Publishers On Notice

The only time I've ever been involved in a car accident that left a car totalled, I was asleep. A drunk in a Corvette managed to slam into the back of my full-time 4WD Jeep Wagoneer while it was parked on the street at 3:00 AM, pushing it forward about twenty feet. As anyone with a full-time 4WD vehicle knows, this is no easy feat. One of my neighbors witnessed the whole thing, including our arrival on the scene in our bathrobes, and called the police, who arrived to find this drunk guy swearing up and down first that my car had backed into his car, then -- when it became obvious even from cursory examination of the evidence that my car was parked at the time -- that someone else had forced him off the road. My neighbor reported to the police that there was no other traffic at the time, and the police noted that the guy's blood alcohol level was well beyond the legal limit, so I didn't think there would be any problem.

Two weeks later, I got a call from the guy's insurance agent, telling me they were no longer going to pay for my rental car. I pointed out that they still hadn't paid me for my totalled car, and that my return of the rental car was dependent on that payment. They informed me that there was "still some question about whose insurance company would be liable for the payment," as there was "still some question about the possibility of another vehicle that may have caused the collision."

I was livid. I pointed out that the police report -- the OFFICIAL source of information in this case -- held no such question, as a reliable, impartial witness said there was no other traffic, and drunk, extremely partial drivers such as their client, were not typically well regarded for their veracity. I went on to tell them that it didn't matter to me, in any case. Any way you looked at it, I was owed the totalled cost of my vehicle and it would be their company that paid me, regardless of what company ultimately bore the cost. If the insurance companies wanted to play "place the blame" and sue each other
for the costs, how did that concern me?

The drunk driver's insurance company paid up.

The ongoing battle between publishers and retailers -- notably Amazon, recently -- reminds me of that insurance company. They seem to have lost sight of the fact that authors still need to get paid a fair amount.

Some time ago, it dawned on me that there's a disconnect between authors and publishers regarding our words. We authors view the words we put down on paper to be the novel. Judging by the rapidly growing popularity of e-books, readers do, too. One would think that publishers would understand this, yet they seem to view the finished book as their product, one that includes only a minor contribution from the author. That product could be considered the sum of the following parts and services:

• Words on the page (provided by the author)


• Cover art (provided by an artist)


• Saleable quotes (usually on the covers)


• Excerpts (usually on the back or dust jacket flaps)


• Author bio (optional; usually only for hardcovers)


• Author picture (optional; usually on hardcovers of bestsellers)


• Cover design (to ensure the artwork is pleasing to the consumer)


• Editing (to ensure the author's words are pleasing to the consumer)


• Marketing (to help sales staff and retailers to sell the product to the consumer)


• Distribution (to ensure the product is available to sell the product to the consumer)


• Sales (to ensure the product is physically available for the consumer to buy

As you can see, those little words on the page are only a small part of the whole package, which is why publishers feel justified in generously granting a mere 6-8% of the revenue to the author of a mass market paperback novel.

To be fair, the way the system works is that an author gets paid an advance against royalties before the novel ever gets to the marketplace, available for consumers to buy. And the reality is that few authors these days (except mega-bestsellers) ever see a dime beyond that advance. Once upon a time, when publishers and retailers were on the same page, books remained on the shelves for a lot longer, which kept an author's backlist of previously-released novels in print and available to the consumer. Sadly, it rarely works that way any more.

So, given that the author's advance is realistically the only payment, the effective royalty rate is dependent on the number of sales. With e-books, that number is straightforward, since e-book sales are non-returnable. With print publishing, the product can be returned, so publishers try to account for that by holding back payment for a projected number of returns, which they call "reserves against returns." What this means to the author is that it's impossible to determine the actual number of copies sold until ALL copies are either sold or returned, the book goes out of print and there's a final accounting. Until that happens, we can only estimate.

Last year, a New York Times bestselling author, Lynn Viehl, posted her royalty statements. I couldn't find her third statement, for the period ending Nov 2009 (which is understandable, as they're just now reaching authors), but the bottom line for her first two statements shows her estimated actual sales copies will be between 44K (net units shipped) and 65K (net units plus reserve, assuming no more returns). She earned $50K up front, and she doesn't seem to expect any additional royalties beyond that (and her statements support that, which -- at the risk of sounding conspiratorial -- seems a bit suspicious) . If she's right, her effective royalty rate on her $8 mass market paperback will be between roughly 10% ($50K/65K/$8) and 14% ($50K/44K/$8).

Compare this to Amazon's current 35% effective royalty rate. If an author with Lynn's numbers were to sell her new e-book at $5, she would only have to sell about 29K to earn $50K. With Amazon's new 70% option, starting at the end of June, the author would need to sell less than 15K copies to earn $50K. That's roughly 1/4 to 1/3 of the paperback audience. Is it reasonable to expect the author to reach that audience and entice them to buy her new e-book? For an established author, it's possible, and the fact that there's no time limit for offering the e-book makes it extremely likely.

Which brings us to the midlist author, a species which has gone by the wayside under the current print publishing model. Advances I've read about recently for a solid midlist author are more like $15K, with net sales of 15K -- about a third of Lynn's numbers, which means established midlist authors only need to sell 5K e-books under the new Amazon model to earn as much as from a traditional print publisher, and they can offer the e-book to the consumer for less.

Remember that list of the parts and services going into a novel? For a midlist author these days, the publisher has been asking (and sometimes requiring
in the contract) that the author provide or perform nearly every item on that list, excepting only the cover art and design and distribution. What added value does the print publisher offer, then? Cover art? For an established author, is that really worth the difference in royalty rates?

Think about it. As an author, which is more attractive: 5K sales to net $15K, or 15K sales to net $15K? As a reader, which is more attractive: $5 for an e-book, or $8 for an e-book?

Publishers, consider yourself on notice. Shape up or ship out. It's your choice. And stop drinking behind the wheel of your Corvette.