audience from scratch, it’s getting a bit rude to imply he’s too dumb to notice such a glaring error as using 3 different tenses all throughout the book. That kind of thing is pretty blatant and if you need an editor for that, you are not writing at a grown-up level.
That said, I’m not saying editors aren’t still necessary. However, in this economy, I’m willing to bet one could find a lot of experienced and unemployed editors willing to do some freelance for an author for very reasonable rates. In some cases “willing to freelance” may even be “desperate to work”.
I don’t see any insurmountable obstacles in the idea of an author and his agent taking their ebook rights directly to distributors and cutting the print publishers out of the original equation. I agree that if the publisher has paid a royalty, he is deserved fair payback for it, and he can rightfully argue that a competing ebook supply of the same work lowers the value of the print rights substantially, depending on factors like respective release dates and whether the work is a textbook or murder-mystery, etc.
But it can be done, so far as I can see. Whether it should be done is debatable and depends on circumstances, but that is true of almost anything in life. I may certainly be missing something here though, let me know if I am.

[Reply]

J. Nelson Leith
on Jul 21st, 2010
@ 5:19 pm: 

“Good luck…” That would be a far more effective argument if publishers were not also shoving most marketing, selling, promoting, and publicizing efforts onto all but their lead-title authors, anyway. As that is the case, the argument just comes off as smug and absurd.

Pride goeth, as they say, and publishers can either start treating their lifeblood, authors, better than their passive investors or I predict agents might start working a model to bring in professional editors for a cut, and simply bypass publishers straight to electrons and POD. Why not, if non-lead authors have to do all their own promotions anyway?

An editor taking, say, 10 points, plus an agent at 15 points, and this still leaves authors with a hefty 45 percent on Amazon, which is pretty darn close to that 50 percent you consider so outrageous. The value of publisher branding could be replaced by agency branding, the whole process still elevated professionally above vanity printing, and bye-bye publishers, bye-bye shareholders!

And publishers won’t have to worry about what kind of face anyone has, because nobody will be paying attention to them.

Most importantly for the market economy aspect of it, and thus the long-term viability of publishing, everyone in the process is an active, value-added, participant. No passive by-standers get rewarded simply because they had some spare cash to throw around.

[Reply]

Evan Reply:
July 22nd, 2010 at 3:48 am

Some things to consider:

To write a book, most authors get paid an advance up front – then when the book sells enough to repay the advance, they start earning cash royalties. Where are they going to find the funding to enable the work in the first place?

Editors need to eat too! How many will wait for their 10% to earn their keep? Who is going to monitor and audit this and ensure they are getting their share – not to mention the government who will treat this 10% as taxable income?

Where is your marketing budget? Layout and design? Permissions and 3rd party licensing budgets? Sales and promotion budgets? Publicity plan and budget… oh, right, you wouldn’t be thinking of all these issues because you aren’t a publisher.

The reality is that there is no support for a work on a self publishing platform. You are on your own. Over time I am sure they will all offer paid programs to help promote your work – but then you will be paying out of pocket for something that your publisher does automatically – and we act as your bank in financing your work!

A bit more understanding of what publishers actually do will go a long way toward dispelling the myths of self publishing.

[Reply]

Gladiators | Like Fire
on Jul 25th, 2010
@ 7:08 am: 

[...] forest (if trees aren’t too inappropriate a metaphor here). To that end Evan Schnittman, at Black Plastic Glasses, has a solidly holistic overview that’s worth reading through: The net result of this [...]

Alfons
on Jul 26th, 2010
@ 12:08 pm: 

The calculation of royalty that Evan uses is based on net sale price. Wouldn’t a better comparison of royalty rates be based on net profit if one wants to see how ‘fair’ a particular rate is? Using the same rate for both print and e-book would undoubtedly result in a smaller share of profits for the author, especially where the upfront development costs of the book have been fully amortized in a previous print edition. Is that fair to the author? The discussion of earnings is a bit of a red herring unless you also discuss the profit margins of each product as well.

As the author’s Guild states in their letter today:
“Knowledgeable authors and agents, however, are well aware that e-book royalty rates of 25% of net proceeds are exceedingly low and contrary to the long-standing practice of authors and publishers to, effectively, split evenly the net proceeds of book sales.”

Not a simple issue, to be sure, especially when you factor in the variance of margins involved with front list vs. back list titles, the timing of release of e-book editions and the amortization of development expense, the agency model, etc.

[Reply]

Evan Reply:
July 26th, 2010 at 12:45 pm

If book publishing agreements were set up as profit-sharing arrangements – yes, this would be an equitable approach… but they are not.

The publisher plays the role of the bank, R & D, promotions, distribution, warehousing (repository and platform development), and accounting. This arrangement has worked for some time as authors need guaranteed funding to be able to write books and publishers agree to the risk in order to be able to profit from that risk.

Somewhere along the line the debate has taken for granted that this is not about equality – if it was, we would be talking about zero advances and profit-sharing schemes.

[Reply]

Cory
on Jul 29th, 2010
@ 2:15 pm: 

Aren’t most Kindle users traditional heavy book buyers, including many women in their forties and fifties – ie not a new market at all? For them surely e-books are replacing print books. it seems disingenuous to argue otherwise. What can a specialist e-book publisher possibly do better than a conventional publisher in creating an e-book for reading on the Kindle? How many of the e-books Amazon sells for Kindle have any special features at all? For every copy of an enhanced ebook sold to a young early adopter for his iphone, there are thousands of books being sold by Amazon for a reading experience identical to that of a conventional book. The Rosetta vs Random House judgement was in 2001, pre-Kindle, a lifetime ago in e-book terms. The judgement stated: ‘ In development is the ability to incorporate within the ebook audio, graphics, full-motion video, and internet hyperlinks related to the electronic text.’ and ‘Rosetta’s ebooks can only be read after they are downloaded into a computer that contains either Microsoft Reader, Adobe Acrobat Reader, or Adobe Acrobat eBook Reader software.’ The court foresaw e-books as becoming more and more complex and multimedia. They did not foresee a reader that mimicked the experience of reading a printed book so directly, and that cannibalised sales so directly. Wouldn’t the judgement have been in Random House’s favour if they had?

[Reply]

Cory
on Aug 4th, 2010
@ 4:10 am: 

Can’t we deduce what kind of people they are, though? Why would you buy a technology made solely for reading unless you were a keen reader? And if you bought a book on it, why would you then also buy the printed version of that book? I have a Sony e-reader and would not buy an e-book and the same book in printed form, except in rare circumstances (if it won the Booker and I wanted a 1st edition, for example.) I’m curious to know what you base your own conjecture about this market on?

[Reply]

Martin Edic
on Aug 6th, 2010
@ 8:01 am: 

This entire discussion, though interesting, is based on trying to wedge an existing model onto an out-moded one. The real change here is not the means by which books are delivered- it is the fact that publishers now have to market directly to readers, something they have never done well and are very uncomfortable with. We don’t buy books based on who published them- just as music labels are not the reason we choose artists. We buy either because we have heard good things or because the title contains information we need and, in both cases, that referral comes from social networks. If an author understands this, there is no reason why they need a traditional publisher. Instead they could compensate a social marketer with a revenue share.
This entire conversation leaves out the costs of print, storage, delivery, returns and remaindering of print titles. Authors are compensated after these costs are factored in so they are not really getting the numbers you put out there. With a pure eBook strategy we need to rethink the relationship as a pure partnership between author and marketer (which is the only function of what used to be known as ‘publishers’). They pair up because the marketer believes the work is marketable and the author believes the marketer can promote their work.
Look around you- everyone I know has bought a reader or an iPad in the last few months or plan to. Books are toast, an anachronism like vinyl albums. This is the truth that the publishing world doesn’t want to acknowledge.

[Reply]

Copyright, Ebooks and the Unpredictable Future | Digital Book World
on Aug 27th, 2010
@ 12:02 pm: 

[...] are now strenuously making the argument that ebooks are like paperbacks, a primary right, and they cannot create a publishing strategy for [...]

Mike Shatzkin
on Mar 23rd, 2010
@ 6:08 am: 

Very thoughtful and original post. You make a critical point that textbooks matched the ecosystem of learning: one class moving at a constant speed from a common starting point to a common ending point. And clearly, digital change enables our learning materials, at least, to be much more nuanced than that.

[Reply]

The iPad: Gateway Drug to Digital Learning? « Black Plastic Glasses
on May 5th, 2010
@ 3:46 am: 

[...] my last post, What’s Next in Digital Reading I explored my notion that there are three kinds of reading; extractive: immersive, and pedagogic. [...]

Jay Huldeen
on Feb 20th, 2010
@ 12:44 am: 

Gooooogle: what happens when they ‘own’ digital copies of all non-copyrighted books? (or is it all books everywhere that they are trying to grab?) Will the world end? Or will mankind just continue to get stupider, once the original copies have been disposed of and there’s no way to tell what they’ve altered in the digital version?

For example, will 1984′s Winston Smith character one day become a kindly rescuer of lab rats liberated by animal rights activists, whose passion for maltreated rodents is assisted by a certain benevolent Internet company’s search engine features, which allows him to organize the movement much more quickly than if he’d had to rely on word of mouth or even yesterday’s electronic mass media?

Maybe more to your liking: what happens to your business and the business of other actual publishers with a history of making stuff out of paper, ink and leather once Goooooogle digitizes it all? I know there’s not much backlist market, (but then why is Gooooogle so hot to acquire this stuff?!?), but are there implications for the publishing business?

Looking forward to your soon return! Please include some morsels of your travels to exotic and faraway places, whatever you write about. It’s like adding a little garlic pepper sauce to your soup.

[Reply]

Jay Huldeen
on Feb 20th, 2010
@ 9:10 am: 

Evan,

I may be paranoid, but I am no Luddite (obviously). Still, it is disconcerting to see the paradigm shifting so rapidly. I — fear is not the right word — dislike is probably better — that a couple of college geeks who were essentially just bright code-monkeys have figured out, with their Boolean strings and webcrawlers, how to ride on the backs of the thousands of database administrators who built the web — database administrators who are basically people who build electronic library shelves. That’s not bad in itself, but now Gooooogle has transmogrified from this mildly annoying but harmless spinster librarian into a bald guy in an expensive but tasteless suit stroking a purring Angora cat on his lap as he plots world domination from his bunker. (Probably now they’ll publish all my personal information, once their bots find this post.) (Oh wait, they already have, and I didn’t get a dime for it.)

As for Apple, all I have to say is: http://www.cracked.com/article_18377_5-reasons-you-should-be-scared-apple.html

Looking forward to your thoughts on the real threats to publishing, and to news of the current state of Mexico City street tacos, and perhaps some descriptions of authentic curry from Bangalore, or figgy pudding from Warwickshire.

Also, and meaning no disrespect, but what is a ‘publishing ecosystem’ exactly? And where does OUP fit into that? Are you part of the canopy, perhaps?

Jay

[Reply]

Shipping Online
on Jan 14th, 2010
@ 7:31 pm: 

I believe one of the main reasons that publishers don’t want there content test to speech enabled, is due to the fact that more then likely they will end up online as torrents. Freely downloadable by everyone on the net. Its a shame piracy stops dis advantaged people from using certen types of technology!

[Reply]

Gary Arms
on May 11th, 2009
@ 5:43 am: 

As someone who teaches the Online Generation, I think it will happen the way it did with music and the way it is now happening with movies and TV shows. People with no ownership stake will put content on line so that others can “share” it. And so the dike will be breached. I agree completely with Evan’s analysis of the Online Generation and his prediction that they will increasingly ignore anything not in the cloud. Anyone who teaches knows it is increasingly difficult to get students to read books. There is a small but significant young audience for books, but a distressingly large portion of the younger generation will not read entire books unless required to do so by professors. When the online generation does research, they do it almost entirely online. Publishers and authors will continue to squabble. Again, I agree with Evan’s analysis; they will never come to general agreement. Meanwhile, the cloud will expand, gobbling up everything that exists in digital form. In music, it appears that artists will continue to make money but most of their revenue will come from live performance, the sale of tee shirts etc. To a considerable degree, the music industry has lost control of its product. “If you can’t beat ‘em, join ‘em.” The success of Hulu suggests that TV and movies can make money selling ads on their own site, a site that is easy to use, reliable and free of viruses. A huge amount of print (especially periodicals) is already on line; the magazines sell ad space too. This is the single most important problem facing all content providers. The future will belong to those able to adapt to the new environment.

[Reply]

Another copyright reshuffle that’s in the cards - The Shatzkin Files
on May 12th, 2009
@ 5:11 am: 

[...] Schnittman at Black Plastic Glasses posted the final chunk of a 3-parter yesterday that contained a real shocker (to me) at the end. The 3-part post shows through [...]