Today in Publishing: A Skirmish

July 22nd, 2010 · 27 Comments
by Kassia Krozser

If you are contract, royalties, or publishing geek, today (yesterday?) was an exciting day. Sort of like the bully saying “I’m gonna beat you up” every day until the scrawny kid picks a fight. All concepts relative. As promised, agent Andrew Wylie did what he said he would:

“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.”


And, as predicted, there was sturm and drang. Random House huffed and puffed and said they wouldn’t contract books from Wylie authors. That’s a fine stance, and I think it will last until they decide there’s a book they want enough to change their collective corporate mind. There’s principle and there’s business. One makes more money than the other.

I don’t have cohesive thoughts on this, but that’s what bulleted lists are for, right?

  • Exclusivity: The Wylie deal (or Odyssey, as the publishing arm is called, deal) is apparently a two-year exclusive agreemen with Amazon/Kindle. I am not a fan of exclusive deals. I think it’s better to make your books available everywhere. My personal feelings aside, if you’re going exclusive, Kindle is the best possible platform. You can read the books you purchase on every possible device, from phones to desktops. Sure there are territorial issues, but y’all know I write long, so we’ll skip that.

    I have three theories on why this is a Kindle-exclusive deal. The first, and most obvious, is that when Wylie started this process a year ago, the digital books landscape was very different. Kindle dominated. Even today, going with Kindle alone is not a bad bet for publishers. Second, it’s possible Amazon offered some fine incentives for an exclusive deal. These deals are not unheard of, and if you’re going for market share, what better way to reach customers than having something nobody else has?

    The last theory is weird and squidgy, but I like it. If you, agent, are trying to convince authors/heirs that going digital is a genius idea, what seems safer than Amazon? Nothing. Recall, if you will, that many old school authors are digital skeptics, believers that books equal print. If you are going to be coaxed into the digital age, you want to go with a name brand.

  • Pirate Killer: It should not surprise anyone that the books on Odyssey’s list are also readily available on pirate sites. In fact, any book on any college syllabus is available. Unless you’re studying the really odd stuff, in which case, awesome! As of last night, these authors are being paid for their digital books. For the first time. That has to count for something. Every day’s delay is lost money.

    For all the promises and assertions of major publishers, they have not been able to accomplish this simple feat: paying all of their authors for their digital works. The mind boggles. They are digital aeons behind on this process, and that’s just for the rights they own free and clear. Again, every day without a legitimate paid alternative is lost money.

  • Royalties: I know it’s crass to talk about money, but we are not talking about new authors realizing their artistic vision. We are talking about library titles that have (presumably) earned out advances and are making what I call bread-and-butter income for publishers. Yes, there are costs of creating a digital version, but offering a 25, 30% royalty is insulting.

    I am going out on a limb and thinking — based on previous reports — there were negotiations between Wylie and other publishers, and the publishers didn’t offer what Wylie thought was reasonable in terms of money. I don’t know who was right or what the middle ground was (and I have my thoughts on agents also serving as publishers without requisite arms’ length negotiations), but the parties involved seem to believe the Odyssey deal is in their best interest. I hope they are sophisticated enough to weigh all pros and cons

  • A Moment: I’ve suffered through a lot of crappy backlist conversions from major publishers. For better or worse, the Odyssey books are quality. They look good, the images are well done. These books are, so far, the quality ebooks we’ve been craving. So much so that I’m not going to debate price with myself.
  • Agents, More: I have spent my adulthood fighting on the side of The Man. I have worked to preserve, for lack of a better term, the business practices of the distributor/publisher/whatever. I am really good at justifying these practices, and, because I am a lousy liar, I know there is a good business justification for things that seem wrong to the peanut gallery.

    Agents know what I know. The economics of a library title are far different than the economics of a new release. And they know that digital margins are far different than print margins. They are going to fight for the best interests of their clients (and not only because those best interests align). What is emerging, a tad more rapidly than I predicted, are robust, serious alternatives.

    In this particular game, it’s up to the legacy publisher to prove its worth. I’m afraid that means money, since we’re mostly talking the kind of books that sell themselves. I say that not only for library, but also for current titles. Contracts must evolve and quickly. Too much competition is lurking for them to remain business as usual.

  • Another Moment: I think I’ve mentioned a time or two that I hate most publisher websites. Too messy, too unfocused. The Odyssey website is pretty and clean. And their digital book covers are appropriately suited to the medium.
  • What Is a Book?: I am less interested in the exclusivity question than I am in this. The rights question — can Wylie do this crazy thing? — depends on the contract between each author and each publisher. For the books in question in the Odyssey, the definition of book was pretty clear to both parties: hard/soft cover, paper with words printed on them. So much has changed since then. How will judges and juries view these old school definitions and the applications today’s marketplace?
  • Litigation Madness: Outside of RICO (thanks, Kirk, though we know it’s a mad stretch!), I don’t think there’s a way for a publisher to assert a class action suit against its stable of authors. Each agreement will have to be litigated separately. Taking name authors to court is dangerous for publishers — do you really want The Man versus poor author? Taking smaller authors to court has equal challenges.

    Litigation keeps America working. I am proof of this, and I’m not a lawyer. Not that I have anything against lawyers. Some of best friends are lawyers. But litigation is expensive, and publishers would have to bank a good number of judgments before the other side cries uncle.

    On the other hand, the threat of litigation will deter smaller authors from pursuing action. Litigation is expensive. How many authors will roll over because they cannot afford to defend their rights?

I know I have more, but, hey, that’s the start of a conversation, right? What are you thinking?

File Under: The Future of Publishing

27 responses so far ↓

  • Ric Day // Jul 23, 2010 at 3:49 am

    An excellent article, Kassia, and a lot of food for thought. I suspect that we may all look back on this as a tipping point in the shift from print to digital books.

    Odyssey appears to be setting a new quality standard for ebooks – one which frankly is overdue; far too many Big Six titles leave one with the distinct impression that they were slapped together in some low-cost sweatshop with no attempt at even the barest quality control.

    I have felt for a while that the obvious lack of care in the production of ebooks by major publishers speaks volumes about their attitude to the digital format. And, I think, those “churn them out quickly and cheaply” attributes have been reflected in consumer demands for lower prices. If it looks like a Lada, don’t ask me for a Lexus price!

    Ironically, the royalty rates Odyssey is seeking to establish are going to create more problems for small publishers than for the conglomerates because initial production costs will be relatively higher for small shops. I think the solution will probably be a transparent approach in which the royalty rate escalates with sales, allowing the publisher to recover some of the launch costs.

    As to the issue of litigation – as ever, that should be a last resort and this is one of those areas in which it is very hard to see anyone, publishers or authors, “succeeding.”

    Lots to think about!

  • REL // Jul 23, 2010 at 6:05 am

    No book on this list sells itself.

  • Ryan // Jul 23, 2010 at 6:34 am

    I would love to hear from some of the Wiley authors on the list like Amis or Roth. Are there Wiley authors who wanted a better royalty share, but were against giving Amazon a monopoly on their ebooks? I suspect internecine conflict at Wiley will come to light soon – too many conflicts of interest to pretend otherwise.

  • Kassia Krozser // Jul 23, 2010 at 8:04 am

    Ryan — I wouldn’t be surprised if we starting hearing about dissent in the Wylie ranks. I know more than a few author who express discomfort with the idea that agents are getting into publishing (or publishing services). I’m not so sure these are author sophisticated enough, yet, about digital distribution to balk at the exclusive deal, but I’m also not invited to their dinner parties. They may have discussions about this stuff. Lots of people talk business over drinks and food.

    Then again, if the first batch of authors see some success (and since they are mostly dead, they’ll have to transmit their presumed happiness via ouija board), noted (notorious?) digital skeptics like Roth may change their stance. At that point, it’s up to the legacy publisher to formulate a deal that competes favorably with Odyssey or Open Road or other start-ups.

    (Editing my response to Ryan: I did not realize that Philip Roth was part of the first 20 authors being published by Odyssey. That makes things really interesting to me as he has not been pro-digital in his public comments.)

  • Mark Young // Jul 23, 2010 at 10:40 am

    A lot has happened in the last three years for authors, agents and publishers in this digital revolution. They say change, once started, comes quicker and quicker. This skirmish is just one blimp on the screen. However, like pebbles dropped in a pool, waves will just keep rolling. Thanks for your thoughts on all this.

  • anonymous publisher // Jul 23, 2010 at 10:44 am

    Kassia

    There is a lot that is wrong with this article;
    1) How can you praise Wylie for making these titles available when the reason they haven’t been previously available is because he’s been witholding rights?
    2) royalties – easy to pay higher royalties when all you are doing is producing an electronic edition – Nice of Penguin, who have rejacketed and repromoted all of Nabakov this year, to contribute to Odyssey’s marketing costs, wasn’t it? I don’t see any first novelists on the launch list – presumably the costs don’t quite work out when you have to spend time and money creating an author brand.
    3) Publisher websites – of course it is easy to have focus when you have a list of 20 titles. Not worth discussing.

    As far as I can tell this move benefits no-one in the long term except Wylie. Not readers who are forced to buy from Amazon. Not booksellers (except amazon). Not authors who might find their relations with publishers who provide them with 80%+ of their royalties a little strained going forward.

    Poor thinking all round.

  • Shelley // Jul 23, 2010 at 10:49 am

    Wylie only publishes the famous, right?

  • Theresa M. Moore // Jul 23, 2010 at 11:18 am

    And, as usual, no one asked the authors what they thought of the move. Any reputable agent would run it past the rank and file before dotting another i.

  • Mark Barrett // Jul 23, 2010 at 11:56 am

    My own take yesterday was that this kind of development was inevitable, and that it will ultimately prove transitory. Trying to plant a flag in the shifting publishing sands is almost pointless because there’s nothing firm to stand on — and that includes copyright if you screw up and lock yourself into the wrong market.

    My only real curiosity is how long it will be before this deal/package gets changed, or, more likely, bought out by someone else.

  • Mike Cane // Jul 23, 2010 at 11:59 am

    Oh there will be litigation. Remember the 35-year statute of limitations on publisher contracts. I will be having firsthand experience with that soon. Better send your Ninjas now to try to kill me, Big 6. Because you are ALL GOING DOWN. I will free EVERY WRITER from your grip. Your backlist is gone — well, the part that Google hasn’t already stolen, you complacent morons.

  • Clive Warner // Jul 23, 2010 at 12:53 pm

    “For all the promises and assertions of major publishers, they have not been able to accomplish this simple feat: paying all of their authors for their digital works. The mind boggles.”

    – Quite.

  • Carolyn Jewel // Jul 23, 2010 at 1:20 pm

    Wow. I’m kind of surprised by some of the comments here. I’m sure, though, there are perspectives that have not yet been brought to light.

    However, the digital rights did not belong to Andrew Wylie. They belong to the author, and there’s just no way, outside of of fraud, that Wylie could have sold the rights without the author’s consent, or the consent of the author’s estate. So no one should be assuming at this point that Wylie did not obtain the required consent until someone with knowledge suggests that’s the case. I don’t think that it is.

    Why should Wylie, or any agent, sell digital rights for a work for a WORSE deal than is commonly available? The print publishers are not offering authors a royalty rate that is anywhere near the royalty rate offered by the established ePublishers or, as it happens, from Amazon. If those publishers wanted those rights, they could have ponied up for a deal that came close to what an author could obtain elsewhere.

    Of course there are no debut authors included. Wylie pretty much represents only authors whose books are destined, in his opinion, for enduring fame and thus, will be reprinted for years and years and years.

    I went to the Oddessy site, saw the list of authors and books and bought 3 of the titles for my mother, who is 82 and cannot hold most paperbacks and no hardbacks because they hurt her hands. She can hold a Kindle, which I bought for her last Christmas.

    Chances are high I’ll buy some of those titles myself to read on my iPhone. There’s a market for this, if only publishers would pay more attention to the real customer: the reader.

  • Kassia Krozser // Jul 23, 2010 at 1:21 pm

    Anonymous Publisher — As you can see, I disagree with some of your points. My understanding was that Wylie was negotiating with certain publishers and they were not coming to a meeting of minds. Or maybe he took their public comments about royalties — Random House gets a lot right when it comes to digital, but they’ve also been the most aggressive about lowering the royalties paid to authors — at face value. Regardless, when it comes to bread-and-butter backlist, yes, it is easy to pay the higher royalties because the incremental costs (after creating the digital version) are negligible. From the perspective of the author, it’s very difficult to accept a lower royalty rate for a book that has earned out all costs and the advance…and that’s what we’re talking about here. New releases have a different economic paradigm, which I believe I mentioned.

    (As for new authors, there are many digital-first publishers who have successfully developed new authors, authors that major publishers have attempted to woo away. What happens quite often is that these authors end up writing for two different houses. Good for them.)

    I should note this approach is not unique to Wylie. Richard Curtis has been doing this for years. Scott Waxman’s agency is engaged in a publishing venture (new titles, I believe). And every day, we hear about individual and groups of authors who are regaining their rights and engaging in digital self-publishing, depending on how you define the term. What this tells me is that publishers, who for a certain type of author already have to make their case for the author’s business, need to compete in a smart way for those books where the digital rights were not specifically granted via contract. One agent put the cut-off date as prior to 1994 (that scares me a bit, thinking it took that long to enshrine digital rights in publishing contracts).

    (You could, just as easily, argue that Penguin UK’s republishing of Nabokov’s works benefited the US edition of Lolita, published by Random House. Rights in the world of books are often parsed out, and the marketing efforts of one entity directly carries forward to others. What makes this any different? And, of course, who’s to say that there will not be a complementary impact on Penguin’s editions? People buy both the print and digital editions of books all the time.)

    I’ll agree that it’s easy to have a nice website when there are only 20 titles, but, if you spend any time at all looking at publisher websites (and I do), finding a decent publisher website is a serious challenge. There has been some positive movement in this regard — Simon & Schuster comes to mind — but most publisher websites do not do a good job of serving their various constituencies. As publishers move more and more into direct sales, they will face the challenge of making their sites shopper friendly.

  • Kassia Krozser // Jul 23, 2010 at 1:23 pm

    Mark — you ask a good question. Wylie’s degree of seriousness in making this a going concern is unknown. Of course, there will be other ventures (I mentioned Open Road — this is part of their business plan). To my mind, two years is a long time for an exclusive anything in a constantly changing landscape.

  • Kassia Krozser // Jul 23, 2010 at 1:25 pm

    Theresa — I’m not sure I get your point. Presumably, the agency would have negotiated with the authors/estates prior to releasing these books in digital. The whole point of the original argument was that the agreements in place with the publishers didn’t give the rights to those publishers. New agreements would have to be negotiated before any digital selling could commence.

  • Kassia Krozser // Jul 23, 2010 at 1:25 pm

    Mike — when they take your mug shot, can we get change that out for your Twitter avatar ;) ?

  • Kassia Krozser // Jul 23, 2010 at 1:27 pm

    Carolyn — you were responding just as I added my long-winded comment. Thanks.

  • Kelly Jamieson // Jul 23, 2010 at 3:17 pm

    After reading your article Kassia I finally see both sides to this issue. It’s not black and white and it is all most interesting as more changes unfold.

  • Dave LaFontaine // Jul 23, 2010 at 5:13 pm

    Heh. The parallels between the publishing business and the music business are about to become clearer. As the business model erodes in the face of encroaching technology, the mossbacked reactionaries will react by crying havoc and setting loose the attorneys. Too bad that recent reports have shown that in the last decades or so, the RIAA has spent nearly $100 million on litigation against its best customers, and in return, netted the massive sum of … $1.4 million.

    Good luck turning that into a coherent business model. (And I say this as an author whose last book title turned up via a Google Alert as being available for download on a BitTorrent site before I had even finished writing it.)

    No, the process of unbundling of services has started & the genie is well & truly out of the bottle. Check out David Byrne’s landmark article on the state of music contracts and business in Wired http://www.wired.com/entertainment/music/magazine/16-01/ff_yorke?currentPage=all

    Basically, there’s going to be a range of contract for authors, just the way there is for bands. On one end of the spectrum is the classic “Just sign here and write, you gorgeous artist you! Don’t worry your pretty head about all that messy business numbers stuff.” On the other is the full-on digital entrepreneur who handles distribution, marketing, customer service, quality control, accounting, etc., all on their own.

    In between will be the contracts that most of us will sign, where we give up some of the rights to our work to publishers in return for actual services performed by them that help our sales. The unsettling thing for publishers must be the thought of authors exerting control over the way the biz/marketing side of their works goes (and having met many of my persnickety, OCD-verging-on-paranoid authorial brethren, I can’t say I completely blame them).

    So if you really want to know what the years ahead hold for Big Publishing … look to the empty hallways and cobwebbed offices at Warner Music & Capitol Records. Is this good or bad for authors? Well, good for some, bad for others.

    Better for consumers, though.

  • Laurel L. Russwurm // Jul 24, 2010 at 5:57 pm

    @Kassia:

    Lousy publisher websites are a symptom of the fact most publishers are simply not adapting to the digital world.

    If they can’t do it in house, hire a web designer. All it takes is a little commitment.

    And from the sound of it, it would be this lack of commitment to progress which has set the stage for Odyssey’s launch.

    Regardless, when it comes to bread-and-butter backlist, yes, it is easy to pay the higher royalties because the incremental costs (after creating the digital version) are negligible.

    The cost of creating a digital version should also be negligible. Even with associated layout costs, this is not rocket science.

    After set-up digital distribution costs virtually nil. Is there any earthly reason why author royalties should be anything less than the 80% range?

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    As a mystery writer and a thoroughly 21st century man, all this is breathtaking, fascinating and scary all at the same time – kind of like a good thriller. I still don’t pretend that I understand it all though. My head is still spinning.

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  • Daithi // Aug 9, 2010 at 9:05 am

    I don’t see why more established authors don’t just retain their digital rights and sell their books directly through Amazon, Apple, Etc. The royalty for doing so is at least 70%. I bet they aren’t getting this through Wyle/Odyssey. If I were an established author I would use my publisher for producing printed books, but I’d sell digital books myself through Amazon, et al.

    Once enough people have eReaders I think even unestablished authors will be going this route. An author making a 10% royaly of a $25 book makes $2.50, but at a 70% royaly of a $10 ebook he makes $7. This means an author only needs to sell 26.3% of his books as eBooks to make the same as he is selling through traditional paper based books. If I can see the writing on the wall I imagine many authors can as well.

  • Kassia Krozser // Aug 9, 2010 at 9:40 pm

    @Daithi — short answer: because publishers insist on acquiring digital rights when the acquire print rights. In fact, no digital, no deal. Very few authors have the leverage to negotiate a better arrangement. Agents are, obviously, working to get the best deals possible, but there is real tension here.

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