Monday, July 12, 2010

Being treated like royalty

I had my first book come out in 1999. I'm on 13 now, with number 14 in press. You'd think by now I'd have learned, but I think it's defensive memory - like marathon runners managing to forget the exhaustion and the pain and remember the glory and sense of achievement. Or parents planning on a second child and managing to forget the birth part, the diapers, sleepless nights and tantrums of the first... Just because I have been re-reminded of it and its something you need to know as a new writer, let me talk a bit about the reality of how out of touch the writer is with actuality, of your only real tool to know how you're doing: royalty statements.

These arrive. Mostly. Well, that depends on your publisher. With Baen mine arrive. With others... maybe. I've yet to see a single royalty statement for my short fiction, and I have sold 25 stories. I don't expect them to make money -- but I'd finding knowing how (and where) they sold valuable. Anyway: If you get a royalty statement really have no way of knowing if they reflect truth or creative fiction. I know one author (at a different publisher ) whose e-sales are clearly creative fiction, because she knows more people who have bought it than she's been paid for. And very small the numbers of sales on more than one book are precisely the same on another - statistically improbable.. You can of course demand an accounting -- but you'll never sell another book, and if you're wrong and the flaw does not exceed $2000 IIRC, it will be expensive, as you pay for it. So it never happens. I blame Norman Spinrad for this sorry state of affairs - but that's a long story for another time. If it hadn't been for Spinrad's action, the industry would have been healthier financially, and far weaker than it is now. I would also probably not have been published. You can -- if you evade the obstacles the big publishing houses made Bookscan put in your way (ever wonder why?) get the Bookscan figures. These however are very much less complete than your publisher's records and don't include every sale (I believe they exclude Amazon, and Indies and many stores not in a few main centres). As they estimate too apparently, they can exceed the numbers on your royalty statement (if for example you sell OK in New York and other major cities, but barely sell a copy in the rest of the US.) Of course it is entirely possible that the dark suspicions in every author's mind are mere paranoia, like the conviction that e-piracy stole all your sales.

But dear future writer, the saga goes on. You see, royalty statements only cover a complete six month reporting period. - Jan-June, July-December. So if your book comes out 30 December, two days later you are at the start to a complete 6 months and in theory you should get your royalty statement in September (in practice December). However if your book comes out on 3 January... your complete 6 months only starts in July-December. So in theory you would get that statement in March. Only in practice the statement will be a further 2-3 months late. So in other words, if your book came out 3 January 2009... you might only hear how it has done, and get any income from it early July 2010.

There are good historical reasons for most of this, and this delay is the origin of advances which are the bane of every publishing house's existence. Advances -- seeing as the landlord and the power company and the grocer take a similarly dim view to authors to waiting 18 months to be paid, are what most of us end up living on. They are an advance on royalty income and are typically paid - for books sold on proposal half on signing, half on turn in, or for multiple book sales 1/3 on signing and 2/3 on turn in, or latterly 1/3 signing, 1/3 turn in, and 1/3 on publication. A good editor once told me they aim at 2/3 of what they think a book will earn, and a good agent told me he aims for as much as a book will earn.

Er. Do you see the flaw in this? As this is all pure thumb-suck as to how well a book -- especially on proposal -- will do, and getting it very wrong (even if the book does much better than expected) reflects badly on the editor - because that's his job - to estimate it right, the publisher's staff have a vested interest in seeing it is nearly right. They have various tools to do this -- firstly their instincts, secondly those very accurate Nielsen Bookscan figures, and thirdly their company's clout in marketing, and distribution and retail space. And next time they buy from the same author, they have the figures resulting from using these tools... So the only ‘real' factor is the editor's instinct. In some cases that is good - Campbell, Jim Baen for examples -- but let's be honest here - it's a big, complex world, and even the very best get it wrong sometimes. Still, that's how it works and this is why (besides wanting money or needing it to live on) authors and agents try for as high an advance as possible. Which, of course skews the system further and forces the publisher to carry considerable debt...

It would be to everyone's advantage if advances became history. Well, certain editors who enjoyed the power of bestowing them, and certain authors who enjoyed the ‘push' that a huge advance gave to a mediocre to poor book, wouldn't like it. But publishers, their shareholders, readers and most authors would benefit.

Only we STILL have the lag phase, between proposal and payment, and the very long gaps in any author's income, and the uncertainty -- so most authors would not be prepared to let a publisher have their books without an advance, because if they did, the publisher could simply use the saving to give more to Joe or Fred in terms of push. Quite frankly there isn't a lot of trust out there, a situation fostered by all the secrecy.

The answer obviously is to do away with the lag phase, and to make sure that authors knew they were getting an equal chance (or reasonable chance) to succeed. Now, as I said, there are good historical reasons for the lag -- some which still exist for paper. Firstly, keeping track of a physical inventory was not easy or quick. Basically a stock count was the only way to really be totally sure. And every six months was pretty reasonable for that. Of course computerisation has improved this vastly and there really is no reason why a publisher cannot know fairly precisely what they've shipped and what they've got back on a day-by-day basis. Some will tell you, some will tell you if asked, and some just won't. Secondly, retailers had a three-month payment window. The publisher needed at least 4-5 months to be sure he'd actually got the money out of them. Thirdly sheer physical distribution - by sea for eg, could add months onto the time for both sales AND returns. Fourthly the issue of returns and the complexity this added onto calculations of royalties. Finally, the authors were costing the publisher interest charges on the advance. It made sense therefore to sit on/use the cash for as long as possible.

Of course all of the above falls apart in an e-book environment. The publisher and the retailer know immediately how much they have sold (and there is no reason the author and readers shouldn't know too), there are no ‘in distribution' copies, no returns, and no reason (as you are not holding physical stock you have to pay for before sale) to delay payment. And if authors - particularly those with work ready to sell - got paid say... monthly (to save on transfer costs), there is no need for advances, and an electronic retailer has as much e-space for Joe Neverheardofim as for Fred Bigname, and both have the same number of copies (ie as many as any reader wants) on their shelf.

It's a very attractive proposition for authors (the idea of a predictable income - even if it's only predictable day to day by tracking it - paid reliably on a predictable day every month - when bills are monthly is almost intoxicatingly lovely, compared to now), and for publishers, as they escape advances _and_ get reliable sales figures on which authors really sell well (without the GIGO input of bookscan, distribution, marketing and retail space) - which should make them make more money.
Maybe it is less attractive for retail...

Can anyone see any holes in it?

20 comments:

Kate said...

Maybe it's just my oh-so-trusting nature but I do see one big hole. All this openness leaves next to no opportunities for crooked dealing.

How can certain editors kill the careers of people they don't like? How can they fudge the figures so that bestsellers appear to have sold lots of copies?

Gosh, Dave, how could you possibly want to change a system driven on rumor and patronage to one driven on easily accessed fact? I'm sure it could never work.

(Puts away the sarcasm dump truck since they don't like that at work)

Amanda Green said...

Dave, great post. I agree that with e-publishing there is no reason for authors not to be able to see exactly how their book is doing. The only problem at this moment with being paid monthly is that many of the main e-book distributors -- Amazon, Smashwords, etc -- pay publishers (and authors) on a quarterly basis. Even though the publisher or author can check their dashboard and see exactly how many books have been sold at any time, the money isn't there. And, unfortunately, there are still the chargebacks to take into account: those who bought the book and changed their mind, fraudulent purchases, etc.

That said, there is nothing preventing the e-publisher from giving a monthly accounting to the author showing what is happening with his book. The payment, at least for now, may remain quarterly. But that will change as the reporting procedures for the outlets change -- which is will as they expand further and further into e-publishing themselves and their "clients" want more frequent payments.

Brendan said...

Plus with no storage, shipping, printing, physical shop front(and associated costs) etc. there is no reason why authors shouldn't be getting a larger slice of the cover price.

Dave Freer said...

Kate - there are certainly some people who will HATE the idea. I hope we can ask the hard question - why?

It's hard to defend the present setup without painting yourself as shall we say... not in a good fashion

Dave Freer said...

Amanda quarterly - that's retail hanging onto their 3 months - It's still better 6 monthly... 18 months later, and you in the dark in the meanwhile

Dave Freer said...

Brendan, yes, a VERY large share I feel is called for. I've just looked at my royalty statements, and the total billing amounts. Other have made a lot of money (a few million) on the back of my work. That's fine... but not when I am barely staying afloat.

matapam said...

As e-book readers spread, the market is growing fast. I recall hearing that last Christmas, e-books outsold print. Will gift-giving turn into regular purchasers of e-books? One certainly hopes so.

I think a lot of traditional publishers will fail to adapt and die. But they won't go down gracefully. They'll try to destroy the competition as they sink. Surviving that will be the trick.

Amanda Green said...

Dave, you're right. It is the retail end of it. Which is why I think we will see, at least in the beginning, more of monthly statements to authors showing number of e-books sold through what retail venue as well as through the e-publisher's site. The statements should also, imo, show the chargebacks -- which are available through most retail site's "dashboards". Whether the e-publisher will pay monthly on e-books sold off their site is another question.

There is no reason the whole process shouldn't be transparent. It is easy to figure out how much Amazon, Smashwords, Fictionwise, etc., take from the sales price of an e-book. Just as it is easy to figure out how much the author will get from the sale of each e-book through the publisher's site.

Will the mainstream publishers resist this? Hell, yeah. They already are. Will those just now entering the e-publishing world embrace it? On the whole. But it will take a whole new mindset when it comes to accounting, one that will -- hopefully -- strengthen the industry.

Dave Freer said...

Matapam, as the reality of the changing environment filters through, I think some of the behemoths of the industry are going to do their level best to kill it, restrict it, slow it - anything but let the status quo - in which they are the behemoths after all change. I'm hoping - like other changes other giants've tried to hobble that it is growing too fast and too big for this, and they'll have to fit into the change rather than crushing it. Mark my words - restrictive contracts to 'retain' authors are less than 2 years away. And there will be a serious effort to exclude or relegate to second tier status with less retail access any individual or new publishing entrant, in special deal with the large retailers. "We'll give you 55% and Joe bigname IF you frontpage us and don't buy from self pubs or put them on a 'self-pubs' site." Mark my words. And make sure you have a website that you can sell from.

Dave Freer said...

I'm off to catch my plane to speak at this digital workshop in Hobart tomorrow (I believe if anyone is in Tas and wants to go, you just need to contact the Tasmanian writers society. I'd have advertised - but I only got flight booking confirmation last night. I'll try to get online and answer comments, but no promises.

Rowena Cory Daniells said...

Enjoy the break in Hobart, Dave!

matapam said...

I also expect to see the future filled with restrictive contracts, and the segregation of small and self publishing to, at best, a small and self sub-category. Hopefully one step up from a Slush Pile and with cross indexing.

I'm not a saleswoman, and trying to advertise my own stuff will be hell. But that seems to be something the publishers expect from an author now anyway, so I'd best get used to the idea.

Amanda Green said...

Dave, those restrictive contracts are already here. At least one of the major publishers has a clause in its contracts restricting its authors from submitting to any other house as long as there is a book waiting to be published with said major publisher. Those contracts with merchants are also coming -- hell, they are here to a degree. That's what started the agency model of pricing on e-books. How else did Steve Jobs know about how e-books would be priced BEFORE the contracts of the big 5 with Amazon were renegotiated. The funny thing is, it is authors who have jumped onto the exclusive market bandwagon. Stephen Covey is just one example of an author who is releasing his backlist exclusively on the kindle.

And, yes, I do think we'll see the big publishers trying to close the small publishers and self-published authors out of the market. But, once they are foolish enough to put that into a contract -- or they tick off someone on the retail side enough to reveal that was part of the "handshake -- the courts will intervene and, at least here in the States, they will be in violation of unfair competition statutes, among others. A business can offer their product to only one retailer, but not in such a way that it interferes with someone else's right to do business.

Brendan said...

We may be seeing the rise of business models that don't include the big publishers. Agent Sydney from the blog Call My Agent in the post Self-publishing for novelists in the digital age here actively encourages authors to self e-pub. And the literary agent Andrew Wylie is so unsatisfied by the e-rights publishers are offering he has said “We will take our 700 clients, see what rights are not allocated to publishers, and establish a company on their behalf to license those e-book rights directly to someone like Google, Amazon.com, or Apple. It would be another business, set up on parallel tracks to the frontlist book business.”

Dave Freer said...

Amanda, there are so many covert deals and vested interests that tie the larger entities together, where they skirt the edge of the law, know they are too big to be sued (their legal expenses are paid the rest of the taxpaying public, as they deduct the cost - which goes a long way beyond the what they'd spend if they had to foot the bill (which is what you should be able to deduct - in my very biased opinion)). When I've heard my fellow authors lauding Steve Jobs and praising McMillan as heroes who saved writers... I want to question their intellect or their motives. Whatever these guys had in mind with anything saving authors is a secondary or tertiary side effect if it actually happens.

Dave Freer said...

Matapam - little as I like it or support it, or think it makes sense, we have to do it. I believe intermediates may come along to do it for us, but they don't exist right now, not unless you are a mega-bestseller (in which case they're free benefits, which you don't need and therefore must get).

Dave Freer said...

Bendan, interesting links. Put it this way, I think there is a better chance right now - and in the next two years - of changing the equation. After that the moment is lost and the new status quo will take hold.

Brendan said...

Dave: If the equation is going to be changed you really need the advocacy groups on side. Do you know what the position of the American Writers Guild and other bodies is? Last I heard they seemed to be spending most of their time raging about the Google Settlement which to me is very much a side issue.

If you want another very scary link try Ebook deals 'not remotely fair' on authors. If writers advocacy groups aren't doing their best to crush even the discussion of publisher exclisive rights extending till the end of copywrite, they aren't doing their jobs.

Barb said...

Excellent post, Dave, and excellent comments from everyone here. I couldn't agree with 'em more.

It sounds like if you have a viable book, one the major publishers don't want, you need to try self-publishing quickly if you plan on trying it at all. Because if the moment _is_ lost as you say, then you basically are acing yourself out of the market before you start.

I would like to know how the major publishers explain the self-publishing success stories out there? The ones I can think of right off the top of my head are Christopher Paolini and Larry Correia -- both parlayed their self-published sales figures into contracts with a reputable publisher (Baen, in Correia's case) -- and even if there was only _one_ success story out there (there are dozens, but those are the two in SF I remembered right off the bat), that proves there are books that the major publishers don't want (for whatever reason) that readers _do_ want and _will buy_ and _will read_.

Oh, and one final thing. The liberal political community has believed for years that the big Republican think tanks have wildly inflated some conservative talk radio/television commentators' book sales by buying in bulk at a discount before the book is ever printed, thus showing it's a "best-seller" very early on and driving buzz. This is a dishonest, unethical practice if proven to be true -- and you'd think the money trail for something like that would be very easy to prove. Why hasn't anyone done anything about that? Thoughts?

Brendan said...

Trudy Canavan tweeter my answer for aus publishers with the Australian Society of Authors position paper ASA EBook Royalties and Contracts(PDF)