Sunday, July 25, 2010

It's an Odyssey

The general definition of an odyssey is an extended adventurous voyage or trip, or an intellectual or spiritual quest. If you've kept up with news from the publishing world this week, you'll probably agree with me that this profession is on an odyssey right now, on odyssey of exploration of new technologies, new relationships and -- unfortunately perhaps -- new conflicts as the struggle for domination continues between the traditional and the innovative.

All right, I hear you asking how this week has been any different from the last year or so. Two things stand out, in my opinion. Both of these are indicators that the business of publishing has changed much faster and in ways that are rocking the traditional publishing business plan so badly that the little leak in the boat has become a flood. How the "agency plan" publishers react very well may be the make-or-break point for them.

The first item that caught my eye in the last week or so was Amazon's announcement that the first quarter sales for the year saw more e-books being sold than hard covers. Specifically, it announced a ratio of 143 e-books sold for every 100 hard covers. In the last month, the difference has increased to 180 e-books sold for every 100 hard covers. Is this the tipping point for e-books, I don't know. I think if it isn't, we are almost there. And, yes, that slight tremor you feel is the "Agency Five" quaking in their boots and trying to hide it.

To put that into perspective, the American Association of Publishers has released its May sales stats. Books sales increased in May 9.8% and sales are up 11.6% for the year. That's the good news:

The Adult Hardcover category was up 43.2% percent in May with sales of $138.5 million; sales for the year-to-date are up by 21.7% percent. Adult Paperback sales decreased 2.2 percent for the month ($110.7 million) but increased by 15.7 percent for the year so far. Adult Mass Market sales decreased 14.6 percent for May with sales totaling $54.6 million; sales were down by 7.3 percent year-to-date. . . E-book sales grew 162.8 percent for the month ($29.3 million), year-to-date eBook sales are up 207.4 percent. [emphasis added] Year-To-Date E-book sales of the 13 submitting publishers to that category currently comprise 8.48 % of the total trade books market, compared to 2.89% percent for the same period last year. . .

So, e-books for these 13 publishers total less than 9% of the market. However, if we were to take into account all books bought in this country, I have a sneaking suspicion that number would be much different. But that is just supposition on my part. However, the rate of growth for e-book sales by the 13 publishers who reported to AAP is telling. Yes, that tremor we felt earlier is getting stronger.

Finally, the news that turned the tremor into a full-blown quake has certain publishers threatening dire consequences. In case you haven't heard, Wednesday, Andrew Wylie announced an exclusive deal with Amazon to bring out 20 "modern classics" as e-books. Among the authors involved are: John Updike, Salmon Rushdie, Philip Roth, and Vladimir Nabokov. You can just imagine the roar that went up from the offices of publishers throughout New York. "These books are still in print. They are still under contract. They are ours! Oh, wait, there's no clause in the contract for electronic or digital rights. Well, that doesn't matter. There is language there somewhere that will cover it. We know there is. So, Andrew Wiley, you can't do this."

Yes, I'm being facetious here. But it does point out the problem facing publishers, authors or their estates with the changing of technology. These contracts written years, sometimes decades ago are out-of-date with the times. And the publishers aren't renegotiating. So agents are looking for alternatives for their clients.

And there is, in the short term at least, going to be fall-out not only for the publishers but for the agents and their clients, even clients who aren't involved in the Odyssey 20 deal. “The Wylie Agency’s decision to sell e-books exclusively to Amazon for titles which are subject to active Random House agreements undermines our longstanding commitments to and investments in our authors, and it establishes this agency as our direct competitor,” Stuart Applebaum, a spokesman for Random House, said in a news release on Thursday. “Therefore, regrettably, Random House on a worldwide basis will not be entering into any new English-language business agreements with the Wylie Agency until this situation is resolved.”

In Mr. Wylie's defense, if he needs to be defended, he noted in his announcement that the deal to bring out the Odyssey books was limited to those books where the publishers did not have the digital rights. “The fact remains that backlist digital rights were not conveyed to publishers, and so there’s an opportunity to do something with those rights.” This has been, in my opinion, an issue since the onset of e-books. If the publisher has the digital rights to an author's backlist, then why not bring them out, if for no other reason than as promotional tools for the newer books?

Needless to say, the industry is standing up and paying attention to what happens next. The "Agency 5" publishers are taking the hard line and saying that Wylie's actions are wrong and injurious not only to the authors but to the publishers and the industry as a whole. Some traditional booksellers are worried that this action is just the tip of the iceberg and will further erode their business. Agents are watching closely to see what happens -- some are probably acting like sharks attracted by chum, circling to see if any of Wylie's 700 clients jump ship -- while others are thinking about how they can follow Wylie's example for their own clients. Then there are the writers. We are a wide and diverse lot. You'll find any number of reactions from us. For myself, I applaud Mr. Wylie and his agency for what they have done. My only fear is that this will cause publishers to insert clauses into their contracts that give them digital rights -- no biggie here if there is reasonable compensation for the author. The key term being reasonable -- but that they will also amend the term "still in print" so that as long as a nominal number of digital copies of a book are being sold, it will considered "in print" for all forms of the book, thereby all but preventing the rights from ever reverting back to the author.

Some other links about this issue:
Galley Cat
Jason Pinter

So, what do you think? Did Wylie make a good move for his clients, all of his clients, or will this wind up backfiring? Should publishers be able to claim the digital rights for books that are "still in print" but were contracted before the advent of e-books and for which they have not executed contract amendments? Is this the tipping point for e-books?

27 comments:

C Kelsey said...

If it's not in the contract, it's not theirs to sell. Lack of foresight on the part of the major publishers, and that lack being used to bring out old content in new forms is just good business. Instead of crying, the big publishers need to start trying to figure out a viable business plan.

Of course, the real earth shattering bang this month isn't the numbers... it's that my dad has a Kindle, can actually use it, AND he likes it. There's the death of print media, right there. :P

Anonymous said...

It sounds like Wylie has just fired the first shot. The second round will be the publishers' reply, which will take the form of renegotiating contracts like Sarah's recent "in any format yet to be invented" clause.

Authors don't have the financial resources to hold out for better terms, don't (yet!) have enough results of direct-from-the-writer Kindle sales, haven't developed alternate venues.

I think it may get ugly for awhile, until the ebook and POD venues shake out and provide a hundred safe harbors for writers walking away from traditional publishers.

MataPam

Rowena Cory Daniells said...

We live in interesting times!

Dave Freer said...

I think it was premature and will cause more bloodshed and uneccessary suffering for authors by forcing the tradpubs into some excessive reactions (of course logic and common sense would simply mean matching or bettering Wiley - which they could do and still be profitable - and offering authors more services - which they're also in a better position to do. Not going to happen.) For the record for authors I estimate tipping point for e-books(pricing them at roughly paperback level)to be roughly 20% - ie where, at 50% of net (the ball-park for new e-pubs selling through Amazon) as opposed to 8%-10%, authors make more money outside of tradpub than in. Um. Given the rough trebling of e-books in the last year... that could be less than a year off. And for those getting 70% by doing the stuff themselves or using out of copyright material, that's sooner. Of course for publishers wishing to put off the evil hour - perhaps indefinately, the higher rate you pay to authors for e-rights the less likely it is they'll jump ship. Baen - as they pay a better rate and have a better relationship with both readers and writers, have a little more time. But by forcing the agency model on Amazon - and making the figures known - the publishers have made it clear that they are getting 70% and paying authors 6%-15% (depending on contract, format). Not only has their share gone up by around 25-30%, but the losses via returns, distribution and paper costs are being saved on e-books - losses that they're very reluctant to quantify, but have to be substantial - perhaps a further 25%of the total -- so there is a lot of pie to fight for. If they can keep it without giving the author any/much more, they go from being marginally profitable to being exceptionally profitable, especially if they can keep the prices high, without having to do anything more than they do now. It's a lot to fight for and be very evil for, and some have have deep pockets to do it with. Worrying times.

Anonymous said...

Amanda's links, especially Jason Pinter's, shows that if the TradPubs can't snatch the e-rights with old contracts, the e-books will undercut their backlist paperback sales.

I always hear about the trouble writers have getting the publishers to keep their books in print. But if you look at Baen, what percent of the income is David Weber's, David Drake's and Lois Bujold's backlist? Another reason Baen may survive when others crash - if their parent company doesn't take them down with them - is their early adoption of e-books and good relations with their writers.

A few writer wins in court over older e-rights, and the TradPubs may not have much money to prolong the fight with.

MataPam

Amanda Green said...

Chris, you'd think common sense would mean if it isn't in the contract, it isn't theirs to sell. Unfortunately, my definition of common sense and theirs seems to be vastly different. As for the publishers trying to figure out a viable business plan, well, that's what a lot of us have been saying for a long time. The problem is, there are too many who don't want to move away from the model they've operated under for years, whether it works or not.

As for the real earth shattering news, LOL. Glad to hear your dad not only has a Kindle but knows how to use it AND likes doing so.

Amanda Green said...

Matapam, actually, this is the second shot, imo. The first happened a around the first of the year when the William Styron heirs challenged Random House's claim that it held the digital rights to his books. Again, they were operating under contracts that were signed long before e-books came onto the scene. It took until April, and there wasn't a clear cut result, but Random House would up ceding "some" of the rights back to the heirs. I'm not sure what that means and I'm too lazy right now to look it up.

And yes, it does mean we're going to see clauses like the "in any format yet to be invented" which, if someone challenges it, will quite possibly be struck down by the courts. At least I hope so.

Yes, it is going to get ugly for awhile and that will only wind up hurting the industry as a whole. I say this because readers don't understand that the authors really don't have much power when it comes to telling publishers what to charge, when to bring out their books, etc. So, any anger that should be directed at the publishers will, in many cases, be directed at the writers and that will mean fewer sales. So the question becomes, how do we educate the reading public to the state of affairs in the industry right now?

Amanda Green said...

Rowena, unfortunately, these are "interesting" times in the terms of "OMG, what's going to happen next?" and not the sit back and enjoy the ride sort of times.

Amanda Green said...

Dave, I have to agree with you. All you have to do is read the reactions of the publishers to what Wylie has done to know that they aren't going to be moderate in their response to what they see as an attack on their property. Instead of simply trying to negotiate in good faith, they will no longer deal with any of Wylie's 700 clients. They threaten lawsuits and more. It really does remind me of a bunch of kids packing up their toys and going home mad because they aren't getting their way.

Amanda Green said...

Pam, the problem is that most writers won't -- and can't -- take the publishers to court of the issue. If they do, they may as well kiss their careers goodbye, at least as far as major publishers are concerned. It is going to take a NAME to challenge and win the issue for anything to change. Either that or a class action suit, but I don't hold out much hope for that happening, at least no time soon.

My biggest concern is that publishers will try to re-write the definition of what "in-print" means to include the sale of a minimal number of e-books, thereby trying to tie up both the digital and print rights to a book forever.

Stephen Simmons said...

"Some people believe that the future means the end of the past. People can be very frightened of change." - Captain James T. Kirk, Star Trek: The Undiscovered Country

I think Wylie may be guilty of having yelled "fire" in a burning theatre. The game is changing, and all the players know it. He just called lots of attention to it.

I've said before, as we noodled this question over the past few months, that one of the possible outcomes I see is a synergistic new relationship between agents and smaller, nimbler publishing houses, with the agents taking over the role of primary gate-keepers. The old "Them" will have to be nimble, and find real ways to offer meaningful value-added-for-percentages-paid if they want to have any seat at all in the new furniture arrangement after this music stops.

In the meantime, it's bound to be a bumpy ride, because somebody (or a whole lot of somebodies) whose livelihood currently depends on "Them" is going to have to kick over the current structure and allow the new one to emerge. Mr Wylie has the luxury of having enough clout to play the game like he's already "One of Them" through the transition.

Anonymous said...

I wonder if Wylie did this specifically to get a decisive and clear judicial ruling? _That_ is pretty much the first thing that is needed, for _prior_ book contracts.

But at some point, e-books will be able to hold their own, and authors can cut all _future_ sales to the TradPubs altogether, if they aren't reasonable about future e-book terms. I hope Dave is right about that point being just a year ahead.

I know the idea of walking away from from your entire back list is painful (and costly!) but is the alternate better? Do writers, other than the best sellers, get much from their back list?

MataPam

Chris McMahon said...

Those statistics are quite amazing. I can't help but be encouraged about the increasing penetration of ebooks.

I am not sure how Wiley's move will work out for his clients, but I think it will be excellent for the development and clarification of these issues overall, as a test case.

Kate said...

Interesting times indeed, and not in a good sense.

IMO what we're seeing here is the fallout over the battle for control. 'Slavery' clauses ("thou shalt not sell anything else under any name whilst thou art contracted with us") have apparently become boilerplate in the last few years - but there are no complaints because, as I said on Thursday - anyone who complains gets blacklisted. "All your everything are belong to us" contracts aren't far behind.

What frightens the publishers more is authors having access to any source of half-way accurate sales data. I'll leave it to fertile evil-minded minds to work out why. Suffice to say, every attempt that's been made by any author organization to get hold of the Nielsen Bookscan data has been blocked.

Control. More addictive than any drug.

Amanda Green said...

Stephen, I think the whole relationship between publishers, agents and authors is going to be changing. I will admit, however, that I have a problem wrapping my mind around the prospect of my agent also being my publisher. Part of that is the potential for conflict of interest between the agent as author rep and the agent as author's publisher. Oh well, time will tell.

Amanda Green said...

Matapam, you may be right that this was a tactical move, a tactical strike really, by Wylie to get some sort of court ruling or some sort of precedence. Either way, part of me applauds him for his audacity while another part wishes he'd been a bit more stealthy about it. There's going to be a lot of turbulence ahead and, I'm afraid, the authors and readers are the ones who are going to pay the most, at least in the short run.

Amanda Green said...

Chris, the numbers continue to surprise me. I happen to believe they will continue to increase for e-book purchases, also for e-book readers. With the price of readers coming down and with more and more manufacturers bringing tablets like the iPad onto the market, I think we're going to see these numbers continue to grow.

What surprises me are the number of posts I see from people who have received a Kindle or an iPad or Nook, or whatever, and who are reading now when they never did before. The convenience of being able to buy and instantly download a book without ever leaving the comfort of your home -- or while waiting for a bus, etc -- combined with being able to carry literally hundreds or thousands of books around with you appeals to so many people. It's time the publishers realized that and tried to find a realistic solution for reaching them and keeping them as paying customers.

Amanda Green said...

Kate, YES! And, yes, you're right about no one challenging their sales numbers. However, that might change in the near future (yes, I know. I've already said in the post and in the comments I don't see it happening, but it can). Authors are able now to see their Amazon rankings and track them. If they use the DTP program to self-publish something, they can see exactly what those numbers are. It's the same with Smashwords, etc. And you can follow sales rankings for Barnes and Noble. The day will come when an author who does as much or more by self-publishing e-books as he does with traditional publishing routes will get fed up and demand an audit. How it will probably happen is in a counter-suit after a publisher sues because that author isn't playing nice about something. When that happens, all hell is going to break loose in the industry. I just don't know whether to duck and cover or try to get the food concession for it because the fireworks are going to be phenomenal. [vbeg]

Brendan said...

Wylie did try to do e-book deals with publishers but they wouldn't stump up what he considered a fair deal.

From a Harvard Press July edition article:

"Wylie’s negotiations with publishers on the book industry’s version of the iPod, e-books, are currently on hold across the board. He’s dissatisfied with the terms publishers have been offering for e-book rights, which were not widely foreseen and are not allocated in most extant book contracts. In fact, Wylie threatens to monetize those unassigned rights by going outside the publishing business entirely"

Publishers should know by now that Wylie(described by The Gaurdian as “the most feared and most influential authors’ representatives in the world of Anglo-American publishing.”) has the clout to carry out his threats and if they didn't take him seriously it is their loss.

Stephen Simmons said...

Amanda, the reception on my crystal ball is hazy at best, I'll admit ... but we're SF writers, aren't we? We're supposed to be able to foresee how specific (theoretical) changes in technology impact the culture we're writing about, and project those reactions forward into our new fictional-future state, aren't we?

I don't see the agent becoming the "publisher", exactly. As in, I don't see him/her being the one writing the checks. But I can't help thinking we're looking at the possibility of a broad-scale, single-layer disintermediation. (Kate's word, I believe?) If the agent becomes the de facto Gatekeeper (cue Sigourney Weaver and Rick Moranis), then the gatekeeping function downstream of him/her becomes redundant.

At that point, the agent becomes the negotiator between the author and the retailer, e-book or POD hard-copy. The "check-writers" become Amazon, B&N, et al for e-books, and the POD publishing house for hard-sales.

The only piece I don't have an answer for is who pays the editors, structural editors, and proofreaders. Oh, and what to do with all the vestigial front-office, business-degree types at the "Agency Five" ...

Amanda Green said...

Brendan, if they didn't know it before, they do now. Of course, that doesn't mean they are willing to admit it to themselves. Instead, they'll puff out their chests, open their mouths and talk about how things were and should always be and ignore the fact that the times "they are a-changing." As I've said, I applaud Wylie on the one hand for rattling the bars, so to speak. But, on the other hand, I do wish they'd been a bit more subtle, maybe even covert about it, because there is going to be a lot of figurative bloodshed before this is all over.

Amanda Green said...

Stephen, your crystal ball is no less hazy than mine. But agents are acting as publishers. I know of two agencies now that have started e-book "presses". That's where my concern is. Unless the agency has been very careful to erect that "Chinese wall" to keep the two entities totally separate there is no way there won't be a conflict of interest. While it might not smack of "ick" quite as badly as those agents who take in the uninformed with their "reading fees", I still have to sit back and scratch my head at the problems such a "publisher" could have.

Francis Turner said...

The more I think about it the more I feel that Wylie has in fact just become a publisher. He doesn't realize it himself yet but he will be a publisher real soon now because there really isn't much that a publisher adds to what he (or a combo of he + amazon + some contracted freeelance edotors/ptoofers etc.) cannot do.

Since publishers dropped the slush pile they effectively made the agent do that winnowing part of the publishers jopb. Amazon does the fulfillment part so the only bit the publishers add is a bit of marketing and some of the production details (editting,proofing, artwrok etc.)

All those bits in the middle can be done by someone else and in fact publishers have actually outsourced a lot of it too.

If the publishers try to blackball him/his clients he can simply do an end run around them and still have his books available for most people from Amazon and I have no doubt he can - since these are big name authors - also get B&N, indie bookstores etc. to distribute them as well, even if they are printed by Amazon's PoD service.

Amanda Green said...

Francis, exactly re: Wylie having become a publisher. As for the possibility of getting print versions of the books into B&N, etc., should his clients forego traditional publishing houses, that might not be as difficult at it seems at first glance. B&N has announced that it will be offering its own version of the Amazon DTP program in the very near future. It wouldn't surprise me at all to see shortly thereafter that they don't also offer some sort of POD program or, as in Amazon's case, a program that will actually "publish" print editions once X-number of e-books are sold. As noted earlier, these are interesting times and I'm not sure whether I want to stay in the light and watch or go hide until the dust has settled.

Francis Turner said...

BTW here's the author's guild's analysis of the royalties authors get via the Wylie deal vs what they would get from a deal with someone like Random House.

http://authorsguild.org/advocacy/articles/what-its-all-about----economics.html

Also this AG statement is interesting. I actually find myself in general agreement with the AG here - which is probably a first
http://authorsguild.org/advocacy/articles/wylie-amazon-and-random-house-battle.html

Amanda Green said...

Francis, thanks for the links. I'll take a look at them later today, after I quit working.

Brendan said...

Francis and Amanda,

The Australian Society of Authors Ebook Royalties position paper says they have seen authors offered as little as 7% of the net receipts and while they see the 25% which is offered to most as an okay deal for books priced over $20, they recommend at least 35% of publisher revenue from sale of e-books.